English Court of Appeal finds catalogue retailers were acting as agents of insurance broker in mis-selling PPI to consumers

About this case:

• Citation:
  [2023] EWCA Civ 1049
• Judgment:
  External link
• Court:
  England and Wales Court of Appeal
• Judge:
  Lord Justice Singh

It was argued by Assurant General Insurance Ltd that the Ombudsman was wrong to conclude that there was a relationship of agency and thus that it had jurisdiction. The appeal was opposed by the Ombudsman, while the remaining respondents did not appear and were not represented.

The appeal was heard in the Court of Appeal by Lord Justice Peter Jackson, Lord Justice Singh, and Lord Justice Warby. Saima Hanif KC and Tom Rainsbury appeared for the appellant and James Strachan KC for the first respondent.

Precedent fact

The second to fifth respondents were consumers who had used home shopping catalogues to make purchases in the early 2000s. Each took advantage of the retailer’s credit facilities to spread the cost of their purchases, and in the process were mis-sold a PPI policy underwritten by the appellant to cover that credit arrangement. All four later complained to the first respondent, the FOS, and the Ombudsman accepted their complaints on the basis that the retailers were acting as the appellant’s agents when they sold the PPI policies to the consumers.

A claim for judicial review of the Ombudsman’s decision was made by the appellant, which was rejected by a judge of the King’s Bench Division of the High Court. The judge took the view that the court would not consider the question of jurisdiction itself but would only review the Ombudsman’s decision on principles of public law.

The judge directed herself that the question in respect of the agency issue was not to construe the contracts but to determine whether it was properly open to the FOS to conclude that a relationship of agency existed. On that point, she concluded that the decision was entirely rational on the materials and in the factual context.

It was argued on appeal that the judge erred in adopting a traditional judicial review approach to the case. The question of whether there was an agency relationship was one of precedent fact which the court was required to decide, as the correct construction of the agreements was a question of law. Further, she had wrongly concluded that she could not find fault with the Ombudsman’s conclusion that it had jurisdiction.

All the indicators

In a judgment with which the other two judges agreed, Lord Justice Singh observed: “The Judge was right to take the view that, generally speaking, issues of fact are for the Ombudsman to determine, subject to judicial review on conventional grounds such as irrationality or procedural unfairness. This is true even of facts which go to the Ombudsman’s jurisdiction, i.e. “jurisdictional facts”. The mere fact that a fact is a jurisdictional fact does not automatically render it a precedent fact.”

However, he went on to say: “The Judge herself said that errors of law fall to be corrected by the court and appears to have appreciated that the construction of a contract is a question of law. She did not, however, apply that appreciation to the present case because she did not engage in the exercise of herself setting out what was the correct construction of the contracts in this case.”

Addressing the question of whether there was an agency relationship, Singh LJ said: “The relationship created by the insurance agreements in this case had all the indicators of a relationship of agency. There was a large degree of control exercised by Assurant over the retailers in relation to marketing and other matters. The retailers owed fiduciary duties to Assurant when they received premiums from the consumer and, having taken their agreed share of the payment, had to account for the rest of the money to Assurant.”

He continued: “The retailers were clearly not independent brokers or anything like that. They were tied to marketing the insurance policies of Assurant. This again is, in my view, an indicator that the retailers were acting as agents of Assurant when selling those policies to consumers.”

Singh LJ concluded: “The question of agency is one of substance and not form. Whatever label is attached to the agreement between them if in truth there is a relationship of agency between the retailer and Assurant, that objective reality cannot be negated by a clause which appears to contradict that reality.”

The court therefore upheld the conclusion of the FOS and dismissed the appeal.