Introduction to the Case
Lloyd’s Insurance Company SA v Financial Services and Pensions Ombudsman and Joanna Donnelly and Harm Luijkx  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 was an appropriate approach. It would defeat the purpose of the FSPO if the court were to re-examine the facts of the case through a different lens. The Court were satisfied that in an insurance context, the FSPO was entitled to interpret the policy through a “common sense” approach as opposed to strict technical construction.
The FSPO’s Statutory Jurisdiction
The court agreed with the Providers that in setting out their jurisdiction, the FSPO had wrongly relied on subsection 60(2)(c) of the 2017 Act. Conversely however, the court found that the FSPO had been correct in relying on subsection 60(2)(b) and (g). The court ruled that this error was not fatal to the decision. The FSPO has the “right to get the decision wrong” so long as it is not a serious or major misinterpretation of the law. The court affirmed that the FSPO has a “wider” jurisdiction than the court and that they are not tied to “strict” contract interpretation like the courts are. In insurance law, if the insured peril is an “effective cause” of the problem, you are still liable regardless of how many causes there are. Overall, the FSPO’s application of the other two subsections was consistent with their view of the policy and the failings of the Providers. Thus, the court were satisfied that the FSPO had the appropriate jurisdiction to determine the matter as they did.
Degree of Compensation Awarded
The court concluded that the FSPO enjoyed a wide scope of discretion when it came to awarding damages, the statutory cap being €250,000. It also felt that the basis of the compensation, the “inconvenience” forced upon the claimants over the duration of correctional work and correspondence, was proportionate. Thus, the FSPO had not committed a “serious and significant error” in the level of compensation awarded.
Important Conclusions and a Case to Compare
There are a few important lessons that can be taken from this case.
It clarifies the relationship between the courts and the FSPO. It is only if the FSPO seriously errs that the court will intervene, and they have no interest in re-examining a case de novo.
Similarly, the FSPO has the “right to get the decision wrong” once the overall correct outcome is reached. Equity plays a role in the decision-making process of the FSPO. Therefore, a minor mistake should not be fatal to an otherwise correct application of the law.
Finally, the court clarifies the FSPO’s authority in relation to compensation. The “inconvenience” caused over the course of the repairs was held to be a satisfactory reason for the quantum awarded. The 2017 Act gives a large scope of compensation and unless the court can be shown that the amount was unreasonable in relation to the type of “inconvenience” suffered, the court will respect the FSPO’s decision.
A case to compare against Lloyd is that of Utmost PanEurope DAC v Financial Services and Pensions Ombudsman and W  IECA 77 (hereinafter ‘Utmost’). This case affirms an appealed decision from the High Court, but more importantly, also further considers the jurisdiction of the FSPO.
While the court may have overturned the FSPO’s decision, it did so in a manner consistent with the tests applied in Lloyd above.
The court found that the FSPO had seriously erred in how it chose to approach the policy. Instead of focusing on the actual policy and its legal impact, the FSPO relied on “unsubstantiated inferences” from correspondence regarding the policy. The trial judge held that certain inferences were “unreasonable” and “untenable”, indicating that no reasonable ombudsman would reach the same conclusions as the FSPO did in their decision.
Applying principles affirmed by Fitzgibbon v The Law Society  IESC 48, the court found that when inferences are interpretated from documents, and these inferences are unreasonable or incorrect, the court is entitled to reverse them.
Therefore, while the court reiterated that the legislator has given significant scope to the FSPO in determining matters, if any serious error is made in determining a matter of law, or ascertaining and assessing the relevant facts, the court will intervene if appropriate.
It could be argued that this decision reigns in the freedom given to the FSPO under Lloyd. Conversely however, it could also be said that this case simply gives us an example of when a court will intervene. The lack of legal justification given by the FSPO in their decision was criticised by the court. Similarly, the medical issue complained of was not substantial enough on its own to trigger the policy and the FSPO had incorrectly inflated its impact in its decision.
Finally, the appeals court also confirmed the importance of proportionate rulings. It is not acceptable for the FSPO to decide matters without appropriate consideration for the impact of their decision. As above in Llyod, the court asserts that all remedies awarded must be proportionate to the “inconvenience” or “complaint” put forward.
While Utmost may have resulted in the FSPO’s decision being overturned, it was done so in the parameters set out and applied in Lloyd, i.e., a serious error in a finding of law.
Overall, proportionality, reasonability, and a legal justification are all important factors for the FSPO to have in mind when determining a matter before them.