In the recent High Court case of Geraldine Cantrell v Allied Irish Banks Plc, the Second Belfry Properties (UK) Plc and Others, the Plaintiff sought an order for damages for breach of contract, breach of statutory duty and damages for negligent misrepresentation against the Defendants. The Plaintiff’s claim was that by virtue of representations made by the Defendants she was induced into making certain investments as a result of which she suffered loss. The Plaintiff claimed that the information provided did not give a full picture as to what the investment entailed.
As a preliminary point the Defendants argued that the Plaintiff’s claim was statute barred by virtue of the Statute of Limitations.
Impact of Gallagher
The Defendants relied heavily on the Supreme Court case of Patrick Gallagher v ACC Bank Plc which held that a Plaintiff’s cause of action accrued at the time at which the investment was made and the six year statute period, within which court proceedings had to be issued, ran from that date. In Gallagher, Mr Justice Charleton held in the High Court that the Plaintiff’s claim in contract was statute barred but the Plaintiff’s claim in tort was not statute barred. Mr Justice Charleton stated it was only when the bond matured at the end of the term that it could be established whether the Plaintiff had suffered a loss and that therefore the time to pursue a claim in negligence ran from the date of maturity. This decision was overturned in the Supreme Court which stated that as a general rule, a claim in tort by an Investor in a financial product must be brought within six years of the date of the investment.
In this case, the High Court in its Judgment analysed in detail the Gallagher decision. Ultimately, the High Court found that whilst any claim for breach of contract taken by the Plaintiff was statute barred, the cause of action for a tort action did not accrue at the date of entering into the investment as there was only a mere possibility of loss but no actual loss and so the cause of action in tort was not statute barred. In coming to this conclusion, the High Court noted that the Gallagher decision is distinguishable on its facts but that the obiter dicta comments (expressions of opinion uttered by a judge in court but not essential to the judge's decision and so not legally binding) of Mr Justice Fennelly in the Supreme Court supported this conclusion. The High Court relied on the comments of Justice Fennelly in Gallagher to support its position that “the cause of action accrues in the case of financial loss when the Plaintiff has suffered actual damage”
Mr Justice Fennelly stated obiter in the Supreme Court in Gallagher (which the High Court relied on in Cantrell) that “the mere possibility of loss arising from advice given on the entry upon a transaction is not enough to constitute actual loss at that point in time. There must be some probability of loss”.
The High Court was persuaded by Mr Justice Fennelly’s logic in Gallagher which was that if a Plaintiff is required to sue early in order to come within the six year statute period, they may be unable to quantify their loss and so unable to prove their claim but yet if a Plaintiff waits to sue at a time when they can quantify their loss then they will be statute barred. Mr Justice Haughton found that the Statute of Limitations could not be intended to operate in this way as otherwise there would be an abundance of legal proceedings issued which would lead to unnecessary legal costs being incurred in cases where ultimately no loss or damage ensued.
Given this decision is a High Court decision it will not carry the same weight as the Supreme Court decision in Gallagher. However, Mr Justice Haughton in the High Court was very careful in his Judgment to assess the Gallagher decision in detail and specifically distinguish certain comments made by Mr Justice Fennelly in support of this Judgment. Mr Justice Haughton distinguished the Gallagher decision on its facts. While this decision will not be welcomed by financial service providers, it remains to be seen what, if any, impact this decision will have on litigation relating to investment advice. One would expect that this decision will be appealed to the Court of Appeal in light of its departure from the Gallagher position.