MOTOR VEHICLES (THIRD PARTY RISKS AND COMPENSATION) (AMENDMENT) BILL

Order for Second Reading read.

The Parliamentary Secretary to the Minister for Law (Assoc. Prof. Ho Peng Kee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill has several objectives. Firstly, it raises the lower limit under section 6(1) for the payment to the Public Trustee of compensation moneys for injuries received in traffic accidents, by an insurer or the owner of a motor vehicle, from the present sum of $500 to $5,000. Secondly, it sets a lower limit of $5,000 under subsections 9(1) and 9(8) for the payment to the Public Trustee of the amount awarded by the court against any person insured for third-party risks. Finally, it sets a lower limit of $5,000 under section 18(3) for the taxation by the court of legal costs in respect of actions for damages for injuries arising out of motor vehicle accidents.

For those not familiar with this legislation, let me say that the Motor Vehicles (Third Party Risks and Compensation) Act (`the Act') was first passed in 1960, ie, more than 34 years ago. The provisions then and now require the Public Trustee to carry out the following -

(a) receive compensation moneys exceeding $500 paid by an insurer or the owner of a motor vehicle, or the amount of any judgement of court (irrespective of the amount) including costs and interest, in respect of death or bodily injury to a motor accident victim, as trustee for the persons entitled to the compensation moneys;

(b) examine the adequacy of out-of-court settlements for compensation made by an insurer and if satisfied that such payment is manifestly inadequate, require the parties to obtain approval of the Court before accepting the payment;

(c) pay out all costs and fees in respect of the same and distribute the balance of the moneys to the persons entitled to the compensation.

Sir, it is understandable that over the years, the quantum of compensation for injuries received in traffic accidents has increased considerably. Compensation moneys today easily exceed $500 in almost all cases. As a consequence, the volume of work of both the Public Trustee and the courts has also seen a substantial increase. To illustrate this, in 1960, when the Act was passed, there were only 264 motor accident cases. Last year alone, there were 2,472 cases. The Public Trustee has informed me that for the first half of this year, there have already been 1,086 cases. Compensation moneys received and administered by the Public Trustee has also increased dramatically. For example, between the years 1991 and 1993, there has been a 41.3% increase from $44.5 million to $62.9 million. The original sum of $500 was fixed when the Act was passed in order to leave out small claims from the purview of the Act. With the increase in the quantum of the compensation moneys received and the rate of inflation over the years, the new sum of $5,000 is a realistic figure.

Mr Speaker, Sir, I would like to assure Members of the House that increasing the amount from $500 to $5,000 will not leave motor accident victims who receive less than $5,000 entirely unprotected and without recourse. Their interests will be protected for the following reasons -

(a) most, if not all of them, will be represented by solicitors who are obliged to ensure that the amount of compensation received is adequate;

(b) any person who is unhappy with his solicitor's bill can require that it be taxed by the court. To minimise the occurrence of such applications, the Public Trustee in consultation with the courts will be advising the Law Society on an appropriate scale of solicitors' costs in such cases for the guidance of solicitors and their clients.

(c) the interests of minors and mentally disordered persons will still be looked after by the Public Trustee as required by rules of court; and

(d) the Public Trustee is prepared to assist any person who may be aggrieved over his compensation moneys.

Sir, these amendments, when passed, will also benefit motor accident victims whose claims are less than $5,000, as these claims no longer attract any court, stamp and solicitors' fees incurred in taxation of the solicitors' bills. The Public Trustee's fees in handling the case need no longer be paid. These are all savings in costs for the motor accident victim. In addition, with the absence of the Public Trustee's and the court's involvement in these cases, these accident victims will receive their compensation moneys earlier. This is something which I am sure the victims will appreciate.

The amendments to sections 6, 9 and 18 of the Act through clauses 2, 3 and 4 of the Bill will achieve the objectives of the Bill set out in the earlier part of my speech.

Sir, I beg to move.

Question proposed.

Mr Chiam See Tong: Mr Speaker, Sir, firstly, I must declare my interest. I am a practising solicitor.

I would like to refer to clause 2 of the Bill whereby the amendment attempts to amend section 6 (1) of the principal Act by changing the figure of $500 to $5,000. In my mind, as the Parliamentary Secretary has said, there is a proliferation of cases and it has increased by about 41.3% and the amount involved is over $62 million. The number of cases and the sums involved are quite large. I think a more appropriate figure should be $10,000 rather than $5,000. The figure of $5,000 is too small, especially when the last amendment was made in 1960, which was 34 years ago. The value of money has diminished and, as the Minister has pointed out, there are a great number of cases jamming up the probably under-staffed Public Trustee's Office.

From my experience, I found that the Public Trustee's Office is rather slow in paying out compensation money. Probably the main reason is that it is very shorthanded and sometimes it takes more than two months for money to be paid out. So it can cause hardship and difficulties to those who have already suffered personal injuries, and especially if they are poor, they have to wait for a long time to get their money. I am not talking of those cases that have to go to court and the long drawn court battles. Sometimes these smaller claims are settled quite quickly and they have to wait for such a long time for the Public Trustee to pay out the money. Even some cynics have said that the Public Trustee is probably keeping the money to earn interest. I hope it is not so and it is untrue.

As regards the requirement of the insurers to pay out the money under section 18 (3) of the principal Act, formerly no amount was mentioned. But now, as the Parliamentary Secretary has said, there is a lower figure of $5,000. I do not actually see the necessity of pegging it to a figure. Once an injured person gets a judgment, there is already a debt owing to him. He is a judgment creditor. Of course, the original section 18 (3) makes it a duty for the insurance company to pay out. But now they do not have to pay out for any sum less than $5,000. Why is there this necessity? In fact, this amendment makes the injured person at a more disadvantageous position. So I cannot really see the rationale of wanting to have this lower figure of $5,000. I hope the Parliamentary Secretary will look into this further. I do not think that the Ministry or any Government department will be made less busy if this is put at a lower figure of $5,000 whereby it is necessary for the insurance company to pay out.

Assoc. Prof. Ho Peng Kee: Sir, the Member asks why we have chosen $5,000. He suggests raising it to $10,000. I think we should take a cautious approach. By raising the current limit from $500 to $5,000, the savings in terms of number of cases - I think the Member very rightly points out, the Official Assignee and Public Trustee's Office is working very hard, not only in terms of Public Trustee's cases but also bankruptcy and other cases - he will have a saving of, based on 1993 figures, 30%. I think we can work with that figure and we can live with it. For the moment, we are lifting it by 10% - from $500 to $5,000. We should take that approach and in due course, after review, if there is indeed a need to raise it further, we can consider that.

The other point that he mentioned is - I think he does not fully appreciate the ambit of section 18 (3) - the question of taxation. Currently, all courts ---

Mr Chiam See Tong: It is not taxation. I am talking about judgment debt. Formerly, there was no figure. The insurance companies have a duty to satisfy the judgment debt despite some of the reasons given in that section. But now they are not required to pay out if the claim is less than $5,000.

Assoc. Prof. Ho Peng Kee: I do not think that is the ambit of the amendment. You mentioned section 18 (3). Section 18 (3) in fact talks about the question of mandatory taxation.

Mr Chiam See Tong: Sorry, it should be section 18 (1).

Assoc. Prof. Ho Peng Kee: Section 18 (1) is not being amended. The amendments are to sections 6 (1), 9 (1) and (8) and 18 (3).

Mr Chiam See Tong: I am referring to probably section 9 whereby it is the duty of the insurance company to satisfy the judgment debt. No figure was given in the past. But now you have made it a lower figure of $5,000. I believe this is probably section 9. Section 18 (3) is in regard to taxation. I am sorry about that.

Assoc. Prof. Ho Peng Kee: Section 9 (1) and (8) sets a lower limit for the payment to the Public Trustee of the amount awarded by a court against any person insured for third-party risks. I think here there is a need also for the Public Trustee to be involved in looking at the matter from a macro level. In other words, whether it is a settlement out of court where you have got an insurance company paying or a court settlement under section 9 (1) and (8), he should look at it from a macro level. He should be the facilitator through which the monies can be paid. That is the ambit of the amendment.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee].

Bill considered in Committee; reported without amendment; read a Third time and passed.