The High Court has dismissed Hugh Governey’s appeal against a finding by the Financial Services Ombudsman that his complaint about a €500,000 property investment was not substantiated.
Mr Justice Hedigan delivered the judgment on 26 August 2013. The appeal concerned an investment bond linked to a highly geared property fund that invested in the Kennet Shopping Centre in Newbury, England. Governey had paid the €500,000 premium in two instalments in January 2006.
He argued that the provider, Anglo Irish Assurance Company, had failed to disclose that the planned Parkway shopping centre could threaten Kennet’s viability. He also complained that advice from property firm Savills had not been disclosed and disputed information about Kennet tenants’ lease break clauses. He said the investment was structured as a life assurance policy, attracting a duty of utmost good faith and full disclosure.
The Ombudsman found in July 2012 that the complaint was not substantiated. Governey asked the High Court to set that finding aside and direct the provider to return the premium, or alternatively to send the matter back to the Ombudsman for review.
The judge said this statutory appeal was not a fresh hearing. Governey had to show, on the balance of probabilities, a serious and significant error in the Ombudsman’s process as a whole. The court had to give weight to the Ombudsman’s specialist expertise and could intervene on factual findings only if there was no relevant evidence on which they could reasonably be based.
The judge said the Ombudsman had addressed the central complaint and given adequate reasons. He also considered the challenge to the Ombudsman’s failure to obtain an internal credit paper, but said it had not been properly raised in the appeal’s grounding affidavit or ventilated before the Ombudsman.
The judgment questioned whether the arrangement was truly insurance, describing the available material as suggesting an investment dressed as assurance for tax purposes. The court did not decide that legal question, however, because the Ombudsman had considered the complaint on the basis that full disclosure applied.
The judge concluded that relevant evidence supported the Ombudsman’s decision. The investment was described as high risk, with the possibility of losing all the capital; the Parkway development had been disclosed; and information available to the provider at the time indicated its impact might be positive. The court also noted that the lease-break figure was wrong, but said the provider had disclaimed responsibility for the underlying figures and that the effect of the error was difficult to assess.
The court dismissed the appeal. It did not order repayment of the premium or remit the complaint to the Ombudsman.