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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Crowley -v- Zurich Life Assurance Plc & Ors [2015] IEHC 197 (04 March 2015)
URL: http://www.bailii.org/ie/cases/IEHC/2015/H197.html
Cite as: [2015] IEHC 197
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Judgment
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Neutral Citation: [2015] IEHC 197 THE HIGH COURT 2012, No. 11281P BETWEEN/ FLORENCE CROWLEY PLAINTIFF AND ZURICH LIFE ASSURANCE PLC, ANTHONY BRENNAN, KATE McNAMARA AND WILLIAM PRASIFKA PRACTISING AS THE FINANCIAL SERVICES OMBUDSMAN
DEFENDANTS JUDGMENT of Mr. Justice Gerard Hogan delivered on 4th of March 2015 1. In a case where the Financial Service Ombudsman has adjudicated on a complaint and has ruled that the service provider acted in accordance with the terms of the underlying contract or otherwise did not act unfairly, can the complainant then subsequently sue the service provider for breach of contract directly in the High Court where no appeal has been taken against the decision of the Financial Services Ombudsman? That, in essence, is the principal issue which arises in this application which has been brought by the financial service provider to have the proceedings struck out on the grounds that the matter is res judicata. 2. The issue arises in the following way: At some time in 2002 the plaintiff, Mr. Crowley, effected a Life and Serious Illness policy with the first defendant’s predecessor, Eagle Star. This policy was subsequently taken over by Zurich Life Assurance plc (“Zurich”), but nothing turns on this. There is no dispute but that the plaintiff discharged all premium payments under the policy thereafter. 3. The policy became due on the happening of certain critical events, which were defined in the following terms by Appendix B. One of these events involved coronary catheter treatment (including angioplasty). This was defined as:
5. On 19th May 2010 Mr. Crowley completed a Serious Illness Claim Form in the wake of this surgery and this was submitted to Zurich. Medical details were supplied by Dr. John O’Connor, Mr. Crowley’s general practitioner, and by his consultant cardiologist, Dr. David Mulcahy. The application was considered by Zurich with the assistance of their Chief Medical Officer. At all events, Zurich wrote to the plaintiff on 8th July 2010 declining the claim. That letter was in the following terms:
The undergoing of any interventional technique, on the advice of a cardiologist that has been appointed as Consultant Physician, that involves the use of transluminal coronary catheters. The procedure must be to correct at least 50% diameter narrowing of two or more coronary arteries. Angiographic evidence to support the necessity for the above operations is required. We received a medical report from your general practitioner which noted that you underwent stenting to the left anterior descending artery. In addition to this report the patient discharge letter you submitted with your claim also confirmed that you underwent this procedure and that the only stenting occurred in the left anterior descending artery. Your general practitioner also provided a summary of the specialist reports you have received in relation to your surgery which confirm the same. As you will note from the above, the procedure must be to correct the narrowing of two or more coronary arteries. The procedure you underwent was to correct narrowing to one artery and therefore in the circumstances we have no option but to decline this claim for serious illness benefit”. 7. That appeal was, however, unsuccessful. In a letter dated 9th November 2010 Zurich stated:
10. I should pause here to say that the second defendant, Mr. Brennan, is the Chief Executive Officer of Zurich Life and the third defendant, Ms. McNamara, is a Claims Assessor employed by Zurich. In essence the claim against Zurich (and, by extension, its employees) is that they have been guilty of breach of contract in failing to honour the terms of the serious illness policy. There are also allegations of fraud and deception on the part of Zurich. 11. The fourth defendant, the Financial Services Ombudsman, then brought an application to have the claim against him struck out on the ground that no reasonable cause of action was disclosed. In his ruling on that day, Kearns P. struck out the proceedings as against the Ombudsman. In the course of that ruling Kearns P. said:
14. At around the same time as the Ombudsman’s application to strike out the proceedings had been determined, the other defendants also issued a motion before this Court in which they also sought to have the proceedings struck out on the ground that it disclosed no reasonable cause of action. Thus, Zurich also sought an order dismissing the proceedings on the grounds that they constituted an abuse of process. In this respect Zurich contented that Mr. Crowley was estopped from pursuing this claim for breach of contract (and other relief) in circumstances where the matter had already been determined by the Ombudsman and in respect of which decision no appeal had been taken to this Court in the manner provided for by s. 57CM of the 1942 Act. 15. Viewed thus, this appeal again raises a question of fundamental importance regarding the status of decisions of the Financial Services Ombudsman which has been considered in a series of High Court judgments. It must be recalled that the Financial Services Ombudsman ultimately adjudicates upon complaints in relation to financial service providers, so that his or her decisions are binding, subject only to the right of appeal to the High Court. In this respect, the Financial Services Ombudsman is quite unlike the Ombudsman established under the Ombudsman Act 1980, as the latter is given the power of suasion only and cannot make any binding adjudication. 16. Quite obviously, the Financial Services Ombudsman adjudicates by reference to the ordinary law of contract in the first instance, but he is not confined to that as the 1942 Act makes it clear that he has a wider jurisdiction to examine aspects of the fairness of any given financial services transaction. 17. Section 57BK(4) of the 1942 Act provides that the Financial Services Ombudsman is entitled:
(a) the conduct complained of was contrary to law; (b) the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant; (c) although the conduct complained of was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant; (d) the conduct complained of was based wholly or partly on an improper motive, an irrelevant ground or an irrelevant consideration; (e) the conduct complained of was based wholly or partly on a mistake of law or fact; (f) an explanation for the conduct complained of was not given when it should have been given; (g) the conduct complained of was otherwise improper.”
22. It is also important to stress again that there was no appeal against the decision of the Financial Services Ombudsman, so that the findings of the Financial Services Ombudsman in this case are final. This is, in any event, made clear by s. 57C(9) of the 1942 Act which expressly provides that adjudications by the Ombudsman have a binding character, subject only to the right of appeal to this Court. 23. In view of this and applying the reasoning of Charleton J. in O’Hara, this Court cannot, as it were, seek to go behind those findings by generally re-opening the plaintiff’s contractual claim unless there are altogether special circumstances which would it make it unfair to hold the parties to the earlier issue estoppel. In other words, this Court would be obliged to hold that the present proceedings should be struck out as an abuse of process by reason of the earlier issue estoppel created by the finality which attaches to the Ombudsman’s determination in the absence of an appeal, unless there are special circumstances which would make this, objectively speaking, unfair? 24. During the course of the hearing, three possible sets of special circumstances were identified. First, the plaintiff, as a litigant in person, failed to understand that he could appeal the Ombudsman’s decision. Second, Zurich employed an incorrect version of the policy at an earlier stage of the deliberations. Third, the medical conclusions were manifestly flawed and were possibly based in part on the wrong version of the policy. These contentions can all be examined in turn. The plaintiff’s explanation for the failure to appeal the decision of the Financial Services Ombudsman 26. In these circumstances, I cannot accept that, viewed objectively, a satisfactory explanation for the failure to lodge an appeal has been advanced by the plaintiff. I must therefore reject his contention that in this respect he can advance a justification for not treating the Financial Services Ombudsman’s decision as a res judicata. The contention that Zurich used a wrong version of the relevant insurance policy 28. The version which was used by Zurich when it wrote to the plaintiff’s cardiologist, Dr. Mulcahy on 20th September 2010 was as follows:
(a) Open-heart surgery to correct narrowing or blockage of one or more coronary arteries with bypass grafts. (b) Any interventional technique involving the use of transluminal coronary catheters to correct significant stenosis (at least 50% diameter narrowing) of two or more coronary arteries. Angiographic evidence to support the necessity for the above operations is required.”
‘The undergoing of any interventional technique on the advice of a cardiologist that has been appointed as a consultant physician that involves the use of transluminal coronary catheters. The procedure must be correct to at least 50% diameter narrowing of two or more coronary arteries. Angiographic evidence to support the procedure will be required.” 31. This was duly done and Dr. Mulcahy issued a further report on 7th January 2014 based on the terms of the policy which was in force in respect of the plaintiff’s claim. Dr. Mulcahy explained:
Mr. Crowley did not have significant (greater than 50%) lesions of either of the other two main coronary arteries at the time he underwent stenting of his LAD.” 33. Accordingly, while it was most unfortunate that the exact and precise wording of the policy had not been supplied to Dr. Mulcahy in the first instance, nevertheless, in view of his subsequent conclusion, I am not persuaded that an injustice was done to the plaintiff on this account. In these circumstances, this development does not justify any departure from the res judicata rule. The contention that the medical conclusions were flawed 35. The plaintiff subsequently informed me that he had approached a variety of consultant cardiologists for this purpose, but they either declined on the ground that they were not insured to give advice of this kind or for other similar reasons. In the end, the plaintiff was unable to supply any further medical evidence to support this contention. 36. Since the plaintiff has been unable - for whatever reason - to obtain medical evidence which demonstrates that the branch of a coronary artery should be regarded as an artery in its own right, I am driven to the conclusion that the plaintiff cannot demonstrate the existence of special circumstances which would defeat the application of the res judicata rule on this account either. Conclusions 38. It is impossible not to have considerable sympathy for the plight of the plaintiff. He purchased life insurance cover to cater for the contingency of serious illness. It transpired that he did in fact have a serious illness, but that the extent of the surgical treatment did not fall within the specific terms of the policy. He is now doubly disadvantaged in that his capacity to earn has been greatly diminished by reason of this serious illness, yet the contingency against which he sought insurance to cover himself has proved to be unexpectedly unavailing. 39. I must nevertheless apply the law as I find it to be. It gives me no pleasure at all to hold that his claim is barred by res judicata and I cannot properly find that it comes within any of the recognised exceptions to that doctrine. I would request Zurich to give as sympathetic a re-consideration of the underlying merits of this claim if this were considered feasible. But beyond that I find myself nonetheless obliged to dismiss the present case on the ground that it is bound to fail having regard to the fact that the unappealed decision of the Financial Services Ombudsman creates a res judicata which is fatal to the plaintiff’s claim. |