The High Court has allowed James and Pamela O’Regan to pursue a narrow negligent misrepresentation claim against their former accountants, while dismissing the deceit claims in their action over a €4.5 million property investment loan.
Mr Justice Alexander Owens ruled on an application by the defendants to dismiss the case for want of prosecution. He found that, after the plaintiffs settled separate litigation over the bank loan in May 2017, their delay in advancing this action was both inordinate and inexcusable. The case remained at plenary summons stage, with outstanding particulars and discovery that should have been dealt with by the end of 2018.
The underlying claim concerns a 2007 loan to buy 15 apartments attached to a hotel in Killarney. The plaintiffs’ pleaded case was that the defendants, their accountants, arranged a deal intended to limit personal recourse for loan capital. The formal loan documents did not do so. The plaintiffs later settled their dispute with the bank for €1.29 million, paid by the end of June 2017.
The judge criticised the plaintiffs’ pleadings as vague and their replies to requests for particulars as inadequate. He said the deceit allegations lacked the particulars and supporting material required for a serious allegation of fraud. He dismissed those paragraphs of the statement of claim, finding that delay and the balance of justice did not support allowing the deceit claims to proceed.
However, the plaintiffs’ solicitor had stated in a further affidavit that the second defendant assured them the facility letter reflected the agreed terms. The judge considered that discrete allegation—an assurance made after the facility letter issued and before the plaintiffs committed to the deal—could proceed as negligent misrepresentation. He said the lapse of time was unlikely to prejudice the defendants in meeting that claim. He did not permit the plaintiffs to advance other negligence claims.
The plaintiffs must deliver an amended statement of claim confined to the permitted claim within three weeks. It must detail the alleged cause of action and losses, account for properties sold and proceeds applied to the loan, identify any security released and its value, and include supporting documents or calculations. They must also provide full particulars of any action against the solicitors involved in the 2007 transaction.
The defendants must file a defence within three weeks of receiving the amended claim. Discovery must be exchanged within three weeks after that, and the plaintiffs must serve notice of trial and set the case down within three weeks of receiving discovery. The defendants may re-enter their dismissal application if the plaintiffs miss the timetable.
The court ordered the plaintiffs to pay the costs of the dismissal application and the defendants’ costs of the notice for particulars and defence. Costs of the plaintiffs’ statements of claim and replies to particulars cannot be included in any costs order in their favour at the conclusion of the action.