O'Regan v Financial Services Ombudsman

JurisdictionIreland
JudgeMr. Justice Gerard Hogan
Judgment Date07 June 2016
Neutral Citation[2016] IECA 165
CourtCourt of Appeal (Ireland)
Docket Number2015, No. 288CA
Date07 June 2016

Peart J.

Hogan J.

Murphy J.

IN THE MATTER OF S. 57CL OF THE CENTRAL BANK ACT 1942 (AS INSERTED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004)

BETWEEN/
DEREK O'REGAN
APPELLANT
- AND -
FINANCIAL SERVICES OMBUDSMAN
RESPONDENT

[2016] IECA 165

2015, No. 288CA

THE COURT OF APPEAL

Insurance – Serious illness cover – Findings of fact – Appellant seeking serious illness cover – Whether provider wrongfully removed serious illness cover from the appellant?s insurance cover

Facts: The appellant, Mr O?Regan, on various dates between 2004 and 2011, applied to Zurich Life for a number of mortgage-related insurance policies. In January 2011, Mr O?Regan was diagnosed with rheumatoid arthritis which rendered him unable to pursue his occupation as a plasterer. Following this diagnosis he applied to Zurich in August 2011 pursuant to what he believed to be the terms of the then current insurance policy (which had dated from 2009). Zurich refused to pay out on that claim on the basis that the policy in force did not include serious illness cover. According to the appellant, that was the first time that he realised that his insurance policy did not contain serious illness cover. In September 2011, the appellant appealed the decision of Zurich to the respondent, the Financial Services Ombudsman (the FSO). The appellant claimed that he was deprived of information relating to the cover he had taken out, and denied the opportunity to identify any errors and change the policy. Zurich?s position was that the in-force policy did not include serious illness cover because it was not applied for on the form that the appellant completed. The FSO made a finding on 24th July, 2012 that the complaint was not substantiated. The appellant appealed that decision to the High Court pursuant to s. 57CL(1) of the Central Bank Act 1942. On 5th March, 2013 the High Court found for the appellant on the ground that there ought to have been an oral hearing. The High Court then set aside the finding of the FSO and remitted the matter to the respondent. The FSO ultimately concluded that the documentary and oral evidence before him did not support the complaint that the provider had wrongfully removed serious illness cover from the appellant?s insurance cover without his knowledge or consent. The complaint was accordingly not upheld. The appellant appealed that decision to the High Court which held that there was no serious or significant error in the respondent?s approach to the case, the handling of the oral hearing, the assessment of the case or the drawing of inferences from the evidence. The appellant appealed to the Court of Appeal against that decision.

Held by Hogan J that, applying?Hay v O?Grady [1992] 1 IR 210, the FSO was fully entitled to reach his findings of fact on the evidence before him. Hogan J held that the High Court was perfectly correct to hold that the FSO was entitled to reach the findings of fact which he did.

Hogan J held that he would dismiss the appeal.

Appeal dismissed.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 7th day of June 2016
1

Where the Financial Services Ombudsman holds an oral hearing in respect of a particular complaint and makes certain findings of fact, to what extent is the High Court bound by such findings where a subsequent appeal is taken from that decision to that Court pursuant to s. 57CL(1) of the Central Bank Act 1942 (as inserted by s. 16 of the Central Bank of Ireland and the Financial Services Authority of Ireland Act 2004)(?the 1942 Act?)? That is the central question which arises upon this appeal by the appellant, Mr. O'Regan, from the decision of the High Court (O'Malley J.) delivered on 2nd February 2015: see O'Regan v. Financial Services Ombudsman [2015] IEHC 85. The issue arises in the following fashion.

2

On various dates between 2004 and 2011 the appellant, Mr. Derek O'Regan and his wife, Ms. Sonia O'Regan, applied to Zurich Life (?Zurich?) for a number of mortgage-related insurance policies. While Mr. O'Regan is the sole appellant, given that Ms. O'Regan was, as will be seen, also actively involved in these applications, I propose simply for reasons of convenience to refer to them both as ?appellants.?

3

Most, but not all, of the policies were applied for through a Mr. Pat Crowley, a financial consultant with Zurich. The appellants say that the policies always included cover for serious illness. It is their case that they were particularly conscious of the necessity for such cover because of certain issues in the family's medical history. Mr. O'Regan was at the time a self-employed plasterer.

4

In January 2011, Mr. O'Regan was diagnosed with rheumatoid arthritis in his ankle and knee joints, which rendered him unable to pursue his occupation as a plasterer. Following this diagnosis Mr. O'Regan applied to Zurich in August 2011 pursuant to what he believed to be the terms of the then current insurance policy (which had dated from 2009). Zurich refused to pay out on this claim on the basis that the policy in force did not include serious illness cover. According to the appellants, this was the first time that they realised that their insurance policy did not contain serious illness cover. It transpired that the most recent previous policy, entered into in 2008, also did not cover serious illness.

5

In September 2011, the plaintiff appealed the decision of Zurich to the respondent, the Financial Services Ombudsman (?FSO?). In the FSO complaint form dated 22nd September 2011, Mr. O'Regan summarised his complaint as follows:

?Our serious illness cover was taken out without our consent in 2008. We never got any paper work regarding this situation. We were insured since 2005 for serious illness why would we stop that premium? We just want fair play, what was owed to us.?

6

Mr. O'Regan wrote a number of letters outlining the various issues he had with Zurich's refusal of his claim. Mr. O'Regan and his wife had serious illness cover from 2005 to 2007 at ?88 per month. In 2007 they re-mortgaged the family home, which involved the taking out of a new policy. Thereafter they paid ?83.23 per month for the new policy, which included serious illness cover. According to the appellants, this policy lapsed temporarily and they reinstated it in 2008 for ?80.70 per month.

7

The appellants maintain that in 2009 they were offered new terms by Zurich which would have had the effect of bringing the cost of the premium down if certain rare diseases were excluded. They insist that they were told ?everything else stays the same?. They accordingly assumed they were paying for serious illness cover all along and say, therefore, that Zurich removed it without their consent. One of the factors which, the appellants say, reassured them in this conclusion was the fact that the premium which was now to be paid for the ?reinstated? policy was more or less the same as with the old policy.

8

The appellants further emphasised the importance of serious illness cover to their family in light of the family's medical history of cancer and arthritis. Mr. O'Regan claims that Mr. Crowley knew that his brother had died of cancer in 2002 and, therefore, knew that he wanted this particular cover. He maintained that any errors in relation to the medical questions on the form are Mr. Crowley's fault, as he filled in the form after being given the relevant information. To anticipate somewhat, Mr. Crowley's evidence at the hearing before the FSO in December 2013 was that he had never been made aware of the relevant medical history. Mr. Crowley's evidence was that the serious illness cover was not included in 2008 or 2009 for reasons of affordability and that the appellants were fully informed at the time as to what their choices were.

9

At all times, however, Zurich maintained that there was never an option of dropping ?rare diseases?, or any diseases, from the serious illness cover. A customer either opted for the cover or did not. Mr. Crowley's evidence was to the same effect, and he denied ever having made suggestions to the contrary.

10

The appellants say that Mr. Crowley did not explain the changes to their policy and that they never received a copy of the full documentation relating to the new policy. They claim, therefore, that they were deprived of information relating to the cover they had taken out, and denied the opportunity to identify any errors and change the policy.

11

Zurich's position throughout has been reiterated that the in-force policy did not include serious illness cover because it was not applied for on the form that the appellants completed. Zurich also asserted that a letter was sent to the appellants on 27th January, 2009, enclosing a policy certificate, policy document and disclosure notes. They say they are satisfied that the policy operated in accordance with its terms and conditions, that the details of the policies were correct and in accordance with the signed application forms and confirmed in the various documents issued to them.

The initial findings of the FSO
12

Following an investigation carried out by way of correspondence with the parties, the FSO made a finding on 24th July, 2012 that the complaint was not substantiated. The appellants duly appealed this to the High Court pursuant to s. 57CL(1) of the 1942 Act.

13

By decision dated 5th March, 2013 the High Court (Feeney J.) found for the appellant on the ground that there ought to have been an oral hearing. Feeney J. then set aside the finding of the FSO and remitted the matter to the respondent. The basis for the ruling was that, having reviewed the correspondence and submissions, Feeney J. was satisfied that there was a clear conflict between the parties as to what information the appellant and his wife had given Mr. Crowley...

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