England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2A 2LL
		7th July 2008

1. MR JUSTICE FORBES: These are two linked renewed applications for permission to apply for judicial review in respect of decisions made by the Financial Ombudsman Service to entertain complaints regarding the selling of endowment policies.
2. It is not necessary to go into the factual material any further than that for the purposes of this short ruling, other than to say that the detailed facts in relation to each case are to be found fully and carefully set out in the supporting grounds of application.
3. On behalf of the applicants in both cases, Mr Stafford submitted that there are three principal matters which give rise to arguable grounds for challenging the decisions in question. The first is that the Ombudsman came to a wrong decision in law as to the applicability of limitation to the complaints in question. The second is that the Ombudsman has applied the legislation and/or rules retrospectively in circumstances where there is no express provision in the legislation for retrospectivity. Finally, it is said that the Financial Ombudsman Service ("the FOS") itself is not sufficiently independent of the FSA as to make the Ombudsman an appropriate independent decision-maker in respect of complaints.
4. It is to be noted that this latter aspect of the matter is not the subject of any specific ground of challenge but the matter has been advanced in the course of submissions before me, and has been dealt with in response by Mr Strachan on behalf of the FOS.
5. I have considered Mr Stafford's arguments very carefully. He has taken great care to take me through the relevant provisions in the legislation and rules, and I have followed very carefully his detailed and carefully written skeleton argument. However, I have come to the conclusion that these matters are not arguable for the purposes of granting permission in either case. Furthermore, in both cases there is an element of prematurity about this application. I will try to explain what I mean very shortly.
6. So far as concerns the limitation argument, I accept Mr Strachan's submission that when one reads the legislation in question, it is quite clear that this complaints procedure is a form of informal complaints procedure, sui generis, set out under the terms of the Financial Services and Markets Act 2000. Section 228 of that Act makes clear that the Ombudsman who deals with the complaint must do what is fair and reasonable in the light of the circumstances giving rise to the complaint. The Ombudsman is not bound by the common law. However, the law is a material consideration which the Ombudsman must take into account when going through the decision-making process which results in a fair and reasonable decision.
7. Since the decision of the Court of Appeal in Heather Moor and Edgecomb Ltd v Financial Ombudsman Service [2008] EWCA Civ 642, it is quite clear that the Ombudsman is not bound by the terms of the common law although, as I have just stated, the law is a material consideration (see the judgment of Stanley Burnton LJ, particularly between paragraphs 34 and 51). It seems to me beyond argument, therefore, that without specific reference to the provisions of the Limitation Act, the Limitation Act does not apply to the scheme as set out under the Financial Services and Markets Act 2000 ("the 2000 Act").
8. Furthermore, as Mr Strachan points out, the actual scheme set up under the 2000 Act and the rules made pursuant to it are inconsistent with the proposition that the Limitation Act is to apply. It is sufficient to refer to Schedule 17 of the 2000 Act and paragraph 13 of that Schedule, which makes provision for the making of rules for the appropriate time limits in respect of complaints. As Mr Strachan pointed out, these provisions would be wholly redundant if the Limitation Act were to apply to complaints made pursuant to the scheme set up by the 2000 Act.
9. So far as retrospectivity is concerned, again I accept what Mr Strachan says, that none of the provisions in the Act and none of the rules made pursuant to the 2000 Act contain any retrospective element, nor has the Ombudsman in her decision-making in either case sought to apply inappropriately any element of retrospectivity. In my judgment, that particular argument does not get off the ground.
10. I finally turn to the question of lack of independence on the part of the decision-maker. It is true that an examination of the statutory framework shows that there is close relationship between the FSA and the FOS. However, it is also clear that the FOS is a separate body corporate and that it is the FOS which is the scheme operator of the overall Ombudsman scheme. The Chairman and Directors are appointed in accordance with the statutory provisions and whilst it is true that they can be removed from office by the FSA, that can only be done with external permission from the Treasury.
11. As Mr Strachan submits, the fact that there is a close relationship between the two bodies does not mean that the FOS is so subservient to the FSA as to make the FOS and its Ombudsmen lacking in the necessary element of independence. In any event, even if there is a degree of closeness which raises a question mark to a limited extent, that is, in my judgment, wholly answered by the fact that the decision-making of the Ombudsman is subject to the review of this court by means of judicial review and that any doubts as to the independence of the Ombudsman is answered by the fact that you have to have regard to the whole scheme: namely not only the provisions of the 2000 Act but also the reviewing powers of the High Court. In my judgment, this latter aspect of the matter makes the argument that there is a lack of independence sufficient to call into question the decision-making of the ombudsman unarguable.
12. Accordingly, those being the three principal points which are raised in these applications, for the reasons I have stated shortly I am satisfied that none of them is sufficiently arguable as to make the grant of permission appropriate.
13. Before concluding this short judgment I should say this. Nothing in this judgment will prevent points that do arise, following the decision-making of the Ombudsman on the merits of each of these complaints, from being the subject matter of a challenge by way of judicial review in due course. Some of the matters raised by Mr Stafford do contain an element of prematurity, in particular the limitation argument. It may be that, having heard all the evidence and determined the matter on the merits, the Ombudsman's decision may be open to challenge by reference to timescales if there has been on the part of the Ombudsman a failure to take that aspect of the matter properly into account when reaching his or her decision as to what is fair and reasonable. I say no more about it than that. Accordingly, for those reasons, both renewed applications are refused.
14. MR STRACHAN: My Lord, there is one matter. In refusing permission on the BP case, Ouseley J did not award us our costs of the acknowledgment of service but indicated that if the applications were renewed the judge dealing with it might take a different view. I am not seeking my costs of today on any exceptional basis. I am just simply seeking my costs of the acknowledgment of service in the light of Ouseley J's observation which was intended to discourage the claimants. My Lord, in my submission we should be entitled to those costs.
15. MR JUSTICE FORBES: What do you say about that, Mr Stafford?
16. MR STAFFORD: Well, I think it would be difficult for me to say anything.
17. MR JUSTICE FORBES: What were your costs of the acknowledgment of service?
18. MR STRACHAN: My Lord, those were £2,574.
19. MR JUSTICE FORBES: Mr Stafford, is there anything you want to say about that?
20. MR STAFFORD: No, my Lord.
21. MR JUSTICE FORBES: In that case I order that both renewed applications are refused, and in respect of case 4330 I order that the claimant is to pay the defendant's costs of preparing the acknowledgment of service in the sum of £2,754.
22. MR STAFFORD: My Lord, there is also the question of permission to appeal. In the normal course of things we would have seven days to appeal your Lordship's judgment. My Lord, there are particular personal circumstances which affect my own position, involving my family, which may make that timescale of seven days impossible to meet. I asked Mr Strachan before we started this morning and he was agreeable, subject to your Lordship's consent, that if we do wish to take matters further we should have 28 days. I am happy to explain.
23. MR JUSTICE FORBES: No, there is no need to. That is right?
24. MR STRACHAN: My Lord, that is right.
25. MR JUSTICE FORBES: Time for application for leave to appeal, is that what you ask?
26. MR STRACHAN: I believe, my Lord, it is a renewed application to the Court of Appeal.
27. MR STAFFORD: I should have prefaced that, my Lord, by saying that in order to keep our options open --
28. MR JUSTICE FORBES: Ordinarily if the decision-making is that of the Court of Appeal, any extension of time that should be granted ought to be the Court of Appeal rather than here. It is not like we are dealing with extending the time for permission to appeal or extending the time for filing the notice of appeal. This is, as Mr Strachan points out, a case where you would have to renew your application for permission to the Court of Appeal. I do not think I have the power to extend the time for that. That is a matter for the Court of Appeal. Let me put it this way. If I do have the power then I am quite happy that you should have the 28 days for that purpose. I will leave it up to you to check.
29. MR STAFFORD: I note what your Lordship says and I will check with the Court of Appeal.
30. MR JUSTICE FORBES: Right. Thank you very much.