Cantrell v Allied Irish Banks Plc

JurisdictionIreland
CourtCourt of Appeal (Ireland)
JudgeMs. Justice Baker
Judgment Date18 Jul 2019
Neutral Citation[2019] IECA 217
Docket NumberNeutral Citation Number: [2019] IECA 217 2017/268 2017/271 2017/273

[2019] IECA 217

THE COURT OF APPEAL

Baker J.

Peart J.

McGovern J.

Baker J.

Neutral Citation Number: [2019] IECA 217

Appeal No. 2017/266

2017/268

2017/271

2017/273

BETWEEN/
GERALDINE CANTRELL
PLAINTIFF/RESPONDENT
AND
ALLIED IRISH BANKS PLC, THE SECOND BELFRY PROPERTIES (U.K.) PLC, TULLAMONA LIMITED, THE FOURTH BELFRY PROPERTIES (U.K.) PLC, LEYALLY LIMITED, THE FIFTH BELFRY PROPERTIES (U.K.) PLC, MONSAL LIMITED, SEAN HENNEBERRY, TONY KILDUFF, WILLIAM LEDWIDGE, JOHN ROCKETT, JOHN ROGER WILKINSON

AND

ESSEX TRUST LIMITED
DEFENDANTS/APPELLANTS
BETWEEN/
LAURENCE McMULLIN
PLAINTIFF/RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/APPELLANTS
BETWEEN
BERNADETTE GOODWIN
PLAINTIFF/RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/APPELLANTS
BETWEEN
MARY HONOHAN
PLAINTIFF/ RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/ APPELLANTS
BETWEEN
PETER TIERNEY
PLAINTIFF/ RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/ APPELLANTS
BETWEEN
BRIAN SPIERIN
PLAINTIFF/ RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/ APPELLANTS
BETWEEN
BRIAN O'REILLY
PLAINTIFF/ RESPONDENT
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/ APPELLANTS
BETWEEN
EDWARD SHEEHAN

AND

EVELYN SHEEHAN
PLAINTIFFS/ RESPONDENTS
AND
ALLIED IRISH BANKS PLC AND OTHERS
DEFENDANTS/ APPELLANTS

Misrepresentation – Negligent statements – Statute barred – Appellants seeking to appeal from High Court decision – Whether the High Court erred in finding that the respondents were not statute barred in their claims of misrepresentation and negligent statements arising from the existence, and pleaded non-disclosure, of loan to value covenants in the borrowings negotiated on behalf of investment vehicles by the appellants

Facts: Appeals to the Court of Appeal arose from a decision of the High Court delivered on 28 April 2017 and order made on 25 May 2017 by which Haughton J determined the preliminary issue regarding the Statute of Limitations 1957 to the claims of the plaintiffs/respondents, investors in a number of property investment schemes of which Allied Irish Banks plc (AIB plc) acted as promoter and placing agency. The investment schemes were undertaken through a number of investment vehicles each bearing the name “Belfry”, of which the second, fourth, and sixth defendants were the relevant companies for the appeals. The defendants/appellants were: (a) AIB plc, which filed a notice of appeal on 9 June 2017; (b) Mr Rockett and Mr Wilkinson, who filed a notice of appeal on 8 June 2017; (c) Mr Ledwidge, who filed a notice of appeal on 8 June 2017; and (d) Mr Kilduff, who filed a notice of appeal on 9 June 2017. The appellants (b), (c), and (d) were referred to collectively as “the Directors”. The appeals raised a question of law regarding the running of time in claims for financial loss in tort. The question was determined by way of trial of a preliminary issue on motion of the defendants of 1 February 2016, the hearing whereof took place over seven days in April and May 2016. The defendants appealed part of the finding, and there was no cross-appeal. The sole question for determination in these appeals, therefore, was whether Haughton J erred in making a distinction between three categories of claim, and in his overall finding that the Investors were not statute barred in their claims of misrepresentation and negligent statements arising from the existence, and pleaded non-disclosure, of loan to value covenants (the LTV covenants) in the borrowings negotiated on behalf of the Belfry investment vehicles by the director defendants.

Baker J held that the cause of action was that sometime after the investments were made, the Directors, in the exercise of the powers vested in them and mentioned in the prospectus, negligently and without informing the Investors, negotiated terms of lending which made the risk greater than that which existed at the date of the investments as the Investors had fewer buffers against market forces than they had contracted for, and the risk was greater than that which they understood had been assumed. As a consequence, it seemed to Baker J that the damage became manifest once the LTV covenants were entered into by the directors and, at that stage, the Investors had less chance of surviving a catastrophic loss of property values. Baker J held that she would allow the appeal on that basis. She noted that it was at the time when the LTV covenants were negotiated that AIB plc had that particular “card”, to use the language of counsel for the Investors, and that was a card which, in the events, was argued to have led to the loss.

Held by Baker J that she would allow the appeal.

Appeal allowed.

JUDGMENT of Ms. Justice Baker delivered on the 18th day of July, 2019
1

These appeals arise from a decision of Haughton J. delivered on 28 April 2017, Cantrell v. AIB [2017] IEHC 254, and order made on 25 May 2017 by which he determined the preliminary issue regarding the Statute of Limitations 1957, as amended, (‘the Statute of Limitations’) to the claims of the plaintiffs, investors in a number of property investment schemes of which Allied Irish Banks plc (‘AIB plc’) acted as promoter and placing agency. The investment schemes were undertaken through a number of investment vehicles each bearing the name ‘Belfry’, of which the second, fourth, and sixth defendants are the relevant companies for the present appeals. For convenience, I will refer to the investment vehicles collectively as ‘Belfry’, and to the plaintiffs, the respondents to these appeals, who were jointly represented by counsel at the hearing of the appeals, as ‘the Investors’, save where the context otherwise requires.

2

The defendants, the appellants in these appeals, who are separately represented, can conveniently be grouped as follows:

(a) AIB plc, which filed a notice of appeal on 9 June 2017;

(b) John Rockett and John Roger Wilkinson, who filed a notice of appeal on 8 June 2017;

(c) William Ledwidge, who filed a notice of appeal on 8 June 2017;

(d) Tony Kilduff, who filed a notice of appeal on 9 June 2017.

I will refer to the appellants (b), (c), and (d) collectively as ‘the Directors’.

3

The appeals raise a question of law regarding the running of time in claims for financial loss in tort. The question of the accrual of a cause of action in tort has given rise to two recent decisions of the Supreme Court, the second of which, Brandley v. Deane [2017] IESC 83 delivered by McKechnie J. on 15 November 2017, postdates the decision of Haughton J. the subject of these appeals. The question is difficult as is apparent from the depth of analysis and length of the judgment of the High Court, the lengthy analysis in Gallagher v. ACC Bank [2012] IESC 35, [2012] 2 IR 620 and Brandley v. Deane and recent decisions of the superior courts of England and Wales, the analysis in some of which has not readily found favour with the Irish Supreme Court.

4

The question was determined by way of trial of a preliminary issue on motion of the defendants of 1 February 2016, the hearing whereof took place over seven days in April and May 2016. The defendants appealed part of the finding, and there is no cross-appeal. The sole question for determination in these appeals, therefore, is whether Haughton J. erred in making a distinction between three categories of claim, and in his overall finding that the Investors were not statute barred in their claims of misrepresentation and negligent statements arising from the existence, and pleaded non-disclosure, of loan to value covenants (the ‘LTV covenants’) in the borrowings negotiated on behalf of the Belfry investment vehicles by the director defendants.

5

Haughton J. found it unnecessary to determine whether the investors were entitled to rely on s. 71(1)(b) of the Statute of Limitations in relation to the pleaded non-disclosure of the LTV covenants.

Factual Background
6

The Investors invested in a number of Belfry funds, the material ones for present purposes being Belfry 2, Belfry 3, Belfry 4, and Belfry 5, the corporate vehicle supporting each fund being named as defendants in the proceedings. The investments were promoted by AIB plc and each Belfry company was established as a special purpose vehicle to invest in UK commercial properties. The Directors were directors of the different Belfry companies.

7

The Investors invested various sums of money ranging from €100,000 to €400,000 between 2002 and 2006. In addition to the proceedings heard before Haughton J. it appears that more than three hundred other High Court proceedings have been commenced by other investors in the Belfry funds and served on some or all of the defendants in these proceedings.

8

The Investors claim that, based upon negligent representations contained in marketing and other material, primarily in the form of prospectuses, they entered into the investments and, as a result of the entire failure of the funds, they lost all of the monies invested. The Investors commenced proceedings seeking damages for breach of contract, negligence, breach of duty, negligent misstatement, and misrepresentation. The eight proceedings in which the preliminary issue was heard by Haughton J. were chosen from a large number of related cases as ‘pathway cases’, although they are not test cases in the formal sense.

9

The trial of the preliminary issue was based primarily on the pleadings and submissions made by the Investors and by the defendants who were separately represented as identified above. There was also before Haughton J. some affidavit evidence, the particular affidavit of importance being the affidavit sworn on 14 March 2016 by Mr Conal Regan, manager at AIB plc, where he exhibited financial statements and updates of the Belfry companies from inception up to 2015.

10

Many of the facts are disputed and Haughton J. approached the trial of the preliminary issue in the light of...

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4 cases
  • Cantrell v Allied Irish Banks Plc
    • Ireland
    • Supreme Court
    • 10 December 2020
    ...aspects of the High Court decision which found that elements of the claim had been statute-barred. The decision of the Court of Appeal ( [2019] IECA 217, Baker J.; Peart and McGovern JJ. concurring) focussed primarily on the claim in respect of the LTV covenant. Baker J. quoted para. 45 of ......
  • Elliott v ACC Bank Plc
    • Ireland
    • Court of Appeal (Ireland)
    • 13 October 2020
    ...considered the issue of when a cause of action accrues in the context of alleged mis-selling: Cantrell v. Allied Irish Banks plc [2019] IECA 217. In Cantrell, the issue for determination was whether plaintiff investors' claims of misrepresentation and negligent mis-statement were statute ba......
  • Cantrell -v- Allied Irish Banks
    • Ireland
    • Supreme Court
    • 12 June 2020
    ...value as a matter of law. Decision 3 The plaintiffs in these proceedings seek leave to appeal from the decision of the Court of Appeal [2019] IECA 217, (Baker J.; Peart and McGovern JJ. concurring), reversing the decision of the High Court [2017] IEHC 254 (Haughton J.), and finding that the......
  • Anthony Elliott and Anne Elliott v ACC Bank Plc, Patrick Condon and James Halley
    • Ireland
    • Court of Appeal (Ireland)
    • 18 January 2021
    ...that it was not unreasonable for them to have challenged, during the course of the appeal, the judgment of this Court in Cantrell v AIB [2019] IECA 217 given that same had only recently been delivered. The plaintiffs also contended that they were successful as regards the third issue in the......
2 firm's commentaries
  • Court Of Appeal: Financial Loss Claims Statute Barred
    • Ireland
    • Mondaq Ireland
    • 15 August 2019
    ...& 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 de......
  • Significant Court Of Appeal Ruling On Running Of Time Under Statute Of Limitations In Financial Loss Claims
    • United Kingdom
    • Mondaq UK
    • 19 November 2019
    ...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 - notw......

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