Judge reserves ruling in $1.6b insurance tax fund

Judgment has been reserved in the $1.6 billion claim filed against government’s failure to establish the Motor Insurance Bureau to compensate victims in accidents caused by uninsured drivers.

Justice Ricky Rahim will deliver a written ruling on March 14 in which one such victim, Davindra Maharaj, is seeking judicial review of the Ministry of Finance’s failure to set up the Accident Victims Compensation Fund to facilitate operation of the bureau.

The Board of Inland Revenue (BIR) and Attorney General are also named as defendants in the lawsuit, in which the Motor Insurance Bureau Association is named along with Maharaj, as a claimant in the lawsuit.

The ground of the lawsuit is that since 2008 a tax on all motor insurance premiums have been collected by the ministry for the fund, to enable the bureau to assess claims by relatives of victims killed or injured in vehicular accidents. To date, the bureau has not been set up, and while the number of such victims have increased yearly and without compensation, insurance taxes continue to be levied on every policy-holder.

Maharaj is contending that the premium is being collected for a purpose other than what it was intended for, by successive governments’failure to establish the bureau. Maharaj and the association were granted leave in January last year, and according to their lawsuit, government had collected $1,067,000,000 from drivers’ premiums.

On Tuesday lasy Rahim heard the case, in which attorney Asaf Hosein, instructed by Emile Pollard representing the claimants, had filed written legal submissions. Dr Claude Denbow, SC, representing the Attorney General, also filed in reply. Both made oral submissions to the judge and in respect of Maharaj, Hosein submitted that insurance tax paid for the purpose of compensating accident victims of uninsured drivers is contrary to the legal purpose of the Miscellaneous Taxes Act. It is contrary, the attorney submitted, because the legal purpose of the act is for the money to be deposited into the fund in order for the bureau to assess claims from uninsured vehicular accident victims.

As regards the association, Hosein contended that the failure of the ministry to establish the bureau based on taxes deducted from such policy-holders is unreasonable.

He submitted that for the past 35 years the courts, including the judicial committee of the Privy Council in England, have pronounced on the hardships suffered by victims in vehicular accidents arising from uninsured drivers. In 2012, the law lords, in adjudicating in the case of Resha St Hill, who was injured in a car driven by a PH driver, said, “The board recognises there remains a serious problem about innocent victims suffering bodily injury or property as a result of the negligence of uninsured drivers.”

Written submissions in reply from the ministry, BIR and the AG said the basis for the challenge is founded in the 2008 and 2014 budget speeches, but there has been no explanation from the claimants why they took so long to seek judicial review within the period stipulated in the Judicial Review Act.

Secondly, the written submission said, it is incorrect to state that the money collected in respect of the Motor Insurance Premium Taxes was applied for the purpose of compensating the motor accident victims of uninsured drivers. The evidence is quite clear that nothing of this sort has arisen, the written submission stated.

Rahim reserved his ruling for March 14.