Ruling opens door to 1,000 bond actions against ACC
Published 08/10/2011 | 05:00
THE High Court has cleared the way for more than 1,000 disgruntled investors who bought ACC Bank's Solid World Bond products to sue the bank.
In a ruling that may affect thousands of bank customers unhappy with financial products which made losses on their maturity, High Court judge Mr Justice Peter Charleton has ruled that those who bought the ACC geared tracker bonds can sue from the time that the bonds matured rather than when they were first bought.
ACC had sought in the test case to head off hundreds of lawsuits by claiming that the investors were statute-barred from suing for alleged losses because they were lodged outside of the six-year period for filing a lawsuit.
More than 400 investors who invested in various Solid World Bonds and investment products are suing the bank over alleged failure to secure any return on their investments.
The vast majority of the investors 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 €650m 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 Irish Independent has learned that there are more than 600 cases on hold that may now be filed as a result of yesterday's ruling.
Last night Dave Coleman, founding partner of Lavelle Coleman, the Dublin law firm that specialises in multi-party litigation, said that the ruling paves the way for more Solid World investors to lodge actions against ACC.
The vast majority of plaintiffs had invested between €25,000 and €200,000 in the bonds.
"By coming together, this group of clients have shown that by pooling their resources, they can successfully assert their rights against a larger opposition," said Mr Coleman.
ACC had argued that restaurateur Patrick Gallagher was statute-barred from taking a case concerning the financial investment product as it was outside the statutory six-year time period.
Mr Gallagher had begun the High Court proceedings against ACC Bank more than six years after purchasing a bond in October 2003.
Mr Justice Charleton found it was not statute-barred as any potential "tort" or damage to the investor only became complete when "the financial loss crystallised" upon maturity of the bond five years and 11 months later rather than at the time of purchase in 2003. Joseph O'Hara, a solicitor, and Mr Gallagher invested money borrowed from ACC Bank in the Solid World Bond in 2003 and 2004, which were due to mature over a period of five years and 11 months.
Both purchased a bond of €500,000 in October 2003 and in March 2004 Mr O'Hara invested a further €250,000 in another Solid World bond.
The borrowing of the money over six years resulted in significant interest payments that far outstripped any return on the bonds.
Counsel for ACC Bank argued that the commencement of Mr Gallagher's case was statute-barred as it was outside the required timeframe -- with a summons issued in 2010.