A SOLICITOR who was employed by the Walkinstown firm of Thomas A Byrne, which has been closed by the Law Society, has asked the Commercial Court to find she cannot be held personally liable for €1.97 million bank loans in relation to which she signed undertakings.

The outcome of the preliminary application by solicitor Barbara Cooney, to be heard next week, will have implications for other actions related to loans grounded on undertakings given by solicitor employees in legal firms.

Ms Cooney has brought the application in proceedings in which Mr Byrne is alleged to have misappropriated some €1.97 million loaned for commercial transactions by Permanent TSB Bank.

As a result, Mr Byrne, Ms Cooney and three clients of his - all gardaí - are facing proceedings by the bank. Mr Justice Peter Kelly was told yesterday by Ronan Murphy, for the gardaí, that they will be seeking indemnity against Ms Cooney in relation to the bank's claims against them.

The bank is suing Mr Byrne, whose practice at Walkinstown Road, Dublin, has been closed by the Law Society; Ms Cooney, with an address at Foxrock Mount, Foxrock, Dublin; Brian Maher, Talbot Avenue, Malahide, Co Dublin; Enda Mulryan, Newcastle, Co Dublin; and Brian Whelan, Ratoath, Co Meath.

The action relates to a commercial loan transaction for the refinancing of an existing commercial loan facility on a property at Upper Dorset Street, Dublin.

The bank claims it agreed to advance €1.97 million to the borrowers on condition the money would be used to discharge the €1.88 million amount due on the original loan facility. It alleges Ms Cooney, with the authority of Mr Byrne, gave the bank an undertaking to register a mortgage in its favour over the property at Upper Dorset Street but that the mortgage was not registered.

It also claims that, on foot of an undertaking of Mr Byrne's of August 28th, 2007, the bank released the loan cheque for €1.97 million to Mr Byrne on condition he use it to discharge the balance of €1.88 million but that Mr Byrne failed to do so.

The bank is suing Mr Maher, Mr Mulryan and Mr Whelan as debtors under the initial loan agreement where the balance of €1.88 million is outstanding. The three defendants have said they would continue to make repayments on the loan facility but are not responsible for Mr Byrne's failure to pay the sum of €1.88 million.

In her preliminary application, Ms Cooney, represented by Alistair Rutherdale, claims Mr Byrne had authorised her on December 9th, 2005, to execute solicitors undertakings on behalf of Mr Byrne and his firm and that she had understood, when executing those undertakings, that she was doing so as an employee of the firm and not personally.

In her capacity as a person authorised by Mr Byrne, she says she executed an undertaking on April 13th, 2006, in the Law Society approved form. On foot of that undertaking, she claims it was Mr Byrne, and not her, who agreed to register the mortgage over the Dorset Street property.