Conor O'Donoghue v Financial Services Ombudsman and Another

• Jurisdiction: Ireland
• Judge: Ms Justice Iseult O'Malley
• Judgment Date: 19 November 2014
• Neutral Citation: [2014] IEHC 620
• Court: High Court
• Date: 19 November 2014

[2014] IEHC 620

THE HIGH COURT

Record No. 119 MCA/2012

O'Donoghue v Financial Services Ombudsman & Ors

IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 57 OF THE CENTRAL BANK ACT 1942 (AS INSERTED BY S.16 OF THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004)

Between/

CONOR O'DONOGHUE

Appellant

AND

THE FINANCIAL SERVICES OMBUDSMAN

Respondent

And

RSA GROUP AND BANK OF IRELAND

Notice Parties

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

ORANGE COMMUNICATIONS LTD v DIRECTOR OF TELECOMMUNICATIONS REGULATION & METEOR MOBILE COMMUNICATIONS LTD (NO 2) 2000 4 IR 159 2000/15/5538

J & E DAVY T/A DAVY v FINANCIAL SERVICES OMBUDSMAN 2010 3 IR 324 2010 2 ILRM 305 2010/24/5828 2010 IESC 30

Insurance – Misrepresentation – Findings of fact – Appellant seeking to appeal against the decisions of the respondent – Whether not holding an oral hearing was an error

Facts: The appellant, Mr O”Donoghue, purchased a second house in Limerick as an investment in 2005. As his home was insured through Bank of Ireland Insurance Services (the bank: the second notice party), he went to them in relation to the second house and was sold an insurance policy. The underwriter transpired to be Royal & Sun Alliance (RSA: the first notice party), with the bank acting as intermediary. In November, 2005, this house was broken into and damaged. The appellant”s claim under the insurance policy was not finally dealt with until, in May 2006, the appellant was informed that RSA were voiding the policy on the grounds of misrepresentation. The reason given was that certain declarations purportedly made by the appellant in the proposal form were considered to be false: that it was not left unoccupied for more than two months a year, that it was regularly occupied at night, and that it was occupied solely by the appellant”s family for residential purposes only. The falsity of the declarations was said to lie in the fact that the property had been under renovation and unoccupied since inception date, and that there was no evidence that the premises was furnished for full habitation. The bank then issued a refund of the premium paid by the appellant. The appellant maintained that he gave the correct information to the bank at the time he sought the insurance. In 2011 the appellant complained that RSA had, through the bank, sold him an insurance policy that he could not use. He said that he had assured the bank that it was not his intention to rent the house and that the bank had introduced the purported tenancy into the matter, resulting in his being furnished with a policy which was later voided on the ground of non-occupancy. The appellant also complained that both Bank of Ireland and RSA had ignored their advertised procedures in relation to the processing of his claim. The bank maintained that the proposal, including the reference to the house being tenanted, was based on information provided by the appellant. In 2012, the respondent, the Financial Services Ombudsman, held that he could not see why, if the appellant did not intend to occupy the property, he signed the proposal form which stated that the ‘home’ was not left unoccupied for more than two months a year; was regularly occupied at night and was occupied solely by the appellant or his family for residential use only. The respondent referred to the appellant”s assertion that he had stated that he would not be living in the premises until such time as his SSIA matured and that the house would not be rented out, but found that this was not confirmed by the proposal form signed by the appellant. Hence those parts of the complaints against RSA and the bank were not accepted. The appellant appealed to the High Court against the two decisions of the respondent. In a supplemental affidavit the appellant complained of the fact that the respondent had not held an oral hearing. The respondent submitted that the appellant could not raise the issue of an oral hearing, not having done so earlier.

Held by O”Malley Iseult J that, applying Ulster Bank v Financial Services Ombudsman [2006] IEHC 323, in the circumstances there was a direct conflict on the factual accounts given by the different parties, which could not be resolved purely by reference to the documents in the case, and that the credibility of the appellant was squarely in issue. Given that the appellant was not legally represented and given the respondent”s own obligations to consider an oral hearing in cases of material conflict, O”Malley Iseult J held that the appellant”s failure to ask for one cannot be conclusive. In the circumstances she considered that the respondent erred in not holding an oral hearing.

O”Malley Iseult J held that the decisions of the respondent were vitiated by serious and significant errors and she allowed the appeal.

Appeal allowed.

Introduction

1 This is an appeal against two decisions of the respondent in which the latter partly upheld complaints by the appellant but found against him on the main aspect of those complaints. The issues raised by the case concern findings of fact made by the respondent in the absence of an oral hearing.

2 In 2005 the appellant, who lives in Limerick, purchased a second house in that city as an investment. As his home was insured through Bank of Ireland Insurance Services ("the bank"), he went to them in relation to the second house and was sold an insurance policy. The underwriter transpired to be Royal & Sun Alliance ("RSA"), with the bank acting as intermediary.

3 On the 2 ^nd November, 2005 this house was broken into and damaged. The appellant's claim under the insurance policy was not finally dealt with until, in May 2006, the appellant was informed that RSA were voiding the policy on the grounds of misrepresentation. The reason given was that certain declarations purportedly made by the appellant in the proposal form were considered to be false. The bank then issued a refund of the premium paid by the appellant. The appellant has always maintained that he gave the correct information to the bank at the time he sought the insurance.

The inception of the policy

4 The appellant says that when he approached the bank in April 2005 to discuss taking out an insurance policy he told the bank that he worked night shifts and also that he would not be able to occupy the house until an SSIA account matured. He did not have any intention of letting it, but he says that the bank recommended a policy that would allow him to rent it out if he so wished. He was told that this would be more acceptable to the insurer as the house was unoccupied and he worked nights. A "tenanted property premium" was payable for such a policy and the applicant agreed to this.

5 The appellant says that he was asked to, and did, sign blank documentation that was to be completed later with the details of what had been agreed.

6 The Home Cover Proposal Form, which is dated the 8 ^th April, 2005, states at the top that the questions on it relate to the facts considered material to underwriting the insurance and explains

"A material fact is one which might affect the company's decision to give you insurance … Failure to [disclose a material fact] may invalidate your insurance."

7 In Section A it is noted that cover is required from the 7 ^th April, 2005. The house is described as "tenanted property". Section B gives the number of bedrooms as three and the number of tenants as one.

8 Section C of the proposal form states that the property is not left unoccupied for more than two months a year; is regularly occupied at night and is

"occupied solely by you or your family for residential purposes only and not used for business purposes other than for keeping up to six paying guests, or for the provision of a child minding service for up to 2 children."

9 A declaration that "the above statements" were true and complete bears the signature of the appellant. The signature is undated.

10 On the 7 ^th April, 2005 Bank of Ireland wrote to the appellant giving him a quotation and inviting him to sign the attached proposal form. On the 8 ^th April, 2005 Bank of Ireland Insurance Services wrote to the appellant to confirm that

"your home is now insured with us based on the cover that you requested when you filled out your application".

11 The appellant paid the sum of €315 to Bank of Ireland Home Insurance by way of cheque dated the 14 ^th April, 2005. He also appears to have signed a direct debit form.

12 According to bank records, a check was made on the occupancy of the house with the local Bank of Ireland branch, and it was told that on the 8 ^th April 2005 that the appellant had confirmed that the house was tenanted by a professional person. The appellant has always denied giving any such information and it is common case that the house was never in fact occupied during the relevant time.

The claim

13 On the 17 ^th November, 2005 the appellant wrote to Bank of Ireland Insurance Services to notify them that damage had been caused to the house and that the Gardaí had been informed. This was acknowledged by an undated letter, marked by the appellant as having been received on the 1 ^st December, 2005, which requested him to contact the office at his earliest convenience.

14 The claim was dealt with at a pace which was subsequently found to be inadequate by the respondent. Ultimately, by letter dated the 2 ^nd May, 2006, Royal Sun Alliance informed the appellant that they would not deal with it. It was stated that he had made false declarations about "the Home" to the following effect:

· that it was not left unoccupied for more than two months a year

· that it was regularly occupied at night, and

· that it was "occupied solely by you or your family for residential...