The question of when actionable damage occurs is often a vexed one insofar as the date of accrual of a cause of action and this has been the subject of conflicting case law in recent times. The recent Supreme Court decision in Gallagher v ACC Bank plc represents a welcome clarification of the rules governing the period of time within which to claim for financial loss arising out of negligence against a financial institution in respect of financial products or advices.

The decision in Gallagher concerned a financial package sold by ACC bank known as “Solid World Bond 4” in respect of which the Plaintiff borrowed money from the bank in order to invest in the bond. Essentially the Plaintiff borrowed from one account in order to invest in another. The investment account was managed with a view to providing enough to repay the money borrowed at the end of a specified period and also to provide profit for the Plaintiff. The Plaintiff complained that this “borrow to invest” financial product was completely unsuitable for him or any investor as it was too volatile to achieve its purpose and he suffered loss and damage as a result.

In the normal course of events one can only sue in negligence or contract for a period of six years from the date of breach of contract or accrual of the cause of action however proceedings in this case were commenced more than six years after the Plaintiff made the investment.

In the Gallagher case, the Plaintiff claimed damages for a breach of the investment contract entered into between him and ACC. Whilst it was accepted by the parties that the claim in contract was statute barred as the claim was not initiated within six years, the position relating to claims of negligent advice causing financial loss or damage has always been less clear with regard to the date of accrual of the cause of action.

The Plaintiff claimed that the right to sue only arose when the investment matured and proved to be inadequate, however the Supreme Court found that the Plaintiff’s cause of action for negligent advices causing financial loss or damage accrued when he invested in the bond at the very outset and his claim of negligence against the bank was therefore statute barred.

It must be emphasised that the Supreme Court based its decision on specific fact however, the implications arising from this decision is that depending on the facts, a claim for negligence in the context of a financial product or advices, may be statute barred unless brought within six years of the date of the investment.


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