SIX FAMILY members being pursued by Allied Irish Banks over unpaid loans of some €25.3 million have claimed they were clearly assured the loans were non-recourse facilities, meaning the bank would not pursue them individually for repayment.

The loans were advanced in February 2007 to buy 86 acres of lands and premises at Kilbarry, Waterford, with a view to securing planning permission for development. The six claim the loans arose after they became involved with another man, Gerard Conlan, in a co-ownership and profit agreement relating to the lands.

Mr Justice Peter Kelly yesterday transferred proceedings by the six to the Commercial Court and returned the case to October.

The members of the Lynch family – Judith Whelan, Leinster Wood, Carton Demesne, Maynooth, Co Kildare; Philip Lynch and Eileen Lynch, Athgarvan Lodge, The Curragh, Co Kildare; Therese Lynch, Ardoyne House, Pembroke Park, Dublin; Philippa Lynch, Burlington Gardens, Burlington Road, Dublin, and Paul Lynch, Oakley Road, Ranelagh, Dublin – have taken their action against AIB, Matheson Ormsby Prentice Solicitors and LK Shields Solicitors.

In an affidavit for the family, Ms Whelan said one or more of the defendants, including AIB, “are irrefutably responsible for the clearest possible representation recorded by lawyers in writing that the Lynch family would have no personal liability”.

She claimed a memo by LK Shields on February 7th, 2007, in relation to a message from Matheson Ormsby Prentice about the nature of the facility, had stated: “Apparently the joint and several recourse condition in the facility letter is to be taken out in its entirety – confirmation of this to follow”.

The next day, just before she signed closing documents on behalf of the Lynch family for the loan, AIB had sent an amended draft facility letter to various parties, including LK Shields, Ms Whelan said.

She said LK Shields had the same day stated the amended AIB letter was “to reflect the fact that the bank now only requires legal recourse against the property being their security for the loan – they no longer require any legal recourse as against Philip, Gerry or the Lynch children”.

It was on that basis, which followed specific queries as to the nature of the liability of the Lynch family, that she was authorised to enter agreements on their behalf, Ms Whelan said. None of the defendants would admit to making those representations, she added.

Whoever was the source of the representation, the firm of LK Shields was clearly negligent in failing to warn the family of any conflict between the loan documents and the prior written legal advice there would be no personal recourse against the Lynch family, she said.

AIB has brought separate proceedings against the six and Mr Conlan, Forenaughts, Naas, Co Kildare. In those proceedings, it claims entitlement to summary judgment for €25.3 million each against all the defendants.

The bank had been unable to effect personal service of the action on Mr Conlan despite a summons server having called four times to his address, the court heard.

Mr Justice Kelly yesterday directed the case by the family against AIB and the two solicitors firms is to proceed as that would determine the key issue between the sides. The bank may bring a counter-claim in those proceedings, he said.