BUSINESSMAN PHILIP Lynch and his family are to appeal to the Supreme Court against a finding they must repay €26 million to AIB Bank arising from an unpaid loan made to them and developer Gerry Conlon to buy development lands in Waterford.
Mr Justice Micheal Peart, who previously found the family are liable for the loan, yesterday said AIB was entitled to judgment orders for about €26 million each against Mr Lynch, his wife Eileen and their children Judith, Paul, Phillippa and Therese, but agreed to stay the orders until January 11th when he will rule whether the family are entitled to a longer stay.
Rossa Fanning, for Gerry Conlon, said the decision on the Lynchs’ liability meant Mr Conlon had no defence to a similar judgment being entered against him but he wanted until January 11th to check the bank’s documents and also wanted a stay.
If the Lynchs won their appeal, that would get Mr Conlon “off the hook” and mean he was also not liable to AIB.
The judge adjourned to January 11th his decision whether to grant a stay pending appeal and granted an interim stay until then.
Mr Conlon’s arguments for a stay may be weaker in circumstances where he had not supported the Lynch side in their action, the judge said. He will also rule on the costs issues arising from the case on January 11th.
Earlier, Michael McDowell SC, for the family, objected to entry of judgment saying the bank was seeking such orders after evading calling any oral evidence of its actions concerning this loan. The effect of judgment orders against various members of the family whose assets didn’t come near €26 million was “catastrophic”, he said.
The family were appealing on several grounds and wanted a stay on any judgment orders pending appeal, he said. They would argue the judge was wrong to find the bank breached no duty of care to the Lynchs and that two solicitors firms had no liability to them.
Mr Lynch was prepared to lodge €500,000 in court as a measure of the seriousness with which he viewed the appeal and the family were prepared to undertake not to dissipate their assets pending its outcome, counsel added.
Michael Collins SC, for AIB, in seeking judgment against all the family and opposing a stay, argued the court had ruled the bank was entited to judgment and the grounds of appeal against the bank were “incredibly thin”.
While he appreciated there were no other proceedings against the family, Mr Lynch was indicating he would put in €500,00 against a liability of €26 million. The court was entitled to assume there was a pool of other creditors seeking to recover debts from Mr Lynch and, while the bank was not alleging assets were being moved within or outside the family, that was “an issue”.
Mr Lynch had chosen not to put a statement of affairs before the court, Mr Collins added. The court was entitled to conclude there were “substantial” liabilities.
The applications arose from the judge’s decision earlier this month that the Lynch family are liable to AIB over a €25 million loan of February 2007 to buy development lands in Waterford, now valued at between €3 million and €4 million. He also rejected their arguments they are entitled to be indemnified for the €25 million by two law firms – Matheson Ormsby Prentice Solicitors and LK Shields Solicitors – arising from advice and information given concerning the transaction. The judge found the family genuinely, but mistakenly, believed the AIB loan was a non-recourse loan, meaning the bank’s recourse was confined to the lands, but rejected their claims AIB negligently misrepresented to them the loan was non-recourse.
He also found, while a solicitor with LK Shields wrongly advised the Lynch side that the final loan facility letter was non-recourse, the scope of the firm’s duty of care to the Lynchs did not extend to a point of making it liable for the loan.
The judge also ruled that Matheson Ormsby Prentice, primarily Mr Conlon’s solicitors in the deal, breached no duty of care to the Lynchs.
