Wyllie Financial Services Ltd & Anor, R (On the Application Of) v Financial Services Compensation Scheme

On a renewed application for judicial review, permission requires a properly arguable case with a realistic prospect of success based on a material public law error. A compensation scheme making evaluative judgments about civil liability, loss and causation is entitled to assess the facts and evidence in context. The supervisory court must respect that evaluative function while independently examining whether the decision involved an error of law, fact, approach or reasonableness. A claimant cannot establish an arguable compensation claim by relying on hypothetical losses flowing from policies which the scheme was reasonably entitled to regard as invalid.

The claimants sought judicial review of the Financial Services Compensation Scheme’s decision of 17 January 2020 refusing compensation arising from life insurance policies arranged through the first claimant, an appointed representative of the defaulting firm. They alleged illegality, irrationality, procedural unfairness and breach of the public sector equality duty, and sought a quashing order, compensation, interim relief and a protected costs order.

Mr Justice Garnham had refused permission on the papers, finding that none of the grounds was properly arguable. The renewed application required the court to decide whether the defendant’s conclusions concerning insurable interest, fair presentation, duty, loss and causation disclosed any realistic prospect of establishing a material public law error.

1. Renewed application refused. The claimants had not shown a properly arguable claim with a realistic prospect of success involving a material public law error. The prior costs order was neither set aside nor varied.
2. The defendant was required to be satisfied that a valid civil liability was owed by the defaulting firm, that recoverable loss or damage existed, and that it had been caused by the firm’s default. Those questions involved evaluation of the particular facts, evidence and circumstances.
3. As to the 484 policies concerning 44 individuals, the defendant was entitled to conclude that there was no insurable interest and that the fair-presentation duty had been breached. The conclusions were open on the evidence and disclosed no arguable misdirection, error of law or unreasonableness. The court rejected the submission that the defendant was legally compelled to treat every policy as valid.
4. The alternative suggested duty to advise the first claimant, as an appointed representative, was also a matter for evaluative judgment in context. The defendant’s conclusion that no such obligation arose was not arguably unlawful or unreasonable.
5. The claimed losses could not establish an arguable case. Unrecovered premiums were outweighed by commissions received. The claimed death benefit depended on an invalid policy, and the defendant was entitled to conclude that no loss had been demonstrated by reference to an available lawful replacement policy. The wider expectation losses likewise depended on hypothetical income and cover which could not logically have arisen from invalid policies.
6. The supervisory court must respect the decision-maker’s evaluative function, while carefully assessing whether the decision contains a public law error in approach, reasoning or conclusion. The permission threshold is modest, but it still requires a properly arguable and realistic case.

• High Court (Administrative Court): Mr Justice Garnham refused permission for judicial review on the papers. On renewal, the court refused permission and left the costs order in place.