Recent High Court Case Clarifies The Relationship Between The Courts And The FSPO

• Published date: 06 October 2022
• Subject Matter: Finance and Banking, Employment and HR, Insurance, Financial Services, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Insurance Laws and Products
• Law Firm: RDJ LLP
• Author: Ms Lisa Mansfield and Donal Twomey

Introduction to the Case

Lloyd's Insurance Company SA v Financial Services and Pensions Ombudsman and Joanna Donnelly and Harm Luijkx [2022] IEHC 290 (hereinafter 'Lloyd') is an appeal to the High Court originating from an FSPO decision. The appellants (Providers) argued that the FSPO had seriously and significantly erred in their interpretation of the law and what was covered by the policy. The High Court however declined to overturn the decision, citing existing precedent relating to the jurisdiction of the FSPO and the role of the court in an appeal under s.64 of the Financial Services and Pensions Act 2017 (hereinafter '2017 Act').

The FSPO's Decision

The complainants purchased the house around 2006 and took out an insurance policy (Provider was 'Liberty' at the time). It became clear in 2010 that there were structural issues in the house resulting from the use of pyrite filling. Similarly, deflecting and 'deficient' roof trusses had caused damage to the upper floors. While the Providers agreed to cover the damage relating to the pyrite, they disagreed that the damage done to the roof trusses came under the specifics of the policy. They argued that the damage arose due to a poorly installed water tank and its position on the spreaders. This was poor workmanship at the time of construction, not a 'defect in the design' of the roof's structure, as per the policy.

The FSPO found in favour of the complainants, however. Determining that the damage was a direct result of the 'inadequate support of the water tank' and that the trusses were a 'fundamental load-bearing part of the roof structure', he awarded '20,000 in compensation. The basis for the award was that the Providers had been 'unreasonable, unjust and improper' in withholding the cover and all the 'inconvenience' caused to the complainants justified the quantum.

The High Court Appeal

The court considered three main issues in their hearing.

The Role of the Court in an Appeal

The court carefully examined its jurisdiction regarding appeals from the FSPO. In accordance with the 2017 Act and relevant precedent, the court's role is to assess whether the FSPO had seriously erred in its interpretation of the law. It is not the role of the court to examine the facts of the case de novo. The FSPO is expected to act informally; according to equity; and not get too drawn into the complex technicalities of a particular matter. The use of 'common sense' and a 'reasonable' interpretation of the policy by the FSPO...