The High Court has provisionally proposed setting aside a Financial Services and Pensions Ombudsman decision concerning a business interruption insurance complaint, after finding serious errors in the Ombudsman’s interpretation of the policy and handling of the insurer’s submissions.
In a judgment delivered on 21 February 2023, Mr Justice Garrett Simons ruled that an insurer could appeal under the Financial Services and Pensions Ombudsman Act 2017 even though it had succeeded in having the underlying complaint dismissed. The court found the insurer had a legitimate interest because the Ombudsman’s findings could affect other complaints involving similar policy wording and potentially trigger obligations under the Central Bank’s supervisory framework.
The complaint arose after the insured business claimed losses during the Covid-19 pandemic. The Ombudsman had concluded that the policy could, in principle, cover losses where a public body restricted access following discovery of an organism likely to cause a notifiable disease. The Ombudsman rejected the claim, however, because the business had not provided enough evidence that Covid-19 was likely to occur at its premises.
The High Court identified three contractual interpretation findings in the Ombudsman’s decision: that an essential-service business could still meet the policy’s access-restriction requirement; that the policy’s atypical-pneumonia exclusion did not apply simply because SARS-CoV-2 could cause those symptoms in some patients; and that the organism did not necessarily have to be discovered at the insured premises. The judge found the Ombudsman had not properly interpreted the contract as a whole and in context, and had not adequately engaged with or explained the rejection of the insurer’s submissions. Those errors, the court held, were serious and significant, and the three findings could not stand.
The court did not decide the correct interpretation of the policy or reconsider the complaint from the beginning. It said the High Court’s appeal role was limited and that deciding the contract questions afresh would be inappropriate, particularly with the insured not participating in the appeal.
The judge’s proposed remedy was to set aside the Ombudsman’s decision without sending the complaint back for reconsideration. He noted that the unchallenged finding about the lack of evidence meant the complaint would have to be dismissed regardless of the disputed interpretations. This was only a provisional view: the parties were to address the final form of order. The proceedings were listed for mention on 27 February 2023 to hear counsel on next steps.