Manchikalapati & Ors, R (On the Application Of) v Financial Services Compensation Scheme [2022] EWHC 2228 (Admin) (02 August 2022)

Manchikalapati & Ors, R (On the Application Of) v Financial Services Compensation Scheme [2022] EWHC 2228 (Admin) (02 August 2022)

FSCS is not required to compensate claimants for litigation costs and judgment interest awarded against an insolvent insurer unless such liabilities arise under the terms of the contract of insurance. The Scheme is limited to contractual liabilities, and neither costs nor statutory interest are covered unless expressly provided for in the policy. The interpretation of 'in respect of' and 'protected claim' does not extend to collateral claims outside the contract.

Citation
[2022] EWHC 2228 (Admin)
Parties
Claimant: Manchikalapati & Ors; Defendant: Financial Services Compensation Scheme
Jurisdiction
England and Wales
Judgment Date
02 August 2022
Procedural Posture
Judicial Review / Final Judgment
Outcome
Claim dismissed
Legal Topics
Policyholder Protection Scheme, Compensation for Insolvent Insurers, Building Guarantee Insurance, Statutory Construction, FSCS Rules
Insurance Law Administrative Law Statutory Interpretation Policyholder Protection Scheme Compensation for Insolvent Insurers Building Guarantee Insurance Statutory Construction FSCS Rules

Case Brief

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Parties

Manchikalapati & Ors

Claimant

Financial Services Compensation Scheme

Defendant

Procedural Posture

Judicial Review / Final Judgment

Legal Issues

  1. 1 Whether FSCS must compensate for litigation costs and judgment interest under building guarantee insurance policies when insurer is insolvent
  2. 2 Interpretation of 'in respect of' and 'protected claim' under FSCS rules
  3. 3 Whether costs and interest are liabilities 'owed under a contract of insurance'

Ratio Decidendi

FSCS is not required to compensate claimants for litigation costs and judgment interest awarded against an insolvent insurer unless such liabilities arise under the terms of the contract of insurance. The Scheme is limited to contractual liabilities, and neither costs nor statutory interest are covered unless expressly provided for in the policy. The interpretation of 'in respect of' and 'protected claim' does not extend to collateral claims outside the contract.

Court Disposition

Claim dismissed

Orders

  • Application for judicial review refused
  • No order for compensation for litigation costs or judgment interest