| Fiji Islands - The State v The Minister for Tourism and Transport, Ex parte Tower Insurance Fiji Ltd - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
JUDICIAL REVIEW
HBJ NO. 24 OF 2000
THE STATE
-v-
THE MINISTER FOR TOURISM & TRANSPORT
ex parte TOWER INSURANCE FIJI LTD.
Counsel: Mr A. Narayan for Applicants
Mr S. Sharma with W. Calachini for Respondent
Hearing: 14th June 2000
Judgment: 20th June 2000
JUDGMENT
This is an application for leave to apply for Judicial Review, and stay, of a decision by the Minister for Tourism and Transport to
regulate insurance premiums chargeable by Insurance Companies for compulsory Third Party Insurance. That decision was made when the
Motor Vehicles (Third Party) Amendment Regulations 2000, were gazetted on 10th February 2000.
The application is supported by the affidavits of Geoffrey Charles Thompson, Gary Callaghan, Michael Peat, and Milind Kharat, all
sworn on the 9th of May 2000. Leave having been granted to consolidate four separate applications by four insurance companies, the leave application
was argued on the basis of the affidavit of Geoffrey Thompson, the contents of all the affidavits being substantially the same.
The Respondent did not file any affidavit in reply, but filed a notice of opposition. Leave and stay are opposed on the grounds that
the application fails to disclose an arguable case for review, that the Regulations were validly made under the Motor Vehicles (Third Party Insurance) Act Cap. 177, and delay.
The facts of the case, as set out in the affidavit of Geoffrey Thompson, are not in dispute. The Insurance Companies which are the
Applicants in this matter, have conducted compulsory third party insurance business in Fiji for some years. Tower Insurance, formerly
known as National Insurance, has conducted such business since 1954. The policies are regulated by the Motor Vehicles (Third Party Insurance) Act Cap. 177, and the setting of levels of premium was, until 1997, approved and regulated by the Commissioner of Insurance.
In 1993, the insurance companies, through the Insurance Underwriters Association of Fiji, requested the Commissioner to increase premiums
because of the increased claims made since 1992. At paragraph 14 of his affidavit, Geoffrey Thompson states:
“Following lengthy negotiations a formula was approved by the Commissioner of Insurance. This formula was intended to relate future
premiums to losses and a long term profit margin of 10% for the industry as a whole. It was agreed that this formula would be used
annually in the future with reviews to be applied on the 1st July. The new formula resulted in premium increases of 5% in 1993, 7% in 1994 and 30% in 1995. The agreed formula was:
Percentage increase or reduction to the existing premiums calculated as follows:
Claims incurred for last five years
Premiums earned for the last five years x 100
___less 100.”
70
In July 1996, the insurance companies used the formula to calculate the new premiums which showed an increase by 84% from the previous
years. The Commissioner of Insurance and the Department of Fair Trading objected to the increase and the parties finally settled
for a 35% increase.
In 1997, the insurance premiums were again increased. On this occasion the Commissioner of Insurance advised the insurers that they
could compete freely in the setting of premiums which would be determined by the market. Subsequently, there was no uniform rate
of premium.
On 10th November 1999, the Fiji Times published an article saying that Cabinet had approved the regulation of maximum premiums setting the
maximum of $60 for Group Two private vehicles. The insurance companies, which had no prior knowledge of Government’s intentions,
wrote to the Minister, voicing their concerns about the proposed changes.
A meeting was then held between the Ministry and the Insurance Companies. The Companies were told that there was no duty to consult
their representative, the Insurance Council of Fiji, and that Cabinet had already approved the Regulations. The Permanent Secretary
did not tell the Companies what the new premiums were to be, or how they were calculated. He invited the companies to write to him
explaining how premiums had been set by them.
On 24th November the Chairman of the Insurance Council of Fiji wrote to the Ministry explaining these matters, but there was no reply. The
Applicants then asked for a further meeting, which was held on 9th December 1999. Again the Ministry refused to tell the companies of the proposed premium structure, but told them that it would be
difficult to review an approval already given by Cabinet. At this meeting the Ministry officials apparently had difficulty understanding
the principles of insurance, and how premiums were fixed.
A further meeting on 3rd February 2000 was held with the Attorney-General. Finally on 4th February 2000 the proposed Regulations were faxed to the Council by the Permanent Secretary. The covering letter said that: “The
premiums indicated in the amended regulations have been arrived at by taking the yearly average of each premium rate charged by the
companies for the different classes of vehicles.”
The letter, addressed to the Chairman, Insurance Council invited responses by 3pm on 7th February 2000. The Council responded at 2.58pm on 7th February. However the Regulations were gazetted with no changes on 11th February. The Insurance Companies responded then suspended third party insurance policies. The Minister responded by telling them,
on 25th February that the law required approved insurance companies to issue and renew policies until the approved companies revoked their
certificate of willingness. She said that failure to renew or issue policies might leave her no choice but to commence High Court
proceedings “to compel an approved company to comply with the certificate of willingness to conduct CTP business.”
The companies then informed the Minister that they would continue to issue and renew policies reserving their right to take further
action.
On 9th May 2000 the leave application was filed.
Delay:
The relief sought in this case is inter alia, certiorari to quash the Minister’s decision to issue the Regulations.
Order 53 Rule 4 of the High Court Rules provide:
“(1) Subject to the provisions of this rule, where in any case the Court considers that there has been undue delay in making an application
for judicial review or, in a case to which paragraph (2) applies, the application for leave under rule 3 is made after the relevant
period has expired, the Court may refuse to grant -
(a) leave for the making of the application; or
(b) any relief sought on the application, if, in the opinion of the Court, the granting of the relief sought would be likely to cause
substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration.
(2) In the case of an application for an order of certiorari to remove any judgment, order, conviction or other proceeding for the
purpose of quashing it, the relevant period for the purpose of paragraph (1) is three months after the date of the proceeding.”
In Harikisun Ltd. -v- Dip Singh and Others Civil Appeal No. ABU0019 of 1995S, the Fiji Court of Appeal said that Rule 4(1)(b) is irrelevant at leave stage. The only question
in relation to delay at leave stage is whether there has been undue delay in making the application, or in the case of certiorari,
whether the application is made within three months.
In this case the application was filed just within the three months which ran from the 11th of February. I note that from 11th February to the 29th of February there were continuing negotiations between the Insurance Council and the Ministry as to the renewal and issuing of premiums
under the Regulations. This application was filed two months after negotiations lapsed.
In the circumstances I do not consider the delay to justify a refusal of leave, especially when the Applicants are still within the
three months stipulated by Order 53 Rule 4. As the Court of Appeal said in Harikisun Ltd (supra) “the questions of delay are best dealt with in depth at the substantive hearing and .... leave should only be refused in
clear cases of unjustifiable delay.” This ground of opposition fails.
An Arguable Case
The test at leave stage is whether the material available discloses what might, on further consideration, turn out to be an arguable
case - Fiji Airline Pilots Association v. The Permanent Secretary for Labour Civil Appeal No. ABU0059U of 1997S.
It is not disputed that the Minister, by virtue of section 29(1) of the Motor Vehicles (Third Party Insurance) Act, had the power to make the Regulations complained of. However the grounds upon which the Applicant is seeking relief are that:
(a) the Minister abused her powers;
(b) the Minister failed to consult the Insurance Council of Fiji, the successor to the South Sea Islands Fire and Tariff Association;
(c) the Applicant had a legitimate expectation as to consultation;
(d) the provision for cancellation of approval under the Regulations is ultra vires the powers given to the Minister under
section 29(1);
(e) the Minister acted unreasonably, unfairly, arbitrarily and improperly;
(f) the Minister failed to conduct a proper enquiry into the third party insurance business;
(g) the Minister failed to consider relevant factors and took into account irrelevant factors;
(h) there was insufficient opportunity to make proper representations;
(i) pre-determination;
(j) error of law on the face of the record;
(k) breach of section 40 of the Constitution.
The Respondent says that this is a hopeless case and that leave should be refused. However, the material in the affidavits filed show
a pattern of consultation between the companies and with the Commissioner of Insurance in the setting of premiums since 1992. The
evidence also shows that premiums have been set according to a rational formula based on the cost of insurance cover to the insurance
company. The Regulations were presented to Cabinet without consultation with the very bodies who were most closely affected by them.
Any consultation thereafter was done at Applicant’s initiative. Furthermore the Regulations were only disclosed by the Respondent
to the Applicants two working days before the deadline for gazetting. Whether or not there was a statutory duty to consult the Insurance
Council, the Applicants as insurance providers had such a direct interest in the Regulations, that in any event it is arguable that
consultation was expected in the interests of fairness.
Furthermore, the criteria used in the Regulations for the setting of premiums differed greatly from the approved formula used until
February 2000. The Applicants have shown an arguable case of inadequate disclosure, unreasonableness and irrelevant considerations.
In all the circumstances, this is not a frivolous or hopeless case. The Applicants have disclosed an arguable case for the granting
of leave to apply for certiorari, prohibition and a declaration. Leave is granted accordingly.
Stay
The Applicants apply for stay of the Regulations on the ground that they will not be compensated in damages if they succeed. The Respondent
objects to stay on the ground that the application was delayed, and that failure to enforce the Regulations will result in an unregulated
system of third party insurance until this action is heard.
The Regulations have now been in force for almost five months. The Insurance Companies have submitted (under protest) to those Regulations,
and did not attempt to review them for two months after publication. Many members of the public have paid the new premiums either
as renewal of existing policies or in issuance of new policies. To stay the operation of those Regulations now, would in my view
be inconvenient for the public. This outweighs the possible prejudice to the Applicants.
Stay is refused.
Nazhat Shameem
JUDGE
At Suva
20th June 2000
HBJ0024J.00S
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