R Aviva Life & Pensions (UK) Ltd v Financial Ombudsman Service Mrs S.P. McCulloch and Another (Interested Parties)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jay |
| Judgment Date | 27 February 2017 |
| Neutral Citation | [2017] EWHC 352 (Admin) |
| Date | 27 February 2017 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/859/2016 |
[2017] EWHC 352 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jay
Case No: CO/859/2016
and
Robert Moxon Browne QC and Sonia Nolten (instructed by Aviva Legal Services) for the Claimant
James Strachan QC (instructed by Senior Legal Counsel at FOS) for the Defendant
Hearing date: 22 nd February 2017
Judgment Approved
See Order at bottom of this judgment.
Introduction
In these judicial review proceedings, the Claimant ("Aviva") challenges a decision of the Defendant ("FOS") given on 16 th November 2015 upholding, in part, the complaint by the Interested Parties ("Mr and Mrs McCulloch") relating to Aviva's handling of two insurance policies taken out in 2006 and 2013 respectively. Mr and Mrs McCulloch have taken no active role in these proceedings, but have made clear that anonymity is not sought under CPR Part 39.2(4).
The issue which arises for determination in these proceedings is narrow. FOS concedes that the decision of its Ombudsman should be quashed on the basis that it is inadequately reasoned. It contends before me, as it has consistently done since February 2016, that this concession renders these proceedings academic. Aviva's case, in essence, is that its application for judicial review should be heard to a conclusion, and a narrative judgment given, because it is unanswerably right both on the facts and in law; or alternatively because a new Ombudsman should have the benefit of whatever I might say in this judgment.
Before I examine these issues, I need to set out the essential factual background to this case. Fortunately, this is not in contest, both in relation to the underlying dispute between Aviva and Mr and Mrs McCulloch, and FOS's handling and adjudication of their complaint. In any event, to the extent that FOS's Ombudsman has made findings of primary fact (as opposed to secondary or inferential findings) in her determination of the complaint, I consider that these cannot be unimpeached.
Essential Factual Background
In July 2006 Mr and Mrs McCulloch took out a 23-year joint life policy ("the joint life policy") which included terminal illness benefits and a sum assured of £127,000. This was, in essence, a composite policy whereby Mr McCulloch was insuring against the contingency of his wife's predecease, and vice versa. A single premium was payable on the basis of a blended mortality risk. I understand that Mr and Mrs McCulloch paid all the required premiums under this policy.
At some point before August 2013, and possibly as early as 2008, Mr McCulloch (who was born in 1971) developed a rare, early-onset form of dementia known as Fronto-Temporal Dementia ("FTD"). This is an aggressive, terminal condition which entails irreversible degeneration of the brain cells in the primary cognitive areas. At that stage, Mr McCulloch's condition was undiagnosed and he was unaware of it. Even so, by that date Mr McCulloch had already suffered significant changes in personality leading to the breakdown of his marriage. There is evidence that he could no longer work and was losing control of his financial affairs.
In early August 2013 Mr McCulloch contacted Aviva by telephone to cancel the joint life policy, because it was no longer required. Mrs McCulloch's written consent was required, and it was obtained on 5 th (or, possibly, 8 th) August. She said that the premiums could no longer be afforded. The direct debit instruction was revoked and the joint life policy was cancelled by Aviva.
At about this time, Mr McCulloch's family had become concerned about changes in his behaviour and personality, and on 20 th August 2013 his sister contacted his GP. That afternoon, the GP saw Mr McCulloch in consultation with his sister. Thereafter, a number of consultations took place and possible mental illness was considered.
In early September 2013 Dr B referred Mr McCulloch for routine investigations into a possible inguinal hernia.
On 9 th September 2013 Dr B referred Mr McCulloch for routine psychiatric assessment: the main presenting complaint was described as "personality change". The referral letter states:
"I reviewed him and his family who unfortunately still have concerns about his behaviour … I spoke to his wife who is now separated from him … and she feels his personality has changed slowly over the last few years.
…
On examination I could find no significant neurological findings of note … The family are still concerned that he has significant behavioural change in the recent past and although I think he has indeed a personal attitude concerns [sic] and this is probably related to his time in the navy and also his work in convoy protection rather than a mental illness but there is significant concerns from his family that he may have a mental illness given his personality."
It is not altogether clear from the medical records exactly when Mr McCulloch was first seen by a psychiatrist, but on my understanding of the GP's computer record the latter had a telephone conversation with a Dr R, consultant psychiatrist, on 10 th October 2013. According to Dr R's letter dated 15 th October 2013, Mr McCulloch did not present with clear signs of mental illness or neurological deficit, and "it is likely that people can have personality traits which again are very much part and parcel of their nature which they fail to recognise it, as a problem". As I have said, it is not clear whether Dr R had in fact seen Mr McCulloch at that stage, or whether he was simply discussing his case in general terms with the GP.
In the meantime, Mr McCulloch's family's concerns were deepening. The GP was told about various specific matters which it is unnecessary for me to set out. Nonetheless, when the GP explored these concerns with Mr McCulloch, he denied any recollection of their having took place.
On 18 th October 2013 the GP referred Mr McCulloch for further psychiatric assessment. After setting out the recent history, the GP said:
"Although I initially thought as we discussed that his symptoms were suggestive of his personality traits and the recent stress of the breakup of his marriage and his career am now beginning to wonder if there is a more acute mental health issue giving that he is running up debts [etc.]
I would appreciate your further review, have arranged for him to have a blood screen and CT scan [on 17 th October] to ensure there is no evidence of frontal lobe pathology to explain his condition but I suspect these will come back normal."
On 1 st November 2013 Mr McCulloch was seen again by his GP. According to the computer record:
"he feels capable of work – denies any abnormal thoughts actions admits to being in debt and having bought things he doesn't need and has no recollection why …"
On 7 th November 2013 Mr McCulloch applied to Aviva for a single life policy with terminal illness benefit, with a sum assured of £500,000 ("the single life policy"). He completed the proposal form in the following material respects:
"Q18: 'Within the last five years, other than in respect of the conditions that you have already declared have you:
1. received any medical attention at a hospital as an inpatient or outpatient, or
2. had or been advised to have any investigations, scans or blood tests?'
A: 'no'
'Q19: Other than in respect of the conditions that you have already declared, are you currently:
1. experiencing any symptoms or complaints for which you have not consulted a doctor or
2. receiving any form of treatment or medication or
3. awaiting any medical or surgical consultation or follow up or
4. awaiting any test or investigation?'
A: Yes – groin hernia (and further details were given)."
It follows that Mr McCulloch did not disclose to Aviva that he had been consulting his GP in relation to possible mental health issues since September 2013, that he had been referred for psychiatric assessment, and that he was awaiting a CT scan.
Aviva accepted Mr McCulloch's application and on 12 th November 2013 cover commenced under the single life policy.
On 18 th November 2013 Mr McCulloch was seen by Dr B, described as a "specialty doctor in psychiatry". Dr B did not give a specific diagnosis, and at the same time did not record any particular concerns. In his clinic letter Dr B did state, "[Mr McCulloch] was unable to give any explanation about his behaviour" and "at times I did feel he didn't have insight into such matters [which I interpret as being a general reference to possible psychiatric issues]".
On 22 nd November 2013, following the result of his CT scan, Mr McCulloch's FTD was diagnosed.
On 11 th December 2013 Aviva was informed by telephone by a relative of Mr McCulloch that he was in a hospice, that his condition was terminal, and that the family wished to notify on his behalf a claim for terminal illness benefit. I have not seen any evidence which specifies the prognosis beyond the condition being "terminal" and "incurable".
At this stage, three salient facts should be noted:
(1) Mr McCulloch's non-disclosures (see paragraph 15 above) were due to his illness and, as the Ombudsman was later to find, "[he] could not be expected to make the same disclosure that [one] would expect a reasonable person to make".
(2) Aviva was not aware of Mr McCulloch's disability until the telephone call on 11 th December.
(3) Had Mr McCulloch's non-disclosures not taken place, Mr McCulloch's policy would not have been issued (see Aviva's evidence submitted to FOS, which was not contradicted).
On 23 rd April 2014 Aviva...
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