Retired broker loses Supreme Court appeal over €500,000 bond

A retired insurance broker who lost €500,000 in a property bond investment has lost his Supreme Court appeal over the Financial Services Ombudsman's (FSO) rejection of his complaint over the investment.

Hugh Governey, of Palmerston Road, Dublin 6, put the money in a property-based fund promoted by Anglo Irish Assurance as a highly geared investment scheme in the Kennet Shopping Centre, Newbury, England. Anglo subsequently became part of Irish Bank Resolution (IBRC) Assurance.

The investment failed because another larger shopping centre in Newbury, the Parkway, attracted lucrative tenants away from the Kennet centre.

Mr Governey had made a complaint to the FSO claiming Anglo/IBRC had breached its duty to disclose all material facts, including information in relation to the rival shopping centre. IBRC, which was a notice party in he case, disputed the claim.

The FSO found the complaint had not been substantiated. The Ombudsman said Mr Governey had been informed by brochure he could lose all of his investment and that a geared property investment was considered high-risk.

Full disclosure

In subsequent High Court proceedings, Mr Governey claimed, since the investment had been structured in the form of a life assurance policy, full disclosure of all risks had to be made or else the contract would be open to rescission.

The High Court found the contract he had entered into was an investment risk rather than an insurance risk and refused an order directing IBRC to repay the €500,000.

Dismissing Mr Governey's appeal against that decision to a three-judge Supreme Court, Ms Justice Mary Laffoy was also satisfied the contract was not, in substance, an insurance contract but an investment fund managed by Anglo.

Mr Governey had expressly waived responsibility to him on the part of IBRC in relation to potential future value of the Kennet centre and, by implication, the disclosure of the facts he alleged should have been disclosed, she said.

The matter of costs of the appeal and the High Court hearing will be addressed in the new year.