J & E Davy v Financial Services Ombudsman and Others

JurisdictionIreland
JudgeMr Justice Finnegan
Judgment Date12 May 2010
Neutral Citation[2010] IESC 30
Date12 May 2010
CourtSupreme Court
Docket Number[S.C. Nos.
J & E Davy t/a Davy v Financial Services Ombudsman

BETWEEN

J & E DAVY TRADING AS DAVY
APPLICANT/RESPONDENT

and

FINANCIAL SERVICES OMBUDSMAN
RESPONDENT/APPELLANT

and

ENFIELD CREDIT UNION
NOTICE PARTY

[2010] IESC 30

Murray C.J.

Denham J.

Hardiman J.

Geoghegan J.

Finnegan J.

Appeal No. 311 AND 332 OF 2008

THE SUPREME COURT

BANKING

Financial Services Ombudsman

Quasi judicial hearing - Procedures - Oral hearing - Whether oral hearing necessary when deciding complaints - Whether applicant entitled to discovery - Whether Financial Services Ombudsman should attempt to engage parties in mediation before proceeding to investigate and adjudicate case - Whether breach of fair procedures - Galvin v Chief Appeals Officer [1997] 3 IR 240, State (Boyle) v General Medical Services (Payments) Board [1981] ILRM 14, McCormack v Garda Síochána Complaints Board [1997] 2 ILRM 321, State (Elm Developments Ltd) v An Bórd Pleanála [1981] ILRM 108 and Monaghan UDC v Alf-a-Bet Promotions Limited [1980] ILRM 64 considered - Central Bank Act 1942 (No 22), Part VIIB - Central Bank and Financial Services Authority of Ireland Act 2004 (No 21), s 16 - Respondent's appeal allowed in part (311 & 332/2008 - SC - 12/5/2010) [2010] IESC 30

J & E Davy v Financial Services Ombudsman

Facts: The Ombudsman directed Davy to inter alia pay the Credit Union €500,000 in exchange for the bonds, to refund the credit Union all fees and commission paid on foot of advices given as to certain transactions resulting in a complaint to the Ombudsman. Davy appealed to the High Court pursuant to s. 57 CL of the Central Bank and Financial Services Authority of Ireland Act 2004 and inter alia instituted judicial review proceedings. The decision was challenged on the basis inter alia that the Ombudsman did not conduct his required tasks pursuant to s. 57CA of the Act, that the procedures adopted by the Ombudsman were unfair, that he impermissibly relied on knowledge and experience in the dealing with the complaint and prejudged the complaint. The High Court concluded that the two-stage procedure adopted by the Ombudsman to deal with the complaint involving the delegation of the task was impermissible. The High Court held that the provision of documents to Davy had been unfair and granted an order of certiorari as to the Decision and remitted the matter to the Ombudsman. The Ombudsman appealed the judgment and order of the High Court and alleged that the trial judge erred in law and fact or on a mixed question of law and fact. The Supreme Court thus considered inter alia the two-stage procedure adopted by the Ombudsman, the fairness of the procedure employed as to the disclosure of documents and the reliance by the Ombudsman on his knowledge and experience.

Held by the Supreme Court per Finnegan J. (Murray CJ, Denham, Hardiman, Geoghegan JJ. concurring), that it was desirable that grounds would be stipulated in a decision and the Court would exercise its discretion accordingly, so as to allow the appeal of the Ombudsman on that grounds. There was no acquiescence by Davy and estoppel and waiver had no relevance. The appeal of the Ombudsman would be dismissed on this ground. The Court was anxious not to restrict the Ombudsman in the procedures which he adopted and it was not appropriate for the trial judge to make suggestions as to procedures. The Ombudsman had discretion such to the requirements of the Act and the requirements of fairness and to adopt procedures. The appeal of the Ombudsman on the two-stage procedure and his reliance on his knowledge and experience would be allowed. On the remaining issues as to fair procedures, failure to specific statutory grounds and the miscellaneous issues raised by the Ombudsman, the appeal would be dismissed. On the issue of mediation, while Davy succeeded on the legal issue in the exercise of the discretion of the court, the relief sought would be refused. The issue of the absence of regulations and the finding that the Ombudsman carried out his functions with a high level of skill, the Court would dismiss the appeal.

Reporter: E.F.

CENTRAL BANK ACT 1942 PART VIIB

CENTRAL BANK & FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004 S16

CENTRAL BANK ACT 1942 S57CL

CONSTITUTION ART 34.1

CONSTITUTION ART 37

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S4

CENTRAL BANK ACT 1942 S57BF

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S3

CENTRAL BANK ACT 1942 S57CI(2)

CENTRAL BANK ACT 1942 S57CA

CENTRAL BANK ACT 1942 (FINANCIAL SERVICES OMBUDSMAN COUNCIL) REGS 2005 SI 190/2005

CENTRAL BANK ACT 1942 S57BB(C)

CENTRAL BANK ACT 1942 S57CA(1)

CENTRAL BANK ACT 1942 S57CA(2)

CENTRAL BANK ACT 1942 S57CA(4)

CENTRAL BANK ACT 1942 S57BK(1)

CENTRAL BANK ACT 1942 S57BL(6)

CENTRAL BANK ACT 1942 S57BK(2)

CENTRAL BANK ACT 1942 S57BX(8)

CENTRAL BANK ACT 1942 S57CE

CENTRAL BANK ACT 1942 S57BK(4)

NATIONAL MATERNITY HOSPITAL v INFORMATION CMSR 2007 3 IR 643 2007/44/9268 2007 IEHC 113

CENTRAL BANK ACT 1942 S57BB

CENTRAL BANK ACT 1942 S57BF(1)

CENTRAL BANK ACT 1942 S57BL(5)

CENTRAL BANK ACT 1942 S57BX(1)

CENTRAL BANK ACT 1942 S57BY(1)

CENTRAL BANK ACT 1942 S57BZ(2)

CENTRAL BANK ACT 1942 S57CB

CENTRAL BANK ACT 1942 S57CC

CENTRAL BANK ACT 1942 S57CD

CENTRAL BANK ACT 1942 S57CI

CENTRAL BANK ACT 1942 S57CA

MONAGHAN URBAN DISTRICT COUNCIL v ALF-A-BET PROMOTIONS LTD 1980 ILRM 64 1980/7/1341

ELM DEVELOPMENTS LTD, STATE v BORD PLEANALA 1981 ILRM 108 1981/4/533

CENTRAL BANK ACT 1942 S57BB(A)

CENTRAL BANK ACT 1942 S57BF

CENTRAL BANK ACT 1942 S57BF(2)

SHEEHAN, STATE v GOVT OF IRELAND 1987 IR 550 1986/8/1751

CENTRAL BANK ACT 1942 S57BF(2)(B)

CENTRAL BANK ACT 1942 S57BF(1)(B)

R (HEATHER MOORE & EDGECOMB LTD) v FINANCIAL OMBUDSMAN SERVICE) 2008 BUS LR 1486 2008 EWCA CIV 642

ENVIRONMENTAL PROTECTION AGENCY ACT 1992 S87

PROTECTION OF THE ENVIRONMENT ACT 2003 S15

O'NEILL & BOVA GENETICS LTD v IRISH HEREFORD BREED SOCIETY LTD 1992 1 IR 431 1991 ILRM 612 1991/5/1177

CENTRAL BANK ACT 1942 S57BK

CONSTITUTION ART 40.3

CENTRAL BANK ACT 1942 S57CE(1)

CENTRAL BANK ACT 1942 S57CE(4)

CENTRAL BANK ACT 1942 S57CE(5)

FLANAGAN v UNIVERSITY COLLEGE DUBLIN 1988 IR 724 1989 ILRM 469 1988/8/2214

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

N, A SOLICITOR, IN RE UNREP FINLAY 30.6.1980 1980/8/1514

CENTRAL BANK ACT 1942 S57BZ(3)

O'CALLAGHAN v JUDGE MAHON & ORS 2006 2 IR 32

CENTRAL BANK ACT 1942 S57BI

CENTRAL BANK ACT 1942 S57BK

FAULKNER v MIN FOR INDUSTRY 1997 8 ELR 107 1997/3/953

CENTRAL BANK ACT 1942 S57CI(3)

R v NORTHUMBERLAND COMPENSATION APPEAL TRIBUNAL, EX PARTE SHAW 1951 1 KB 711 1951 1 AER 268

R v NORTHUMBERLAND COMPENSATION APPEAL TRIBUNAL, EX PARTE SHAW 1952 1 KB 338 1952 1 AER 122

BANNON v EMPLOYMENT APPEALS TRIBUNAL 1993 1 IR 500 1992/10/3110

CENTRAL BANK ACT 1942 S57CI(2)(A)

CENTRAL BANK ACT 1942 S57CI(2)(B)

CENTRAL BANK ACT 1942 S57CI(2)(C)

CENTRAL BANK ACT 1942 S57CI(2)(D)

CENTRAL BANK ACT 1942 S57CI(2)(E)

CENTRAL BANK ACT 1942 S57CI(2)(F)

CENTRAL BANK ACT 1942 S57CI(2)(G)

MCCORMACK v GARDA SIOCHANA COMPLAINTS BOARD & ANOR 1997 2 IR 489 1997 2 ILRM 321 1997/4/1431

MAGUIRE & ORS v ARDAGH & ORS (OIREACHTAS JOINT COMMITTEE ON JUSTICE) [ABBEYLARA CASE] 2002 1 IR 385 2001/14/3995

BORGES v FITNESS TO PRACTICE COMMITTEE OF THE MEDICAL COUNCIL & MEDICAL COUNCIL 2004 1 IR 103 2004 2 ILRM 81 2004/5/962 2004 IESC 9

YOUELL & ORS v BLAND WELCH & CO LTD & ORS (NO 2) 1990 2 LLOYDS 431

RICHARD F GALLAGHER SHATTER & CO, STATE v DE VALERA (TAXING MASTER) 1986 ILRM 3 1984/7/2212

1

Judgment of Mr Justice Finnegan delivered on the 12th day of May 2010

2

Finnegan [nem diss]

3

The applicant (hereinafter "Davy") is a stockbroker. The respondent is the Financial Services Ombudsman (hereinafter "the Ombudsman") appointed under the Central Bank Act 1942 Part VIIB(as inserted by section 16 of the Central Bank and Financial Services Authority of Ireland Act 2004) (hereinafter "the Act"). The notice party (hereinafter "the Credit Union") is a company incorporated with limited liability and operates as a Credit Union in the vicinity of Enfield, Co. Meath. At all material times the Credit Union was a client of Davy. The Credit Union took no part in the proceedings.

4

On the 22 nd August 2007 the Credit Union made a complaint against Davy to the Ombudsman concerning the investment by the Credit Union in three perpetual bonds issued by three banks, Nordea Bank, Jyske Bank and Oko Bank (hereinafter "the Bonds"). The Bonds in each case are perpetual subrogated Bonds which are unlikely to be redeemed by the issuer. It is not suggested that the issuing banks are other than stable. The market value of the Bonds had been subject to a significant decline. On 5 th November 2007 the Deputy Ombudsman issued a report which upheld the complaint of the Credit Union and made certain directions. Further submissions were made by Davy and the Credit Union on this report. On the 21 st January 2008 the Ombudsman issued a Final Decision ("the Decision") in which he found that the complaint made by the Credit Union was substantiated. He directed Davy:-

5

(i) to pay the Credit Union the sum of €500,000 in exchange for the bonds;

6

(ii) to refund the Credit Union all fees and commissions paid by it in relation to the purchase of the bonds;

7

(iii) to complete these transactions or on before the 22 nd February 2008.

8

Arising out of the foregoing Davy took the following steps:-

9

(i) It appealed to the High Court pursuant to section 57CL of the Act.

10

(ii) It instituted plenary proceedings challenging the constitutionality of the Act. In short Davy claims that the Ombudsman not being a judge appointed under Article 34.1 of the Constitution in exercising...

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