The background to the case was that the parties had entered into swap agreements on 14 July 2006, to hedge the interest rate exposure of Komady Limited.  In late 2011, the relationship between Komady and Ulster Bank deteriorated.  In mid-2012, Komady sought independent advice from financial and legal experts on the swap agreement and subsequently commenced its mis-selling claim in November 2012.  

This claim would ordinarily fail, as the Statute of Limitations 1957 allows a maximum of six years to bring any action founded on a contract. On that basis, the defendant, Ulster Bank, sought to have the proceedings dismissed as a preliminary matter.

Komady alleged that Ulster Bank had fraudulently concealed the true nature of the swap agreement. The company claimed that it only became aware that the swap agreements were unsuitable for its objectives in 2012. Komady argued that the limitation period should therefore not begin to run until 2012, when the company received legal and financial advice informing it of the unsuitability of the agreements.

Ulster Bank, however, argued that the limitation period should run from the date that Komady entered into the swap agreement, as Komady could not point to any fact disclosed after July 2006 which was central to their ability to bring the claim, which is the central criterion for extending the limitation period under the Statute.

Judge Peart observed in his judgment of 26 June 2014 that to allow Komady to maintain its claim could mean that anyone who “brings a claim on the basis of a failure to advise would in effect face no limitation period”.  He further held that Komady knew all that it needed to know in order to get independent advice on the swap agreement in July 2006 and that, the plaintiff therefore had enough information to ground their claim from the offset.  There had been no fraudulent concealment on the part of Ulster Bank. 

The Komady decision is helpful in identifying the appropriate limitation period for claims of financial mis-selling and it confirms the approach taken by the Supreme Court in Gallagher v ACC Bank plc [2012] IESC 35.  Judge Peart noted in his judgment that fraudulent concealment would be held to occur in the context of the Statute of Limitations “where the facts necessary to found a cause of action have been concealed from a plaintiff by the defendant.”  No such concealment had arisen in the case of Komady. 

Komady Limited & Michael O’Reilly v Ulster Bank Ireland Limited [2014] IEHC 325