PIVOTAL CCJ RULING
A recent ruling by the Caribbean Court of Justice (CCJ) in a case brought by two policyholders against the Barbados-based Colonial Life Insurance Company (CLICO), could open the door for other policyholders seeking to recoup money they had put into the regional insurance company.
Just over a month ago, the Trinidad-based CCJ ordered the Judicial Manager of CLICO International Life Insurance Limited, to pay over US$500 000 to two brothers, Octavius and Laurent John, who invested in several executive premium annuity policies, which were intended to aid them in their retirement in Dominica.
Speaking to The Barbados Advocate recently, attorney-at-law Zahidha James, who successfully argued the case before the five-member panel of judges, said her clients, one of whom was diagnosed with cancer and had hefty medical bills, are pleased and relieved at the outcome of the case and to finally have their money back.
“CLICO was offering these policies that promised people to get certain returns if they invested in the policies and several people all over the Caribbean invested in them. For many people, they were investments in their future for when they got older. With respect to my clients, they said to the court those were all their savings and the expectation was that at a certain age they would surrender their policies and get back quite a bit of money and live on that as their retirement income,” she explained.
James further stated that when the brothers started to hear “rumblings” that CLICO was having financial difficulties, the two sought to surrender their policies, but were assured that the rumours were false and were persuaded to reinvest with the company, after being told it was sound and had numerous assets. She added that on hearing more about the difficulties of the insurance company, they sought again to surrender their policies, but the company refused to pay. As a result, she said the John brothers started legal proceedings against the company to recover the money due to them, and on September 7, 2010, obtained judgement against CLICO in the High Court of Dominica and CLICO was ordered to pay them.
The attorney indicated that CLICO did consent to pay the money and it was agreed that the payments would start April 30, 2011. But James explained this never materialised, as on April 14, 2011 CLICO was placed under judicial management, which stayed the brothers’ proceedings against CLICO.
“This meant that if you wanted to enforce your judgement, you had a problem and then anybody else who had policies, whether they were ready to surrender them or not, would have to wait for the period of judicial management to be over for them to sue CLICO. So the John brothers had a judgement, but could not collect on it because when a company is under judicial management, the rule is you cannot sue them unless you have leave of the court. Our application asked the court for permission, in spite of judicial management, for the brothers to sue CLICO, so they could collect on their money.”
The brothers’ attorney explained that while they were successful with that application in the High Court of Barbados, the matter was appealed and the decision overturned.
“So we were unsuccessful at the Court of Appeal, but successful at the Caribbean Court of Justice. The CCJ being convinced by the evidence and arguments as presented by the Johns, exercised their discretion to award them their monies immediately, as opposed to allowing the litigation process to continue,” she said.
James explained that while the judicial management process that CLICO engaged in was to be temporary, it has been a far cry from that, resulting in many persons being put at a grave disadvantage. She contended that the judicial manager failed in its role to come up with a plan in a reasonable time, that stated how the company was going to pay its creditors and policyholders.
“We argued that three months is a typical time that a company should get itself in order… But what we found is that rather than not being temporary, it was indefinite and technically, I have not heard anything to suggest that the judicial management is over and at the time we went to court, the judicial manager could offer no plan of how the policyholders were going to be paid. That was an issue we raised in the High Court and the Court of Appeal and even when we got to the CCJ, they still had nothing to show,” she opined.
James insisted, “If this ever happens again, or if people are still finding themselves in a situation like the brothers, where you are faced with illness and financial difficulties and there isn’t a viable plan by a company under judicial management that can address your issues, then you might very well be one of the people who can be compensated by the company.”
Referring to the insurance acts in this country and across the region, she said under those statutes, governments have a supervisory role and the relevant authorities should have done an audit of the company and ranked policyholders according to priority. She is also adamant there should be a system, by CLICO or whatever Government body is in charge, for people who need money urgently to have their needs met.
“It is not clear that was done. So if people had major surgeries or major injuries, there was never an indication that there was ever a policy, in any of the countries, that said let’s take care of these people. So for example, like my client when he had the cancer diagnosis, you would think in a situation like that there would be some sort of set up where they would say let’s advance some money to this person, at least for his treatment. That didn’t happen,” she stated.
The attorney told The Barbados Advocate that in light of the CCJ ruling, where the justices were sympathetic to people who had financial difficulties and health issues, it no doubt sets a precedent for what people in a similar situation can hope to accomplish. But, she noted that it is unclear how many people could be affected in that way.
“We are hoping that everyone is paying attention to what is acceptable and what is not,” she affirmed. (JRT)