Koczan v Financial Services Ombudsman

JurisdictionIreland
JudgeMr. Justice Hogan
Judgment Date01 November 2010
Neutral Citation[2010] IEHC 407
CourtHigh Court
Date01 November 2010
Koczan v Financial Services Ombudsman
IN THE MATTER OF SECTION 57CL OF THE CENTRAL BANK ACT 1942 (AS INSERTED BY SECTION 16 OF THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004)
BETWEEN/
GRZEGORZ KOCZAN
APPELLANT

AND

FINANCIAL SERVICES OMBUDSMAN
RESPONDENT

[2010] IEHC 407

[No. 93 MCA/2010]

THE HIGH COURT

INSURANCE

Contract

Financial Services Ombudsman - Appeal of decision to High Court- Critical illness cover - Absence from work due to serious back injury - Whether injury covered by critical illness cover policy -Whether delay in processing of claim payment under policy - Lapsed policy due to non payment of premiums - Whether appellant given fair warning by terms of policy that policy would lapse if payments were not maintained even after triggering event of injury - Whether Ombudsman failed to consider all circumstances of appellant's written claim - Whether policy term was unreasonable, unjust, oppressive or improperly discriminatory in its application to appellant - Whether Financial Services Ombudsman failed to have regard to material considerations of appellant's complaint - Whether decision reached was vitiated by serious and significant errors - Whether statutory appeal or separate judicial review proceedings appropriate - Square Capital Ltd v Financial Services Ombudsman [2009] IEHC 467 (Unrep, McMahon J, 27/8/2009); Dunne v Minister for Fisheries and Forest [1984] IR 230; Teahan v Minister for Communications (No 1) [2008] IEHC 194 (Unrep, Laffoy J. 18/6/2008) and Ulster Bank Investment Funds Ltd v Financial Services Ombudsman [2006] IEHC 323 (Unrep, Finnegan J, 1/11/2006 considered - Central Bank Act 1942 (No 22), ss 57BK(4), 57CI(2), 57CL- Central Bank and Financial Services Authority of Ireland Act 2004 (No 21) - Part appeal allowed and remitted (2010/93MCA - Hogan J - 1/11/2010) [2010] IEHC 407

Koczan v Financial Services Ombudsman

Facts: The appellant sustained a serious injury in the course of his employment in July 2006 and he had taken out a life assurance policy earlier on. The company alleged that the policy had lapsed, as the last payment was made in September 1, 2006. The dispute was referred to the Ombudsman, who had dismissed the complaint and from this decision the appellant sought to appeal to the High Court. The substantive appeal related to conclusion made as to absence from work benefits. The appellant claimed that the Ombudsman had not considered all circumstances explained by the appellant. The jurisdiction of the High Court was provided pursuant to s. 57CL(1) of the Central Bank Act 1942, as inserted by s. 16 Central Bank and Financial Services Authority of Ireland Act 2004. The question of the appeal process and the mechanism of judicial review were also canvassed by the appellant. The appellant contended that the policy did not disclose that it was essential to ensure that payments were made continually even after incapacitation at work for coverage to follow.

Held by Hogan J. that the Court was coerced to the conclusion that the decision of the Ombudsman was vitiated by two serious and significant errors in that (a) she accepted the company's assertions regarding the lapsing of the policy at face value without subjecting it to analysis and (b) she did not examine whether such terms were or might be unjust, unreasonable or oppressive within the meaning of s. 57Cl(2). Had the applicant elected to proceed by judicial review, he would have succeeded on the ground that the Ombudsman had failed to have regard to material considerations in arriving at her decision. The conclusion of the Ombudsman as to critical illness and delay would stand affirmed, while as to the decision related to the absence from work benefits, the Court would allow the appeal. The Court would set aside the findings of the Ombudsman in accordance with s. 57CM(2)(b) and the Court would redirect that she review and re-examine the complaint relating to absence from work benefits.

Reporter: E.F.

CENTRAL BANK ACT 1942 S57BB

CENTRAL BANK & FINANCIAL SERVICES AUTHORITY IRELAND ACT 2004 S16

CENTRAL BANK ACT 1942 S57BK(4)

CENTRAL BANK ACT 1942 S57CI (2)

CENTRAL BANK ACT 1942 S57CL

CENTRAL BANK ACT 1942 S57CI(2)(C )

CENTRAL BANK ACT 1942 S57CL(I)

CENTRAL BANK ACT 1942 S57CM

SQUARE CAPITAL LTD v FINANCIAL SERVICES OMBUDSMAN UNREP MCMAHON 27.8.2009 2009/53/13449 2009 IEHC 407

CENTRAL BANK ACT 1942 S57BB(A)(I)

CONSTITUTION ART 34.3.2

M (S) v IRELAND & AG 2007 3 IR 283 2007 IESC 11

DUNNE v MIN FOR FISHERIES 1984 IR 230

TEAHAN v MIN FOR COMMUNICATIONS UNREP LAFFOY 18.6.2008 2008/60/12436 2008 IEHC 194

O'REILLY v MACKMAN 1983 2 AC 237

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

CENTRAL BANK ACT 1942 S57CM(2)(A)

CENTRAL BANK ACT 1942 S57CM(2)(B)

CENTRAL BANK ACT 1942 S57CM(2)(C)

1

JUDGMENT of Mr. Justice Hogan delivered on November 1, 2010

2

1. The complexities of modern financial products, coupled with obvious information asymmetries which have clear implications for consumer welfare, clearly demonstrate the necessity for robust regulation of the conduct of financial service providers. To this end the Oireachtas has provided for the office of the Financial Services Ombudsman ("the Ombudsman") with extensive regulatory and supervisory functions. The Ombudsman is enjoined by s. 57BB of the Central Bank Act 1942 (as inserted by s. 16 of the Central Bank and Financial Services Authority of Ireland Act 2004) to deal with consumer complaints in an informal and expeditious manner. Section 57BK(4) further provides that the Ombudsman is entitled:-

"to perform the functions imposed, and exercise the powers conferred, by this Act free from interference by any other person and, when dealing with a particular complaint, is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without regard to technicality or legal form."

3

2. The Ombudsman's task, therefore, runs well beyond that of the resolution of contract disputes in the manner traditionally performed by the courts. It is clear from the terms of s. 57BK(4) that the Ombudsman must, utilising his or her specialist skill and expertise, resolve such complaints according to wider conceptions of et aequo et bono which go beyond the traditional limitations of the law of contract. This is further reflected by the terms of s. 57CI(2) which provide that:-

4

2 "(2) A complaint may be found to be substantiated or partly substantiated only on one or more of the following grounds:

5

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

6

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

7

(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;

8

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

9

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

10

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

11

(g) the conduct complained of was otherwise improper."

12

3. This forms the background to the present appeal to this Court pursuant to the provisions of s. 57CL of the 1942 Act. The appellant, Grzegorz Koczan, who is originally from Poland, was employed as an operative with Kerry Foods. It is not in dispute but that, unfortunately, he sustained a serious injury to his back in the course of his employment on 31 st July, 2006. The effect of the injury has been to incapacitate him, at least to the point whereby he is now only fit for light work. Some months previously in December, 2005 Mr. Koczan had taken out a life assurance and critical illness policy with Bank of Ireland Life ("the company"). The policy was designed to be a twenty year policy with an initial premium of €52.49 per month and it contained provisions designed to compensate employees for their absence from work.

13

4. In the wake of this accident, Mr. Koczan not unnaturally made a claim in respect of this policy. However, the last payment paid on the policy was on September 1, 2006 and the company contended that, as a result, the policy had lapsed. By letter dated May 13, 2009 the Bank did, however, offer Mr. Koczan the sum of €825, based on a figure of €165 per week. Under the policy, no sums were payable under the first four weeks of absence from work, so that the entitlements were confined to the four weeks of September 2006.

14

5. Mr. Koczan referred this matter to the Ombudsman, but the complaint was dismissed by a decision of the Acting Deputy Financial Services Ombudsman on 10 th February, 2010. Mr. Koczan has in turn appealed this decision to this Court. I was informed during the course of the hearing that the company had elected not to take part in these proceedings.

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6. Two matters raised in the appeal can be dealt with shortly. Mr. Koczan complained that he was denied the benefit of critical illness cover. But it is absolutely plain that from the terms of the policy that the critical illness cover was confined to a specified list of serious illnesses such as blindness, health attack and cancer. As the Ombudsman pointed out in her decision, back injuries - however serious for the sufferer - simply did not come within the terms of the policy. It follows that this part of the decision must be upheld.

16

7. So far as the issue of delay on the part of company is concerned, I must likewise affirm the ruling of the Ombudsman. There was abundant evidence...

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