Significant Court Of Appeal Ruling On Running Of Time Under Statute Of Limitations In Financial Loss Claims

Cantrell and Others v Allied Irish Banks plc and Others [2019] IECA 217

In a significant ruling on the application of the Statute of Limitations in financial mis-selling claims, the Court of Appeal has reconfirmed that time will start running once a claimant first begins to suffer actual loss - notwithstanding that this may arise at a point long before the claimant ever becomes aware of that loss and the accrual of a cause of action.

Background to Case

Between 2002 and 2006, the plaintiffs invested in a number of property investment schemes of which AIB acted as promoter and placing agent. Funding for these investment schemes, more commonly known as the Belfry Funds, was raised through a mixture of equity and bank borrowings. Bank borrowings negotiated as part of these investments were subject to LTV (loan to value) covenants which meant that, in the event of the value of any property purchased falling below 80% of the sums borrowed, there would be an automatic event of default and the crystallisation of a floating charge, which would entitle the lender to dispose of the investment properties. While these investments were initially profitable, their value went into decline from 2008 with the borrowings going into default. The plaintiffs issued proceedings in 2014 alleging breach of contract, negligent misstatement and negligent misrepresentation against AIB, the directors of the Belfry Funds and others.

It was a key part of the plaintiffs' cases that they were not made aware of the LTV covenants at the time of their investment in the Belfry Funds and in particular that their investment would be entirely wiped out if property values fell and the lender chose to activate its powers under the LTV covenants. The plaintiffs relied on a letter expressing concern regarding the property values which they received in August 2008 and pleaded that it was not until either then, or September 2009 when they received year end financial statements, that they knew of the LTV covenants, the losses suffered and that the lender had forced a sale of the properties.

High Court Ruling

The High Court (Haughton J) found that the plaintiffs were not statute barred in bringing their claims for misrepresentation and negligent misstatement and concluded that they did not suffer actual loss on entering into their investments. While they did undergo risk, this was not to be equated with damage since their investments were capable of making a profit - and did do so in...

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