High Court upholds FSO decision in money withdrawal dispute

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Jeremiah and Mary Coleman are both retired and had held a current account with the Allied Irish Banks PLC for several years. Mrs Coleman claimed that she went into the branch on 22nd March 2013 with a view to discuss changing her account.

However, documents furnished to the FSO demonstrated that the balance of the account, €9,418, was withdrawn in cash that day. A withdrawal form was signed by Mrs Coleman, and was completed by Ms Carmel Walsh, who had over 30 years of experience in her position.

When Mr and Mrs Coleman were furnished with a bank statement dated the 28th of March, 2013, which showed the withdrawal, they submitted that they did not pay attention to this as they assumed the money had been transferred to their new account.

When they received a bank statement from the new account, which showed a zero opening balance, they did not initially take action, and it was only a year later when Mrs Coleman said she realised the money had gone.

Mrs Coleman contacted the bank, and the branch manager informed them that they could refer the matter to the FSO, which they did.

The FSO reviewed the complaint and the evidence of both parties, and found that “the submissions and evidence furnished do not disclose a conflict of fact such as would require the holding of an oral hearing to resolve any such conflict”.

It determined that “the complaint that the provider has wrongfully refused to refund the complainants the monies withdrawn from their account in 2013 as a result of the disputed transaction, cannot be upheld. The evidence confirms that this withdrawal was authorised by the first complainant and the debit correctly applied to the account.”

Mr and Mrs Coleman then appealed to the High Court, seeking an order setting aside the FSO’s finding, and claiming that “where a clear conflict of fact emerged in an appeal before the FSO, there was an obligation to hold an oral hearing”. Counsel cited a number of recent authorities including Davy v. FSO 3 I.R. 324, Hyde v. FSO (unreported High Court 16th of November, 2011), Murphy v. Financial Services Ombudsman (unreported High Court 21st of February, 2012) Lyons v. FSO (unreported High Court 14th of December, 2011) and Smith v. FSO (unreported High Court 4th of February, 2014).

It was submitted that the finding could not be allowed to stand in circumstances where it amounted to a significant attack on the truthfulness and/or integrity of Mrs. Coleman in circumstances where she was never heard. Further the appellants had no opportunity to cross examine the bank’s witnesses.

The FSO argued that the appellants must establish that there has been a serious and significant error, or a series of such errors, before the court can intervene, and that it was well within the FSO’s discretion to decide not to hold an oral hearing.

It was also noted that in considering an oral hearing, the FSO had to have regard to the fact that if Mrs Coleman was alleging fraud on the part of the bank, this was not something that the FSO could determine having regard to s. 57 BZ (1) (d) of the Central Bank Act 1942. The FSO could not make determinations of criminal liability as to do so would impinge unconstitutionally on the function of the courts.

High Court judge Mr Justice Noonan observed that the test for appeal had been clarified in the case of Molloy v. FSO (15th of April, 2011) as including the following elements:

“(i) the burden of proof is on the appellant;

(ii) the standard of proof is the civil standard;

(iii) the court should not consider complaints about process or merits in isolation, but rather should consider the adjudicative process as a whole;

(iv) the onus is on the appellant to show the decision reached was vitiated by a serious and significant error or a series or such of errors; and

(v) in applying this test, the court may adopt what is known as a deferential stance and may have had regard to the degree of expertise and specialist knowledge of the Ombudsman.”

He noted that although the appellants submitted that the FSO made a number of errors in determining the facts, that, without more, was not something that could ground an appeal. He cited Smartt v. FSO IEHC 518 and Governey v. FSO IEHC 403 in support.

He observed that the FSO had a broad discretion as to whether or not to hold an oral hearing, citing Ryan v. FSO (unreported High Court 23rd of September, 2011).

He further observed that the cases relied upon by the appellants were ones where the decision of the FSO had been set aside due to a failure to hold a hearing, and that the critical issue in those cases was that a dispute of fact arose which could only be determined by the holding of an oral hearing, as in Galvin v. Chief Appeals Officer 3 I.R. 240.

It followed in his view that the requirement to hold an oral hearing was predicated on the assumption that the holding of such a hearing would enable the FSO to determine the issue in dispute and make a finding of fact. Clearly, this would not be possible in all cases, as noted in Star Homes (Middleton) Ltd v. The Pensions Ombudsman IEHC 463 and Calland, R (on the application of) The Financial Ombudsman Service Ltd EWHC 1327.

Thus, the requirement to hold an oral hearing could only arise where the fact in issue could not be resolved without such hearing.

In the present case, the FSO was confronted with a statement from Mrs Coleman that she did not make any withdrawal from the bank on the 26th of March, 2013. On the other hand, the bank relied upon its own documents and a statement from the teller on duty that day who had no recollection of Mrs Coleman or her transaction but could merely say what her normal practice was and how it applied to the completion of the withdrawal docket.

The judge failed to see how an oral hearing could have advanced this state of affairs, and therefore the FSO had acted within its jurisdiction.

It would clearly have been well outside the remit of the FSO to arrange to have various witnesses from the bank called to be asked if they had misappropriated the appellants’ funds. That is clearly not a matter upon which the FSO could have embarked. Such an issue would be one for An Garda Síochana were a complaint to be made by the appellants.

The appeal was therefore dismissed.