Cantrell v Allied Irish Banks Plc

JurisdictionIreland
CourtSupreme Court
JudgeMr. Justice O'Donnell
Judgment Date10 Dec 2020
Neutral Citation[2020] IESC 71
Docket NumberS:AP:IE:2020:000011

[2020] IESC 71

AN CHÚIRT UACHTARACH

THE SUPREME COURT

Clarke C.J.

O'Donnell J.

Dunne J.

Charleton J.

O'Malley J.

S:AP:IE:2020:000011

Between/
GERALDINE CANTRELL
Appellant
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
Respondents

and the following seven sets of proceedings:

1. bearing High Court Record Number 2014 No. 6899 P and entitled as between

LAURENCE MCMULLIN
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

2. bearing High Court Record Number 2014 No. 6898 P and entitled as between

BERNADETTE GOODWIN
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

3. bearing High Court Record Number 2014 No. 6913 P and entitled as between

MARY HONOHAN
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

4. bearing High Court Record Number 2014 No. 6812 P and entitled as between

PETER TIERNEY
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

5. bearing High Court Record Number 2014 No. 6979 P and entitled as between

BRIAN SPIERIN
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

6. bearing High Court Record Number 2015 No. 4218 P and entitled as between

BRIAN O'REILLY
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

7. bearing High Court Record Number 2014 No. 7166 P and entitled as between

EDWARD SHEEHAN AND EVELYN SHEEHAN
Appellant
AND
ALLIED IRISH BANKS PLC AND OTHERS
Respondents

Misrepresentation – Negligent statements – Statute barred – Appellants seeking to appeal from Court of Appeal decision – Whether the High Court erred in finding that the appellants were not statute barred in their claims of misrepresentation and negligent statements

Facts: The High Court (Haughton J), on 28 April 2017, determined the preliminary issue regarding the Statute of Limitations 1957 to the claims of the appellants, 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 respondents were the relevant companies for the appeals. The respondents 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 respondents (b), (c), and (d) were referred to collectively as “the directors”. 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 respondents of 1 February 2016, the hearing whereof took place in April and May 2016. The respondents appealed part of the finding. The question for determination 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 respondents. It seemed to the Court of Appeal (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. The appellants appealed to the Supreme Court.

Held by O’Donnell J that Haughton J was correct to hold that it had not been established that the claims made by the appellants were statute-barred as it was not shown that the LTV covenants had a negative impact on the valuation of the investment prior to August 2008.

O’Donnell J held that he would allow the appeal, set aside the order of the Court of Appeal, and restore the order of the High Court.

Appeal allowed.

Judgment of Mr. Justice O'Donnell delivered the 10 th day of December, 2020.
I – Introduction
A. Background
1

The point at which a cause of action can be said to have accrued is not in itself a subject that might attract the interest of even the most diligent law student. Indeed, such a student might be surprised to learn that it remains an issue of legal controversy. It was settled more than a century ago that a cause of action arose or accrued when every fact which it would be necessary for the plaintiff to prove in order to support his right to judgment of the court was in existence: Read v. Brown (1888) 22 Q.B.D. 128. This might appear no more than a statement of the obvious. In the case of a tort such as the tort of negligence, where it is necessary to prove damage to establish the cause of action, it follows that the cause of action accrues when there is both a negligent act (or omission), and damage. The question of what amounts to damage and when, accordingly, a cause of action in negligence accrues has been the subject of intense debate in this case, and in a number of cases over the past 30 years or more. That is not because of the intrinsic interest or significance of the issue, but rather because s. 11(2)(a) of the Statute of Limitations 1957 (“the 1957 Act”) provided that:-

“Subject to paragraphs (b) and (c) of this subsection, 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.” (Emphasis added)

It will be necessary to consider later statutory amendments to that provision, but it is accepted that s. 11(2) applies in this case.

2

While in most cases, the negligent act (or omission) and the damage will occur at the same time, the requirement that there be both a negligent act/omission and damage raises the possibility that, in some cases, damage may not occur until some time after the negligent act, with the result that the cause of action does not accrue, and consequently that time does not run under s. 11(2) until that later date. The possibility of retarding the running of the Statute of Limitations is the subject of such intense scrutiny in the case law, not because it provides a last gasp lifebelt for the tardy plaintiff and his or her lawyers – although it may have that effect on occasions. Instead, it has been the subject of debate in a large number of cases where it is alleged that damage, and quite possibly the negligence causing the damage – and therefore the possibility of a claim in respect of a cause of action – was not reasonably capable of being discovered within three or six years of the negligent act, as the case may be. This could arise in the context of a personal injuries case where, for example, a person sustains an injury which did not become symptomatic for a number of years. It may also arise in the context of damage to property where a defective design or method of construction may only manifest itself long after the building was built, handed over and paid for. It may also arise in cases of professional negligence. For example, a solicitor may be negligent in accepting title for a property on behalf of his client, but that may only come to light when the client seeks to sell the property many years later. A particular issue which has arisen in recent years, in the aftermath of financial crisis, is where a disappointed investor may seek to claim in respect of investments which have proved unsuccessful. It is in the nature of many investments that they are intended to be medium or long-term in nature and may be expected to fluctuate to some extent so that a loss, which the plaintiff may subsequently attribute to the negligence of a particular advisor, may not be said to have occurred or been detectable until some time after the advice was given and the investment made or the asset acquired.

3

In the case of personal injuries, this difficulty was addressed by the Statute of Limitations (Amendment) Act 1991 (“the 1991 Amendment Act”), which introduced the possibility of an extended limitation period where the ingredients of a cause of action were not reasonably discoverable within the primary statutory period. Section 7 of the Liability for Defective Products Act 1991 (“the Defective Products Act”) permits a similar, though not identical, extension of time in the case of claims in respect of defective products. However, in the case of property damage and claims for financial loss, whether as a result of professional negligence or otherwise, the rule remains that set out in s. 11(2) of the 1957 Act: namely, that a claim will be statute-barred if not initiated within six years of the accrual of the cause of action. Hence in the latter cases, the intense focus on the date of accrual of the cause of action with, inevitably, plaintiffs seeking to extend the interval between the negligent act or omission, and the alleged damage (and thus extend the end point of the limitation period), and defendants seeking to narrow and close it. This is, therefore, the very real practical significance of the issue which arises for determination in this and nearly every other case in which the question of accrual of a cause of action arises.

4

However, it should be recognised at the outset that, while the practical consequence of the legal issue in this case is its impact on the limitation period in these proceedings, and that there is some overlap between the issue of the occurrence of damage and the problem of latent damage – the somewhat dry and technical legal question which arises in this case – it is not addressed...

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