High Court Rejects Appeal That FSPO Exceeded Its Jurisdiction

• Published date: 19 July 2022
• Subject Matter: Finance and Banking, Insurance, Financial Services, Insurance Laws and Products
• Law Firm: William Fry
• Author: Ms Lisa Carty and Deirdre O'Donovan

Lloyds Insurance Company SA v Financial Services and Pensions Ombudsman and Joanna Donnelly and Harm Luijkx (Notice Parties) [2022] IEHC 290, was a statutory appeal to the High Court from a decision (Decision) of the Financial Services and Pensions Ombudsman (FSPO). The complaint arose out of a structural insurance policy (Policy) over the Notice Parties property.

In 2006 the Notice Parties purchased a house from a developer with the benefit of the Policy. Defects in the property came to light in 2010. Lloyds Insurance Company (Insurer) refused to provide cover for damage to the roof connected with deflecting trusses associated with cracking on ceilings and walls. The Insurer's refusal was on the basis that the roof trusses were not inherently defective and the damage was caused by the incorrect positioning of a water tank in the attic.

The FSPO Decision

The Notice Parties complained to the FSPO, who upheld the complaint on the grounds that it was unreasonable, unjust and improper for the Insurer to refuse cover. The Insurer was also ordered to compensate the Notice Parties for inconvenience in the sum of ?20,000. The Insurer appealed to the High Court (Court). It maintained that the FSPO was guilty of a serious and significant error in interpreting "structure" under the Policy in a way that included the Notice Parties' claim.

The Insurer argued that the FSPO exceeded its jurisdiction by treating its refusal of cover, that was permitted under the Policy, as unjust, unreasonable or improper conduct. The Insurer also took issue with the entitlement to and quantum of compensation, which it was contended was disproportionate to any inconvenience suffered by the Notice Parties and having regard to the engagement by the Insurer.

The High Court's Appellate Jurisdiction

The courts have consistently held that an appeal of an FSPO decision is not intended to be a re-examination of the merits of the decision under appeal. The Court confirmed, relying on earlier authorities that there is a high threshold to be met before it will intervene to set aside an FSPO decision. Where the appeal involves a decision as to the construction of an insurance policy, as was the case here, the Court must be satisfied it was vitiated by a serious and significant error. As to questions of law, although the Court will not take a deferential approach to parts of the FSPO's decision on pure questions of law, it will only intervene where the error of law is material and overall, the...