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Clico policyholders win case- $300m payout (with CNC3 video)
Close to 250 members of the United Policyholders Group, which took the Government to court over money promised to them arising out of the Clico bail-out plan, landed a victory in excess of $300 million yesterday. Presiding in the Port-of-Spain Assizes, Justice Joan Charles ordered the Government to make good on its promise to pay them.
She ruled that the claimants were to receive 100 per cent of Clico’s contractually-owed liability to them, as well as interest at the rate of three per cent from September 2010 to March 12, 2013, as well as their legal costs. However, she later granted a 28-day stay, to allow the State’s attorneys to consider the ruling and determine the way forward.
Reading from a 47-page ruling, Charles ordered the Government to: “Make good the said legitimate expectation by making suitable arrangements to ensure the claimants, less those who have already accepted the Government’s offer, receive 100 per cent of Clico’s contractual liability to them.” The small group of claimants who turned up at the court yesterday smiled as the judge added:
“I hold that the claimants are the beneficiaries of legitimate expectations engendered by representations made to them by or on behalf of the Government, that Government would ensure that their funds in Clico would be safe and that it would guarantee repayment of all monies owed to them and the Government would make good the deficit in the Statutory Fund.”
Proclaiming a landmark victory as he addressed reporters outside the Hall of Justice, Port-of-Spain, Senior Counsel Ramesh Lawrence Maharaj said the ruling reflected that “the present Government, the Prime Minister and members of the Cabinet acted unlawfully when it decided not to honour the promise and the guarantee and assurance given by the last government that Executive Flexible Policy Annuity (EFPA) Clico policyholders would be paid their full sums of money due on their policies.”
Maharaj said during the crisis of 2008, the Government promised EFPA holders they would get the full sum due under their policies, and encouraged them not to take their money out of CL Financial and Clico. “Based on that assurance, they kept their monies in the system. When the new Government took office, they decided to come up with a plan in which they were given time to accept that plan, that they would get their money over a period of 20 years,” Maharaj explained.
He said the initial promise had led to a legitimate expectation of a substantive benefit, but “Government unlawfully frustrated that expectation.” Citing some of the reasons that led to her ruling, Charles said on the basis of financial reports presented to the court, fiscal facts confirmed the Government’s economic outlook had changed “for the better” for the years 2009-2011.
“The evidence before me suggests that there was some fiscal improvement by August 2011 with respect to the Government’s finances and Clico’s balance sheet. As previously noted, Mr Dookeran himself stated in Parliament that the balance sheet defect of Clico had been reduced to $3.1 billion from $6 billion the previous year,” Charles said.
Maharaj said the Government’s attempt to argue that it had no money to honour the promise had been shot down, based on the evidence it provided to the court showing otherwise. “It showed that when the last government made the decision to honour the guarantee given to policyholders and they decided to make that promise, the country was in a worse economic situation than when this Government decided to break the promise,” he said.
“It showed the Government was in a better economic position to ensure the Statutory Fund was not in deficit and therefore could have honoured the promise.” Maharaj reiterated that the Government had “acted arbitrarily and did not consider the rights of these Clico policyholders.” He was unable to say for sure if other Clico policyholders who accepted the Government’s earlier offer could now seek redress on the basis that they had been misled.
The claimants were also represented by Peter Knox, QC, and Vijaya Maharaj, while the State was represented by Alan Newman, QC, Russell Martineau, SC, and Kelvin Ramkisson.