The Court of Appeal allowed appeals by Allied Irish Banks plc and several director defendants in litigation brought by investors in Belfry property funds, holding that the investors’ negligence claims concerning loan-to-value covenants were statute barred. The court did not decide whether the investors could rely on section 71(1)(b) of the Statute of Limitations; that issue was left for the High Court.
The appeals concerned a preliminary limitations ruling by the High Court in 2017. The investors alleged that investment materials failed to disclose or explain loan-to-value covenants later included in borrowing arrangements for the funds. They said the covenants increased the risk that lenders could force property sales after values fell, and that they would not have invested had they known of the terms. Those allegations remain to be determined at trial.
The High Court had held that the relevant tort claims were not out of time because loss was not sufficiently established until the investments’ values fell. The Court of Appeal disagreed. It said the pleaded case linked the alleged negligence to the added risk created when the covenants were included in the borrowing arrangements, rather than solely to the later collapse in property values.
Justice Baker said the claimed damage accrued when the covenants were agreed, because the investors were then exposed to greater risk than they understood they had accepted. The precise dates for the different funds were unclear, but the court concluded they were outside the six-year limitation period. It was not necessary to decide whether the High Court had correctly divided the claims into categories.
The judgment records that the investors’ funds initially performed well, then suffered as commercial property values fell. The investors said the lender’s rights under the covenants contributed to the eventual loss of their equity. Whether they can prove that causal link was not decided in this appeal. The court’s decision addressed when the claims accrued for limitation purposes.
The appeals arose from eight pathway proceedings selected from a larger group of related cases. The Court of Appeal made no factual findings on the pleaded allegations and did not determine the section 71(1)(b) issue, which it returned to the High Court.