“Ask up there, not me,” chair says after FSC blunder

A High Court judge has dismissed the Financial Services Commission’s bid to wind up Equity Insurance Company Ltd, ruling that the regulator has not established a clear case and that pressing ahead with liquidation proceedings at this stage would undermine a statutory appeals process already under way.

 

The ruling was handed down by Justice Dr H Patrick Wells in a 77-page written decision dated last Friday, in which he told the FSC it was free to renew its application in the future, “at the very minimum, after a resolution of the matters currently sub judice before the Financial Services Commission’s Appeals Tribunal”. 

 

Justice Wells informed the FSC it was at liberty to seek directions from the court where there may be undue or unreasonable delay in this regard.

 

The recently established tribunal is currently hearing an application from the insurer, which is challenging the FSC’s decision to revoke its general insurance licence in circumstances it claims lacked due process.

 

In August last year, the FSC seized control of the company, citing unresolved breaches of multiple laws and ongoing threats to consumer interests.

 

The judge also awarded costs to Equity Insurance against the commission, “in an amount to be assessed if not agreed”. 

 

In his five-point conclusion, which he said informed his final judgment, Justice Wells said the commission is not bound to proceed under section 57 of the Insurance Act. “They have opted for section 56, knowing what the law requires, and that is a matter for them.”

 

“The commission is incorrect in law that the Bankruptcy and Insolvency Act is the controlling statutory liquidation regime that must be followed if Equity is permitted to be wound up, as insurance companies are expressly excluded from the operation of that Act, by virtue of the definition of ‘corporation’ in section 2 of the Act.”

 

The judge added: “The commission has not established a prima facie case to the satisfaction of the court, as there are substantial and genuine disputes on the alleged facts that challenge the basic premise of the reasons for seeking leave to present a winding-up petition; the fundamental issue of the correctness or lawfulness or reasonableness of the decision to cancel the registration of Equity is still to be determined by the Financial Services Commission Appeals Tribunal.”

 

Justice Wells highlighted that the tribunal is a body duly tasked under statute, by Parliament, to hear appeals of those regulated by the FSC who are aggrieved by its decisions; and that “ignoring that process denies access to justice for Equity and undermines the integrity of the Appeals Tribunal, potentially rendering its proceedings nugatory and pointless, in spite of a clear legislative mandate to hear appeals from those aggrieved by decisions of the commission”. 

 

Justice Wells continued: “And much of the core facts relied on by the commission to seek leave are subject to both determinations by the Appeals Tribunal and by the High Court in judicial review proceedings that are pending, and which have set out to impeach those core facts.”

 

On the question of security for costs, the judge said they only arise in these proceedings for consideration if the court intends to grant leave, having been satisfied that the applicant has established its case for leave to the satisfaction of the court.

 

At that point, Justice Wells explained, the order for security for costs is made in an amount deemed reasonable by the court. The leave will thereafter be subject to the actualisation of whatever security is ordered. Failure to give the security ordered means that there is no leave granted.

 

He said that the court, in ordering security for costs, has the discretion to accept an undertaking as the security — though uncommon — where the court, bearing in mind all the circumstances, considers an undertaking to be satisfactory.

 

At its first hearing on March 12,  the FSC Appeals Tribunal refused the commission’s request to suspend the appeal by Equity.

 

Tribunal chair, retired High Court judge Christopher Blackman, during a case management conference on the appeal, explained the reason for throwing out the FSC’s application to suspend the appeal.

 

“We declined it for reasons that the FSC should have gotten that stay order from the High Court, as they had notice when they went before the High Court before coming here today. So, if they wanted me to stop, they should have asked the High Court,” he said.

 

‘If the High Court had issued an order, so be it. But don’t pass up the opportunity to go to the higher court, and then come back to me. No, sir. You went up there. Ask up there. Don’t ask me.”

 

The tribunal will sit again on April 30 from 10 a.m. to review the proceedings thus far and determine the way forward, with a possible date to hear the substantive appeal between late May and early July. 

Senior Counsel Larry Smith and Alrick Scott SC, along with T’Shara Sealy, are representing the insurance company, while Garth Patterson SC appears for the FSC.

(EJ)