Court of Appeal rules that matters dealt with by Financial Services Ombudsman cannot be subject of fresh High Court proceedings

About this case:

• Judgment:
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Mr Murphy had been a taxi driver prior to a road accident in January 2010 which caused him injuries which meant he could not continue to work.

He had previously commenced an income protection policy with Canada Life on 22nd May 2002, and he submitted a claim pursuant to this policy in June 2010.

The company originally started making payments at the rate of €632 per month based on Mr Murphy’s 2009 earnings, albeit that Mr Murphy contended that he ought to have been paid approximately €800 per week.

However, following an independent medical examination carried out on Mr. Murphy by a consultant occupational physician on 6th September 2011, Canada Life ceased making payments on the basis that Mr Murphy no longer met the criteria of physical health as defined in the relevant policy.

Mr Murphy made a complaint to the FSO, which found that under the terms of his policy he had to show at least three or more of ten medical conditions indicating disability. Further, the independent occupational physician had clearly stated that he was satisfied that the plaintiff’s injuries did not meet the criteria.

The doctor had added a further supplementary report confirming that he had a full opportunity for a complete medical examination and general assessment.

As a result, the FSO found that it was “reasonably appropriate for Canada Life to conclude that the complainant no longer met the policy criteria of disability”. The complaint was accordingly rejected. The decision of the FSO stated that this finding was “legally binding on the parties, subject only to an appeal to the High Court within twenty one calendar days”.

Mr Murphy chose not to appeal, but commenced proceedings against Canada Life seeking damages for breach of contract, and covering the same ground that he had pursued before the FSO.

The Court of Appeal considered whether the doctrine of res judicata, which holds that a matter which has been finally judicially decided cannot be re-opened, applied to decisions of the FSO which had not been appealed to the High Court.

Mr Justice Gerard Hogan found that “it is perfectly clear, both as a matter of principle, statute and authority that, broadly speaking, a claimant cannot advance a complaint to the FSO and then, should that claim prove unsuccessful, re-litigate the same matter before the High Court under the guise of separate proceedings.”

The doctrine of res judicata did not only apply to judicial findings, but to administrative determinations which were final.

Under Section 57CI(9) of the Central Bank Act 1942, findings of the FSO were binding upon the complainant, the regulated financial service provider concerned and every other person who is a party to the complaint, unless an appeal was brought.

The judge found that it would be quite inconsistent with that legislative intent if these statutory provisions could be effectively circumvented by issuing new High Court proceedings which attempted in effect to re-litigate the same matters that were already determined by the FSO in the course of the adjudication upon the earlier complaint.

The principle was also established by High Court authorities, including Murray v. Trustees and Administrators of the Irish Airlines Superannuation Scheme IEHC 27, 2 I.L.R.M. 196,O’Hara v. ACC Bank plc IEHC 367 and Crowley v. Zurich Life Assurance IEHC 197.

All three decisions were unanimously of the view that a disappointed litigant cannot re-litigate a matter which has been the subject of an adverse decision from either the Pensions Ombudsman (in the case of Murray) or the FSO (in the cases of O’Hara and Crowley) by reason of the principle of res judicata.

The judge expressed his understanding that the plaintiff was disappointed with the FSO decision, but noted that his remedy should have been to appeal that decision to the High Court.

As it was, he could not re-litigate the matter, and his appeal was dismissed.