A RESTAURATEUR who lost heavily after investing in ACCBank’s Solidworld bond products is entitled to sue the bank, a High Court judge has found, in a decision which clears the ways for potentially hundreds of similar court cases.
Mr Justice Peter Charleton’s dismissal yesterday of the bank’s claim that Patrick Gallagher was outside the statutory six-year time limits to sue it over the bonds exposes the bank to the possibility of a deluge of similar actions.
More than 400 people have already initiated cases against the bank over the bonds.
While Mr Gallagher initiated his action more than six years after purchasing a bond in October 2003, the judge found his case was not statute-barred because any potential damage to him only became complete when his financial loss “crystallised” upon maturity of the bond five years and 11 months later, rather than at the time of purchase in 2003.
Earlier this year, the Commercial Court heard more than 400 people who invested in various Solid World Bonds and investment products were suing the bank over alleged failure to secure any return on their investments.
The vast majority of the investors – 430 out of 432 – had taken out loans with ACC to buy the bonds and are claiming losses arising from interest repayments on the loans.
The schemes were hugely popular among Irish investors in 2003 and 2004.
An estimated €650 million worth of the geared tracker bonds were sold here to more than 1,000 investors who borrowed an average of €200,000 from ACC to invest in the bonds.
The borrowing of the money over six years resulted in significant interest payments which far outstripped any return on the bonds, the judge noted.
Mr Justice Charleton yesterday dealt with separate actions by Joseph O’Hara, a solicitor, and Mr Gallagher.
Counsel for ACC argued Mr Gallagher’s case was statute-barred as it was brought outside the required timeframe with a summons issued in 2010.
The issue in Mr O’Hara’s case was whether the fact his complaint had been dismissed by the Financial Services Ombudsman precluded him pursuing High Court proceedings.
Mr Justice Charleton ruled that the ombudsman’s finding barred proceedings before the High Court on the same subject, save in circumstances of unconstitutionality.
