Sunam Saini v Sundarrama Venkat Narasimha Reddy (Motor Insurer's Bureau Of Singapore, Third Party)

• Jurisdiction: Singapore
• Judge: Leslie Chew
• Judgment Date: 01 November 2007
• Neutral Citation: [2007] SGDC 299
• Published date: 25 January 2008
• Court: District Court (Singapore)
• Defendant Counsel: Loh Kia Meng (Rodyk & Davidson LLP),Lai Yew Fei (Rajah & Tann)

1 November 2007

District Judge Leslie Chew:

The Application

1. This is an application by the Third Party, Motor Insurer’s Bureau (“MIB”) to strike out the Defendant’s Third Party action. The application is made under O 18 r 19 Rules of Court (“ROC”). The actual application as set out in paragraph 1 of the MIB’s summons, seeks the striking out of particular words of paragraph 2 of the Defendant’s Amended Statement of Claim against the Third Party as well as paragraphs 6 and 7 thereof. The grounds of the application the MIB says are that the amended Statement of Claim against the MIB:

a. discloses no reasonable cause of action; and/or

b. is scandalous, frivolous or vexatious; and/or

c. may prejudice, embarrass or delay the fair trial of the action; and/or

d. is otherwise an abuse of process of the Court.

The Factual Background

2. The case before me is a straightforward case of a motor accident. On 19 August 2003 the Plaintiff was a pillion on the Defendants’ motorbike. On that day, the Defendant’s motorbike skidded and as a result, the Plaintiff was thrown off the motorbike and suffered injuries.

3. The Plaintiff instituted the present action against the Defendant. In his defence to the action by the Plaintiff, filed on 27 September 2006, the Defendant alleged that the accident came about because he had to brake suddenly on account of a motor car suddenly crossing his path without warning.

4. The motorist supposedly involved in this accident is unknown because he apparently sped off after causing or contributing to the accident. In that sense, the motorist is untraced or untraceable. As a result of the involvement of the unknown motorist, the Defendant issued Third Party proceedings against MIB.

5. MIB in turn took out the present application to strike out the Third Party proceedings.

The MIB

6. According to its web-site – see www.gia.org.sg – “the MIB is an independent body that was set up by insurers in 1975. It is funded by motor insurers in Singapore. Its main purpose is to compensate people injured in road accidents caused by negligent untraced or uninsured motorists.”

7. The MIB is not new as a concept. It is found in the United Kingdom. No doubt our roots in the common law of England, has resulted in our designing an entity along similar lines. The object which MIB sought to achieve when it was set up and continues to seek to achieve, is to have a scheme of compensation subject to certain terms, in order “to compensate people injured in road accidents caused by negligent untraced or uninsured motorists.” It does this by contractual arrangements with the Minister for Finance, recently replaced by the Public Trustee by way of Assignment.

8. Relying on the stated objectives of the MIB, the Defendant took the view that they came within the scope of the MIB scheme – this will be elaborated below – hence the Third Party proceedings. The MIB on the other hand takes the position that the Defendant’s claim in the Third Party Proceedings is misconceived.

Defendant’s Submission

9. The Defendant’s main arguments to justify the Third Party Proceedings against MIB may be summarized as follows:

a. One of the clearly expressed objectives of the MIB is the setting up of a scheme to compensate an injured accident victim where the motorist who caused the accident is untraceable. In this case, the accident is partly caused, the Defendant argued, by an unknown motorist.

b. In these circumstances, the Plaintiff would be without remedy if the Defendant does not initiate the Third Party Proceedings to make MIB pay or at least contribute towards the damages that the Plaintiff may be entitled to as a result the present action.

c. Moreover, in numerous similar cases in the past, the MIB did not object to a joinder by way of third party proceedings so as to be made liable for the damages payable to the plaintiff. By reason of such previous conduct estoppel by convention operated against the MIB. This prevents them from disavowing liability in such cases.

d. The overall public interest is better served if the MIB is prohibited from taking their present position of avoiding liability in cases such as the present one.

Third Party’s Position – MIB Position

10. The MIB argued that:

a. The Defendant has no cause of action since the Defendant is not a party to the Agreement between the Minister for Finance and the MIB dated 22 February 1975 (‘the Principal Agreement’) establishing the scheme of compensation for such cases and which has since been assigned to the Public Trustee.

b. The Defendant does not fall within the scheme envisaged by the Principal Agreement.

c. The Defendant does not qualify as a ‘claimant’ within the meaning of the Principal Agreement. He has not met the conditions precedent required under the Principal Agreement for compensation.

d. No estoppel operated against the MIB from challenging the locus standi of the Defendant to institute the present Third Party Proceedings.

My Decision

11 The present application by the MIB, is the usual type of application under the Rules of Court (‘ROC”) to strike out a claim on the grounds provided for under O 18 r 19 of the ROC and pursuant to the inherent jurisdiction of the court.

12. The main bases upon which the MIB rely to put their case within O 18 r 19 ROC may be succinctly put as follows:

a. The Defendant is not a party to the Principal Agreement and therefore there is no privity of contract between the Defendant and the MIB to ground a cause of action.

b. The Defendant is not within the scope of and has not met the preconditions of the Principal Agreement.

13. Before I go any further into the respective arguments of the parties, I should note that the Defendant concedes the following:

a. He is not a party to the Principal Agreement and that there is no privity of contract between the Defendant and the MIB.

b. He has not complied with the preconditions necessary to qualify him for a claim under the Principal Agreement.

14. However, the Defendant argued that he is nevertheless within the scope of the objectives of the Principal Agreement and the MIB is by reason of their previous conduct in such matters, prevented by estoppel from avoiding the effects of the Principal Agreement. Moreover, public interest or policy requires that MIB meet their obligations under the Principal Agreement which was designed in the first place, to benefit third parties including the Defendant.

The Motor Insurers’ Bureau

15. In order to understand the arguments of both parties in context, it is useful to set out the historical framework of the MIB.

16. The MIB is a scheme designed to deal with the situation where the rights of a third party under the Motor Vehicles (Third Party Risks and Compensation) Act (“the Act”) are illusory because the tortfeasor is either uninsured (because the insurance policy is ineffectual for technical reasons) or cannot be traced.

17. The MIB scheme traces its historical roots to the British scheme which was set up in 1946 – for an excellent discussion of the MIB and the scheme which it administers in Singapore (which is based on the UK model) see generally, Insurance Law in Singapore, Tan Lee Meng, 2^nd Edition, Butterworths, Chapter 22.

18. As early as in 1966, the High Court in Singapore had expressed its disappointment in the fact that in Singapore at that time, there was no scheme equivalent to that provided for by agreement between the Minister of Transport and the Motor Insurers’ Bureau in the UK.

19. In New India Assurance Co. Ltd v Simirah [1966] 2 MLJ 1 at 4, Thompson L P observed that in the situations where the motor car driver is either uninsured or untraced, not to assist the accident victim is to fail to provide for ‘social justice’. In that case a young widow was left with no remedy when her husband was killed in a motor accident as a result of the negligence of a man who was found to be uninsured due to legal technicalities. Eventually in Singapore the MIB entered into an agreement with the Minister for Finance on 22 February 1975 which essentially set up a compensation scheme similar to the one established in the UK under their 1946 agreement.

20. The preamble to the Principal Agreement states expressly that, “…the parties hereto are desirous of implementing a scheme to secure compensation to third party victims of road accidents in cases where, notwithstanding the provisions of the Motor Vehicles (Third-Party Risks and Compensation) Act (Chapter 189) relating to compulsory insurance, the victim is deprived of compensation by the absence of insurance, or of effective insurance;” and “…to secure compensation for third party victims of road accidents when the driver responsible for the accident could not be traced:”

21. The Principal Agreement has been supplemented by two further agreements dated 24 Sep 1998 and 13 Aug 2003 respectively. Save for the amendments made to the Principal Agreement by the agreement of 24 Sep 1998 which relates to the updating of the title of the Motor Vehicles (Third Party Risks and Compensation) Act (Chapter 88) and the formal requirements set out in Clause 5 of the Principal Agreement, the supplemental agreements do not substantively affect the issues raised in this dispute. For reasons of accuracy and convenience, I shall refer to the Principal Agreement as supplemented by the two further agreements which was on 13 Aug 2003 assigned to the Public Trustee as the “New Principal Agreement”.

The Defendant’s case Against the MIB

22. With reference to the second recital of the New Principal Agreement (referred to in paragraph 20 above), the provisions governing claims in such situations which is the argued case before this court, is to be found in Part III, Clause 8 of the New Principal Agreement.

23. The Defendant’s position in his Third Party proceedings is that he is entitled to make a claim under the New Principal Agreement against the MIB on the basis that there is an ‘untraced’ driver which the...