High Court of Ireland Decisions
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Cite as: [2015] IEHC 85
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Judgment
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Neutral Citation: [2015] IEHC 85 THE HIGH COURT [Record No.2014/169 MCA] IN THE MATTER OF SECTION 57CL OF THE CENTRAL BANK ACT 1942 (AS INSERTED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004) BETWEEN DEREK O’REGAN APPELLANT AND
FINANCIAL SERVICES OMBUDSMAN RESPONDENT JUDGMENT of Ms. Justice Iseult O’Malley delivered the 2nd February, 2015 Introduction 2. The appellant’s case was that he at all times believed that a mortgage protection policy taken out by himself and his wife included serious illness cover. They discovered for the first time that it did not when, in 2011, he was diagnosed with rheumatoid arthritis and sought to make a claim against the policy. 3. Although the appeal is brought in the name of Mr. O’Regan only, it is accepted by the respondent that it is also brought on behalf of his wife since the mortgage and the insurance policy were in joint names. They are therefore referred to as “the appellants” or, where appropriate, by name. Background 5. In January 2011, Mr. O’Regan was diagnosed with rheumatoid arthritis in his ankle and knee joints, which rendered him unable to pursue his normal occupation as a plasterer. 6. In August 2011, the appellant applied to Zurich pursuant to what he believed to be the terms of the then current insurance policy (dating from 2009) due to the diagnosis of rheumatoid arthritis. Zurich refused the plaintiff’s claim on the basis that the policy in force did not include serious illness cover. According to the appellants, this was the first time that they realised that their insurance policy did not contain serious illness cover. It transpired that the most recent previous policy, entered into in 2008, also did not cover serious illness. 7. In September 2011, the plaintiff appealed the decision of Zurich to the respondent. In the Financial Services Ombudsman complaint form dated 22nd September 2011, Mr. O’Regan summarised his complaint as follows:
9. In asserting that the new policy contained serious illness cover, reference is made by the plaintiffs as to the comparison of the price of the premium paid in the 2007 policy containing serious illness cover and the premium in the 2008 policy, a difference of around €3. 10. Mr. O’Regan emphasises the importance of serious illness cover to their family in light of the family’s medical history of cancer and arthritis. Mr. O’Regan claims that Mr. Crowley knew that his brother had died of cancer in 2002 and, therefore, knew that he wanted this particular cover. He also says that any errors in relation to medical questions on the form are Mr. Crowley’s fault, as he filled in the form after being given the relevant information. Mr. Crowley’s evidence was that he was never made aware of the relevant medical history. He says that the serious illness cover was not included in 2008 or 2009 for reasons of affordability and that the appellants were fully informed as to what their choices were. 11. Zurich has at all times maintained that there was never an option of dropping “rare diseases”, or any diseases, from the serious illness cover. A customer either opted for the cover or did not. Mr. Crowley’s evidence was to the same effect, and he denied ever having made suggestions to the contrary. 12. The appellants say that Mr. Crowley did not explain the changes to their policy and that they never received a copy of the full documentation relating to the new policy. They therefore claim that they were deprived of information relating to the cover they had taken out, and denied the opportunity to identify any errors and change the policy. 13. Zurich’s position throughout has been reiterated that the in-force policy did not include serious illness cover because it was not applied for on the form that the appellants completed. Zurich also asserted that a letter was sent to the appellants on 27th January, 2009, enclosing a policy certificate, policy document and disclosure notes. They say they are satisfied that the policy operated in accordance with its terms and conditions, that the details of the policies were correct and in accordance with the signed application forms and confirmed in the various documents issued to them. First finding of Financial Services Ombudsman 15. On the 25th February, 2013 this finding was appealed to the High Court. On the 5th March, 2013 the High Court (Feeney J.) remitted the matter to the respondent on the basis that there should have been an oral hearing. The basis for the ruling was that, having reviewed the correspondence and submissions, Feeney J. was satisfied that there was a clear conflict between the parties as to what information the appellant and his wife had given Mr. Crowley regarding health issues in their family, and what information he had given them about serious illness cover. Mr. Crowley had said that he was never made aware of the history of cancer and had not made a recommendation that any benefit should be removed. His account of events focussed on the appellant’s need to reduce their premium and he was “satisfied” that they were aware that they were not applying for serious illness cover. The insurance company relied on Mr. Crowley’s account. There was also an issue as to whether the appellant had received the documentation about the policy. Feeney J. held that in the circumstances the nature and extent of the conflict of evidence was such that an oral hearing would have been necessary. 16. An oral hearing was duly held on the 17th December, 2013 and the respondent gave his decision on the 12th February, 2014. Test applicable to this appeal
20. An appeal against a finding of the respondent is a statutory appeal. Unlike many such appeals it is not confined to a point of law. The appeal in this case is against a finding made after an oral hearing, conducted because of a conflict on the facts which could not otherwise be determined. The appeal was not a de novo hearing, but a review of the respondent’s findings, so it is perhaps necessary to spell out the approach taken by the court to the respondent’s assessment of the evidence. 21. In my view, where the respondent has made a finding on foot of an oral hearing, the court should continue to defer to the respondent’s views on evidence relating to matters within his area of expertise. Where, however, the conflict of evidence relates to factual, non-technical matters, such as whether or not particular facts were communicated or particular assurances were given, it seems to me to be appropriate for the court to consider the case in accordance with the principles set out by the Supreme Court in Hay v. O’Grady [1992] I.R. 210 dealing with the jurisdiction of that court dealing with an appeal from the High Court. The principles are listed in the judgment of McCarthy J. at p. 217 as follows:
(2) If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings, however voluminous and apparently weighty the testimony against them. (3) Inferences of fact are drawn in most trials; it said that an appellate court is in as good a position as the trial court to draw inferences of fact (see the judgment of Holmes L.J. in ‘Gairloch’, SS Aberdeen Glendine Steamship Co. v. Macken [1899] 2 I.R. 1, cited by O’Higgins C.J. in The People (Director of Public Prosecutions) v. Madden [1977] I.R. 336 at p.339). I do not accept that this is necessarily so. It may be that the demeanour of a witness in giving evidence will, in itself, lead to an appropriate inference which an appellate court would not draw. In my judgment, an appellate court should be slow to substitute its own inference of fact where such depends on oral evidence or recollection of fact and a different inference has been drawn by the trial judge. In the drawing of inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial judge. (4) A further issue arises as to the conclusion of law to be drawn from the combination of primary fact and proper inference…If, on the facts found and either on the inferences drawn by the trial judge or on the inferences drawn by the appellate court in accordance with the principles set out above, it is established to the satisfaction of the appellate court that the conclusion of the trail judge…was erroneous, the order will be varied accordingly. (5) These views emphasise the importance of a clear statement, as was made in this case, by the trial judge of his findings of primary fact, the inferences to be drawn and the conclusion that follows.”
…it is also important to note that part of the function of an appellate court is to ascertain whether there may have been significant and material error(s) in the way in which the trial judge reached a conclusion as to the facts. It is important to distinguish between a case where there is such an error, on the one hand, and a case where the trial judge simply was called on to prefer one piece of evidence to another and does so for a stated and credible reason. In the latter case it is no function of this court to seek to second guess the trial judge’s view.” Oral hearing and second finding of the Financial Services Ombudsman 25. The appellants were legally represented at the oral hearing. The case made by them was that they had taken out a number of policies with Zurich Life Assurance plc, through Mr Pat Crowley, beginning in 2004. It is common case that in the early years their policies included mortgage protection, life assurance and serious illness cover and they said that they had believed that this was continued at all relevant times. In 2011, Mr. O’Regan was diagnosed with rheumatoid arthritis and made a claim on the policy. At that point he was informed that there was no serious illness cover. 26. Having regard to the principles of law discussed above, the evidence will be dealt with mainly by reference to the summary given in the respondent’s written decision. 27. It is clear from the evidence that it was Mrs. O’Regan who had most, if not all, of the dealings with Mr. Crowley. She gave evidence in relation to the inception of the most recent policy, in January 2009. She said that at the end of 2008 Mr. Crowley rang her and asked her did she know that the previous insurance policy was about to lapse. She said she did, but that she was pregnant and they were both out of work. She told him that they were paying interest only on the mortgage at that point. Mr. Crowley responded that in those circumstances they should not be paying for full mortgage cover. He said that he would see if he could “take it down” for them. 28. Mrs. O’Regan said that she went to see Mr. Crowley, who had an application form ready for her. She signed it, took it home for her husband to sign and brought it straight back to Mr. Crowley. As far as she knew, the only thing that was changing was that the payments would come down, because they did not need full cover for the mortgage while paying interest only. She believed, arising from her conversation with Mr. Crowley, that “everything else stays the same”. 29. Mrs. O’Regan’s counsel asked her to explain the fact that the policy entered into in the previous year did not have serious illness cover. She said that the family had been under financial pressure at that stage also and she had told Mr. Crowley that they could not afford the policy. He had said to her that he could try and bring it down, that there were “diseases that you would never hear of or you might never, ever get”. She said that there was nothing said about serious illness cover. She believed that Mr. Crowley knew that they needed it because of her husband’s family history - his brother had died of cancer and there was arthritis in the family. She was adamant that Mr. Crowley knew this. 30. When asked about the January 2009 policy, both of the appellants said that they had never received any accompanying documentation explaining what cover was in place. 31. Mrs. O’Regan said that Mr. Crowley filled in the answers to the health questions on all the application forms, having been given the relevant information. Mr. O’Regan’s evidence was that he first met Mr. Crowley in 2005 and gave him his family’s medical background at that time. He met him again in 2011 when he confronted him over the lack of cover. 32. The last policy that did, undoubtedly, have serious illness cover had cost them €83.23 per month. The latest policy was €80 per month. The appellants assumed that this figure meant that they had serious illness cover, minus the “rare diseases”. 33. Both of the appellants accepted that there had been a period of several months in 2007 up to February 2008 when they had allowed a policy to lapse for non-payment. They also accepted that they had both signed the application forms in 2008 and 2009 without reading them - this, they said, was because they trusted Mr. Crowley. 34. Mr. Crowley said that the first policy he sold to the appellants was in 2005, and that he dealt with Mrs. O’Regan only. He never met Mr. O’Regan until 2011. He said that he went through all of the questions on the application form with Mrs. O’Regan each time and entered the information she gave him. He advised them as to their options each time - for example, whether it was more cost effective to reinstate a lapsed policy, by paying the back premiums, or to take out a new one. He said that it would not have been possible to give them a quotation without advising as to what was covered. He maintained that he was never told about Mr. O’Regan’s brother, and never said that it was possible to reduce the premium for serious illness cover by dropping “rare diseases”. 35. Mr. Paul Murphy, Zurich’s Operations Manager, gave evidence relating to the automated system for sending out policy documentation. The respondent’s finding 37. The previous policies
In April 2007 the O’Regans applied for a mortgage protection policy through an independent broker. This policy never came into effect. In July 2007 the O’Regans applied through the same independent broker for a guaranteed term protection policy (12904448) for life and serious illness cover on both of their lives. This policy lapsed in September 2007. In March 2008 the O’Regans applied through Mr. Crowley for two separate policies. One (13416652) was a term protection policy for life cover on both of their lives. The other (13416367) was a mortgage protection policy for life cover only on both of their lives, to protect an outstanding mortgage. These policies lapsed in December 2008. In February 2009 the O’Regans applied through Mr. Crowley for a term protection policy (13947298). The document signed by both of them requested life cover only. 39. Discussions concerning the cover required
He noted Mr. Crowley’s evidence that it was not possible to remove some illnesses or diseases and retain cover for others, under a guaranteed term protection policy. Mr. Crowley had said that he did not discuss diseases, just serious illness, and that the policy with life cover only was chosen by the O’Regans in order to reduce the premium. The respondent then referred to the documentary evidence. He noted that the application form for the guaranteed term protection policy in February 2008 detailed the provision for life cover. The section below that, entitled “Serious Illness Sum Insured” had a line drawn through it. The other application signed at the same time also detailed the provision for life cover. The percentage of serious illness cover required was marked as “none”. It was noted that it was accepted that Mr. Crowley had filled in the forms but that his evidence was that he asked the questions and filled in the answers provided to him. Both of the O’Regans had said that they signed the forms without reading them, because they trusted him and he had not said that he was taking them off serious illness cover. Each of the application forms contained a “Declarations” section. In each, it was confirmed that the policy being applied for did not replace an existing policy. There was also a declaration that the customer had read the entire form and was satisfied that all answers were true and complete.
…in circumstances where the Complainants have acknowledged that they did not read the contents of the Application Forms they had signed in February 2008, it is very difficult for the Complainants to establish now that the Provider acted without their knowledge or consent in putting in place a policy with no serious illness cover, or failed to provide them with accurate information about the type of cover which was put in place.”
Zurich provided copies of the documentation which it said had been issued at the relevant times. The company’s operations manager also gave evidence about the process by which documentation was sent out to customers. Specific reference was made to evidence that when a policy certificate was produced, a covering letter would also issue. Staff in the assembly area would place these in an envelope with the policy booklet and the disclosure notes in such a way that the typed address on the top of the letter would appear in the envelope window. Without the covering letter, the person in the assembly area would not have an address to post the envelope to. 43. Content of the policy documents
The cover letter in each case informed the customer that if the policy was not to their satisfaction they could cancel it within 30 days and have any payment refunded. 45. The level of premium payable
47. The 2009 policy
Mr. Crowley had explained this at the hearing as being necessary because they were paying interest only on the mortgage loan and the capital sum was therefore not decreasing. Serious illness was not covered by the policy. The company said that this was because it was not asked for. The O’Regans said that they were unaware that it was not covered and that Mr. Crowley had not explained this “massive change” to their policy. The respondent noted that page 2 of the 2009 application form referred to the fact that there was life cover of €200,000 in respect of each of the complainants but €0 in respect of “additional benefits or options”. There was a declaration section, signed by Mr. and Mrs. O’Regan, by virtue of which they declared that they had read the entire application form and were satisfied that the answers and statements made in it were true and complete. They acknowledged at the hearing that they had not read it.
Mr. Crowley’s evidence was that Mrs. O’Regan had always been his point of contact and that he had not met Mr. O’Regan until September 2011, when the complaint was made. He said that at no stage prior to that had he been made aware of the history of cancer in Mr. O’Regan’s family. The respondent noted that the application form signed by the O’Regans in 2005 had asked whether any close family member had suffered from any of a list of specified illnesses, including cancer. This had been answered “No”. The declaration section of the form was the same as those referred to above. It was also noted that the application forms signed in February and March 2007 did give the answer “Yes” to that question, with the additional information as to the death of Mr. O’Regan’s brother. However, this application had not been made through Mr. Crowley. The next time the O’Regans dealt with Mr. Crowley, in February 2008, the answer to the question was again “No”. Zurich said that Mr. Crowley would not have had access to forms transmitted through an independent broker. 50. Respondent’s conclusion
51. Mr. O’Regan, who is now without legal representation, continues to maintain that he and his wife were misled in relation to the extent of the cover they were getting. In general, he makes the case that they should have been believed by the respondent. He also raises a new issue - he says that the paperwork has been “doctored” since the original complaint was made, in that, firstly, the medical definitions in the cover requirements for serious illness have been altered without medical reason. Secondly, it is said that there are some inconsistencies in the copy documents put before the respondent, especially before the first decision. 52. The respondent points to the fact that there was no clear pattern established before the 2009 policy - earlier policies were sometimes entered into with Mr. Crowley, sometimes with an independent broker; some covered serious illness, some did not. 53. With regard to the allegation of “doctoring”, it is submitted that this argument was not made at the oral hearing by the appellants’ legal representatives. In any event, it is submitted that there is an explanation for the inconsistencies and that by the time of the oral hearing, every party was using the same, comprehensive set of complete documents. The change in the medical definition would, it is further submitted, be relevant only if it was accepted that there was cover for serious illness in place. Discussion and conclusions 55. It should probably be noted that the appellants must be considered to have told the truth to Zurich in relation to Mr. O’Regan’s brother in 2007. The fact that this application was made through an independent broker does not change the fact that the application was being made to Zurich. There would be no conceivable reason why the appellants might be thought to have attempted to conceal the relevant information in subsequent years. 56. However, this does not dispose of the central problems in the appellants’ case. Firstly, there was evidence which the respondent found to be credible, that the discussion between Mr. Crowley and Mrs. O’Regan was about affordability of premiums rather than the need for serious illness cover, and, secondly, the admission by both appellants that they never read the documents before signing them. 57. Looking at the case, as I must, by reference to the content of the written decision, the transcript of the hearing and the legal principles discussed above, I am constrained to find that there is no serious or significant error in the respondent’s approach to the case, the handling of the oral hearing, the assessment of the case or the drawing of inferences from the evidence. It is not, therefore, possible as a matter of law for this court to disagree with his conclusions. |
