The United Policyholders Group and Others v Attorney General of Trinidad and Tobago (Trinidad and Tobago)

JurisdictionUK Non-devolved
CourtPrivy Council
JudgeLord Mance,Lord Neuberger,Lord Carnwath,Lord Sumption,Lord Clarke
Judgment Date28 June 2016
Neutral Citation[2016] UKPC 17
Date28 June 2016
Docket NumberAppeal No 0017 of 2015

[2016] UKPC 17

Privy Council

From the Court of Appeal of the Republic of Trinidad and Tobago


Lord Neuberger

Lord Mance

Lord Clarke

Lord Sumption

Lord Carnwath

Appeal No 0017 of 2015

The United Policyholders Group and others
The Attorney General of Trinidad and Tobago
(Respondent) (Trinidad and Tobago)


Peter Knox QC Ramesh L Maharaj SC Robert Strang

(Instructed by Sheridans)


Howard Stevens QC Rowan Pennington-Benton Professor Satvinder Juss

(Instructed by Charles Russell Speechlys)

Heard on 18, 19 and 20 January 2016

Lord Neuberger

(with whom Lord Mance, Lord Clarke, Lord Sumption and Lord Carnwath agree)


The appellants, who are all residents of Trinidad and Tobago, are holders of life policies issued by the Colonial Life Insurance Company (CLICO). Their claim arises out of the banking crisis in early 2009 when CLICO was in serious financial difficulties. That claim is based on assurances of support for CLICO given by the then government, which they say created a "legitimate expectation" enforceable in law. They assert that, following the elections in May 2010, the new government failed to honour that expectation, and that they are entitled to relief accordingly. Their claim succeeded in the High Court but failed in the Court of Appeal.

Factual background

CLICO is a company regulated by the Insurance Act and is a subsidiary of a holding company, CL Financial Ltd (CLF); one of CLICO's subsidiaries is CLICO Investment Bank (CIB). As the Court of Appeal noted, CLF was the largest private conglomerate in Trinidad and Tobago. The reported value of its assets was equivalent to more than 70% of the country's gross domestic product, and a substantial part of those assets are in the financial sector.


Under section 37(1) of the Insurance Act, CLICO was required to establish and maintain a statutory fund to cover its liabilities to policyholders under long-term insurance business. Section 37(4) of the same Act required CLICO to maintain a fund in Trinidad and Tobago with sufficient assets to cover its liability (including its contingency reserves) to policyholders' resident in Trinidad and Tobago. The Insurance Act contained investment rules for such Funds, including, for example, in section 46 and Schedule 2, a prohibition on investment in more than 30% of the shares of a single company. There were also restrictive rules for the valuation of assets in such Funds. Under section 80(1) of the Insurance Act, policyholders protected by a Fund are to be treated in preference to other creditors in insolvency, and in such an event the assets and liabilities of the Fund are to be assessed separately and, with the exception of any surplus, used only to pay off liabilities of the Fund.


CLICO was under the general supervision of the Central Bank of Trinidad and Tobago. Under section 41 of the Insurance Act, it was required to report to the Central Bank with particulars of the assets and liabilities of the Fund. Section 44D of the Central Bank Act gave the Central Bank power to take control of a financial institution and to take all steps it considered necessary to protect the interests of depositors and creditors of the institution, where it was of the opinion that those interests are threatened, or that the institution was likely to be insolvent or that it was not maintaining high standards of probity or sound business practices. Section 44F(5) of the Central Bank Act required the Central Bank to comply with general or special directions of the Minister.


The appellants all held versions of a CLICO policy called the Executive Flexible Premium Annuity (EFPA). These policies were distinguished by the offer of relatively high interest rates paid out on the premium for a fixed initial period. They also included provision for an annuity on the life of the policyholder, and (as is now common ground) were thus within the definition of "long term insurance business" for the purposes of the Insurance Act.

The crisis and the government's response

In January 2009 the Central Bank became aware that CIB had serious liquidity problems, and that both CIB and CLICO were in substantial deficit. On 24 January 2009, the Central Bank advised the Minister of Finance and the Prime Minister that there would be a run on both institutions if the problems became public. On 30 January 2009, the Central Bank took control of CIB using its emergency powers under section 44D of the Central Bank Act.


On the same day the government and CLF came to an agreement which was set out in a Memorandum of Understanding (the MoU). The preamble of the MoU recorded that CLF had asked for the government's intervention in the "rehabilitation" of CIB, CLICO and another subsidiary British American Insurance Company (BA). It stated:

"The financial condition of CIB, CLICO and BA threaten the interest of depositors, policy holders and creditors of these institutions and pose danger of disruption or damage to the financial system of Trinidad and Tobago."

The agreement had been reached to correct the financial position of the three companies and to protect the interests of their depositors, policyholders and creditors. Among other things:

  • a) CLF agreed to sell its shareholdings in a number of identified companies and such other assets as might be necessary, and to apply the proceeds (a) to correct CIB's financial position, and (b) to ensure that CLICO's and BA's statutory fund requirements were satisfied.

  • b) The government agreed to provide collateralized loan financing to CLICO and BA to meet any residual statutory fund deficit which might still exist after this sale of CLF's shareholdings and assets.

  • c) CLF agreed that CLICO and BA would restructure their operations to conform to traditional life insurance business in a manner to be approved by the Central Bank.

  • d) CLF was required to make full and fair disclosure of the liabilities and assets of companies within the group.


On 6 February 2009 the Central Bank Act was amended to extend the Central Bank's powers of intervention under section 44D to cover insurance companies. On 13 February 2009 the Central Bank took control of CLICO. A statement issued by the Central Bank on that day said:

"These steps would convince policyholders that CLICO has the full backing and commitment of the Government and the Central Bank of Trinidad and Tobago. Policyholders should also feel confident that their funds are protected and this should encourage the maximum roll-over of policyholder funds. At worst, to facilitate an orderly recovery of CLICO, we would request that policyholders to do not seek withdrawals before their maturity dates …"


The appellants rely on a number of public statements, made at this time and over the following months, about the nature of the government's support for CLICO. It is unnecessary to set them all out. Some were qualified specifically by reference to the conditions of the MoU, but others were not so qualified. For example, on 15 February 2009 a full-page advertisement was placed in local newspapers in the name of CLICO (signed by the new Chief Executive, Mr Musaib-Ali, appointed at or about the time of the takeover by the Central Bank).

"CLICO [TRINIDAD] wishes to assure all its Policyholders and Clients that our normal business operations will continue.

All terms and conditions of existing policy contracts will be honoured.

All Policyholders' funds are guaranteed by the Government of Trinidad and Tobago and the Central Bank." (original emphasis)


In a Parliamentary Answer on 24 June 2009, the Minister of Finance referred to "the restructuring agreement … carried out in the Memorandum of Understanding signed with [CLF]" under which the government was "committed to restructuring [CLF] as a going concern" to ensure that other creditors and shareholders would "at the end of the day … get back and recoup all of their losses or potential losses". But that was "not a guarantee to them". She explained:

"We guarantee the policyholders and resident of this country, that is our guarantee, but we are committed to seeing that CLICO becomes a going concern because we want to ensure that the moneys that the taxpayers have invested are recouped, and in so doing the persons to whom you spoke will therefore benefit because that will be part of the whole exercise of creating solvency for CLICO and [CLF]."


On 24 July 2009 the Cabinet approved funding of $5 billon to facilitate the restructuring of CLICO and BA. The initial injection through the Central Bank of $1.2 billon was later increased to $1.9 billon. Further funding of $3.1 billon was provided in the form of government bonds issued directly to CLICO and placed in the Fund to reduce the deficit. They were to be drawn upon to meet liabilities as they arose and which CLICO was not able to meet.


CLICO continued to trade under the control of the Central Bank, but problems continued into the following year. On 13 January 2010, in an interview, the Minister of Finance spoke of the wide implications of the CLICO intervention:

"I would say everyone will get their money but in the context of the enormity of the situation and the fact that it will affect us all. It is not just those who invested. If you do not contain it, it can have a contagion effect for the whole economy. What it requires is the confidence of the people of Trinidad and Tobago and the patience and understanding that it is a national issue and understand the enormity of the situation …"

In March 2010, in media briefing, the Governor of the Central Bank explained that CLF's assets had been "far more leveraged" than originally thought, the contribution from the sale of assets in the short to medium term was likely to be much lower than envisaged, and values had been affected by the weakness of both the...

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