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Friendly society told $20m damages bid over car insurance ban has no chance in court

Puisne Judge Larry Mussenden (File photograph)

A friendly society has lost a legal battle to offer its members car insurance after a judge ruled their $20m compensation case had no chance in court.

Puisne Judge Larry Mussenden said in a February 10 judgment the Bentley Friendly Society had adopted a “shotgun approach” to their arguments, but the legal basis of most were “unarguable or almost incontestably bad”.

Mr Justice Mussenden said: “It is clear to me that the BFS are passionate about their purpose and raison d’être.

“They have provided a historical background about slavery, emancipation, friendly societies and the honourable intention of offering insurance to the members of friendly societies.

“However, in the litigation arena, bringing or defending applications requires precision, adherence to the law and procedures and a focus on the issues.”

Mr Justice Mussenden ruled the case was “obviously bound to fail” and should not be allowed to proceed.

The Bentley Friendly Society had argued the Ministry of Finance had been wrong when it revoked its legal right to take on third party risks and asked for $20 million in damages, the Ministry called on the court to strike out the case.

The society had asked for an “immediate reversal” of a 2014 ruling that prevented the Transport Control Department from accepting Bentley insurance policies.

The society argued that the Friendly Societies Act 1868 and the Insurance Act 1978 allowed it to offer motor insurance to its members.

Section 57 of the Insurance Act says that “insurance business carried on by a friendly society registered under the Friendly Societies Act 1868 … shall be deemed not to be insurance business within the meaning of this Act”.

The Friendly Societies Act allows a society to make good “any loss sustained by the members by fire, collision, tempest or shipwreck, or by any contingency whereby they sustain any loss or damage to their motor bikes, autos, real estate or boats” as long as the investment of each member accumulates or be employed for the sole benefit of the investing member, their spouse or their beneficiaries.

The TCD processed about 50 licence applications with BFS listed as the insurer between November 2013 and April 2014.

But the BFS claimed the Attorney-General later instructed TCD to deny the applications at the request of private entities.

The matter went to the Supreme Court in 2016 and Puisne Judge Stephen Hellman said there was no reason in principle why friendly societies should not be able to conduct insurance business as long they had authorisation from the Governor.

The BFS applied to the Governor for permission to offer insurance to its members, but the legislation was later “corrected” to state applications would need to go to the Ministry of Finance.

The friendly society said the “erroneous advice” had cost the society and the previous Supreme Court ruling should be reconsidered because it was based on the legislative error.

But the Ministry of Finance argued that the action was only an attempt to reargue the same case as 2016 and should be struck out.

Mr Justice Mussenden said the BFS had put forward a wide range of arguments, but most did not address the legal arguments related to the strike out application.

He added: “On analysis, most of the claims fell into the category that they disclosed no reasonable cause of action and/or are scandalous, frivolous and vexatious or unsustainable.”

Mr Justice Mussenden said that several of the claims should be struck out as they were an abuse of process as they had either already been litigated or should have been handled by Judicial Review.

He added: “The BFS still requires approval from the appropriate authority to undertake third party insurance.

“If the BFS had issues with the request made by the Governor or the minister then they could have taken judicial review procedures against them within the time limit for doing so.”

The judge added: “Generally, in my view, this is a case where it is plain and obvious that it should be struck out.”

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