Cromwell Property Securities Limited v Financial Ombudsman Service Limited

Cromwell Property Securities Limited (CPSL) sought judicial review of a decision made by the Financial Ombudsman Service Limited (FOS) concerning a complaint by a retail investor, Mr. Ian Smith. The dispute arose from Mr. Smith's investment in a property syndicate managed by CPSL, where he alleged misleading and deceptive conduct by CPSL in relation to the investment's performance and risks. FOS had found in favour of Mr. Smith, determining that CPSL had engaged in misleading or deceptive conduct and ordering compensation. CPSL challenged FOS's decision in the Supreme Court of Victoria, which then referred the matter to the High Court of Australia.

The High Court was required to determine whether FOS had acted within its jurisdiction when it made its determination. Specifically, the court considered whether FOS had the power to determine that CPSL had engaged in misleading or deceptive conduct under the *Trade Practices Act 1974* (Cth) (now the *Competition and Consumer Act 2010* (Cth)), and whether FOS had correctly applied the principles of causation and remoteness in assessing damages. The central question was whether FOS's determination was affected by an error of law, rendering it amenable to judicial review.

The High Court held that FOS had acted within its statutory powers. Their Honours, Hayne and Kiefel JJ, reasoned that FOS's jurisdiction extended to determining contraventions of the *Trade Practices Act* in the context of financial services complaints. They found that FOS had correctly applied the relevant legal principles regarding misleading and deceptive conduct, causation, and the assessment of damages. The court emphasised that FOS was not bound by strict rules of evidence and was entitled to make findings of fact based on the material before it, provided those findings were reasonably open.

The High Court dismissed CPSL's application for judicial review.