Ireland: Appeal Against Finding Of Financial Services Ombudsman Dismissed By The High Court

Last Updated: 26 February 2019
Article by Jennifer Noctor

In a judgment1 of Ms. Justice Faherty delivered on 7 December 2018, a decision of the Financial Services Ombudsman (“FSO”) rejecting a claim relating to the sale of a financial product was upheld. The court found that the claims were not substantiated and that the FSO’s findings in relation to whether the investment was an execution only investment was not vitiated by serious or significant errors.  She also accepted that once a box was ticked on the application form to say it was execution only, the FSO was reasonably entitled to regard it as such a transaction.  


The Appellant, Mr. O’Driscoll had invested €350,000 in a commercial property life fund called the Broad Street Property Life Fund in January 2007, managed by Irish Life Assurance Plc. (“Irish Life”). The investment was made through Mallow Mortgage Company Ltd t/a Liam Mullins & Associates (“Mallow”). The timeframe for taking out the investment was short and was the subject of some conflict between the parties as to the content and location of the meeting, however the timeline itself was uncontentious. On 25 January 2007, a meeting took place between Mallow and Mr O Driscoll, attended also by a representative of Irish Life to answer any questions relating to the policy. On 26 January, Mr. O’Driscoll completed the application form and handed over a cheque to his broker and on 30 January 2007, the investment was taken out with Irish Life.

The fund was invested in a commercial property on Broad Street which was purchased by Irish Life and had a major bank as its tenant. Ultimately it did not perform as anticipated the property was sold in June 2013 and Mr. O’Driscoll received a return of €152,621.55 on his investment on 26 May 2015. 


Mr O Driscoll commenced his claim against Mallow and Irish Life in 2012. He claimed that the property fund was not suitable to his requirements, that he sought a capital protected product and that he was wrongfully advised in relation to the investment including that the parties misrepresented the risk profile of the investment. 

Mallow’s defence was that the investment was taken out on an execution only basis. As Mr. O’Driscoll was related to Mallow, he did not want his relation to know all of his financial information and for that reason marked the document as execution only. Mr O Driscoll conceded that he had been provided with policy documentation at the meeting but not read them. Initially the FSO ruled against Mr O Driscoll but that was overturned by the High Court, which ruled that an oral hearing should have been held by the FSO as there was a clear conflict of evidence between the parties.

Following an oral hearing, the FSO ruled again against the Appellant but found that as there was a specific waiver in the application form for the execution only aspect, it would have been prudent for Mallow to have had Mr. O’Driscoll to sign this and awarded Mr. O’Driscoll a compensatory payment of €10,000.  

High Court Appeal

That finding was again appealed to the High Court. The Court stated that in order to succeed with the Appeal, the Plaintiff had to establish as a matter of probability that ….the decision was vitiated by a serious and significant error or a series of such errors. In applying the test, the Court will have regard to the degree of expertise and specialist knowledge of the Defendant. The Court stated that it was not the function of the Court to place itself in the shoes of the FSO and that it was immaterial that the Court could have come to a different conclusion on the evidence once the conclusion actually arrived by the FSO was one reasonably open to them on the evidence presented.

While the Court looked at the case of Rubinstein v HSBC Bank [2011] EWHC 2304 which was relied upon by the Plaintiff, it was satisfied that the factual matrix was substantially different and that it was reasonably open to the FSO to find that the transaction was carried out on an execution only basis. Likewise the Court was satisfied that there was no evidence before the FSO as to why the waiver was not executed and that it was not persuaded that the FSO’s treatment of Mr. Mullin’s failure to have Mr. O’Driscoll complete the document was a sufficient basis for the Court to conclude that the FSO made a serious and significant error in finding that the transaction was execution only. 

The court stated there was no requirement for the FSO to make a finding as to whether or not the Appellant was or was not an unsophisticated investor. The Plaintiff’s relief as sought in the two separate Notices of Motion against the parties was dismissed. 

RDJ represented Mallow in respect of both High Court appeals and obtained an order for costs against the Appellant.


1 Val O’Driscoll v The Financial Services & Pension Ombudsman & Mallow Mortgage

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