Gallagher v ACC Bank Plc (No 1)

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 07 October 2011
• Neutral Citation: [2011] IEHC 367
• Court: High Court
• Date: 07 October 2011

O'Hara & Gallagher v ACC Bank PLC

COMMERCIAL

BETWEEN

JOSEPH O'HARA

PLAINTIFF

AND

ACC BANK PLC

DEFENDANT

PATRICK GALLAGHER

AND

ACC BANK PLC

[2011] IEHC 367

[No. 1804P/2010]

[No. 5537P/2010]

THE HIGH COURT

PRACTICE AND PROCEDURE

Limitation of actions

Misrepresentation and breach of contract - Accrual of cause of action - Contingent liability - Damage - Function of Financial Services Ombudsman - Issue estoppel - Additional claim - Abuse of litigation - Whether seconds plaintiff's claim statute barred - Whether damage suffered immediately upon misrepresentation - Whether first plaintiff's claim already determined - Whether bound by decision of Financial Services Ombudsman - Whether entitlement to re-litigate - Whether issue could have been raised in previous proceedings - Ulster Bank Investment Funds Ltd v McCarren [2006] IEHC 323, (Unrep, HC, Finnegan P, 1/11/2006); Square Capital Ltd v Financial Services Ombudsman [2009] IEHC 407, [2010] 2 IR 514; Hayes v Financial Services Ombudsman (HC, MacMenamin J, 3/11/2008); Murray v Trustees and Administrators of the Irish Airlines (General Employees) Superannuation Scheme [2007] IEHC 27, (Unrep, HC, Kelly J, 25/1/2007); Doherty v South Dublin County Council (No 2) [2007] IEHC 4, [2007] 2 IR 696; Carroll v Ryan [2003] 1 IR 309; A(A) v Medial Council [2003] 4 IR 302; Arklow Holdings Ltd v An Bord Pleanála [2011] IESC 29; Read v Brown (1888) 22 QBD 128; Hegarty v O'Loughran [1990] 1 IR 148; Irish Equine Foundation Ltd v Robinson [1999] 2 IR 442; M(H) v HSE [2011] IEHC 339, (Unrep, HC, Charleton J, 20/7/2011); Murphy v McInerney Construction Ltd [2008] IEHC 323, (Unrep, HC, Dunne J, 22/10/2008); Moore (DW) & Co Ltd v Ferrier [1988] 1 WLR 267; Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384; Forster v Outred & Co 1982] 1 WLR 86; Darby v Shanley [2009] IEHC 459, (Unrep, HC, Irvine J, 16/10/2009); Shore v Sedgwick Financial Services Ltd [2008] EWCA Civ 863, [2009] Bus LR 42; Bell v Peter Browne & Co [1990] 2 QB 495; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Law Society v Sephton [2006] UKHL 22, [2006] 1 AC 543 considered - Statute of Limitations 1957 (No 6), s 11(1)(a) - Central Bank Act 1942 (No 22), s 57 - Central Bank and Financial Services Authority of Ireland Act 2004 (No 21), s 16 - Application granted against first plaintiff and refused against second plaintiff (2010/1804P & 2010/5537P - Charleton J - 7/10/2011) [2011] IEHC 367

O'Hara and Gallagher v ACC Bank plc

Facts: A preliminary motion was brought to dismiss the proceedings relating to the purchase of bonds by the plaintiffs. The defendant bank sought an order dismissing, striking out and/ or staying the proceedings on the basis that in the first case, having regard to the determination of the Financial Services Ombudsman, the proceedings could not be properly pursued and that in the second case, that the proceedings were out of time. The Court had to consider the nature of the powers and responsibilities of the Financial Services Ombudsman pursuant to the S. 57BX(3)(a) Central Bank Act 1942, as inserted by s. 16 Central Bank and Financial Services Authority of Ireland Act 2004. The plaintiffs claimed that the prior adjudication by the Financial Services Ombudsman did not bar him from legal proceedings on the basis that the claims were different and the Court had to consider the question of issue estoppel.

Held by Charleton J. that ACC succeeded in preventing Mr. O' Hara's action proceeding as it in substance was already determined by the Financial Services Ombudsman and Mr. Gallagher was entitled to proceed with his case as it was not statute barred. There were no special circumstances whereby the application of estoppel through an abuse of process of the courts in raising the same subject matter in a complaint to a statutory body and in separate proceedings should not apply in this instance. The quantification of damages was not simply difficult but impossible as no loss had occurred. If there was misrepresentation, the tort only became complete when a financial loss crystallised.

Reporter: E.F.

RSC O.84C

RSC O.84

ULSTER BANK INVESTMENT FUNDS LTD v FINANCIAL SERVICES OMBUDSMAN UNREP FINNEGAN 1.11.2006 2006/56/11976 2006 IEHC 323

SQUARE CAPITAL LTD v FINANCIAL SERVICES OMBUDSMAN 2010 2 IR 514 2009/53/13449 2009 IEHC 407

DOHERTY v SOUTH DUBLIN CO COUNCIL & ORS (NO 2) 2007 2 IR 696 2007/15/3009 2007 IEHC 4

CENTRAL BANK ACT 1942 S57BX(3)(A)

CENTRAL BANK & FINANCIAL SERVICES AUTHORITY OF IRELAND ACT 2004 S16

CENTRAL BANK ACT 1942 S57BX(3)

CENTRAL BANK ACT 1942 S57CE

CENTRAL BANK ACT 1942 S57CI(9)

CENTRAL BANK ACT 1942 S57CL

CENTRAL BANK ACT 1942 S57CK

MURRAY v TRUSTEES & ADMINISTRATORS OF THE IRISH AIRLINES (GENERAL EMPLOYEES) SUPERANNUATION SCHEME UNREP KELLY 25.1.2007 2007/43/9011 2007 IEHC 27

PENSIONS ACT 1990 PART XI

PENSIONS (AMDT) ACT 2002 S5

CARROLL v RYAN & ORS 2003 1 IR 309 2003 2 ILRM 1 2003/8/1753

A (A) v MEDICAL COUNCIL 2003 4 IR 302 2004 1 ILRM 372 2003/1/49

ARKLOW HOLIDAYS LTD v BORD PLEANALA & ORS UNREP SUPREME 21.7.2011 2011 IESC 29

STATUTE OF LIMITATIONS 1957 S11(1)(A)

STATUTE OF LIMITATIONS 1957 S11(2)(A)

CANNY LIMITATION OF ACTIONS 2010 PARA 7.01

READ v BROWN 1889 22 QBD 128

HEGARTY v O'LOUGHRAN & EDWARDS 1990 1 IR 148 1990 ILRM 403

IRISH EQUINE FOUNDATION LTD v ROBINSON & ORS 1999 2 IR 442 1999 2 ILRM 289 2000/11/4112

M (H) v HEALTH SERVICE EXECUTIVE (HSE) - NORTH EASTERN AREA UNREP CHARLETON 20.7.2011 2011 IEHC 339

MURPHY v MCINERNEY CONSTRUCTION LTD & GRIFFIN UNREP DUNNE 22.10.2008 2008/44/9514 2008 IEHC 323

DW MOORE & CO LTD & v FERRIER 1988 1 WLR 267 1988 1 AER 400

MIDLAND BANK TRUST CO LTD & GREEN v HETT STUBBS & KEMP (A FIRM) 1979 CH 384 1978 3 WLR 167 1978 3 AER 571

FORSTER v OUTRED & CO (A FIRM) 1982 1 WLR 86 1982 2 AER 753

DARBY v SHANLEY (T/A OLIVER SHANLEY & CO SOLICITORS) UNREP IRVINE 16.10.2009 2009/12/2684 2009 IEHC 459

SHORE v SEDGWICK FINANCIAL SERVICES LTD & ANOR 2009 BUS LR 42 2008 PNLR 37

BELL v PETER BROWNE & CO (A FIRM) 1990 2 QB 495 1990 3 WLR 510 1990 3 AER 124

WARDLEY AUSTRALIA LTD & ANOR v STATE OF WESTERN AUSTRALIA 175 CLR 514 1992 HCA 55

LAW SOCIETY v SEPHTON & CO (A FIRM) & ORS 2006 2 AC 543 2006 2 WLR 1091 2006 3 AER 401

1 1. The plaintiff Joseph O'Hara is a solicitor and the plaintiff Patrick Gallagher is a restaurateur. In 2003 and 2004, the plaintiffs invested substantial sums of borrowed money in a financial product marketed by the defendant ACC Bank called the 'Solid World Bond'. The defendant bank lent them the necessary funds. The bonds were to mature over of a period of five years and eleven months. Mr. O'Hara invested more than Mr. Gallagher. Both of them individually purchased a bond in the sum of €500,000 in October 2003 and this was called the 'Solid World Bond 4'. The next year, in March 2004, Mr. O'Hara invested a further €250,000 in another offering from ACC Bank, which was called the 'Solid World Bond 5'. Borrowing substantial sums over nearly six years resulted in a significant liability in interest payments against the plaintiffs. That has far outstripped any return on the bonds.

2 2. While the name on the bonds might imply that monies were being placed into securities or share funds which were unshakable, the intervening years have proved that the world financial system is far from solid.

3 3. This judgment is on a preliminary motion to dismiss the proceedings on two legal grounds. Consequently, I will not now recite the allegations and counter allegations that would be made at trial by the investors and the bank. It suffices to say that Mr. O'Hara and Mr. Gallagher both lost heavily. The investment did not perform as well as they had expected and as they claim that the bank represented it would. As I understand it, while the capital sum was secure on the investment and has been returned, much of this has been dissolved by liability to pay interest on the borrowing.

Issues

4 4. In the case of Mr. O'Hara, ACC Bank pleads that it has already been determined by the Financial Services Ombudsman that the circumstances of the investment do not give rise to any legal liability on the part of the bank. In the case of Mr. Gallagher, ACC Bank pleads that the commencement of the case is out of time. Mr. Gallagher issued a plenary summons on the 10 ^th June, 2010. Mr. O'Hara issued a plenary summons on the 24 ^th February, 2010. Proceedings were therefore issued in each case more than six years after purchasing the bonds. I will deal with issues as to prior determination and breach of the limitation period in turn.

5 5. As this is an application to dismiss proceedings on the basis of a preliminary motion, the facts must be approached by the court on the basis of each of the plaintiffs being able to prove their case as set out in the pleadings and the defendant bank being unable to establish an answer.

Prior Determination

6 6. The relief sought by ACC Bank against Mr. O'Hara is encapsulated in the first paragraph of the notice of motion before the Court. The defendant bank claims:-

"An order dismissing, striking out and/or staying these proceedings on the basis that having regard to the determination of the Financial Services Ombudsman dated 30th November 2009 in respect of a complaint brought by the plaintiff against the defendant, the proceedings cannot properly be pursued".

7 7. An issue was first formally raised by Mr. O'Hara with ACC Bank as to his dissatisfaction with his purchase of the bonds through a letter of complaint from O'Donnell Waters Solicitors, dated the 20 ^th February, 2009. That firm wrote to ACC Bank seeking the return of all the interest paid by Mr. O'Hara. The letter claims misconduct by misrepresentation and breach of contract against ACC Bank. The letter asserts that the...