Wragge Lawrence Graham & Co

UK 200 2013 position: 25

Ombudsman’s decision will preclude subsequent litigation on the same matter

Wragge & Co first reported on the decision in Clark and another v In Focus Asset Management & Tax Solutions Ltd in January 2013. In essence, the claimants accepted the Financial Ombudsman’s decision arising out of their complaints against their financial advisers.

The losses were in excess of £500,000 and the Ombudsman found they were entitled to compensation. The maximum sum it could award was £100,000. The claimants accepted this sum, subject to their right to claim more in court proceedings. They then issued court proceedings, which the defendant sought to strike out as an abuse of process, the matter already having been litigated or judged (the doctrine of res judicata). The High Court held that the Ombudsman’s decision, which was said to be ‘binding and final’, simply referred to the end of the Ombudsman’s process and did not preclude court proceedings from subsequently being issued following the acceptance of a decision. As a result, the claimants were entitled to claim damages for an amount in excess of the sum they had accepted.

On appeal, the Court of Appeal held that an Ombudsman’s decision could indeed preclude subsequent court proceedings if the cause of action before the Ombudsman was the same as that before the court. It was for the defendant to prove the causes of action were the same. If they were not, there would be no issue of res judicata. If it was the same, court proceedings would not be permitted to simply ‘top up’ the Ombudsman’s award…

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