Brian McDonagh, Maurice McDonagh and Kenneth McDonagh v Ulster Bank Ireland DAC, Norman Ginnelly, Paul McCann, Patrick Dillon, CBRE, Promontoria Aran, Link ASI Ltd, Conor Maher and Alan Monaghan

• Jurisdiction: Ireland
• Court: Court of Appeal (Ireland)
• Judge: Mr. Justice Charles Meenan
• Judgment Date: 18 January 2024
• Neutral Citation: [2024] IECA 10
• Docket Number: Court of Appeal Record Number: 2023/171

Between/

Brian McDonagh, Maurice McDonagh and Kenneth McDonagh

Appellants

and

Ulster Bank Ireland DAC, Norman Ginnelly, Paul McCann, Patrick Dillon, CBRE, Promontoria Aran, Link ASI Limited, Conor Maher and Alan Monaghan

Respondents

[2024] IECA 10

Whelan J.

Noonan J.

Meenan J.

Court of Appeal Record Number: 2023/171

THE COURT OF APPEAL

CIVIL

JUDGMENT of Mr. Justice Charles Meenan delivered on the 18 ^th day of January 2024

Introduction:-

1 . This is an appeal against the judgment and order of the High Court (Quinn J.) wherein he found that the plaintiff's claim against the fifth named defendants (“CBRE”) was barred pursuant to the provisions of s. 11 of the Statute of Limitations Act 1957 (as amended) (“the Act”) and that the action be dismissed. The issue before the High Court was when the time allowed by the Act for the commencement of proceedings started to run. The appellants claimed damages for negligence and breach of duty on the part of CBRE in giving a valuation for a 33-hectare site at Kilpeddar, County Wicklow (“the lands”) where the appellants planned to develop a data centre. The lands were the security for a loan advanced by the first named defendant (“the bank”). In order to identify the date upon which time began to run for the purposes of the Act, the High Court had to identify the date upon which the damage alleged by the appellants occurred.

2 . The appellants also maintained that their cause of action against CBRE was concealed by fraud, thus preventing time to run as per s. 71 of the Act.

3 . Notices of Discontinuance were served on all defendants other than CBRE.

Background:-

4 . The background to these proceedings was set out in some detail by the trial judge. In summary, in July 2007 the appellants purchased the lands having borrowed some €21.5m from the bank and investing a further sum of €4.5m. For the purposes of this transaction CBRE valued the lands at €56m, also in July 2007. It would appear that CBRE was instructed by the appellants, who discharged its professional fee, though, as will further appear, there was a dispute as to who instructed CBRE. In any event the valuation report was addressed to the bank. On 3 August 2007, the acquisition of the property was completed, and the appellants executed a mortgage in favour of the bank.

5 . The appellants never repaid the loan or any part of it. On 13 March 2013 the appellants and the bank entered into what is referred to as the “compromise agreement”. This agreement was also not adhered to by the appellants and there then followed the inevitable litigation which has resulted in several lengthy and detailed judgments both of this Court and the High Court.

6 . Under the compromise agreement the liabilities of the appellants to the bank, which then stood as a sum in the region of €25m, were to be written off in return for a payment by the appellants of some €5m and the sale of certain properties including the lands by a target date, being 31 July 2014. However, the said agreement also provided that in the event of the failure by the appellants to comply with the terms of the agreement or in the event that the lands were not disposed of, the bank would be at liberty to take whatever steps it deemed fit on foot of the security held by it.

7 . The appellants did not comply with the compromise agreement. On 11 April 2018 the bank formally demanded the payment for a sum of €27,470,404.15. On 2 July 2018 the High Court (Twomey J.) granted the bank judgment in the sum of €22,947,202.85.

8 . In the course of the proceedings before Twomey J. the appellants argued, inter alia, that there was no breach of the compromise agreement and that receivers, appointed by the bank pursuant to its security, were invalidly appointed.

9 . On 26 June 2013 the bank commenced proceedings against CBRE, claiming damages for negligence and breach of duty in respect of the said valuation report. These proceedings were compromised, without admission of liability, by CBRE who paid the bank €5m and a contribution towards its costs. The bank, though not legally obliged to do so, credited the €5m received against the monies owing by the appellants.

10 . On 6 April 2022 the Court of Appeal upheld the findings of Twomey J. concerning, inter alia, breach of the compromise agreement and the validity of the appointment of the receivers.

11 . In addition to not repaying the monies borrowed or honouring the compromise agreement, the appellants engaged in deception. As mentioned, the compromise agreement required that the appellants sell the lands by 31 July 2014. In the proceedings before Twomey J. the appellants asserted that on 13 June 2014 they had sold the lands by signing a document described as a “Heads of Agreement”. Under this “agreement”, the appellants were purporting to sell the land for a price of €1,501,000 to a company called “Granja Limited”. Twomey J. held that Granja Limited was a “front” for the first named appellant and therefore not a contract for the true sale of the lands as was required by the compromise agreement. In the course of the hearing of this application in the court below, the appellants acknowledged that this agreement was a “sham”.

12 . On 1 February 2021 the bank disposed of the lands for a sum of €3m. On 12 February 2021 these proceedings were issued, though now only continued against CBRE.

CBRE proceedings:-

13 . CBRE entered an appearance on 24 February 2021. The appellants delivered a statement of claim dated 14 March 2022 and subsequently an amended statement of claim was delivered, dated 23 July 2022. I will be referring in some detail to the contents of the amended statement of claim later in this judgment.

14 . CBRE delivered its defence on 27 September 2022. By way of a preliminary plea, it was pleaded that the appellants' claim was statute barred. The appellants and the respondents, having exchanged affidavits and an agreed statement of facts, agreed that the issue on the statute of limitations be heard notwithstanding that there was no order of court directing the trial of a preliminary issue.

Relevant statutory provisions

15 . Section 11 of the Act provides as follows:-

“11-(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued —

(a) actions founded on simple contract;

(b) actions founded on quasi-contract;

—-

(2)(a) —- An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued —”

16 . Section 71 of the Act provides:-

“71-(1) Where, in the case of an action for which the period of limitation is fixed by this Act, either —

• (a) the action is based on the fraud of the defendant or his agent or any person through whom he claims or his agent or,

• (b) the right of action is concealed by the fraud of any such person,

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it. —-”

Judgment of the High Court:-

17 . The trial judge set out in some detail the background events and an account of the various legal proceedings. Both parties accepted that any action for breach of contract would commence on the date of the breach, being July 2007 when CBRE furnished its valuation. The parties were also in agreement that the cause of action in negligence would accrue as and from the date when the damage occurred. The plenary summons was issued on 12 February 2021. Thus, if the trial judge determined that the damage occurred on a date earlier than 13 February 2015, the appellants proceedings would be statute barred.

18 . The trial judge considered a number of leading authorities as to when it could be said that the damage occurred in cases such as this. Having considered, inter alia, Gallagher v ACC Bank [2013] ILRM 145, Brandley v Deane [2018] 2 IR 741, Cantrell v Allied Irish Banks [2020] IESC 71 and Smith v Cunningham [2021] IECA 268 and [2023] IESC 33, the trial judge set out the principles which he considered to be most relevant to the facts of the instant case at para. 148:-

• “(1) The six-year limitation period in a negligence action (apart from a claim for personal injuries) runs from the date on which the cause of action accrued (section 11(2)(a) of the Act of 1957.)

• (2) The Act contains no definition of the ‘accrual’ of a cause of action, but the time limit runs only from the date on which the tort has become actionable by reason of the occurrence of loss or damage. See Cantwell (sic) v AIB, ( per O'Donnell J.) and Brandley v Deane ( per McKechnie J.) there is no ‘discoverability’ test.

• (3) Certain torts are actionable per se. Negligence is not such a tort and it has only become complete and actionable when the damage has occurred. Without such damage, no cause of action has accrued.

• (4) Evidence is required before a determination can be made that loss has occurred (see Ubaf v European American Bank Corporation, as cited with approval by O'Donnell J. in Cantwell (sic).

• (5) In identifying the date on which a cause of action has accrued, it is necessary to establish that every fact which it would be necessary for the plaintiff to prove at trial in order to support his right to a judgment of the court, must have come into existence (see Collins J. in Smith v Cunningham and Finlay C.J. in Hegarty v O'Loughlin).

• (6) In many cases the harmful act or event and the occurrence of loss or damage will arise simultaneously. This may be obvious in cases of physical damage to property, or may become obvious in certain other circumstances, such as where a flawed title has been acquired due to the negligence of a solicitor. In economic loss cases it will frequently not be the case that the damage has occurred simultaneously with the harmful act.

• (7) A mere possibility or a contingency of...