In Gallagher v ACC Bank  IESC 35 the Supreme Court unanimously ruled that the applicable time of 6 years within which to take an action in tort for negligence concerning a financial loss would commence from the moment the individual invested in an investment product in circumstances where it was held that the plaintiff suffered a loss by virtue of entering into the investment. It was ruled that the plaintiff suffered an immediate loss as it was an unsuitable investment, and not because the investment was mismanaged.
A recent high court preliminary ruling has however opened the door to many investors to bring damages claims against fund promoters where a loss has been suffered and who would otherwise have been statute barred. Mr Justice Robert Haughton’s preliminary ruling in Cantrell v AIB PLC & Ors  IEHC 254, where AIB acted as promoter and placing agent, found that certain elements of the plaintiffs’ claims were statute barred but the plaintiffs’ claims that loss based on representations and prospectuses provided to them where they each lost between €75,000 and €440,000 could proceed with time commencing from dates post the dates of investments. The claims involve the operation of 5 separate investment funds in UK commercial property, known as “the AIB Belfry Funds”. The loan-to-value covenant aspect of the funds permitted assets which the fund invested in to be sold if fell below a certain value. The plaintiffs claimed that these sales occurred as the recession took hold and that there was a failure to explain the LTV covenants to them prior to entering into the investment. Mr Justice Robert Haughton ruled that the cause of action in tort therefore did not accrue at the date of entry into the investments as at that point there was a mere possibility of loss and not an actual loss.
The eight sets of proceedings were chosen from a large number of related cases to act as ‘pathway cases’.
An appeal is pending and the matter is back before the courts on the 20th February 2018. Galligan Johnston will issue an updated brief on the outcome of this case as there are many in the investment community who will be impacted by the result.