A solicitor and a builder client who both invested pension money in a property fund can go ahead with their claim that they were mis-sold the product, the High Court has ruled.
Philip O’Sullivan, a solicitor from Tralee, Co Kerry, and Liam Sugrue, along with his building company Farnes Construction, are separately suing Canada Life (Ireland), Irish Life Assurance plc, Oregan Financial Ltd and PSC Wealth Plus Ltd trading as PSC Wealth Plus. Since the proceedings began, Farnes has been dissolved.
Ms Justice Siobhán Phelan rejected an application from the Oregan and PSC defendants to dismiss the case on grounds of delay and want of prosecution.
Both men allege they have suffered losses as a result of being advised to invest in the same property fund in 2005 and 2006.
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They claimed they were not told, before entering into their investments, of the existence of a loan-to-value covenant in bank borrowings to secure the investments.
The covenant meant that if the value of the investment property fell below 80 per cent of the initial value, or below the amount loaned, the bank would be entitled to take control of the property and sell it in reduction of its debt.
The claims are denied and full defences have been lodged.
Mr O’Sullivan invested €363,294 in 2005, some €311,000 of it coming from his Law Society of Ireland Retirement Trust Scheme.
He says that as a result of the existence of the loan-to-value covenant in a loan for one of the properties in the fund, and the subsequent sale of the relevant property, he lost the opportunity to participate in recovery of the property market.
The property in question was acquired by the fund in February 2006 but in 2010 a receiver was appointed over it and it was sold in 2011.
Mr O’Sullivan says that had the building not been sold, the hypothetical value of his investment on retirement at 75 would have been €277,300.
In the case of Mr Sugrue and Farnes Construction, Mr Sugrue says his pension savings and accrued benefits of €57,120 were invested in the property fund in 2005 and 2006.
He says he and his company suffered loss following the appointment of a receiver on foot of the breach of the loan-to-value covenant and the subsequent sale of the property while it was in negative equity.
Had this not happened, the hypothetical value of the investment on Mr Sugrue’s retirement at 75 would have been €88,120, it is claimed.
The case was initiated in 2014 and the Oregan and PSC defendants brought applications in 2020 to the court seeking the dismissal of the proceedings claiming, among other things, the delay in prosecuting the case was grossly unfair to them. The plaintiffs opposed the applications.
In a judgment dismissing the applications, Ms Justice Phelan said that while there was inordinate delay, it was excusable.
The balance of justice was also “not yet tipped in favour of dismissal of the proceedings in either case”, she said.
