J and E Davy trading as Davy -v- Financial Services Ombudsman & Ors, [2008] IEHC 64 (2008)

Docket Number:2008 140 JR
Party Name:J and E Davy trading as Davy, Financial Services Ombudsman & Ors
Judge:Kelly J. / Charleton J.

JUDGMENT BY: Kelly J.THE HIGH COURTCOMMERCIAL2008 No. 140 J.R.BETWEENJ. AND E. DAVY TRADING AS DAVY APPLICANTANDFINANCIAL SERVICES OMBUDSMAN, IRELAND AND THE ATTORNEY GENERAL RESPONDENTSANDENFIELD CREDIT UNIONNOTICE PARTY2008 No. 17 MCAANDIN THE MATTER OF AN APPEAL PURSUANT TO SECTION 57 CL OF THE CENTRAL BANK ACT 1942, (AS INSERTED BY SECTION 16 OF THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004) BETWEENJ. AND E. DAVY TRADING AS DAVYAPPELLANTANDFINANCIAL SERVICES OMBUDSMANRESPONDENTANDENFIELD CREDIT UNIONNOTICE PARTYJudgment of Mr. Justice Kelly delivered the 13th day of March, 2008 There are two separate pieces of litigation before the court. They both arise out of a final decision of the Financial Services Ombudsman (the Ombudsman) made on the 21st January, 2008. That decision was in respect of a complaint to the Ombudsman from Enfield Credit Union (Enfield) in respect of three perpetual bank bonds sold to Enfield by the Appellant (Davy).Enfield's complaint alleged, inter alia, that Davy had breached its duty of care to Enfield by, inter alia, failing to make clear that the bonds did not have a fixed maturity date which was alleged to be fundamental to the manner in which Enfield administered its investment portfolio. The complaint also alleged that Davy failed to explain in an adequate way the features of the proposed investment structures and factors likely to influence the market value of the bonds throughout their lifetime.Enfield's complaint was upheld by the Ombudsman. Davy was directed to pay Enfield the sum of 500,000 in exchange for the bonds sold and to refund all fees and commissions paid in relation to the purchase of the bonds. Davy was directed to complete those transactions on or before the 22nd February, 2008 subject of course, to its statutory entitlement to appeal to this court.That appeal is one of the two pieces of litigation before me at present.The other is an application by Davy for judicial review in respect of the Ombudsman's decision. Leave to apply for judicial review was granted ex-parte by O'Neill J. on 8th February, 2008.On the application of the Ombudsman I transferred both pieces of litigation to the Commercial List by orders which I made on 3rd March, 2008.A dispute arose between the parties as to the order in which this litigation ought to be dealt with by the court. The matter was stood over until Friday the 7th March, 2008 to enable instructions to be taken and full argument to be made on the topic. This is my judgment on that issue.There is one matter in respect of which there was agreement. It relates to that part of Davy's judicial review application which seeks to have certain provisions of the Central Bank Act, 1942 as inserted by s. 16 of the Central Bank and Financial Services Authority of Ireland Act, 2004 (the Act) declared to be contrary to the provisions of the Constitution. It was because of this claim that it was necessary to join Ireland and the Attorney General as co-respondents with the Ombudsman in the judicial review proceedings. All parties agree that that claim should not be adjudicated upon until such time as the judicial review application on conventional grounds against the Ombudsman and the appeal under s. 57 CL of the Act are disposed of. Only in the event of Davy being unsuccessful in respect of those two matters will the question of the constitutional validity of the legislation fall to be decided.Davy wish to have the judicial review application heard first while the Ombudsman wishes to have the merits of the matter adjudicated upon by the court. Whether that is done by hearing the appeal under the Act first or concurrently with the judicial review application is left to the discretion of the court. The principal argument for having the merits addressed in this fashion was based on provisions of the Act which it was said require the Ombudsman to adopt a 'merit based' approach.The thrust of Davy's case on judicial review is that there was no legally valid decision made by the Ombudsman. It follows logically that if that be correct then there is no decision from which an appeal can be brought under s. 57 CL of the Act. That being so there is little point in my view in proceeding to entertain the appeal on the merits until such time as the validity of the decision appealed from has been adjudicated upon. In logic, therefore, the judicial review application should proceed first. Only in the event of the court deciding that the Ombudsman's decision is not legally flawed should it proceed to consider an appeal on the merits.I am satisfied that such a course it is not merely recommended by logic but also supported by considerations of cost and time.The judicial review application will be heard on affidavit, will not involve discovery being made and will be heard over a period of a few days. The appeal on the merits on the other hand is, I am told, likely to take of the order of two weeks to be heard, will involve an application for discovery and is likely to require viva voce evidence to be given. It would make little sense to embark upon that procedure either prior to or concurrently with the judicial review application if it should transpire that Davys are correct and that the decision of the Ombudsman is invalid.Whilst I appreciate the desire of the Ombudsman and indeed Enfield to have the court embark upon a consideration of the merits of the case against Davys, such a course could not be justified having regard to the additional cost and expense and public time that would be involved in such an exercise which might ultimately prove to be otiose.If Davy succeed in their judicial review application then the decision of the Ombudsman will be set aside and the court will have to consider remittal of the matter back for consideration in accordance with the law as determined by the court. If Davys are not successful then the court will proceed to hear their appeal on the merits. In either event the merits of the case will not be lost sight of, albeit that their consideration will have to be deferred for a relatively short period of time. I say that because as the judicial review is now being dealt with in the Commercial List it will be possible to have a hearing of the application in a matter of weeks.I therefore adjudge that the judicial review application should proceed to be heard first and I will give appropriate directions to achieve an early hearing of that matter.JUDGMENT BY: Charleton J.Neutral Citation [2008] IEHC 256THE HIGH COURTJUDICIAL REVIEW2008 No. 140 JRBETWEENJ. & E. DAVY TRADING AS DAVYAPPLICANTANDFINANCIAL SERVICES OMBUDSMAN, IRELAND ANDTHE ATTORNEY GENERALRESPONDENTSANDENFIELD CREDIT UNIONNOTICE PARTYJudgment of Mr. Justice Charleton delivered the 30th July, 20081. On 21st January, 2008, the Financial Services Ombudsman ruled that the applicant, a firm of stockbrokers, should buy back from Enfield Credit Union, the notice party, three perpetual bank bonds at their original cost of 500,000. Out of this ruling have sprung three distinct cases before this court. Firstly J. & E. Davy have lodged a notice of appeal to the High Court against the ruling under Part VIIB of the Central Bank Act 1942, as inserted by s.16 of the Central Bank and Financial Services Authority of Ireland Act 2004. That appeal will look at the decision again and, having considered its merits, may either affirm the ruling of the Ombudsman or make a different ruling. Secondly, a constitutional challenge has been launched by J. & E. Davy to the authority of the Financial Services Ombudsman. The claim there is that the Financial Services Ombudsman, in exercising his jurisdiction under the legislation, is fulfilling a judicial function without being a judge under Article 34.1 of the Constitution and is outside the exception of the exercise of limited functions and powers of judicial nature provided for in Article 37 of the Constitution. Finally, judicial review is sought to impugn the decision on the basis that the Financial Services Ombudsman has misconstrued his powers under the statute and has fallen into unconstitutional procedures. It is this last case that I am dealing with in this judgment.Comment2. Having reviewed the papers, and having heard extensive argument from counsel, I am satisfied that the Financial Services Ombudsman, in making the rulings challenged in this review, carried out his function in good faith and with a high level of skill. The judicial review function of the High Court is concerned with examining whether powers exercised by judges of the Circuit and District Court and the Special Criminal Court are exercised within the terms of the authority conferred on them by statute and by the Constitution, whether officials conferred with quasi judicial powers and administrative functions have carried them out within their jurisdiction, whether quasi judicial functions have been exercised on the basis of fair procedures and, finally, whether an exceeding of jurisdiction is to be found by reason of a decision flying in the face of fundamental reason and common sense. Inevitably, in these cases, the argument on each side will tend to touch on the merits and demerits of any particular decision. It is not the function of the High Court, however, on judicial review of a decision to substitute its own view as to the merits of any case. Nor is it the function of the High Court to issue a judgment in such way that will constrain the decision maker in the exercise of a quasi judicial function in the manner in which any discretionary power may be exercised. In referring concisely to the facts, therefore, I am not to be taken as having formed any view as to the merits of the original ruling. This is outside my function.Background3. As I understand it, there are 438 credit unions in Ireland. The notice party is one of them. On its headed note paper it is described as a limited liability company and, I would assume, that other credit...

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