Couple sue Bloxham over bond losses

A retired couple who claim they have lost €470,450 because of allegedly negligent advice from Bloxham Stockbrokers about an investment bond have brought a legal action against the firm.

The action by Desmond and Maura Ellison, of Annaglog House, Ardee, Co Louth, is the fifth brought in the Commercial Court against Bloxham over the same “Dresdner” bond.

The couple claim Bloxham wrote to them in early 2005 suggesting a number of options for reinvesting maturing funds and that a Dresdner bond was sold to them “as a low risk product with no identified possibility of capital loss”.

They claim Bloxham specifically represented to them the bond was suitable for their needs as a retired couple and, on that basis, they invested €485,000. It later emerged the investment was not what they thought and they had lost €470,450 as a result, it is claimed.

The court was previously told Bloxham is suing Morgan Stanley in Britain alleging breach of contract relating to the bond but that claim is limited to €42.75 for every €100 invested in the bond.

It is alleged a ‘call option’ exercisable by Morgan Stanley compromised the integrity of the Dresdner bond as a secure investment vehicle and a “mandatory redemption event” exercised by Morgan Stanley had the net result bond holders would only recover 3 per cent of their investment.

In an affidavit, Mr Ellison said they delayed bringing proceedings against Bloxham because of that firm’s case against Morgan Stanley. However, they had now initiated this court action after learning other investors, in addition to the Solicitors Mutual Defence Fund, had taken proceedings.

Mr Ellison said his solicitors had also advised him they had been unable to ascertain the extent to which insurers were standing behind Bloxham’s and that there appeared to be a dispute about who would indemnify the firm.

The proceedings, brought against a number of persons allegedly partners in Bloxham at the relevant time and against FBD Securities Ltd, were admitted to the Commercial Court yesterday by Mr Justice Peter Kelly.

The judge noted several of the defendants objected to the case being admitted on grounds including it did not meet the €1 million threshold for Commercial Court cases. Declan McGrath, for several of the defendants, also disputed arguments by Alan Doherty, for the couple, there was no defence to their claim.

The judge said there are several actions against the same defendants and while the facts in the Ellison case are different, the couple had “clear correspondence” from Bloxham relating to their investment. This and other matters, including their concern others could get judgments if they waited, titled the balance in favour of there being a trial of the matters at the same time, he ruled.

Last week, Greystones and District Credit Union in Co Wicklow initiated a separate action against Bloxham after losing €1.25 million as a result of allegedly negligent advice to invest in the same type of bond.

Bloxham is already being sued by the Solicitors Mutual Defence Fund over the same bond. The SMDF, the main insurance body for solicitors, has alleged its ability to indemnify soliciors had been affected by more than €8 million losses suffered after the bond’s value fell.

Separate proceedings by LK Shields Solicitors and by Maurice Curran, a retired solicitor and former chairman of the SMDF, and his wife Noelle, have also been taken over some €1.4 million total losses relating to the same bond.

Some of the Bloxham defendants are seeking indemnity on grounds they were not partners at the time of the alleged negligent advice in 2005. The cases have been adjourned to May for further directions.