Manchikalapati & Ors, R (On the Application Of) v Financial Services Compensation Scheme [2023] EWCA Civ 1006 (05 September 2023)

Manchikalapati & Ors, R (On the Application Of) v Financial Services Compensation Scheme [2023] EWCA Civ 1006 (05 September 2023)

Claims for post-judgment interest and litigation costs are not compensable under the FSCS Policyholder Protection Rules because they are not amounts owed 'under' the contract of insurance. The scheme is limited to contractual liabilities, and the words 'in respect of' in the relevant rules do not extend compensation to statutory or court-ordered sums beyond the policy terms.

Citation
[2023] EWCA Civ 1006
Parties
Claimants/respondents: Manchikalapati and Others; Defendant/appellant: Financial Services Compensation Scheme
Jurisdiction
England and Wales
Judgment Date
05 September 2023
Procedural Posture
Judicial Review Appeal / Court of Appeal (civil Division) Appeal From High Court
Outcome
Appeal allowed; High Court decision quashed.
Legal Topics
Policyholder Protection, Compensation Schemes, Building Guarantee Insurance, Judicial Review, Interpretation of Regulatory Rules
Insurance Law Administrative Law Statutory Interpretation Policyholder Protection Compensation Schemes Building Guarantee Insurance Judicial Review Interpretation of Regulatory Rules

Case Brief

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Parties

Manchikalapati and Others

Claimants/respondents

Financial Services Compensation Scheme

Defendant/appellant

Procedural Posture

Judicial Review Appeal / Court of Appeal (civil Division) Appeal From High Court

Legal Issues

  1. 1 Whether claims for post-judgment interest and litigation costs are compensable under the Policyholder Protection Rules (PPR) by the FSCS
  2. 2 Proper interpretation of 'in respect of' and 'under' in the PPR
  3. 3 Whether the compensation scheme extends to statutory interest and costs not expressly owed under the insurance contract

Ratio Decidendi

Claims for post-judgment interest and litigation costs are not compensable under the FSCS Policyholder Protection Rules because they are not amounts owed 'under' the contract of insurance. The scheme is limited to contractual liabilities, and the words 'in respect of' in the relevant rules do not extend compensation to statutory or court-ordered sums beyond the policy terms.

Court Disposition

Appeal allowed; High Court decision quashed.

Orders

  • The FSCS is not required to compensate the Policyholders for post-judgment interest and litigation costs.
  • The High Court's order granting judicial review is set aside.