Appeal against adverse decision of Financial Ombudsman in serious illness insurance dispute dismissed

About this case:

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The central question of the case was: 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?

On various dates between 2004 and 2011 the appellant, Mr Derek O’Regan and his wife, Ms Sonia O’Regan, applied to Zurich Life for a number of mortgage-related insurance policies, which the appellants claimed always included cover for serious illness.

In January 2011, Mr O’Regan was diagnosed with rheumatoid arthritis, which rendered him unable to pursue his occupation as a plasterer. He then applied to Zurich pursuant to what he believed to be the terms of the then current insurance policy (which had dated from 2009).

However, 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, and they alleged that it had been removed without their consent.

Following an investigation carried out by way of correspondence with the parties, the FSO made a finding on 24 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.

In 2013 the High Court remitted the matter, finding that as there was a clear conflict between the parties as to what information had been available to Mr and Mrs O’Regan, there should have been an oral hearing.

On the conclusion of the second investigation, the FSO observed that the appellants admitted that they had signed the documents without reading them, but on the basis that they trusted their advisor, Mr Crowley

However, 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 their insurance cover without their knowledge or consent. The complaint was accordingly not upheld.

In her High Court judgment O’Malley J. articulated the appropriate test for review which ought to apply, namely, that set outin Ulster Bank v Financial Services Ombudsman & Ors IEHC 323:

“To succeed on this appeal the plaintiff must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test the Court will have regard to the degree of expertise and specialist knowledge of the defendant.”

She concluded that while she had great sympathy for the appellants,

The central question of the case was: 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?

On various dates between 2004 and 2011 the appellant, Mr Derek O’Regan and his wife, Ms Sonia O’Regan, applied to Zurich Life for a number of mortgage-related insurance policies, which the appellants claimed always included cover for serious illness.

In January 2011, Mr O’Regan was diagnosed with rheumatoid arthritis, which rendered him unable to pursue his occupation as a plasterer. He then applied to Zurich pursuant to what he believed to be the terms of the then current insurance policy (which had dated from 2009).

However, 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, and they alleged that it had been removed without their consent.

Following an investigation carried out by way of correspondence with the parties, the FSO made a finding on 24 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.

In 2013 the High Court remitted the matter, finding that as there was a clear conflict between the parties as to what information had been available to Mr and Mrs O’Regan, there should have been an oral hearing.

On the conclusion of the second investigation, the FSO observed that the appellants admitted that they had signed the documents without reading them, but on the basis that they trusted their advisor, Mr Crowley

However, 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 their insurance cover without their knowledge or consent. The complaint was accordingly not upheld.

In her High Court judgment O’Malley J. articulated the appropriate test for review which ought to apply, namely, that set out in Ulster Bank v Financial Services Ombudsman & Ors IEHC 323:

“To succeed on this appeal the plaintiff must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test the Court will have regard to the degree of expertise and specialist knowledge of the defendant.”

She concluded that while she had great sympathy for the appellants, she was constrained to find that there was no serious or significant error in the FSO’s approach to the case.

The limitations on appellate review since been consistently applied by the Supreme Court, for example in Hay v. O’Grady 1 I.R. 210 when case McCarthy J. explained:

“An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.”

McCarthy J. went on to hold that if “the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings.”

The Court of Appeal observed that “provided that there is credible testimony to support the FSO’s findings of primary fact and such are clearly stated, the scope of review by the High Court of such findings is distinctly limited”.

This brought to the Court to the fundamental question at issue in the appeal: are the findings of fact made by the FSO supported by credible evidence such that the High Court was bound to uphold those findings by analogy with standard Hay v. O’Grady principles?

The Court concluded that the FSO reached certain findings of fact which were adverse to the appellants, and that these were findings of fact which, applying Hay v. O’Grady principles, the FSO was fully entitled to reach on the evidence before him.

Thus, the Court found that it had no option but to dismiss the appeal.