The High Court has dismissed an appeal by Charles Verschoyle-Greene against a Financial Services Ombudsman finding that his complaint about a €2m property investment was not substantiated.
Mr Justice Noonan delivered judgment on 12 May 2016. The statutory appeal challenged the Ombudsman’s determination of 20 January 2014, which had rejected complaints concerning the New Mersey Property Syndicate and a separate investment in the Newgrange Fund. The appellant withdrew his complaint about Newgrange during the oral hearing, leaving the New Mersey investment at issue.
In 2007, Verschoyle-Greene invested €2m in New Mersey, a syndicate that bought a retail shopping centre in Liverpool. He borrowed that amount from Bank of Ireland, the parent of the respondent bank. After the 2008 economic collapse, the property’s value fell and a loan-to-value covenant was breached, triggering an increase in the interest rate charged to the property. The investment ultimately failed, and he lost his equity.
His complaint was that the bank had not disclosed the covenant and that he would not have invested had he known about it. He also alleged that he had been told rent declines were the only way he could lose money. The bank disputed that account. Its witnesses said the investment materials described multiple risks, and that the covenant was standard and did not cause the loss. The Ombudsman accepted evidence that deteriorating market conditions caused the loss and concluded the complaint was not substantiated.
The appeal raised alleged unfairness at the Ombudsman’s oral hearing, including that the appellant was not told in advance that the bank would bring a solicitor and barrister, and that his accountant was not allowed to sit beside him while he gave evidence. The court found no unfairness: the appellant knew he could have legal representation, did not raise a concern or seek an adjournment at the hearing, and was allowed time to consult his accountant.
On the substance, the court applied the statutory appeal test: the appellant had to show that the Ombudsman’s decision was vitiated by a serious and significant error. It was not a fresh hearing of the complaint. The judge held that the Ombudsman could accept the evidence that the appellant understood the investment risks and that the LTV covenant was not the cause of his loss. The court found no basis to interfere with those conclusions and dismissed the appeal.