No-holds-barred contest over Legal Shield

THE gloves came off in a High Court hearing over the future of legal costs insurance firm Legal Shield Namibia last week.

Late on Friday afternoon, Acting Judge John Manyarara reserved judgement at the end of a two-day hearing marked by the exchange of acrimonious accusations between lawyers acting for Legal Shield and the Chief Executive Officer of the Namibia Financial Institutions Supervisory Authority (Namfisa). Two main issues were thrashed out before Acting Judge Manyarara.The one was on a question whether one of Legal Shield’s main publicity tools, the ‘Winna Mariba’ television game show, is an infringement of a Short-Term Insurance Regulation forbidding anyone from giving or offering someone else “any valuable consideration” as an inducement to take out a policy.The ‘Winna Mariba’ show is one of the major problems that Namfisa has had with Legal Shield over the past year.Namfisa claims that the show induces people to take out policies with Legal Shield.Last week the leading member of Legal Shield’s team of lawyers, Dave Smuts SC, disputed that interpretation of the show, arguing that ‘Winna Mariba’ was aimed at encouraging Legal Shield members to keep their policy premium payments up to date rather than at recruiting new policyholders.Only Legal Shield members are eligible to take part in the show, with the chance of winning cash prizes that could amount to thousands of Namibia dollars.The mere chance to take part in a show like ‘Winna Mariba’ – which Smuts said was a chance of about one in 75 000 – could not be considered to be the sort of “valuable consideration” forbidden by the Short-Term Insurance Regulations, he argued.The extent of acrimony between Legal Shield and Namfisa and the tooth-and-nail nature of the fight between them in court became clear during arguments on the ‘Winna Mariba’ show.Smuts charged that the Registrar of Short-Term Insurance, Frans van Rensburg – who is also the CEO of Namfisa – was “a little bit drunk from his powers, and from his position of omnipotence” thought people could do only what he said they could.Nic Maritz, a South African senior counsel representing Namfisa’s Van Rensburg, struck back by accusing Legal Shield and its lawyers of “scandalous, scurrilous and defamatory allegations against the Registrar and everybody else involved”, and of an “emotive tirade”.This, he said, had nothing to do with the facts of the case and was all about claims of “megalomania” and “abuse of process” on the part of Van Rensburg.In his argument in support of an application from Van Rensburg for Legal Shield to be placed under the control of a provisional curator, who would take over the management of the company while its affairs are further investigated, Maritz told the Acting Judge that the law stated that the court had to grant such a curatorship order if it was the opinion of the Registrar of Short-Term Insurance that it was desirable to place a company under curatorship.The court’s opinion on appointing a curator would become relevant only when such an appointment would have to be made final at a later stage, he argued.Predictably, Smuts took issue with that argument.He told the Acting Judge that Maritz wanted to negate the court’s discretion, and that such an approach would be unconstitutional since it would deny Legal Shield the right to a fair trial before it is placed under provisional curatorship.Smuts charged that the effect of Namfisa’s court offensive was that Legal Shield was being threatened with extinction and with being closed down.Among the grounds on which Namfisa was asking for the appointment of a provisional curator was what Maritz called “an incestuous relationship” between Legal Shield and its holding company, Trustco.The majority shareholder of Trustco, Quinton van Rooyen, is the Managing Director of both companies.He could control the appointment of the boards of directors of both companies, and through that could also control the affairs of both companies, according to Maritz.”There is a massive potential for conflict of interest, which makes it undesirable for Mr Van Rooyen to be Managing Director of both companies,” Maritz argued, telling the court that there was massive potential that Van Rooyen’s personal interest could conflict with his duty to act in the interest of Legal Shield.He cited one deal between Legal Shield and Trustco as an example.Trustco borrowed money from Legal Shield to buy computer equipment.It then leased this equipment to Legal Shield, but because there was an agreement in terms of which Trustco handled management for Legal Shield, the computers in actual fact remained with Trustco for its use.The effect was that Legal Shield was being made to pay twice over for the same computer equipment, Maritz claimed.Legal Shield also rented office space from its own parent company, Trustco.Again, Trustco employees – who also do Legal Shield work – remained using that office space.It was this sort of arrangement that had prompted Van Rensburg to threaten to cancel Legal Shield’s registration as a short-term insurer, and to ask for a provisional curator to be appointed to run its business, the court was told.If conflicts of interest arose between Legal Shield and Trustco because of such arrangements, Van Rooyen would probably have to face himself in a mirror, and argue and debate the matter with himself before walking away, Maritz mocked.He charged that Legal Shield was nothing but an empty shell, created with the aim of providing a steady stream of cash to Trustco.Smuts’s response was that all the grounds on which Van Rensburg based his actions were “utterly flimsy” and baseless, and premised on distortions and misinterpretations of facts.He said policyholders’ claims would still be paid out without Van Rensburg’s interference.Two main issues were thrashed out before Acting Judge Manyarara.The one was on a question whether one of Legal Shield’s main publicity tools, the ‘Winna Mariba’ television game show, is an infringement of a Short-Term Insurance Regulation forbidding anyone from giving or offering someone else “any valuable consideration” as an inducement to take out a policy.The ‘Winna Mariba’ show is one of the major problems that Namfisa has had with Legal Shield over the past year.Namfisa claims that the show induces people to take out policies with Legal Shield.Last week the leading member of Legal Shield’s team of lawyers, Dave Smuts SC, disputed that interpretation of the show, arguing that ‘Winna Mariba’ was aimed at encouraging Legal Shield members to keep their policy premium payments up to date rather than at recruiting new policyholders.Only Legal Shield members are eligible to take part in the show, with the chance of winning cash prizes that could amount to thousands of Namibia dollars.The mere chance to take part in a show like ‘Winna Mariba’ – which Smuts said was a chance of about one in 75 000 – could not be considered to be the sort of “valuable consideration” forbidden by the Short-Term Insurance Regulations, he argued.The extent of acrimony between Legal Shield and Namfisa and the tooth-and-nail nature of the fight between them in court became clear during arguments on the ‘Winna Mariba’ show.Smuts charged that the Registrar of Short-Term Insurance, Frans van Rensburg – who is also the CEO of Namfisa – was “a little bit drunk from his powers, and from his position of omnipotence” thought people could do only what he said they could.Nic Maritz, a South African senior counsel representing Namfisa’s Van Rensburg, struck back by accusing Legal Shield and its lawyers of “scandalous, scurrilous and defamatory allegations against the Registrar and everybody else involved”, and of an “emotive tirade”.This, he said, had nothing to do with the facts of the case and was all about claims of “megalomania” and “abuse of process” on the part of Van Rensburg.In his argument in support of an application from Van Rensburg for Legal Shield to be placed under the control of a provisional curator, who would take over the management of the company while its affairs are further investigated, Maritz told the Acting Judge that the law stated that the court had to grant such a curatorship order if it was the opinion of the Registrar of Short-Term Insurance that it was desirable to place a company under curatorship.The court’s opinion on appointing a curator would become relevant only when such an appointment would have to be made final at a later stage, he argued.Predictably, Smuts took issue with that argument.He told the Acting Judge that Maritz wanted to negate the court’s discretion, and that such an approach would be unconstitutional since it would deny Legal Shield the right to a fair trial before it is placed under provisional curatorship.Smuts charged that the effect of Namfisa’s court offensive was that Legal Shield was being threatened with extinction and with being closed down.Among the grounds on which Namfisa was asking for the appointment of a provisional curator was what Maritz called “an incestuous relationship” between Legal Shield and its holding company, Trustco.The majority shareholder of Trustco, Quinton van Rooyen, is the Managing Director of both companies.He could control the appointment of the boards of directors of both companies, and through that could also control the affairs of both companies, according to Maritz.”There is a massive potential for conflict of interest, which makes it undesirable for Mr Van Rooyen to be Managing Director of both companies,” Maritz argued, telling the court that there was massive potential that Van Rooyen’s personal interest could conflict with his duty to act in the interest of Legal Shield.He cited one deal between Legal Shield and Trustco as an example.Trustco borrowed money from Legal Shield to buy computer equipment.It then leased this equipment to Legal Shield, but because there was an agreement in terms of which Trustco handled management for Legal Shield, the computers in actual fact remained with Trustco for its use.The effect was that Legal Shield was being made to pay twice over for the same computer equipment, Maritz claimed.Legal Shield also rented office space from its own parent company, Trustco.Again, Trustco employees – who also do Legal Shield work – remained using that office space.It was this sort of arrangement that had prompted Van Rensburg to threaten to cancel Legal Shield’s registration as a short-term insurer, and to ask for a provisional curator to be appointed to run its business, the court was told.If conflicts of interest arose between Legal Shield and Trustco because of such arrangements, Van Rooyen would probably have to face himself in a mirror, and argue and debate the matter with himself before walking away, Maritz mocked.He charged that Legal Shield was nothing but an empty shell, created with the aim of providing a steady stream of cash to Trustco.Smuts’s response was that all the grounds on which Van Rensburg based his actions were “utterly flimsy” and baseless, and premised on distortions and misinterpretations of facts.He said policyholders’ claims would still be paid out without Van Rensburg’s interference.