The High Court has affirmed a Financial Services and Pensions Ombudsman decision directing Lloyd’s Insurance Company SA to remediate roof-related damage at a home and pay the homeowners €20,000 for inconvenience.
The statutory appeal concerned a policy covering major damage caused by defects in the design, workmanship, materials or components of a home’s defined structure. Lloyd’s had covered pyrite-related damage but declined cover for cracking linked to deflecting roof trusses and water tanks in the attic.
The insurer argued that the trusses were not inherently defective. It said the tanks had been incorrectly positioned on inadequate supports, imposing an unintended load that caused the trusses to deflect. The insurer maintained that this was a defect in the tank supports, rather than a defect in an insured structural element.
The homeowners’ engineers attributed the damage to inadequacies in the trusses and their inability to support the load. The Ombudsman upheld the complaint in July 2020, directing the insurer to repair damage resulting from a structural defect, including correct positioning of the tanks, and to pay €20,000 for inconvenience.
In its appeal, Lloyd’s argued that the Ombudsman had misinterpreted the policy, departed from agreed engineering evidence, exceeded his statutory jurisdiction and awarded disproportionate compensation. The Ombudsman defended the decision, including on the basis that his statutory remit extended beyond strict contractual rights.
Justice Siobhán Phelan found that the evidence before the Ombudsman did not establish the insurer’s claimed agreement among engineers about the cause of the damage. There was evidence that the trusses were structurally inadequate and not fit to bear the relevant load. The court held that the Ombudsman was entitled to treat the damage as resulting from a defect in the roof structure, which the policy defined to include load-bearing parts of roofs. The appeal was not a rehearing of the complaint, and the insurer had not shown a serious and significant error warranting intervention on that issue.
The court did find that the Ombudsman had wrongly relied on section 60(2)(c) of the Financial Services and Pensions Ombudsman Act 2017. That ground concerns conduct that complied with law or an established practice but was nevertheless unreasonable or unjust; the Ombudsman had instead found that the policy covered the damage and that cover was wrongly refused. The court held the error was not material because the decision was also supported by other statutory grounds, including unreasonable and improper conduct.
Justice Phelan also rejected the challenge to the €20,000 award. She said the Ombudsman had authority to compensate for inconvenience and that the amount fell within a reasonable range, given the prolonged process and the homeowners’ return to a home with structural works outstanding.
The court affirmed the Ombudsman’s decision and directions under section 64(3)(a). It directed that the matter be listed 14 days after judgment for consequential matters and any submissions on the form of the order.