In Governey v Financial Services Ombudsman [2015] IESC 38 the Supreme Court held that where a statutory provision restricts the constitutional right to appeal a High Court decision, but sets no criteria for the grant of leave, leave will be granted where the applicant makes an arguable or stateable case for the type of appeal allowed.

Facts 

Mr Governey brought High Court proceedings challenging a decision of the Financial Services Ombudsman (FSO).  He had invested €500,000 in a property based fund promoted by Anglo Irish Assurance Co Ltd (Anglo). The fund was a highly geared investment scheme and the plaintiff argued before the FSO that since the investment was structured in the form of a life assurance policy, full disclosure of all risks had to be made or else the contract would be open to rescission.  He argued that it misrepresented the risk involved by not disclosing all material facts.

The FSO concluded that the plaintiff who was an experienced investor was made aware that this was an illiquid, high risk investment subject to the possibility of total investment loss.  Accordingly, he decided there was no misrepresentation of the investment and there was no material non-disclosure of risk.  The plaintiff appealed to the High Court.

High Court

Hedigan J, stated that the test for an appeal of this nature was well established and noted:-

  1. The burden of proof is on the party appealing the ruling
  2. The onus of proof is the civil standard
  3. The court should not consider complaints about process or merits in isolation, but rather should consider the adjudicative process as a whole;
  4. In light of the above principles, the onus is on the party appealing to show that the decision reached was vitiated by error; and
  5. In applying this test the Court will adopt what is known as a deferential stance and must have regard to the degree of expertise and specialist knowledge of the Ombudsman.

The plaintiff's main contention in respect of the FSO's ruling was that the decision did not fully consider the facts at hand, did not disclose how the respondent came to make that decision, and that the FSO was not mindful of the principle of utmost good faith in relation to disclosure of material facts in relation to contracts of insurance/assurance.

The FSO argued that he exercised his function in accordance with his jurisdiction and that there was no requirement that his findings be as detailed or as thorough as a court judgment.

Hedigan J dismissed the appeal holding that there relevant evidence before the FSO upon which it could reasonably come to this conclusion.  He went on to say that the consideration of the balance of all of the matters before the FSO was an exercise by him of his expertise and his decision was "a judgment reasonably made and clearly based upon the evidence before him."

As section 57 CM of the Central Bank Act 1942 (as amended) restricts an appeal from the High Court Mr Governey sought leave to appeal the decision which was refused by Hedigan J.  Mr Governey then sought leave from the Supreme Court to appeal the decision of the High Court.

Supreme Court - Leave to Appeal 

The first issue before the Supreme Court was the criteria for the grant of leave.  Mr Governey argued that the leave should be granted once he could show a stateable case. The FSO argued that, as the Oireachtas chose to require that leave be obtained before an appeal could be brought; a higher standard should be implied.  Clarke J held, that given that the default position in the Constitution is a guaranteed a right of appeal, any leave provision which narrowed that right should be strictly construed. The Act of 1942 Act did not set out any criteria as to leave and in those circumstances Clarke J held that " it must be interpreted as meaning that leave should be granted provided that a stateable basis for appeal has been established.  No higher criteria should be implied in the absence of express provision".

Stateable Case 

The second issue was whether Mr Governey had made out a stateable case.  Clarke J held that he had put forward a stateable case based on the following arguments:-

  1. In relation to questions of law or of the application of law to agreed or established facts, there was less of a case for the courts affording the FSO any particular level of deference. Accordingly the trial judge adopted an overly deferential attitude in relation to the determination of the FSO in this case.
  2. By choosing to offer an investment product in the form of a life assurance policy, a financial institution takes onto itself a much greater degree of obligation of disclosure than might ordinarily be the case due to the doctrine of uberrima fides (which requires both parties to insurance or assurance contracts to make full disclosure in the utmost good faith).
  3. The FSO was wrong in holding that a general disclosure of the overall level of risk was sufficient when there was not, a disclosure of material facts which would allow that risk to be assessed. 
  4. The High Court, by applying a test of rationality to a decision of the FSO without examining the legal issues raised was in error. It was argued that the FSO was wrong in law on the materiality question and therefore the High Court should not have afforded any deference to the FSO on that legal issue.
  5. The FSO gave inadequate reasons for his decision in that they failed to adequately state why, in the view of the FSO, the failure of disclosure alleged did not meet a materiality test.

Comment

While this decision only relates to an application for leave to appeal it does show that the Supreme Court is willing to entertain arguments that the deference shown by the High Court to the expertise of the FSO should be curtailed when issues of law are involved.  This issue was also argued successfully in Millar & anor -v- Financial Services Ombudsman [2014] IEHC 434 which is currently under appeal.