Hooper Dolan Financial Ltd v Financial Services Ombudsman and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice John MacMenamin
• Judgment Date: 15 April 2011
• Neutral Citation: [2011] IEHC 296
• Court: High Court
• Date: 15 April 2011

[2011] IEHC 296

THE HIGH COURT

[No. 1298 J.R./2009]

Hooper Dolan Financial Ltd v Financial Services Ombudsman & Ors

BETWEEN

HOOPER DOLAN FINANCIAL LIMITED

APPLICANT

AND

FINANCIAL SERVICES OMBUDSMAN, FINANCIAL SERVICES OMBUDSMAN COUNCIL, IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

AND

ABBEYLEIX CREDIT UNION LIMITED

NOTICE PARTY

1 JUDGMENT of Mr. Justice John MacMenamin delivered on 15th day of April, 2011

2 1. On 30 ^th June, 2009, the first named respondent ("the Ombudsman") made a finding in relation to a complaint made by the notice party herein. That finding was adverse to the applicant company ("Hooper Dolan") which now challenges that finding by way of judicial review. It is claimed the finding was ultra vires the powers of the Ombudsman. However, this is by no means the only question for consideration in this complex case. The issues include whether Hooper Dolan (i) has debarred itself from seeking judicial review by delay, estoppel, waiver or acquiescence; (ii) engaged in nondisclosure, or abuse of process, such as would justify the Court in declining relief by way of judicial review; (iii) has lost locus standi by reason of its failure to raise issues as to jurisdiction either prior to, or during, the decision making process. The decision, and consequent order to be made, also require consideration as to whether the Ombudsman misapplied the Central Bank Act 1942 (Financial Services Ombudsman Council) Regulations 2005 ( S.I. No. 190 of 2005) ("the Regulations"); whether those Regulations were an ultra vires exercise of the power delegated to the second named respondent ("the Council"); and whether certain provisions of the Central Bank Act 1942 are invalid as an unlawful delegation of the powers of the Oireachtas, having regard to Article 15.2 of the Constitution of Ireland. Further questions arise as to whether those impugned provisions exceed the boundaries of the "principles and policies" test, or are constitutionally invalid by reason of retrospectivity.

3 2. Hooper Dolan has also brought an appeal against the impugned decision. It has been decided that the Court should deal with the judicial review first.

4 3. As a preface to what follows, it will be convenient briefly to outline the legislative framework. The Central Bank and Financial Services Authority Act 2004 substantially amended the Central Bank Act 1942, inter alia, by the insertion of a new part, Part VIIB. The purpose of this new part was to reconstitute the position of the Ombudsman and to extend the functional range of that office. All references in this judgment to "the Act" or "the Act of 1942" are to the Central Bank Act 1942, as amended by the Act of 2004.

5 4. The objects of the new part, Part VIIB, are specifically identified in s. 57BB of the Act as follows:-

6 a "(a) to establish the Financial Services Ombudsman as an independent officer -

7 (i) to investigate, mediate and adjudicate complaints made in accordance with this Part about the conduct of regulated financial service providers involving the provision of a financial service, an offer to provide such a service or a failure or refusal to provide such a service, and

8 (ii) to exercise such other jurisdiction as is conferred on the Financial Services Ombudsman by this Part;

9 (b) to ensure that the Financial Services Ombudsman and the staff of the Financial Services Ombudsman's Bureau are accessible and that complaints about the conduct of regulated financial service providers are dealt with efficiently and effectively and are adjudicated fairly;

10 (c) to enable such complaints to be dealt with in an informal and expeditious manner;

11 (d) to improve public understanding of issues related to complaints against regulated financial service providers and related consumer protection matters."

12 5. The Council was established under s. 57BC of the Act of 1942. Among its functions, there ascribed, are the appointment of the Ombudsman (ss. 57BD(1) and 57BJ) and the making of regulations under section. 57BF..

13 6. Section 57BF(1) provides:-

14 2 "(1) The Council shall make regulations for or with respect to matters -

15 (a) that are, by this Part, required or permitted to be prescribed, or

16 a (b)that are necessary or convenient to be prescribed for the purpose of enabling the Financial Services Ombudsman to perform the functions imposed, and to exercise the powers conferred, on that Ombudsman by this Part.

17 (2) In particular, a regulation under subsection (1) may do any of the following:-

18 (a) prescribe matters that the Financial Services Ombudsman must take into account when investigating or adjudicating a complaint;

19 (b) prescribe procedures to be followed in processing a complaint;

20 (c) specify circumstances in which the Financial Services Ombudsman can dismiss a complaint without considering its merits…"

21 7. The principal functions of the Ombudsman, as identified in Part VIIB, are to deal with the complaints made to him by mediation, or, where necessary, by investigation and adjudication (section 57BK(1)). Under s. 57BX(1)(a) of the Act, an "eligible consumer" may complain to the Ombudsman as to the conduct of a regulated financial service provider in relation to financial services provided by such provider.

22 8. Section 57BY(1) of the Act is pivotal to this case. It deals with jurisdiction. It provides:-

"The Financial Services Ombudsman shall investigate a complaint if satisfied that the complaint is within the jurisdiction of the Financial Services Ombudsman." [Emphasis added]

23 9. Thus a statutory duty to be "satisfied" as to jurisdiction devolves on the Ombudsman or the official deputised to carry out this function. This is a mandatory provision in its terms and makes the consideration of jurisdiction a sine qua non to what follows. The term "satisfied" is an objective term. It connotes reaching a conclusion having considered the relevant background facts, evidence, and law as to jurisdiction.

24 10. There are a number of definitions contained within the Act which are also relevant. The definition of "eligible consumer" in s. 57BA requires first, a consideration of the definition of the term "consumer". The Act of 1942, at the time of its amendment by the Act of 2004, provided as follows:-

"consumer means -"

25 (a) a natural person when not acting in the course of, or in connection with, carrying on a business, or

26 (b) a person, or group of persons, of a class prescribed by Council regulations."

27 11. The term "eligible consumer" was defined as follows under s. 57BA:-

"eligible consumer', in relation to a regulated financial service provider, means a consumer -"

(a) who is a customer of the financial service provider, or

(b) to whom the financial service provider has offered to provide a financial service, or

(c) who has sought the provision of a financial service from the financial service provider…"

28 12. But in 2005, the Council made regulations reliant on its power to do so under para. (b) of the definition of "consumer" in s. 57BA of the Act, as cited above. That paragraph empowered the Council to prescribe a person or group of persons as a "class" of consumer. The effect of this was to thereby prescribe a broader "class" of persons who might avail of the services of the Ombudsman as "eligible consumers". Thus "consumer" was broadened so as to be:-

29 a "a. A person or group of persons, but not an incorporated body with an annual turnover in excess of 3 million euro. For the avoidance of doubt a group of persons includes partnerships and other incorporated bodies such as clubs, charities and trusts, not consisting entirely of bodies corporate, and

30 b b. incorporated bodies having an annual turnover of 3 million euro or less in the financial year prior to [the] year in which the complaint is made to the Ombudsman (provided that such body shall not be a member of a group of companies having a combined turnover greater than the said 3 million euro)."

31 13. These are, consequently, the designated categories of person or entities who may now make a complaint. Hooper Dolan challenges this categorisation as being an effective and constitutionally impermissible "amendment" of the Act of 1942.

32 14. With this framework in mind, I turn now to the factual background. The events in question entirely predate the appointment of the present Ombudsman, Mr. William Prasifka, who has, however, sworn a replying affidavit in which he sets out background events within his knowledge.

Factual Background

33 15. Hooper Dolan is a company incorporated in the State with limited liability. It carries on business as an investment product intermediary. Its activities are supervised by the Financial Regulator.

34 16. The notice party herein ("the Credit Union") is itself a financial service provider, as defined. From the year 2004 onwards, Hooper Dolan provided the Credit Union with investment and advisory services in respect of its surplus funds. To this end, Hooper Dolan identified investment opportunities offered by stockbrokers. It then acted as an intermediary in executing orders for investments made by the Credit Union. Hooper Dolan says that it understood the Credit Union to be a sophisticated investor in that it was responsible for, and managed, an investment portfolio of approximately €3.6 million. In an affidavit sworn for the purposes of the appeal brought contemporaneously with this review, John O'Byrne, a director of Hooper Dolan, specifically deposes that his firm was aware of the extent of the funds managed by the Credit Union because it had conducted a review of the Credit Union's portfolio of investments.

35 17. It is necessary to trace what follows chronologically, as time considerations are relevant both to...