Chubb European Group S.E. v Financial Services and Pensions Ombudsman

JurisdictionIreland
JudgeMr. Justice Garrett Simons
Judgment Date21 February 2023
Neutral Citation[2023] IEHC 74
CourtHigh Court
Docket Number2021 N o. 290 MCA
Between
Chubb European Group S.E.
Appellant
and
Financial Services and Pensions Ombudsman
Respondent
Rappel Enterprises
Trading as Arklow Marine Services
Notice Party

[2023] IEHC 74

2021 N o. 290 MCA

THE HIGH COURT

Insurance – Contractual interpretation – Breach of fair procedures – Appellant appealed from a decision of the respondent dismissing a complaint made by an insured against the appellant – Whether the respondent purported to make findings on the interpretation of the relevant contract of insurance without applying the proper principles of contractual interpretation

Facts: The appellant, Chubb European Group SE, appealed to the High Court from a decision of the respondent, the Financial Services and Pensions Ombudsman. The decision under appeal had been to dismiss a complaint made by an insured against their insurance provider, the appellant. The appellant had been the successful party before the respondent, at least insofar as the formal outcome of the investigation of the complaint against it had been concerned. Notwithstanding that the complaint against it had been dismissed, the appellant nevertheless contended that the respondent’s decision contained a number of findings which were, potentially at least, adverse to it. The decision purported to give an interpretation to a form of policy wording which had been employed in a number of other insurance policies entered into by the appellant. It was also said that the findings in the decision triggered, potentially at least, certain obligations under the Central Bank’s supervisory framework for Covid-19 and business interruption insurance. The respondent submitted that the appeal was inadmissible in circumstances where, or so it was said, the underlying legislation did not allow for what might be described as a “winner’s appeal”.

Held by Simons J that the statutory right of appeal against a decision of the respondent was not confined to an appeal against the overall outcome of the investigation of a complaint but also allowed for an appeal against the grounds for the decision and an appeal against a direction. However, Simons J held that the court had a discretion to dismiss an appeal as frivolous and vexatious, and an appeal by a party, who had been successful on the overall outcome of the investigation of a complaint, may be dismissed if that party was not at least potentially prejudiced by the decision. The appellant pointed to two areas of potential prejudice, namely that the impugned decision might represent a persuasive precedent in other complaints and might trigger the review obligation under the Central Bank’s supervisory framework. Simons J held that the impugned decision was vitiated by serious and significant errors: first, the respondent purported to make findings on the interpretation of the relevant contract of insurance without applying the proper principles of contractual interpretation; secondly, those findings were reached in breach of fair procedures in that the respondent did not properly engage with the various submissions made on behalf of the appellant and/or failed to provide any reasoning for not following those submissions. Simons J held that it would be inappropriate for the court to determine the questions of contractual interpretation de novo. Simons J held that the court would not, therefore, substitute the court’s own findings for those of the respondent; rather, the principal relief to be granted would be an order setting aside the respondent’s decision.

Simons J’s provisional view was that the appropriate order was to set aside the respondent’s decision simpliciter with no order for remittal. Simons J emphasised that this was only a provisional view, and that the parties would be afforded an opportunity to address him on the final form of order.

Appeal allowed.

Appearances

Declan McGrath SC and Christopher Mills for the appellant instructed by Clyde & Co Ireland Solicitors

William Abrahamson SC and Francis Kieran for the respondent instructed by Fieldfisher LLP

JUDGMENT of Mr. Justice Garrett Simons delivered on 21 February 2023

INTRODUCTION
1

This matter comes before the court by way of a statutory appeal from a decision of the Financial Services and Pensions Ombudsman. The decision under appeal had been to dismiss a complaint made by an insured against their insurance provider.

2

The unusual feature of the appeal is that the appellant, the insurance provider, had been the successful party before the Ombudsman, at least insofar as the formal outcome of the investigation of the complaint against it had been concerned. Notwithstanding that the complaint against it has been dismissed, the insurance provider nevertheless contends that the Ombudsman's decision contains a number of findings which are, potentially at least, adverse to it. The decision purports to give an interpretation to a form of policy wording which has been employed in a number of other insurance policies entered into by the insurance provider. It is also said that the findings in the decision trigger, potentially at least, certain obligations under the Central Bank's supervisory framework for Covid-19 and business interruption insurance.

3

The Ombudsman submits that the appeal is inadmissible in circumstances where, or so it is said, the underlying legislation does not allow for what might be described as a “ winner's appeal”. The question of who has standing to bring an appeal is one of the principal issues for determination in this judgment.

OMBUDSMAN'S JURISDICTION
4

The Ombudsman's jurisdiction to consider and determine complaints is created by Part 5 of the Financial Services and Pensions Ombudsman Act 2017 (“ the FSPO Act 2017”). Unless otherwise stated, all references in this judgment to a section of an Act are intended to refer to the FSPO Act 2017.

5

The statutory regime is broadly similar to that which had applied to the financial services ombudsman under the Central Bank Act 1942 (as amended). The latter office has since been dissolved and its functions transferred to the financial services and pensions ombudsman (referred to throughout this judgment as “ the Ombudsman”). The establishment date under the FSPO Act 2017 is 1 January 2018.

6

The Ombudsman's jurisdiction to consider and determine complaints in respect of the conduct of a financial service provider is extensive. The Ombudsman can consider not only complaints made in respect of the provision of a financial service, but can also consider complaints in respect of conduct involving an offer to provide a financial service, or involving the failure to provide a particular financial service requested by the complainant. In such circumstances, the Ombudsman has jurisdiction to uphold the complaint on the grounds, inter alia, that the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant.

7

The Ombudsman's jurisdiction is thus not confined to circumstances where there is a contractual relationship between the financial service provider and the complainant. Indeed, the complaint might be precisely that the financial service provider refused to provide a particular service, with the consequence that no contract was ever entered into between the parties.

8

Section 60(2) of the FSPO Act 2017 provides as follows:

“A complaint may be found to be upheld, substantially upheld or partially upheld only on one or more of the following grounds:

  • (a) the conduct complained of was contrary to law;

  • (b) the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;

  • (c) although the conduct complained of was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;

  • (d) the conduct complained of was based wholly or partly on an improper motive, an irrelevant ground or an irrelevant consideration;

  • (e) the conduct complained of was based wholly or partly on a mistake of law or fact;

  • (f) an explanation for the conduct complained of was not given when it should have been given;

  • (g) the conduct complained of was otherwise improper.”

9

The Ombudsman enjoys what might be described as a hybrid jurisdiction, whereby he may adjudicate not only on contractual disputes, e.g. where a complainant alleges that the conduct of a financial service provider in refusing to honour a claim is in breach of contract, but may also make determinations and direct remedies in respect of conduct which, while not contrary to law, is found by the Ombudsman to be “ unreasonable” or “ unjust”.

10

The breadth of the Ombudsman's jurisdiction has been pithily described as follows by the High Court (Hyland J.) in Danske Bank v. Financial Services and Pensions Ombudsman [2021] IEHC 116 (at paragraph 27):

“Those subsections make it clear that the Ombudsman both has jurisdiction to uphold on grounds involving what I might describe as black letter law issues i.e. contrary to law, or based on a mistake of law but also to uphold on grounds where there has been no breach of law at all, including quite strikingly upholding a complaint where the conduct is in accordance with law, but the Ombudsman holds that the application of that law was detrimental to the complainant. The breadth of the Ombudsman's jurisdiction under s.60(2) cannot be underestimated: he or she is effectively given a jurisdiction to override the law in certain situations, in the sense that although a complainant may have no remedy in law, including under the law of contract, nonetheless they can have their complaint upheld. In other words, a financial service provider can act perfectly lawfully but nonetheless find that a complaint is upheld against it carrying with it an...

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