The Judicial Committee of the Privy Council (the Judicial Committee) delivered judgment on 20 April 2015 upholding the judgment of the Supreme Court of Mauritius, which set aside Rainbow Insurance Company Limited’s (Rainbow’s) application for Judicial Review and confirmed the decision of the Financial Services Commission, Mauritius (FSC) to suspend with immediate effect Rainbow’s registration for both its general and long term business.

Rainbow mounted a wide-ranging challenge to the decision of the FSC, on the basis of:

  1. Procedural unfairness because the decision to suspend registration was effectively made without proper consultation.

The Judicial Committee dismissed the challenge, confirming that there is no general common law duty on a public body to consult persons who may be affected by a proposed measure before it is adopted. There may be an obligation to consult arising out of a statutory scheme or as a consequence of having created a legitimate expectation. The Judicial Committee considered that the statutory scheme did not envisage such consultation in all circumstances before the FSC reached a determination. The Judicial Committee concluded that the statutory scheme envisaged that the insurer had an opportunity to engage with and make representations. It did not provide for consultation and fairness did not require such consultation, especially where the ultimate sanction was prohibition.

  1. Illegality and abuse of power as the FSC had no lawful basis to suspend Rainbow’s registration, having, in its preliminary letter to Rainbow, claimed only that it had “reason to believe” that Rainbow had not conducted its business in accordance with sound insurance principles and because of an improper delegation of powers.

The Judicial Committee concluded that there was no substance to either branch of this challenge.

In relation to whether the FSC had a lawful basis to suspend Rainbow’s registration, the Judicial Committee found that the FSC’s preliminary letter made only temporary (although very significant) directions and proposed the suspension of Rainbow’s registration.

The Judicial Committee found that there was no improper delegation. The individual to whom Rainbow alleged the improper delegation had been made was a “fact finder” and the FSC responded appropriately to the report he had produced.

  1. Irrationality because Rainbow was treated in a discriminatory manner in the calculation of its expected recoveries from third parties by subrogated claims, and because of the speed with which the FSC acted.

The Judicial Committee concluded that there was no substance to either branch of this challenge, based upon the facts presented to it.

  1. Breach of Rainbow’s legitimate expectation that it would be given sufficient time to adapt to the FSC’s new regulatory requirements.

The Judicial Committee summarised that the courts have developed the principle of legitimate expectation as part of administrative law to protect persons from gross unfairness or abuse of power by a public authority. The Judicial Committee concluded that there were formidable hurdles, both legal and factual, which this challenge could not surmount. Further, the fact that the FSC was exercising regulatory powers in the interests of policyholders and others made this challenge difficult to sustain.

The Judicial Committee reiterated that judicial review is not an appeal on the facts. Only in rare cases (and not in this instance) will the court have to examine questions of disputed fact.

This case illustrates the difficulties in mounting a successful application for judicial review.

The full judgment can be found here:

https://www.jcpc.uk/decided-cases/docs/JCPC_2013_0065_Judgment.pdf.