A RETIRED couple who hoped to use their investments to fund the cost of medical treatment for one of them in the United States were “devastated” to learn they had lost most of their €400,000 investment after a bond plummeted in value, the Commercial Court heard yesterday.
Mr Justice Peter Kelly said he was concerned at the situation in which Noel and Yvonne O’Callaghan found themselves in and was taking that into account in transferring their action alleging negligence against various partners in Bloxham stockbrokers to the fast-track court, the commercial division of the High Court.
Mr O’Callaghan (75), a retired bloodstock agent, of Quarry Road, Rathmichael, Co Dublin, said he is the sole carer of his 73-year-old wife, who suffers from a degenerative and progressive condition, multiple system atrophy, which means she cannot walk unaided.
They were seeking medical help in the US and were hoping to use their investments to fund medical costs but were devastated at what had happened to those, he said.
Bloxham is facing claims totalling more than €11 million in the Commercial Court over the same bond, including claims by the Solicitors Mutual Defence Fund, Greystones & District Credit Union and by another retired couple, Desmond and Maura Ellison, Annaglog House, Ardee, Co Louth.
In an affidavit yesterday, Mr O’Callaghan said he was introduced to Bloxham in 1999 and had relied solely on the firm’s advice in relation to investments made through them. He and his wife had sold their house at that time and were looking to invest funds for their retirement, he said.
He was not familiar with stock markets and had not invested in equities and/or corporate bonds during his working life, he added. They had initially invested some €600,000 in Anglo Irish Bank series B preference shares and in December 2004 were advised by Bloxham that Anglo had redeeemed the shares at par and they were in funds of €569,5000.
Following advice from Bloxham, he invested €400,000 in what he understood was a bond issued by Dresdner bank.
Mr O’Callaghan said he was comforted by being told by Bloxham he would not be open to capital loss when the stock was redeemed, which he understood meant the capital investment would be guaranteed. This was important as the money was earmarked for their retirement.
In June 2009, the couple were informed the bond was in fact subject to an agreement with Morgan Stanley and, as the bond was downgraded by the rating agency Standard & Poors, Morgan Stanley could exercise an option to terminate the agreement, he said. This was the first time they were told the bond “could be effectively written off” by the actions of a third party.
Bloxham had advised them the investment was now worthless and they would receive three cent for every euro, Mr O’Callaghan said. “This news has left us devastated.”
Although Bloxham had informed them it had retained lawyers in the UK in an effort to recover their losses, they understood the proceedings issued against Morgan Stanley were limited to recovering some €42.75 for every €100 invested.
Mr O’Callaghan said he also learned various actions have been initiated here against Bloxham arising from the same bond and, in all the circumstances, including his wife’s circumstances, was seeking to have the case transferred to the Commercial Court.
