Court Of Appeal: Financial Loss Claims Statute Barred

Cantrell & Ors v Allied Irish Banks Plc & Ors [2019] IECA 217 (18 July 2019)

The Court of Appeal has overturned a finding of the High Court in one of the so-called "pathway cases", setting the parameters for hundreds of investors seeking damages against AIB and a number of other defendants for losses made on their investments.

High Court

The appeals arose as a result of a decision of Mr. Justice Haughton in the High Court (delivered on 28 April 2017) on a preliminary issue as to when the time limitation periods started to run for claims arising from losses suffered by investors following their investment in certain "Belfry" property investment schemes (the "Belfry Funds").

A component of the investment included a loan whereby debt was acquired with a loan to value ("LTV") covenant which meant that if the property value fell below 80% of the purchase price of the assets, there would be an automatic default and crystallisation of the floating charge, entitling the lender to dispose of the assets. The investors, who claimed to have entered into the Belfry Funds on the basis of representations made in the investment prospectus and other marketing material, said that they received no notice of this covenant or its potential negative impact until they received a letter from the defendants in 2008 indicating that the property value had fallen below 80% of the purchase price and that an event of default had occurred. Ultimately, the investors lost all of their investments and commenced proceedings in 2014 seeking damages for breach of contract, negligence, breach of duty, negligent misstatement and misrepresentation.

The High Court held that the limitation period in relation to the breach of contract claims began on the date the investors entered into the contract which, as it was in excess of 6 years from the date of commencement of the proceedings, meant those claims were statute barred.

The remaining "claims in tort" were split into three categories by the Judge: (1) negligence simpliciter; (2) negligent misstatement/misrepresentation; and (3) negligence and breach of fiduciary duty/mis-management. In respect of (1) and (2) it was held that the 6 year limitation period only began to run when the actual damage occurred. That was found to be the date when the audited accounts demonstrating the actual loss in shareholder value were signed off by the directors. As that fell within the relevant limitation period, the claims were not statute barred.

...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT