Carr v Financial Services Ombudsman

• Jurisdiction: Ireland
• Judge: Ms. justice Iseult O'Malley
• Judgment Date: 26 April 2013
• Neutral Citation: [2013] IEHC 182
• Court: High Court
• Date: 26 April 2013

[2013] IEHC 182

THE HIGH COURT

No. 132MCA/2012

Carr v Financial Services Ombudsman

No Redaction Needed

IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 57CL OF THE CENTRAL BANK ACT, 1942

BETWEEN/

ANGELA T. CARR

Appellant

-and-

THE FINANCIAL SERVICES OMBUDSMAN

Respondent

-and-

EBS BUILDING SOCIETY

Notice Party

CENTRAL BANK ACT 1942 PART VIIIB

CENTRAL BANK AND FINANCIAL AUTHORITIES ACT 2004 S16

CENTRAL BANK AND FINANCIAL AUTHORITIES ACT 2004 CHAP 5

CENTRAL BANK ACT 1942 PART VIIB S57C1

CENTRAL BANK ACT 1942 PART VIIB CHAP 6

IRISH LIFE & PERMANENT v FINANCIAL SERVICES OMBUDSMAN UNREP HOGAN 3.8.2012 2012 IEHC 367

HAYES v FINANCIAL SERVICES OMBUDSMAN UNREP MACMENAMIN 3.11.2008 (EX TEMPORE)

IRISH LIFE & PERMANENT v FINANCIAL SERVICES OMBUDSMAN UNREP WHITE 16.11.2011 2011/27/7176 2011 IEHC 439

DAVY v FINANCIAL SERVICES OMBUDSMAN 2010 3 IR 324 2010/24/5828 2010 IESC 30

HYDE v FINANCIAL SERVICES OMBUDSMAN UNREP CROSS 16.11.2011 2011/26/6887 2011 IEHC 422

MOLLOY v FINANCIAL SERVICES OMBUDSMAN UNREP MACMENAMIN 15.4.2011 (EX TEMPORE)

ULSTER BANK v FINANCIAL SERVICES OMBUDSMAN UNREP FINNEGAN 1.11.2006 2006/56/11976 2006 IEHC 323

DE PAOR v FINANCIAL SERVICES OMBUDSMAN UNREP MCGOVERN 20.12.2011 2011/11/2670 2011 IEHC 483

WALSH & ORS v FINANCIAL SERVICES OMBUDSMAN UNREP HEDIGAN 27.6.2012 2012/46/13729 2012 IEHC 258

GALVIN v CHIEF APPEALS OFFICER & MIN FOR SOCIAL WELFARE 1997 3 IR 240 1998/7/1929 1997 IEHC 218

CENTRAL BANK 1989 S117

Mortgage – Complaint against mortgage lender – Appeal against findings of Financial Services Ombudsman – Personal injury - Compensation

Facts: The case involved an appeal against the findings of the Financial Services Ombudsman regarding a complaint made by the appellant against her mortgage lender “EBS”, which she claimed had resulted in her suffering ill-health.

O”Malley J held that the test to be applied was whether the appellant had demonstrated a serious or significant error in the findings of the respondent, Ulster Bank Investments v. Financial Services Ombudsman [2006] IEHC 323 applied.

The appellant contended that the respondent had failed to follow appropriate guidelines as provided by the Consumer Protection Code 2006. The court held that although it was desirable to make a reference to the code in its determinations, the respondent was not required to do so as he perceived the appellant to be giving instructions and not seeking advice.

The alleged failure of the respondent to consider all aspects of the mortgage account was rejected, he was entitled to select and determine issues he deemed relevant; he was only obliged to give a “broad gist” of his reasons.

The respondent did not err in not granting an oral hearing, no dispute arose which would require it and it was within his jurisdiction to refuse.

There was no obligation on the respondent to award compensation; it was one of a wide range of options when considering redress.

To be satisfied of the cause of illness the respondent was not obliged to call for evidence from professionals; failure to do so did not affect the validity of the decision.

The respondent was entitled to his make his finding; he did not err in an identifiably serious or significant manner in reaching the conclusion as to compensation.

1 Judgment of Ms. justice Iseult O'Malley delivered the 26th of April, 2013

Introduction

2 1. This appeal relates to the findings made by the respondent in relation to a complaint made by the appellant arising out of her dealings with her mortgage lender, the notice party ("EBS"). The history of the complaint began in early 2008, when the appellant requested a temporary switch to an interest-only mortgage. As a result of the changes made her mortgage protection policy was cancelled and her interest rate and insurance premium increased. The appellant fell into arrears and suffered the stress of worrying that she would lose her home over a sustained period of time. She developed health problems that she believes to have been a direct result of EBS's mismanagement of her affairs.

3 2. The complaint to the respondent was made on the 9 ^th June, 2010. The respondent's first finding was issued on the 18 ^th July, 2011. In it he found partly in favour of the appellant, in that he considered that EBS had failed to provide a proper level of service to her for the period of September 2008 to April 2010. However, he refused to find that EBS failed to advise her properly in relation to her original request.

4 3. Submissions were then invited as to the appropriate redress having regard to that part of the complaint that had been upheld. The appellant claimed a figure of over €580,000 for losses to date and a figure of over €250,000 for losses into the future. She also claimed general damages. A supplementary finding issued on the 27 ^th March, 2012 in which the respondent directed EBS to make amendments to her account with the effect of reducing the arrears balance by €4,142.36 and to pay her the sum of €2,500 in compensation for the distress and loss caused to her.

5 4. The appellant's grounds of appeal as set out in the Summons are that the respondent did not consider all aspects of her complaint; failed to hold EBS properly accountable having regard to the Consumer Protection Act 2007 and the Consumer Protection Code; wrongly decided not to have an oral hearing; failed to identify and investigate a dispute of fact; failed to operate within his own advertised time-scale; inaccurately assessed matters relating to the appellant's health; failed to provide appropriate guidelines in relation to the claim for loss and damage despite a request therefor and failed to award appropriate damages.

6 5. The respondent's case is that his findings were made within jurisdiction and in the manner contemplated by the Act; that any error made was not significant or serious and was within jurisdiction; and that the decision not to hold an oral hearing was a lawful exercise of his discretion.

7 6. The notice party entered an appearance but did not participate in this hearing. There is no appeal against that part of the finding which was in favour of the appellant.

Background

8 7. The appellant, who is an architect, had a tracker mortgage and a top-up loan with EBS. She was made redundant from her position in a small architectural practice in Dublin at the end of February, 2008. She contacted EBS by telephone to ask for an appointment, with a view to requesting a switch to an interest only mortgage, and was advised to put her request in writing. She did so, by letter dated the 6 ^thMarch, 2008, in the following terms:-

"Re: Mortgage Loan Account Nos. 50046703 & 51475658 "

9 I would like to change the status of the above loans from Repayment & Interest to Interest Only, for a period initially of 12 months. I am currently exploring career advancement opportunities outside the Dublin area (principally in Cork or Galway) and would propose letting the above property during this time.

10 Changing the loan account to an Interest Only option would reduce the monthly loan payments to a level that would easily be covered by rental income. I have consulted my local branch and my understanding is that the monthly expenditure for the mortgage & insurance policies would reduce from approx. €2286.90 to approx. €1866.00.

11 I have also consulted a number of local auctioneers who confirmed that a monthly rental income of approx. €2000.00 would be achievable on the property. In the event of an increase in interest rates, I would foresee no difficulty in supplementing the rental income from my salary, as my own living expenses will be dramatically reduced. I would be obliged if you could give this proposal due consideration and will be happy to address any further queries you may have."

12 8. The appellant did not mention the fact that she had become unemployed, because, she says, she had two job offers at the time and was confident of getting employment - hence the reference to her salary.

13 9. On the 13 ^th March, 2008 EBS responded in a letter headed "Re: Conversion of account 50046703 to a residential investment property loan with interest only payments & conversion of account 5147658 to interest only payment". The letter set out, as follows, a list of matters that "required attention" before the requested changes could be made.

14 (1) "Tracker rates are not applicable to Residential investment property loans. We will require your agreement to convert your loan to our commercial base rate index (currently 5.25%).

15 (2) You will need to amend your property insurance to Buy to Let Cover as you may not be properly covered now that the property is rented to tenants.

16 (3) The term on the above loan is 35 years. The maximum loan term allowable on a residential investment property is 30 years. Please forward your written agreement to reducing the term of this loan.

17 (4) When the account converts to interest only payments, the loan balance will remain static whilst the life cover will reduce over the term of the loan, potentially leaving a shortfall in your life cover. We require written confirmation that you are aware of this and wish to proceed on this basis. (See the attached waiver).

18 (5) We require updated address ID for your new home. A copy of a current utility bill is suitable for this purpose.

19 (6) Payment protection insurance is not required for investment properties. Please forward a written request to cancel this cover.

20 (7) Please be advised that you should contact the Revenue Commissioner to remove the Tax Relief at Source you are currently receiving on this loan. TRS is not applicable to investment properties."

21 10. On the 3 ^rd April, 2008 the appellant wrote to confirm the following:-

"Re: Conversion of...