Appeal Court dismisses challenge to levy on car-insurance premiums

A judge’s dismissal of a lawsuit by the Motor Insurance Bureau Association, which challenged the State for permitting the levying of more than $1 billion in motor insurance premium taxes since 2008 to compensate accident victims of uninsured drivers, but has not disbursed those funds, has been upheld by the Court of Appeal.

In a written ruling, Justices of Appeal Prakash Moosai, Charmaine Pemberton and James Aboud upheld the ruling of Justice Ricky Rahim in 2017.

Rahim held the association’s claim, which was also supported by Davindra Maharaj, was misconceived, devoid of a legal foundation and there was no evidence the Minister of Finance or the Board of Inland Revenue acted unreasonably in permitting the levying of insurance premium taxes to compensate victims of uninsured drivers.

Maharaj and the bureau argued that the levy was contrary to the legal purpose of the Miscellaneous Taxes Act and that the enrichment of the BIR was unjust, since the motor insurance premium taxes were collected for purposes which are contrary to the act.

Maharaj also sought to have repaid the $5,456 which was collected from him.

The association sought a declaration that the failure of the ministry to establish a Motor Insurance Bureau for disbursing funds to the victims, while it actively allocated funds for the compensation of the said accident victims, was unreasonable.

Both parties sought an order for the ministry to pay into court the monies collected since 2008.

In the 2008 budget presentation, the then-minister of finance announced a fund would be established to compensate accident victims of uninsured drivers. To date, a total of $1,0646,905,472 has been collected from drivers but none has been paid out.

The State has not been able to disburse any money from the fund because of a lack of the requisite legal instruments to authorise payments. As a result, the fund has stood dormant and since 2017, no further sums have been allocated.

Pemberton, who delivered the ruling, said Rahim’s judgment could not be faulted as it was “well-reasoned.”

She also noted the evidence of the former permanent secretary of the Finance Ministry – now high commissioner – Vishnu Dhanpaul’s evidence that to establish the fund, separate and apart from the Consolidated Fund, there needed to be legislation for that purpose.

In the absence of any legislative grounding, the funds collected went to the Accident Victims Compensation Fund Suspense Account. Dhanpaul said allocations to the vote titled Accident Victims Compensation Fund were based on an estimated revenue taken from the insurance premium tax, the money transferred to the suspense account was not the same collected by the BIR from payment of the insurance premium tax. The latter has been deposited into the Exchequer Act and automatically forms part of the Consolidated Fund.

Rahim held that the Exchequer and Audit Act provided for funds collected as taxes to be deposited into the Consolidated Fund which is controlled and managed by the minister.

“The money collected as an Insurance Premium Tax is not the same as that transferred from the Consolidated Fund by authority of Parliament and direction of the MOF in acting pursuant to his duty as manager of the Consolidated Fund.

“The purpose of levying Insurance Premium Tax is not that of compensating victims of uninsured drivers,” Rahim held and the Court of Appeal agreed.

In the appeal, Maharaj and the association urged the judges to take into account statements by two ministers of finance in their budget presentation. They contended because the fund was not created by Parliament, that inaction was open to challenge. However, Pemberton said, “The appellants appeared unconcerned that these statements did not receive Parliamentary blessing in the form of an act of Parliament.”

However, the State contended the minister was unable, unless authorised by law, to initiate any scheme meant to be funded by monies collected by levying taxes.

“Such initiation must be authorised by act of Parliament, through the Appropriation Act for the particular financial year,” Pemberton said.

She also held that since the intentions to set up the fund did not go through a parliamentary process and elevated to an act of Parliament, the court could not interfere in what currently exists.

“Where is the evidence that the funds collected through the tax and deposited in the Consolidated Fund were or are being misused?

“Or, is it a case that the fact that the funds are deposited in a suspense account and are not used as they have not received Parliament’s approval for use, is a cause for concern?

“Further, even if there were concerns, can this form the basis for the court’s intervention on either a Constitutional basis or constitute a decision capable of being judicially reviewed? No such concrete evidence or submission was forthcoming."

Pemberton also said the budgetary statements of intention could not form the basis of a claim for legitimate expectation.

In dismissing Maharaj and the association’s appeal, Pemberton noted in her decision, “Trinidad and Tobago has a serious challenge when it comes to the carelessness and sometimes callousness of road users.

“Many do not understand or appreciate that a motor car in the hands of an impaired person, is a lethal weapon. One only needs to ask surviving victims and their families and sadly the families of those who do not survive the truth of the unfortunate and sometimes devastating consequences, both financially and emotionally of that statement.

“It is a cost as well that this society has met and will continue to meet until we take some concrete steps to alleviate the causes and effects of these distressing consequences.

“...This situation is one of national importance, since, as we deliver this judgment, the carnage on our roads remains unabated whether involving drivers, whether insured or uninsured.”

Maharaj said he is contemplating pursuing an appeal at the Privy Council.

Maharaj and the association were represented by Dons Waithe, and Seana Baboolal while Michael Quamina, SC, represented the minister. Dr Claude Denbow, SC, represented the Attorney General.