U2 drummer settles High Court case against accountants

U2 drummer Larry Mullen and his partner, Ann Acheson, have settled an action against their former accountants over alleged losses of more than €11m due to allegedly unsuitable investment advice.

The case related to agreements dating from late 2000 under which Mr Mullen and Ms Acheson alleged they retained Gaby Smyth & Company accountants and/or Gaby Smyth, as a sole trader, in relation to their financial, taxation and investment affairs.

The defendants denied their claims.

On Thursday, Douglas Clarke SC, for the couple, told Mr Justice Seamus Noonan two preliminary applications in the case, for discovery of documents, would not trouble the court as the case had been settled.

Counsel sought and secured an adjournment for a week when he hoped to be in a position to apply to the court for final orders.

In proceedings initiated in 2013, the couple claimed, under agreements entered into, the defendants were to identify suitable investment opportunities in circumstances where the couple had advised on several occasions they had a conservative and low risk approach to investing.

They claimed they were told in November 2007 the “European Hotel fund” was suitable with “very little risk or downside”.

They claimed that fund involved a high degree of risk and this was evident from an information memoradum prepared by Goodbody Stockbrokers and PreGroup in October 2007.

That memo stated the investment “involves a high degree of risk” and investors should “...be able to withstand the total loss of their investment”.

The memo was not drawn to the couple’s attention, they claimed, and they invested €1m in that hotel fund in December 2007 and a further €2m in June 2009.

Romania

It was further alleged Gaby Smith Accountants and/or Gaby Smyth continued to record the value of the hotel fund as €3.625m in the couple's accounts until December 21st 2011, despite the existence of financial statements, filed in the Companies Registration Office on September 2010, providing for a 52 per cent write down on the cost of that investment.

Further financial statements filed in September 2011 provided for a further 48 per cent write down on that cost, it was claimed.

The case also related to a €500,000 investment by the couple in a property in Timisoara, Romania.

They alleged they got a €350,000 loan for that investment.

They claim they got a further loan from Ulster Bank of some €4.5m on joint and several terms with two other parties, one of whom they didn’t know, in relation to that investment.

They alleged the firm and/or Gaby Smyth failed to advise them of the identities of the other person to whom the Ulster Bank loan was being provided and failed to advise them of the different contributions being made by the other investors.

They were not told the contribution from the investor whose identity was completely unknown to them was “significantly smaller” and were also not advised that their interest, and the interest of the two other investors, was held on trust by a named individual, it was alleged.

A further €1.2m was invested in a property fund, the Orion property fund, managed by Liberty Asset Management, it is claimed. A €1.2 loan from Ulster Bank financed that investment, it was alleged.

The couple also claim they got a €2m loan from Ulster Bank around January 2006 for the purposes of a €3m investment in the Crystal property fund, also managed by Liberty Asset Management

They sued for breach of contract and/or breach of collateral contract, negligence, breach of duty, negligent misrepresentation and/or negligent misstatement.

The action was brought by Mr Mullen and Ms Acheson, with an address in Howth, Co Dublin, against Gaby Smyth & Company Accountants; Gaby Smyth as a partner in the firm and/or a sole trader carrying on business at Merrion Road, Ballsbridge; and against Jill Percival and Pat Cleary, as alleged partners or former partners in Gaby Smyth & Co.

The court heard previously Ms Percival and Mr Cleary had no involvement in the advice and should not be sued.