HIGH Court judge Joan Charles yesterday ruled the CLICO bailout plan presented by the People's Partnership Government was unlawful.
The State has now been ordered to pay a group of Executive Flexible Premium Annuity (EFPA) policyholders all the money they invested in the failed insurance giant, plus interest.
The judgment was handed down by Charles yesterday in respect to a lawsuit filed by the United Policyholders Group that is reported to have some 400 members along with Madan Singh, Basdeo Rajkumar, Sandra Rajkumar and Stacey Noelle Williams against the Attorney General of Trinidad and Tobago.
The group was represented by Queen's Counsel Peter Knox, former attorney general Ramesh Maharaj, SC, Vijaya Maharaj, and Nyala Badal.
Queen's Counsel Allan Newman, former attorney general Russell Martineau, SC, Kelvin Ramkissoon and Kerry Ann Oliverie represented the State.
In its application, the United Policyholders Group contended the bailout plan presented by the former People's National Movement (PNM) administration amounted to a guarantee policyholders would be reimbursed the funds they held in the cash-strapped conglomerate.
Charles agreed. "It is declared that the claimants are the beneficiaries of legitimate expectations engendered by representations made to them by or on behalf of the government that (i) the government would ensure that their funds in CLICO would be safe and that it would guarantee repayment of all monies due to them; and (ii) the government would make good the deficit in the Statutory Fund," her ruling stated.
Speaking to the media outside the Hall of Justice following the ruling, Maharaj said the reason the policyholders left their money in CLICO was because of the PNM's promise.
"Based on that assurance they kept their monies in the system, and when the new government took office, the new government decided to come up with a plan in which they were given time to accept that plan in that they would get their money over a period of 20 years," he said.
"This morning Justice Charles ruled that the Government acted unlawfully, and ordered the Government to honour the expectation made by the last government to the CLICO policyholders that were part of the action and that is important only those policyholders who were part of this action would benefit from this judgment," he said.
"It is ordered that the defendant do make good the said legitimate expectation by making suitable arrangements to ensure that the claimants, less those who have already accepted the Government's offer, receive a sum equal to 100 per cent of CLICO's contractual liability to them," Charles's ruling stated yesterday.
"Interest at the rate of three per cent from September 2010 to March 12, 2013, be paid on the said sum," the ruling stated.
Charles did not agree with the People's Partnership's contention that it did not have the money to abide by the PNM promise.
"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.
"So it showed that this government was in a better economic position to ensure that the Statutory Fund was not in deficit and therefore could have honoured the promise," Lawrence Maharaj said.
The State has 28 days to file an appeal.