Casey and Another v Governor & Company of Bank of Ireland and Another

• Jurisdiction: Ireland
• Court: Court of Appeal (Ireland)
• Judge: Ms Justice Caroline Costello
• Judgment Date: 21 March 2025
• Neutral Citation: [2025] IECA 66
• Docket Number: [2024 No 197]

Between

Rachel Casey and Eoghan Casey

Plaintiffs/Respondents

and

Governor & Company of Bank of Ireland and Bank of Ireland Mortgage Bank

Defendants/Appellants

[2025] IECA 66

The President

Butler J

McDonald J

[2024 No 197]

[2021 No. 3709 P]

COURT OF APPEAL

CIVIL

Negligence – Cause of action – Statute barred – Appellants seeking dismissal of proceedings – Whether proceedings were statute barred

Facts: The respondents, Ms and Mr Casey, pleaded that a pension backed mortgage loan was mis-sold to the deceased, Dr Casey, and that he would never have entered into the transaction in the first place, had he not been negligently advised by the appellants, the Governor and Company of Bank of Ireland and Bank of Ireland Mortgage Bank, in 2006. The High Court concluded that there was insufficient evidence to decide that the alleged cause of action had accrued no later than June 2011, and therefore that it was not possible to say that the claim was statute barred. The appeal to the Court of Appeal raised the vexed question of when a cause of action accrues for the purposes of s. 11 of the Statute of Limitations Act 1957 in respect of a claim in negligence for pure economic loss. The appellants’ appeal was based on four contentions: (a) the trial judge failed to place adequate weight on the claim as pleaded; (b) the trial judge wrongly decided that evidence of the property value was a necessary element for the accrual of the alleged cause of action; (c) the trial judge conflated the accrual of the appellants’ cause of action against the deceased (for the loan debt) with the accrual of the deceased’s alleged cause of action against the appellants; and (d) in doing so, the trial judge misapplied the legal principles applicable to deciding when the deceased’s alleged cause of action accrued.

Held by Costello P that the most recent authority to consider when a claim in negligence resulting in financial loss accrues is Smith v Cunningham [2021] IECA 268. Applying the authorities to the appeal, she found that the question was whether the deceased suffered actual damage sufficient to complete the tort of negligence by June 2011 at the latest, or whether, as the respondents contended, the tort was merely completed upon the issuing of a letter of demand by the second appellant on 10 October 2019. Applying an objective test and adopting a pragmatic approach to the analysis of damage, she held that the deceased sustained damage upon entering into the transaction and his cause of action accrued at that date. Furthermore, while not relevant to the question of the date of the accrual of the cause of action, though highly relevant to any overall sense of injustice, she noted that the deceased had been informed by September 2007 that the tax advice provided by the appellants, upon which he relied when entering into the transaction, was incorrect, and that he could not continue to make the monthly payments of €5,000. She noted that he knew that he was exposed to a liability to repay a loan, plus interest, and that he could not do so from his own resources. She found that had he chosen to sue the appellants at that time, it would have been open to him to do so. While there would have been questions around the quantification of his claim for damages, she was satisfied that the cause of action existed, and indeed had existed from day one.

Costello P reversed the decision of the High Court and allowed the appeal. She dismissed the proceedings on the basis that they were statute barred.

Appeal allowed.

[approved]

JUDGMENT of Ms Justice Caroline Costello delivered on the 21 ^st day of March 2025

1 . This appeal raises the vexed question of when a cause of action accrues for the purposes of s. 11 of the Statute of Limitations Act 1957 (as amended) in respect of a claim in negligence for pure economic loss. In particular, the question is whether the High Court was correct to conclude that there was insufficient evidence to decide that the alleged cause of action, the subject of these proceedings, had accrued no later than June 2011, and therefore that it was not possible to say that the claim was statute barred.

The Facts

2 . The case concerns an investment by the late Dr Eugene Casey (“the deceased”) in a financial product which was recommended and sold to him by the defendants/appellants, or one or other of them (“the appellants”). The deceased entered into a personal pension, Policy No. 081269B1, commencing on 1 ^st January 2004 with New Ireland Assurance Company. At some time in 2006, the deceased entered into an agreement, subject to contract, to purchase the property known as 3, Daly's Terrace, Carmody Street, Ennis, County Clare (“the property”). He approached Bank of Ireland private banking for advices, as he wished to do so in a tax efficient way. The respondents' case (which is accepted for the purposes of this motion) is that the deceased was advised to purchase the property by way of a pension backed mortgage loan. If he invested €5,000 per month in a pension product and availed of tax relief against his income from his practice as a GP and purchased the property with an interest only 10-year loan, at the end of the term, his pension could be encashed so as to repay the outstanding principal and leave the deceased with a fund plus the property free of any debt.

3 . On 13 ^th October 2006, Bank of Ireland Mortgage Bank (“the second named appellant”) issued a Letter of Loan offer to the deceased to enable him to purchase the property. It offered to advance €356,250 for a period of ten years. Repayment was to be by way of 120 interest only instalments in the sum of €1,330.96. The total sum payable under the loan was €515,965.20. The loan was described as an interest only pension. Special condition (a)(iii) required the deceased to put in place a pension policy “ on terms acceptable to the Lender” which “must have a projected maturity value of at least twice the amount of the loan”. It continued:

“ The proceeds of the Pension Policy shall, at the end of the term … be off set against the outstanding principal balance, interest and all other monies payable on the Loan. If, however, these proceeds are not available or are insufficient to discharge in full the amount due for any reason, the Borrower shall be liable to pay to the Lender at once the outstanding principal, balance and interest and all other moneys payable. (c) The Borrower must pay the premiums on the Pension Policy when due.”

Thus, the offer was inextricably linked with the investment in a pension which was to be encashed to repay the principal borrowed at the end of the term. The deceased accepted the offer on 20 ^th October 2006. In fact, the monies were advanced pursuant to a slightly revised mortgage loan offer letter dated 13 ^th November 2006, but the terms material to the dispute in these proceedings remained unaltered. The offer of 13 ^th November 2006 was accepted by the deceased on 14 ^th November 2006.

4 . A pension incepted by the deceased with New Ireland Assurance on 1 ^st January 2004 was agreed to be the pension satisfying special condition (a)(iii) (now special condition (b)(i)). The loan was advanced on 24 ^th November 2006 and the deceased duly purchased the property and executed a mortgage in favour of the second named appellant.

5 . The deceased had agreed to monthly repayments under the New Ireland pension policy of €5,000 per month, but the direct debit failed on 19 ^th September 2007 and from November 2007, he reduced the monthly payments from €5,000 to €750 per month. He did so, having received independent advice to the effect that he could not claim tax relief on his earnings from the General Medical Scheme (“GMS”) for the purposes of a private pension as separate pension arrangements applied to GMS earnings. He therefore could not afford to make the projected payments, given the proportion of his earning from private practice.

6 . On 14 ^th September 2009, the deceased instructed New Ireland Assurance to mark his New Ireland pension policy “ paid up” with immediate effect and ceased making any payments into the policy with effect from 30 ^th September 2009. In April 2010, he encashed the policy. On 8 ^th June 2011, the deceased advised the second named appellant that all funds had been transferred out of the New Ireland pension policy.

7 . None of the proceeds were utilised to pay down the sums due on foot of the loan. It was therefore legally impossible to repay the loan from the pension as per the agreement and it was de facto practically impossible to do so where such pension as had been built up was encashed and the proceeds utilised elsewhere. No alternative provision for repayment of the loan was put in place.

8 . Thus, from September 2007, the deceased knew that he could not afford the premia payments necessary for the pension fund to attain the growth required to ensure that a lump sum would be available in November 2016 to pay the principal due on foot of the loan. Further, he would have no lump sum after repayment of the loan available to fund his retirement. In response, he initially reduced the payments drastically, and from 30 ^th September 2009, he ceased making payments into the New Ireland pension entirely. He encashed the policy in April 2010, but he did not utilise any portion of the sum realised to reduce the liabilities secured by the mortgage.

9 . The mortgage term expired on 30 ^th November 2016 and the repayment balance stood at €356,044.75. The deceased was not able to repay the balance due, so he availed of advices from Cahill Taxation Services who negotiated on his behalf with the second named appellant. On 12 ^th December 2016, the second named appellant wrote to the deceased offering him an alternative repayment arrangement whereby the deceased would make repayments of €1,200.00 per month. This level of repayment would not clear the debt. Rather, it was...