Quinn v Financial Services Ombudsman

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] IEHC 453
• Court: High Court
• Docket Number: 2015 No. 224 MCA
• Date: 29 July 2016

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)

AND IN THE MATTER OF A DETERMINATION OF THE FINANCIAL SERVICES OMBUDSMAN MADE ON 24 JUNE 2015 BEARING

REFERENCE NUMBER 13/78351

BETWEEN

KEVIN QUINN & JOAN QUINN

APPELLANTS

AND

THE FINANCIAL SERVICES OMBUDSMAN

RESPONDENT

AND

ULSTER BANK IRELAND LIMITED

NOTICE PARTY

[2016] IEHC 453

2015 No. 224 MCA

THE HIGH COURT

Banking & Finance – S. 57CL of the Central Bank Act 1942 – Appeal against the decision of the Financial Services Ombudsman – Curial deference

Facts: The appellants had filed an appeal against the order of the respondent for setting aside the part of the order in which it was found that the complaints filed by the appellants were unsubstantiated. The appellants' chief complaint was concerning the high rate of interest being charged by the notice party other than what was mentioned in their mortgage agreements.

Mr. Justice Max Barrett refused to grant the desired reliefs to the appellants. The Court held that there was no procedural flaw or infirmity in the determination of the respondent, which would warrant the court to defer. The Court held that it need not show any curial deference with respect to purely legal questions involved in the decision of the respondent, but at the same time, some degree of curial deference was allowed in relation to the issues of facts. The Court held that it would not intervene in the determination made by an expert administrative body unless it was shown that there existed some form of manifest error in its decision.

JUDGMENT of Mr Justice Max Barrett delivered on 29th July, 2016.

Mr Justice Max Barrett

Part 1

Background

1 Between July and September, 2013, the Financial Services Ombudsman received two complaints from Mr and Mrs Quinn relating to the handling of their six Ulster Bank mortgage accounts. The Quinns complained, amongst other matters, that Ulster Bank was charging them a rate of interest different to that contained in letters of loan offer, dated 6th October, 2008, and that Ulster Bankwas wrongly claiming that the loans were “interest only” for a period of five years only, after which they reverted to capital plus interest.

2 Following receipt of these complaints, an exchange of correspondence took place between the Ombudsman and the Quinns and between the Ombudsman and Ulster Bank. A final response letter of 19th March, 2014, issued from Ulster Bank to the Quinns. Before a decision was made by the Financial Services Ombudsman to investigate the complaint in detail, the parties were invited to consider availing of mediation. The Quinns indicated their willingness to do so. Ulster Bank, however, did not wish for mediation. So the Ombudsman advised that the matter would proceed to investigation and adjudication by his office. Much to-ing and fro-ing followed between the parties before a finding was issued by the Financial Services Ombudsman on 24th June, 2015.

3 The Financial Services Ombudsman considered each of the six mortgage accounts on an individual basis. He also noted at the outset of his finding that any new letters of loan offer superseded previous offers. This had the practical consequence that (later) letters of loan offer which the bank contended were the applicable contractual documentation were preferred by the Financial Services Ombudsman to (earlier) letters of loan offer which the Quinns contended were the applicable contractual documentation. Proceeding by reference to what he considered was the applicable contractual documentation, the Financial Services Ombudsman identified the interest rates arising and concluded that there was no documentation upon which the Quinns could rely in contending, as they did, that their contractual rate was the standard variable rate minus 0.21%. The Ombudsman agreed with the Quinns that the explanations provided to them as to how their interest rate operated had caused confusion and uncertainty. However, he was satisfied that the Quinns had not been charged a higher interest rate than that detailed in their mortgage agreements. He also found that the Quinns had been correctly placed on capital and interest repayments in compliance with their loan agreements. Overall, the Financial Services Ombudsman concluded that there was no reasonable basis upon which to direct the undoing of a contract freely entered into by the Quinns as competent adults. But he was satisfied that Ulster Bank had not afforded a suitable level of customer care to the Quinns and directed Ulster Bank to pay compensation of €3,000 for this failing.

4 By notice of motion dated 15th July, 2015, acting pursuant to s.57CL of the Central Bank Act 1942, the Quinns brought the within appeal seeking (1) an order setting aside that part of the determination of the Financial Services Ombudsman in which he found that the Quinns' complaints were not substantiated, (2) if appropriate, an order under s.57CM of the Act of 1942 remitting the Quinns' complaints to the Ombudsman for further determination and (3) certain ancillary reliefs. When it comes to the interest rate issue, the Quinns complain that given the confusing answers emanating from Ulster Bank as to the calculation of the applicable interest rate, the Financial Services Ombudsman should not have proceeded to a determination without requiring further information of Ulster Bank. The Quinns also complain that there was a want of evidence to support Ulster Bank's assertion as to the applicable interest rate whereas they maintain that there was evidence which undermined the Bank's assertion. When it comes to the interest-only nature of the loans, the Quinns maintain that by finding that the later letters of offer were the applicable letters of offer the Ombudsman effectively re-wrote the agreement that was extant between them and Ulster Bank. They also point in this regard to the fact that, for what it is worth, in their application forms for the loans they requested interest-only loans. The Quinns maintain that the foregoing alleged errors are either errors of principle or constitute significant and material errors of fact such as to negate the findings and conclusions of the Ombudsman and justify the remittal of matters to him for further consideration.

Curial Deference

A. General.

Part 2

Curial Deference

5 Curial deference denotes the paying of respect by the courts on the basis of another's competence. It embraces (i) the paying of respect to the decisions of others by according weight to those decisions, and (ii) a recognition of the binding nature of decisions so long as they are, say, reasonable. Curial deference is not a matter of judicial servility or subservience. Rather it seeks to recognise the role of the courtsvis-à-vis the modern administrative State. There are no degrees of deference: a court either defers or it does not. But watchful caution by our judges is needed. To the extent that curial deference precludes rigorous judicial enquiry, it tends towards administrative displacement of judicial judgment. And in that lies an obvious danger. One constraint on agency substitution of the judicial view must be when issues of fundamental rights present. But even beyond the parameters of constitutional and Convention rights, it does not suffice for the courts merely to announce that an area is one in which curial deference is shown and leave matters at that. The public, who continue to look ultimately to their courts for a remedy against perceived injustices, are entitled to know the basis and parameters of such deference, not least so that they can challenge matters if they consider that undue curial deference is being sought of a court. What then is the logical basis for curial deference to delegated decision-makers?

B. Deference as a Matter of Principle.

6 Curial deference to delegated decision-makers is sometimes posited as an example of the courts giving effect to legislative intent. Clearly the courts must give effect to legislative intent, as manifested in statute, so long as the legislature acts within constitutional boundaries. However, lawmakers rarely indicate what the general principles of judicial review in a given context should be. So curial deference seems in practice to be but a judicially ordained allocation of decision-making power between courts and delegated decision-makers by reference to other principles. But what are these other principles? Three possible principles spring immediately to mind: (1) the rightly constrained role of the judiciary as an unelected branch of government; (2) the notion that the courts function as a check on executive excess, rather than as supervisors of executive action; and (3) the concept of automatic deference, whereby despite the fact that the legislature may have delegated powers vaguely, the courts ought to assist in seeing that decisions of the delegated body are generally given effect. Each of these principles likely contains a seed of truth as to why the courts consider that, as a matter of principle, curial deference is meritedvis-à-vis the actions of delegated decision-makers. Yet each also presents with difficulties. As to (1), the precise limitations on the judicial branch remain ill-defined, so this principle runs the risk of offering an objective cloak for subjective judgment. As to (2), this offers no guidance on the extent of the check to be provided. And as to (3), the review powers of the courts offer so significant a protection to the individual citizen that those powers, if they are to be constrained, ought to be constrained with some specificity. Even these limited difficulties prompt the thought that it may be the practical reasons for curial deference, as much as their principled cousins that inform that deference. What then are the practical reasons for curial deference?

C....