The High Court has refused applications by two investment firms to dismiss two related claims over investments in a property fund, despite finding that the plaintiffs had delayed in progressing their cases. Ms Justice Siobhán Phelan ruled that the delay was inordinate but excusable in the particular circumstances, and that the balance of justice did not yet favour dismissal.
The applications were brought by the third and fourth named defendants under the court rules and its inherent jurisdiction, alleging delay and want of prosecution. The claims concern investments in the same fund, which acquired the Lateral Building in 2006. The plaintiffs allege that they were not advised about a loan-to-value covenant affecting the fund’s borrowing and that the covenant contributed to losses after a receiver was appointed in 2010 and the building was sold in 2011. The defendants deny negligence or breach of duty. These allegations were not determined on the dismissal applications.
The proceedings were issued in August 2014. The defendants delivered defences in 2015. In one case, the court identified more than seven years without meaningful steps; in the other, it found at least two years of inordinate delay between the completion of discovery in 2017 and a later application concerning a preliminary limitation issue. The judge said the plaintiffs had not kept the moving defendants informed that they were waiting for a related case to resolve the limitation question.
That related case, Cantrell, proceeded through the courts between 2016 and 2020. The Supreme Court ruled that claims of this kind accrued when a loan-to-value covenant had a negative impact on the investment’s valuation. Justice Phelan said awaiting that decision was a sensible course in the specific circumstances, given its potential to determine whether these proceedings could continue and the cost of litigating the same issue separately. She found the delay from May 2016 to December 2020 excusable, and also excused an earlier period in one case so the related proceedings could move together.
The judge also considered the balance of justice, in case her conclusion on excusable delay was wrong. The defendants relied on the age of the events and the prospect of disputes about oral advice, but did not identify specific missing witnesses or documents. The judge noted that transaction documents could assist the defence. She said the position of a dissolved company that was a plaintiff in one case raised potential complications, but deciding whether the remaining plaintiff could pursue that part of the claim was outside the scope of these dismissal applications.
The court refused the applications. It allowed the plaintiffs seven days from the order to deliver replies, set deadlines for any particulars and replies, and reserved the defendants’ right to apply again if there is further unexplained and unnecessary delay. The trial judge may also consider dismissal if a fair hearing is no longer possible because of delay.