State v Minister for Tourism and Transport, Ex parte Tower Insurance Fiji Ltd [2000] FJHC 132; Hbj0024d.2000s (8 December 2000)

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

CIVIL JURISDICTION

JUDICIAL REVIEW NO: HBJ0024 OF 2000S

THE STATE

-v-

MINISTER FOR TOURISM & TRANSPORT

ex parte TOWER INSURANCE FIJI LTD. & ORS.

Counsel: Mr W. Calachini for Applicant

Mr A.K. Narayan for Respondent

Hearing: Friday 1st December 2000

Decision: Friday 8th December 2000

DECISION

This is an application for stay of my decision declaring the Motor Vehicles (Third Party Insurance) (Amended) Regulations 2000, invalid and quashing them. That decision was made on 13^th October 2000. A Petition of Appeal having been filed in the Fiji Court of Appeal on 21^st of November 2000, the Applicant now applies for stay of the judgment pending that appeal. The application is opposed by the Respondents.

The Facts

The facts of the case are fully set out in the judgment. The Respondents in this application are Tower Insurance Company, Dominion Insurance Ltd., Queensland Insurance Ltd., and New India Assurance Co. Ltd., and are all involved in underwriting compulsory third party insurance for motor vehicles. Over the years the rates of third party insurance premiums were set either by the Commissioner of Insurance, or by free competition between the companies. On 10^th November 1999, an article in the Fiji Times reported that Cabinet had approved the regulation of premiums for third party insurance, setting a maximum of $60 per annum for Group Two private vehicles. The proposed rates reduced the cost of premiums, in the case of one group of vehicles, by 60%. The Insurance Council of Fiji, on behalf of all the concerned insurance companies wrote to the Government protesting that the rates had been arrived at without consultation and without considering current underwriting losses.

At a meeting held between representatives of the Transport Ministry, and the insurance companies, the companies raised their concerns. They were told by the Permanent Secretary that the Regulations had been approved by Cabinet and were ready to be sent to the Government Printer. He did not give them a copy of the Regulations, nor did he explain how the new premiums had been calculated. He invited the companies to write to him explaining how they set insurance premiums.

A letter was written, and further meetings were held on 9^th December 1999, and 3^rd February 2000. At the February meeting, the Attorney-General was present, and he agreed to recommend to the Minister for Transport and Tourism, that the insurers should be allowed to see the draft Regulations with a copy of the formula used.

On 4^th February, a copy of the Regulations were faxed to Mr Milind Kharat, the Chairman of the Insurance Council of Fiji, together with a letter from the Permanent Secretary explaining that the premiums had been arrived at “by taking the yearly average of each premium rate charged by the companies for the different classes of vehicles.”

The Council was given until 3pm on 7^th February to respond. The Council responded, saying that the formula failed to take into account underwriting losses, or the increasing cost of claims, and threatening to suspend underwriting of compulsory third party insurance. On 10^th February the Regulations were gazetted.

A meeting was held on 21^st February, (after the Companies had suspended underwriting third party insurance) which was attended by the Minister. Some attempt was made to achieve a compromise, but this was unsuccessful. However the Minister agreed to review premium rates after a year. The Companies then decided to continue to issue and renew policies in the public interest. However they each brought applications for judicial review on the ground that the Regulations were null and void, and sought an order quashing them. The applications were amalgamated by consent. Leave was granted, but a stay of the Regulations pending the hearing of the matter was refused.

The application for judicial review was successful. The Regulations were declared ultra vires for failure to consult, and failure to consider relevant considerations.

The Minister now seeks to stay the effect of the decision. A stay would effectively allow the Regulations to be enforced until the appeal is heard.

The Application

The Applicant filed the affidavit of Ajay Singh, sworn on 23^rd of October 2000. The affidavit refers to ten grounds of appeal, eight of which “are on determination of questions of law and have good prospects of success”. Paragraph 8 of the affidavit reads: “It is in the public interest that third party insurance premiums continue to be regulated pending the determination of the Appeal in this matter. It is therefore necessary to seek a stay of execution of the orders of the Court made 13 October 2000.”

In response the affidavit of Milind Kharat sworn on 29^th November 2000, denies that the appeal has any prospects of success. At paragraph 5, Mr Kharat says that the Applicants intend to commission an Actuary to conduct a survey to calculate new rates of premium, which would cover underwriting losses. The results of the commission would then be put to the Minister for any future regulation.

At paragraph 6, the affidavit reads:

“That in the meantime, as an interim measure, and to mitigate some of our losses, the applicants have implemented new rates since the judgment of the Court. If stay is granted substantial prejudice would be caused to us as we would suffer the excessive losses previously drawn to this Honourable Court’s attention .... Dominion Insurance Company Limited would suffer a loss of approximately $520,000.00 per year should stay be granted .... Each of the other applicants would suffer like losses based on the volume of business underwritten.”

In submissions, at the hearing of this application, counsel for the Applicant submitted that the Respondent companies had acted with indecent haste to implement new premium rates, and that they did so before the appeal period had expired. He said that the interim increases were substantial, in the case of private cars from $60.00 under the Regulations, to as much as $90.00 at Dominion Insurance, and in the case of rental cars, from $150.00 under the Regulations, to $200.00, in the case of New India Assurance.

He submitted that such heavy increases were not in the public interest, and that the Regulations should continue to apply until the hearing of the appeal. He said that the appeal had strong prospects of success and that the Insurance Companies, in insisting on making a profit on compulsory third party insurance business, were dictating their own terms to the Government.

Counsel for the Applicant said the interim increases were insignificant, particularly when they were compared with premium rates before the passing of the Regulations. He said that the affidavit of Ajay Singh failed to put adequate material before the court, as to the effect of the judgment on the appeal. He said that the appeal was unmeritorious, and that the delay in the hearing of the appeal (which will now be heard next year) will greatly prejudice the insurance companies. He said that the Applicant was not prepared to compensate the Respondent for loss of revenue on premiums in the interim period before the appeal is heard, and that the Respondents could never recover their losses from the public. He said the prejudice caused the Respondents far out-weighed any public interest consideration in maintaining the Regulations, and said that in any event, the competence of the interim Attorney-General to bring an appeal in respect of the decision of the Minister for Transport and Tourism in the Coalition Government, was questionable. He said he would raise the question of the standing of the Applicant, at the appeal.

Principles

The principles governing a stay application are now well-settled. The courts have a wide general discretion to grant or refuse stay. The successful party to litigation should normally be allowed to enjoy the fruits of his/her judgment. However a stay might be granted where the Applicant shows that his/her appeal would be rendered nugatory if stay were refused, or if it is shown that a refusal of stay would cause serious prejudice to him/her.

It was said in Linotype-Hell Finance Ltd. -v- Baker (1992) 4 ALL ER 887):

“Where an unsuccessful defendant seeks a stay of execution pending an appeal to the Court of Appeal, it is a legitimate ground for granting the application that the defendant is able to satisfy the court that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success.”

In Attorney-General -v- Emberson (1889) 24 QBD 58, it was held that a stay should be granted where the special circumstances of the case so require. The court must consider the balance of convenience and the competing rights of the parties.

The grounds for stay

The grounds relied upon by the Applicant are that the appeal will succeed and that the public will suffer if the Regulations are not enforced.

Although the Respondent disputes the submission that the appeal has merits, the Applicant has an undoubted unrestricted right of appeal. Furthermore, the appeal raises important issues about the duty of public bodies to consult important stakeholders, with or without a statutory duty to consult. It also raises the issue of the relevance and weight of the public interest in keeping premium rates down, and the relevance of the commercial costs of offering compulsory third party insurance.

As such I am prepared to accept that this is not an appeal which is clearly devoid of merit.

What of the balance of convenience? Will the appeal be rendered nugatory if a stay is not granted? Will the Appellant be “ruined”? Of what relevance is the public interest?

The appeal will clearly not be rendered nugatory if the Regulations are not enforced pending the appeal. The evidence at the substantive hearing was that premium rates have fluctuated considerably in the past ten years, and that certainly since 1996, insurance companies were free to set their own rates and to compete with each other.

It appears from the schedule of interim prices fixed by the companies since the judgment was delivered, that the companies have decided to return to that status quo which existed before the Regulations were published.

If the appeal is allowed, all members of the public who have paid a higher premium than provided by the Regulations, will simply be given a refund. The Regulations will then be deemed to be the law, and the interim premium rates will be of no further relevance. Counsel for the Respondent pointed out correctly that it would be a simple matter to refund any over-payment to premium holders, because the companies hold all details of the policies.

It is not suggested by the Applicant that a refusal of stay would render the appeal nugatory.

The balance of convenience, for the same reasons, favours the Respondent. The Applicant has not offered to compensate the Respondent for the shortfall in premiums, if the appeal is unsuccessful. In the absence of such compensation, the Respondents may be forced to run insurance business at a loss until the appeal is heard, with no hope of redress if the appeal fails. This prejudice, according to the affidavit of Milind Kharat, is considerable.

There is of course no conclusive proof that the Respondents would be running at a loss under the Regulations. The decision of this court was simply that the Minister failed to take the commercial costs of running the third party insurance business into account, in making her decision to regulate premiums.

However, there is no doubt that the prejudice to the Respondents would be considerable. The public on the other hand can be refunded the cost of over-payment of premiums.

For these reasons the application for stay of the judgment of this court is refused.

It is not suggested by the Respondents that the Applicant had been consulted in the setting of the new interim premiums. Although, in the interim period, there is no duty to do so, it might have been a wise course to take, given the possible time lapse between the judgment and the hearing of the appeal. The costs of premiums appear to fluctuate considerably, with Dominion Insurance Ltd. offering the highest prices on premiums, and Tower Insurance Ltd. and Queensland Insurance Ltd. offering prices at a lower scale. Although the prices at the lower scale are similar to premium rates before the passing of the Third Party (Insurance Regulations 2000), a wise course might have been to discuss interim rates with the Minister before the appeal is heard. This of course is merely an observation; and the parties may well decide to consult in due course.

The application for stay is refused. The Applicant must pay the Respondents costs of this application which I set at $200.

Nazhat Shameem

JUDGE

At Suva

8^th December 2000

HBJ0024D.005