Ex-insurance broker loses bid to force IBRC to repay €500k

A retired insurance broker, who lost €500,000 in a property bond deal with Anglo Irish Assurance Co in Jan 2006, has lost a High Court bid to force the Irish Bank Resolution Corporation (IBRC), formerly Anglo, to pay it back to him.

Mr Justice John Hedigan said Hugh Governey, of Palmerston Rd, Dublin 6, put the money in a property-based fund promoted by Anglo Irish Assurance Co as a highly geared investment scheme in the Kennet Shopping Centre, Newbury, England.

The investment had failed because another shopping centre, the Parkway, had attracted lucrative tenants away from the Kennet centre. Mr Governey had made a complaint to the Financial Services Ombudsman.

Judge Hedigan said the essence of his complaint was that, 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.

Anglo had rebutted his claim, arguing it had disclosed all material facts to Mr Governey and Parkway had not been seen as a risk but a potential positive effect on the Kennet as it would increase footfall in Newbury.

The judge said the ombudsman had decided Mr Governey’s complaint against IBRC had not been substantiated. It was clear Mr Governey’s complaint was that the Anglo/IBRC had not fully appraised him of the risks involved in the investment.

Judge Hedigan said it seemed to be very questionable as to whether the contract really was one of assurance. “Everything I have read and heard concerning it strongly suggests it was a contract of investment dressed up as a contract of assurance for tax purposes,” he said.

The contract had dealt with an investment risk not an insurance risk. There was no life risk covered and it was described as an investment bond.

Judge Hedigan said the amount of €500,000 had been described as the amount to be invested and the bond was intended to mature after at least five years.

He said the ombudsman had expressed the view the appellant was an experienced investor and the court could not accept that this description of him was anything other than correct.

Mr Governey bore no resemblance to the inexperienced investor with which the ombudsman frequently dealt and who frequently came to the High Court on appeal.

The ombudsman’s finding noted Mr Governey had been informed by brochure he could lose all of his investment and that a geared property investment was considered high-risk.

The judge refused an order directing IBRC to repay the €500,000.