O'Sullivan v Canada Life [Ireland] Ltd ; Sugrue v Canada Life [Ireland] Ltd
| Jurisdiction | Ireland |
| Judge | Ms. Justice Siobhán Phelan |
| Judgment Date | 25 November 2022 |
| Neutral Citation | [2022] IEHC 657 |
| Court | High Court |
| Docket Number | [Record No. 2014/7651P] |
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[2022] IEHC 657
[Record No. 2014/7651P]
[Record No.: 2014/7652P]
THE HIGH COURT
JUDGMENT OF Ms. Justice Siobhán Phelan delivered on the 25 th day of November, 2022
. These separate but related matters came before me on foot of two applications on behalf of each of the Third Named Defendant and Fourth Named Defendants to dismiss the proceedings in these related proceedings pursuant to O. 122 R. 11 of the Rules of the Superior Courts 1986 (as amended) and/or the inherent jurisdiction of the Court on the grounds of delay and want of prosecution (four separate motions heard together).
. The two sets of proceedings in which these applications are brought are related in that they both concern investments made by the Plaintiffs in each case (referred to hereinafter as the “ O'Sullivan” and the “ Sugrue and Farnes” proceedings to distinguish them from each other) in the same property fund (hereinafter “the property fund”). The Third Named Defendant provide investment services and the Fourth Named Defendant is an investment product intermediary. The Plaintiff in the O'Sullivan case is a solicitor by profession and acts for the Plaintiffs in Sugrue and Farnes. The proceedings are maintained against the same Defendants and concern, inter alia, a claimed tort of negligent misstatement and breach of fiduciary duty arising from the existence of a loan to value covenant in bank borrowings to secure the investment, of which it is claimed the Plaintiffs were not advised before entering into their investments. Proceedings did not issue within six years of the investment in either case but the Plaintiffs contend that they are not statute barred as they were commenced within six years of negative impact of the loan to value covenant on their investments in the property fund.
. The thrust of the Plaintiffs' resistance to these applications is focussed on the excusability of delay in the particular circumstances of these cases and balance of justice considerations. The primary explanation for delay between 2016 and 2020 advanced in both cases is the fact that a preliminary issue in relation to the Statute of Limitations, 1957 (as amended) [hereinafter referred to as “the Statute of Limitations”] was being pursued in a case which was “ on all fours” with these cases, namely, Cantrell v. AIB Plc (Record No. 2014/690P) [hereinafter “the Cantrell proceedings”], finally resulting in a decision of the Supreme Court which found that those similar proceedings were not statute barred (see [2020] IESC 71).
. Given the similarity between the two sets of proceedings and the respective applications of the Third and Fourth Named Defendants on these applications to dismiss and to avoid unnecessary duplication, I am delivering a single judgment, addressing each application and claim separately and individually only to the extent I consider necessary.
. To properly contextualize the within applications it is important to understand the significance for these cases of the decisions of the Superior Courts in the Cantrell proceedings. By way of summary, in the Cantrell proceedings it was claimed that the nature of the borrowing was not known to the investors at the time of subscription to the funds in issue. In each case, however, borrowing was negotiated after the closing of the funds and the loan agreement contained a loan to value covenant which provided that if the value of the property fell below 80% of the initial value, or below the amount lent, then the lender was entitled to activate the clause, and a floating charge would crystallise in which case the lender would be entitled to take control of the property and sell it in reduction of its debt. In the Cantrell proceedings the Courts (High Court, Court of Appeal and finally the Supreme Court) were required to determine the date of occurrence of damage in tort actions in which damage is an ingredient of a cause of action (unlike claims for breach of contract) by way of trial of a preliminary issue on a motion.
. The judgments in the Cantrell proceedings applied to eight cases in total listed for hearing together but all against AIB Plc. The complexity of the issue for determination is borne out by the differing judgments of the courts. In the High Court (Haughton J.) it was concluded that assuming that actionable wrong occurred when the investments were entered into, the cause of action in tort did not accrue at the date of entry into the investments as there was a mere possibility of loss but no actual loss and the loan to value covenant made no difference to this. It was only when actual damage or loss was caused that the tort became actionable. In the Court of Appeal (Baker J.), the Court overturned the decision of the High Court and concluded that the investors had suffered a loss when the loan to value covenants were entered into for the purpose of securing the borrowings (para. 161).
. In his judgment on behalf of the Supreme Court on appeal from the decision of the Court of Appeal, O'Donnell J. described the cases as “ pathfinder” cases selected from more than 300 proceedings brought by disappointed investors in a series of schemes promoted by AIB Plc (para. 5 of the judgment). It was widely understood that the judgment would have implications for many others.
. Ultimately, the Supreme Court concluded, reversing the decision in the Court of Appeal and affirming the decision in the High Court, that the cause of action for negligent mis-selling accrued in such cases from the date the loan to value covenant had a negative impact on the valuation of the investment.
. While issues relating to the Statute of Limitations and to delay are related, it is not an answer to an application to dismiss on delay grounds that the proceedings are not statute barred. The relevance of the decision in the Cantrell proceedings for this application is not therefore that these proceedings may not be statute barred but rather whether the fact that a preliminary application on foot of the Statute of Limitations was being pursued in those cases excuses the Plaintiffs' delay in progressing these proceedings.
. Proceedings were issued in 2014 at the suit of the Plaintiffs in two separate sets of proceedings. In the Statements of Claim delivered in both cases the Plaintiffs allege in almost identical terms that that they have suffered loss as a result of being advised to invest in the same property fund.
. In the O'Sullivan case, the Plaintiff alleges that he invested the sum of €363,294.40, comprised in large part of the transferred accrued benefits from his Law Society of Ireland Retirement Trust Scheme in the sum of €311,742.79, in the Property Fund on the 14 th of November, 2005. The Plaintiff pleads that as a result of the existence of a loan to value covenant in a loan for one of the properties in the fund, and the subsequent sale of the relevant property, he lost the opportunity to participate in recovery of the property market. The property at issue was known as the Lateral Building. This property was acquired by the Property Fund in February, 2006. A receiver was appointed in respect of the property in 2010 and the building was sold in 2011. The Plaintiff pleads that had the building not been sold, the hypothetical value of the Plaintiff's investment on retirement at 75 years of age would have been €277,300.
. In the Sugrue and Farnes case, the Plaintiffs plead that the proceeds of the First Named Plaintiff's pension savings and accrued benefits in the combined sum of €57,120.37 were transferred to the First Named Defendant in two separate payments in November, 2005 and February, 2006 for investment in the Property Fund used to purchase the Lateral Building in February, 2006. Like the Plaintiff in the O'Sullivan proceedings, in this case the Plaintiffs suffered loss following the appointment of a receiver on foot of the breach of the loan to value covenant and the subsequent sale of the property while it was in negative equity. The Plaintiffs plead that had the building not been sold, the hypothetical value of the Plaintiffs' investment on the First Named Plaintiff's retirement at 75 years of age would have been €88,120.
. Notably, in the Statements of Claim and in Replies to Particulars, it is pleaded in both cases that the Third Named Defendant failed, inter alia, to ensure that the nature and risks of the investment were properly described (including as to the loan to value covenant) and the Fourth Named Defendant advised and recommended that the Plaintiff invest in the property fund and promoted the fund without assessing and advising of associated risks. Reliance is placed on a meeting alleged to have occurred on an unspecified date 2005, prior to the investment, with named officers of the Fourth Named Defendant (different individuals in each case). Accordingly, in both cases reliance is placed not only on documents relating to the investments but also on what was represented orally.
. Full defences have been filed in both cases by each of the Third and Fourth Named Defendants. As already noted, in each case reliance is placed on a plea that the proceedings are statute barred and issue is joined in relation to pleas that the said Defendants advised or recommended or promoted investment in the fund or were negligent in advising in respect of risk. The Third Named Defendant states that its only role in connection with the Plaintiffs'...
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