Central Bank of Trinidad and Tobago v Mediserv International Ltd

• Jurisdiction: Trinidad & Tobago
• Judge: David C Harris
• Judgment Date: 13 April 2021
• Neutral Citation: TT 2021 HC 72
• Docket Number: CV2017-00528
• Court: High Court (Trinidad and Tobago)

IN THE HIGH COURT OF JUSTICE

Before

The Honorable Justice David C Harris

CV2017-00528

Between

Central Bank of Trinidad and Tobago

Claimant

and

Mediserv International Limited

Defendant

Appearances:

Mr. Russell Martineau S.C. leads Mr. Kerwyn Garcia instructed by Ms. Elena Araujo for the Claimant

Mr. Farid Scoon for the Defendant

INTRODUCTION 1

1 The Claimant is and was at all material times a body corporate established by section 3 of the Central Bank Act Chap. 79:02. The Defendant is a limited liability company incorporated under the Companies Act on November 10, 1999 with its registered office at 54 Rushworth Street, San Fernando.

2 Pursuant to the Insurance Act Chap. 84:01 (“the Act”) at section 4(1), the Claimant is charged with the administration of the said Act 2.

3 Section 3 of the Act defines “insurance business” as the business of or in relation to the issue of or the undertaking of liability under policies to make good or indemnify the insured against any loss or damage including liability to pay damages or compensation contingent upon the happening of a specified event in the currency in which the premium had been paid, but does not include—

• a) business in relation to the benefits provided by a friendly society or a trade union for its members or their dependents; or

• b) business in relation to a scheme under which superannuation benefits, pensions or payments to employees or their dependents on retirement, disability or death are provided by an employer, or his employees, or by both, wholly through an organisation established solely for those purposes by the employer or his employees, or by both.

4 The Act applies to all companies which carry on in Trinidad and Tobago insurance business of all or any of the classes specified in the First Schedule to the Act 3 and a company may apply to the Claimant for registration under the Act to carry on insurance business. 4 The Defendant has never so applied to the Claimant.

5 Under the Success & Wellness Lifestyle Management Contract and the Mediserv Jewel Success & Wellness Lifestyle Management Plan, the Defendant is described as “the Company” or “the Plan Administrator”. The “Plan Administrator” is defined in the Success & Wellness Lifestyle Management Contract and the Mediserv Jewel Success & Wellness Lifestyle Management Plan as the functionary responsible for the day-to-day management of the Plan and through whose authority the member receives any benefit. The Defendant is stated in those contracts to be responsible for the day-to-day management of the Plans and for authorizing the provision of benefits to members of the Ventures and Investment Programme ( “VIP”).

6 It is a term of each of the said contracts that upon acceptance by the Defendant into the Plans to which each relates, members, that is, members of Ventures and Investments Programme (“ VIP”) who have applied for and have been accepted by the Defendant to participate in the Plans must make payments to a Fund which the Defendant manages. The Defendant contends that the

benefits provided to members are paid out from the Fund after the member has made a claim in keeping with the procedure set out in the particular contract and if in the exclusive opinion of the Defendant, the member satisfies the requirements for eligibility for payment. Benefits are provided to members on terms determined exclusively by the Defendant. The Defendant alleges that the said VIP has contracted with several entities to manage its affairs 5

7 Under section 2B-2 (para. 7) of the Success & Wellness Lifestyle Management Contract for instance, the Defendant agrees to manage a Fund being a part of a plan to support members' benefits and to receive contributions and to distribute benefits, including making payments on the submission of valid claims in the prescribed manner. The Defendant and the VIP have advertised the plans and coverage provided under the said contracts.

8 By pre-action protocol letter dated January 23, 2015 the Claimant, called upon the Defendant to cease to conduct the operations for which the Claimant had received complaints. The Defendant's Attorneys responded to the pre-action letter, stating that the Defendant is a third party administering a self-insured plan for and on behalf of the Friendly Society named Ventures and Investments Programme ( “VIP”). The Attorneys also stated that the Defendant is a risk management company whose job is to manage a predictable amount of risk and to calculate and arrange to set aside an amount of money originating from and managed on behalf of VIP that will cover an unpredictable future loss. The Defendant's Attorneys further stated that the Defendant was not then nor had ever been involved in writing or conducting insurance business of the type prescribed by the Insurance Act.

9 The Defendant alleged that the VIP was a Friendly Society. At the written request of the Claimant, the Office of the Registrar of Friendly Societies confirmed via their letter of 6 ^th August 2015 that none of the following entities (which are referred to in the various plans here in question) — VIP, the Defendant, Salubrity and KREW (also known as D' 5'oclock KREW) — is registered as a Friendly Society under the Friendly Societies Act Chap. 32:50 and that none of the aforementioned entities is approved to be a trustee under that Act. The Defendant has not disputed this fact.

10 By letter dated 18 ^th August 2015, the Claimant wrote to the Defendant's Attorneys requesting that the Defendant supply full particulars of the allegation that VIP is a Friendly Society and that

the Defendant, Salubrity Ltd and KREW are trustees of VIP. By letter dated September 3, 2015, the Attorneys responded to say that they wished to advise that VIP belongs to the class of friendly societies to which the Friendly Societies Act does not apply and is excluded from registration and the identified entities are not required to be approved as trustees under that Act. This is pursuant to s. 3 of the Act

11 The Defendant was never and is not listed in any of the Registers maintained by the Claimant pursuant to section 9(a) of the Act 6 or at all to carry on any class of insurance business within the country. The Defendant is a company within the meaning of the Companies Act but is not registered by the Claimant in respect of any class of business specified in the First Schedule to the Act. 7

12 In its Amended Defence, the Defendant contends that Mediserv International Limited (“ Mediserv”) “is contracted by the members of the VIP to manage the Medical plan including the Medical Fund and the Wellness Funds and any other Funds that the VIP may establish from time to time under the Medical plan.”

13 Further, the Defendant states that it does not advertise itself as an insurance company providing traditional insurance, but, offers self-insurance as an alternative; that it is not carrying on prohibited insurance business; it is simply a third party risk management company administering a self-insured plan for and on behalf of the Friendly Society named Venture and Investments Programme ( VIP) and serves as Manager and Trustee to the VIP.

14 According to the Defendant, due to it being a risk management company, in that sense alone it is similar to a regulated insurance company. However, contends the Defendant, rather than having an insurance premium, the Defendant arranges for members of the VIP to set aside an amount that is sufficient to cover potential future loss.

15 The Defendant maintains that its business and services is one of self-insurance which is not prohibited under the Act and that it belonged to the class of friendly societies to which the Friendly Societies Act Chap. 32:50 does not apply, pursuant to s. 5(1)(d) 8 thereof.

16 In the Court's view, the Defendant's position in summary is: “… that it is a Third Party Administrator for an unincorporated and unregistered body of persons, engaged in risk management and administration of a self-insured plan not advertising itself as an insurance company providing the traditional insurance, but advertising and administering or facilitating the provision of self-insurance as an alternative”.

ISSUES TO BE DETERMINED

17 The parties have agreed that the following are the issues for determination in this matter:

• i. Whether upon a true construction of the term, “insurance business” as defined by section 3 (1) of the Insurance Act Chap 84:01 (“the Act”) Defendant is carrying on “insurance business”;

• ii. Further or alternatively, whether on a true construction of the terms of: (i) the Success & Wellness Lifestyle Management Contract; (ii) the Mediserv Jewel Success & Wellness Lifestyle and Management Plan; (iii) the GEMS Contract and (iv) the IntraMed Benefits Plan, the Defendant is providing benefits to members, which amount to the carrying on of insurance business within the meaning of the Act.

RELEVANT LAW

18 The interpretation of the Insurance Act at s. 3 (definition of ‘insurance business’), the First Schedule, and s. 11 (prohibition of carrying out “insurance business”) is relevant to determination of the issues identified above.

19 The parties have provided legal authorities to support their respective positions as put forward in the pleadings, submissions and arguments.

20 In addition to the relevant sections of the Insurance Act, the Claimant relies on various authorities set out in its bundle not least of which are CV2010-00758 Central Bank v Worldwide Insurance 9 and Re Barrett (1992) 34 FCR 508 at 522. 10

21 The Defendant relies on, amongst several others, Re Law Guarantee Trust and Accident society Limited, Liverpool Mortgage Insurance Company Case [1914] 2 Ch 617 (CA) per Buckley LJ at 631; Prudential Insurance Co. v Inland Revenue Commissioners [1904] 2 KB 658 at 663 where Channell J considered the question “what is a contract of...