{"id":66,"date":"2014-02-25T00:00:00","date_gmt":"2014-02-25T00:00:00","guid":{"rendered":"https:\/\/fenchurchlaw.hostingsystems.co.uk\/uk\/blog\/2014\/02\/25\/clark-v-in-focus-there-is-only-one-cherry-and-no-second-bite-at-it\/"},"modified":"2024-08-21T17:02:17","modified_gmt":"2024-08-21T16:02:17","slug":"clark-v-in-focus-there-is-only-one-cherry-and-no-second-bite-at-it","status":"publish","type":"post","link":"https:\/\/fenchurchlaw.com\/en-uk\/clark-v-in-focus-there-is-only-one-cherry-and-no-second-bite-at-it\/","title":{"rendered":"Clark v In Focus: There is only one cherry, and no second bite at it"},"content":{"rendered":"

Summary<\/strong><\/p>\n

Financial advisers across the country will be breathing a sigh of relief as they digest the Court of Appeal\u2019s decision in Clark v In Focus, meanwhile consumers which have suffered losses in excess of the statutory limit of the Financial Ombudsman Service\u2019s scheme have been given a stark warning: by all means accept the Ombudsman\u2019s award, but the Courts will give you no second bite at the same cherry.<\/p>\n

The facts and the decision<\/strong><\/p>\n

Mr and Mrs Clark claimed that they had lost in excess of \u00a3300,000 as a result of negligent investment advice.<\/p>\n

They initially pursued their complaint through the Ombudsman. The Ombudsman was established under the Financial Services and Markets Act 2000 (\u201cFSMA\u201d); the rules under which it operates are fleshed-out by the Financial Conduct Authority\u2019s Handbook. It was intended as a fast, cheap and relatively informal dispute resolution service, which at the time of the Clark\u2019s claim had the power to award a consumer compensation against a financial services provider \/ adviser, up to a maximum of \u00a3100,000 (the limit is now \u00a3150,000).<\/p>\n

In resolving disputes, the Ombudsman has to give each side the chance to put their case in writing; additionally, there may or may not be an oral hearing and oral evidence taken. The Ombudsman then has to determine the complaint \u201cby reference to what is, in the opinion of the Ombudsman, fair and reasonable in all the circumstances of the case\u201d. That will include taking proper account of the law, but may encompass other factors as well. If the Ombudsman believes that more than the statutory limit should be paid, he can recommend that an adviser pays a higher amount. When the Ombudsman makes a decision, the consumer has a choice as to whether or not to accept it. If he rejects it, it doesn\u2019t bind the consumer or the adviser. If he accepts it, he can enforce any award up to the statutory limit as a county court judgment, but cannot enforce the Ombudsman\u2019s recommendations above that limit.<\/p>\n

In the case of the Clarks, the Ombudsman ordered that they be paid \u00a3100,000, and recommended additional compensation. They accepted it, but expressly made their acceptance subject to their \u2018right\u2019 to bring court proceedings for the balance. Their adviser paid the award, but no more. True to their word, they commenced court proceedings for negligence, giving credit for the \u00a3100,000 already received.<\/p>\n

Cranson J, disagreeing with an earlier High Court decision in Andrews v SBJ Benefit Consultants [2011] PNLR 477, held that the Clarks\u2019 causes of action did not merge with the Ombudsman\u2019s award. They could bring their claim.<\/p>\n

The Court of Appeal have now overturned that decision: it has held that the Ombudsman service makes final judicial decisions for the purposes of res judicata, and that therefore where the facts giving rise to a complaint before the Ombudsman also give rise to a cause of action, and the Ombudsman decides a relevant question arising out of those facts, then the acceptance of the Ombudsman\u2019s award will preclude a court action such as the Clarks\u2019; the cause of action will already have been adjudicated upon.<\/p>\n

The fact that res judicata was not mentioned in the relevant parts of the FSMA or the Handbook did not mean that it did not apply; quite the contrary, clear language would have been needed to exclude it. Neither did it matter that the Ombudsman could take into account factors which the courts could not.<\/p>\n

Once it was established that the Ombudsman\u2019s decision was a judicial decision on facts giving rise to a cause of action, the Clarks\u2019 reservation of their \u2018rights\u2019 to commence legal proceedings for further damages was meaningless, because they had no such right. Res judicata operates irrespective of the wishes of either or both parties.<\/p>\n

As the Court noted, the Ombudsman scheme was intended to resolve disputes, rather than be just the first stage in a longer process.<\/p>\n

Implications<\/strong><\/p>\n

Whether or not res judicata applies in a given case will depend upon the facts of that case and how the complaint, award and the subsequent claim is framed. The question is whether the cause of action in respect of which the later claim is brought has already been adjudicated upon by the Ombudsman.<\/p>\n

The onus of proving that it is will be on the party alleging that it is (the adviser) and Arden LJ indicated that doubt would be resolved in favour of the consumer.<\/p>\n

Still, wherever a person\u2019s loss exceeds the statutory limit (now \u00a3150,000), then that person would be well advised to seek legal advice on their particular situation: depending on their prospects of success and the likely value of their claim, they may well be giving up a substantial amount of money by accepting the Ombudsman\u2019s award.<\/p>\n","protected":false},"excerpt":{"rendered":"

Summary Financial advisers across the country will be breathing a sigh of relief as they digest the Court of Appeal\u2019s […]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12],"tags":[],"class_list":["post-66","post","type-post","status-publish","format-standard","hentry","category-case-law"],"acf":[],"yoast_head":"\nClark v In Focus: There is only one cherry, and no second bite at it - Fenchurch Law UK<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fenchurchlaw.com\/en-uk\/clark-v-in-focus-there-is-only-one-cherry-and-no-second-bite-at-it\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Clark v In Focus: There is only one cherry, and no second bite at it - 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