Judge clears way for Belfry fund investors to sue AIB
The High Court has cleared the way for a full trial of hundreds of damages actions brought by investors in property funds promoted by AIB.
The investors allege the funds were promoted between 2002 and 2006 by the bank and five directors of various companies in the Belfry Properties group, including property investor Tony Kilduff and former head of AIB private banking John Rockett. Individuals invested anything between €75,000 and €440,000, which were sourced from savings, pension funds or loans.
Following the collapse of the funds, investors brought claims seeking damages.
They claim the defendants were negligent, acted in breach of contract, and in breach of fiduciary duty in the manner they operated the funds.
The claims are denied.
In a ruling on a preliminary issue concerning more than 300 actions over the Belfry Funds, Mr Justice Robert Haughton found that, while elements of the claims are statute barred, the cases can go ahead.
The investors have sued over losses sustained after they put money into five Belfry Funds. The funds invested in commercial property in the UK.
The defendants had also argued the claims were statue barred because they were brought more than six years after the investors entered into the Belfry Investments.
The investors rejected this and their lawyers argued that the claims should be allowed proceed to a full hearing.
Mr Justice Haughton said the investors claims of an alleged failure to advise them about aspects of the funds, known as a Loan To Value (LTV) covenant, before they invested in the funds, are not statute barred.
It is claimed that these covenants permitted assets which the fund had invested in to be sold, if their value fell below a certain amount. These asset sales, it is claimed, occurred as prices plummeted during the recession.
The judge, who based his decision on eight test or pathfinder cases, also found other categories of the claims had been brought outside the statue of limitations. The aspects of the claims the judge found to be outside the allowed six-year period include that the defendants were negligent in the management and choice of the investments, the rotation of the properties and the generation of excessive fees.
Speaking after the ruling, solicitor Tom Casey, who is representing the majority of the investors, said that after a six- day hearing on the preliminary issue his clients were delighted with the court's decision.
Approximately 30 of the investors were present in court for Mr Justice Haughton's ruling.