• July 7th, 2020

Supreme Court issues warning to insurance companies

WINDHOEK - Three judges of the Namibian Supreme Court issued a stern warning to insurance companies that are defying the provision of the Namibia National Reinsurance Act, which compels them to reinsure a portion of their business with NamibRe that their opinion about the unconstitutionality of the Act does not make them immune to the enforcement mechanisms it provides, unless a court makes such a finding through due process of law in an appeal judgment. 

Deputy Chief Justice Petrus Damaseb, who wrote the unanimous judgement with Supreme Court Judge of Appeal Elton Hoff and acting Supreme Court Judge of Appeal Yvonne Mokgoro in an appeal by finance minister Calle Schlettwein and NamibRe, also set aside an order by the Windhoek High Court to stay the implementation of the impugned regulations of the Act. 

Schlettwein welcomed the caution and the setting aside of the stay order in a press release issued shortly after the judgement this week. According to the appeal judges, the High Court did not have the jurisdiction to stay the implementation of an Act of parliament, and that in any event, such an order was not pleaded or asked for by the parties. Schlettwein and NamibRe dragged eight companies: Hollard Insurance Company of Namibia Limited, Hollard Life Namibia Limited, Sanlam Namibia Limited, Santam Namibia Limited, Trustco Insurance Limited, Trustco Life Limited, Outsurance Insurance Company of Namibia Limited, Old Mutual Life Assurance Company Namibia Limited and their respective CEOs to court after they refused to re-insure a percentage of their insurance premiums with the state-owned company in defiance of the Act.

 The minister and NamibRe want the High Court to order that pending the outcome of the review application, the companies are obliged to comply with the provisions of the Act, the notices and the regulations with immediate effect. They further asked the High Court to authorise them, failing the order by any of the respondents, to apply to the High Court forthwith on the same papers, duly amplified as required, for an order of committal for contempt in respect of any such breach of the court order. In short, they were asking the court to authorise them to institute criminal proceedings against any of the respondents’ CEOs should they be successful in their application and the accounting officers of these insurance companies do not comply. The insurance companies launched an application of their own in the high court to challenge the constitutionality of the Act and is refusing to re-invest with NamibRe, pending the finalisation of their application. Windhoek High Court Judge Thomas Masuku, however, refused to entertain the matter and instead made a ruling staying the implementation of the Act until the outcome of the constitutional challenge. Schlettwein and NamibRe then lodged an appeal in the Supreme Court against that decision of Judge Masuku and also asked for a declaratory order that the provisions of the Act are enforceable and that the CEOs of the insurance companies can be held liable for the defiance and held in contempt of a court order. Damaseb, however, found that such a declarator is not appropriate in circumstances where the collateral challenge the insurance companies lodged is not yet determined.

He, however, found that the minister and NamibRe do have other remedies to enforce the provisions of the Act in Section 42 of the Act, which provides for penalties and/or prison terms for defaulters. While the judge said employees of corporate entities such as CEOs cannot be held liable for the misdeeds of their employers, directors might be. The judge further stated it was unexplained why the minister and NamibRe had no recourse to the sections in the law to exact compliance. Therefore, he said, what is clear is that the minister and NamibRe are not without alternative remedies; “rather that they prefer remedies other than those that the legislature has provided for them and without placing on record why the statutory remedies are considered inappropriate.” The three judges then made an order that the appeal succeeds in part only and substituted the high court order with one that reads: The application is dismissed. He awarded costs to the insurance companies including the cost of one instructing counsel and such number of instructed counsels employed by each for the high court application and the appeal, and to the minister for the cross-appeal by the insurance companies. 

Roland Routh
2019-12-13 07:55:55 | 6 months ago

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