AIB says Lynch family liable for €25m debt

AIB has told the Commercial Court it is not contending that businessman Philip Lynch and his family are liable for all of the AIB debts of developer Gerry Conlan arising from a mortgage related to a €25 million land deal in Waterford.

AIB is, however, claiming the Lynch family has a liability for a €25m loan facility provided to them and Mr Conlan to purchase development lands in Waterford.

Michael Collins, for AIB, made the clarification yesterday after earlier suggestions that a mortgage related to an €25m AIB loan facility for the Waterford deal appeared to make the Lynch family liable for all the debts of Mr Conlan to AIB.

In evidence yesterday, Eileen Lynch, her daughters Philippa and Therese, and her son Paul all said they would not have become involved in the Waterford deal if they believed AIB had any personal recourse to them over the €25m loan and added they do not consider they owe AIB that sum.

Mrs Lynch said her husband would talk to her about his business dealings and she would call him “conservative” and herself “very conservative”. She would never consider anything risky and would “not have been a bit pleased” about exposure to a €25m liability. If her husband had said there was any such risk, she did not think she could say in court what she would have said to him, Mrs Lynch said.

Paul Lynch said he had expressed concerns at a Lynch family meeting in late January 2007, before the loan facility was signed on February 8, 2007, about getting involved in property deals because he was sceptical about the property market. But he said he was assured at that meeting the Waterford deal involved no risk, the €25m loan was secured on the lands only and it was a case of “hand back the keys”.

Therese Lynch became distressed during her evidence in which she told the court her family were very prudent and her father would not do anything risky. She had never believed there was any risk associated with the Waterford deal, she said.

The court also heard Paul Lynch, Philippa Lynch and Mrs Lynch had bought substantial shareholdings in One51 investment group, of which Mr Lynch is CEO.

Evidence on behalf of the Lynch family concluded yesterday in their action aimed at preventing AIB pursuing them individually over the €25m loan.

The family claim the loan was advanced on a non-recourse basis.

The action is against AIB and two firms of solicitors — LK Shields and Matheson Ormsby Prentice. The family allege negligence by the solicitor defendants in relation to alleged advice concerning the deal and are claiming indemnities. The defendants deny the claims.

After evidence for the Lynch side concluded yesterday afternoon, Mr Collins, for AIB, said the bank was not calling evidence. At that stage, Michael McDowell, for the Lynchs, said he was applying for a dismissal of the bank’s counterclaim in which the bank sought €25m orders against the six Lynch family members. Counsel argued there was no evidence before the court on foot to support that counterclaim and to show the money was due and owing.

In not calling evidence, AIB was seeking to shield a bank official who was contacted by an agent of Mr Conlan’s on February 7, 2007, and agreed to delete a special condition in the loan facility related to recourse, counsel also said.

If his application succeeded, the plaintiffs succeeded and the only issue was costs, Mr McDowell said. John Gleeson, for LK Shields, supported Mr McDowell’s application.

Mr Collins said there was no basis to dismiss the counterclaim and there was evidence the €25m loan had been provided, drawn down and was due and owing. AIB’s letter of demand was exhibited, he added.

Mr Collins argued it was never put at issue by the plaintiff witnesses that the loan facility letter, properly construed, meant anything other than joint and several liability. There was also no evidence AIB misrepresented the nature of the loan facility, he said.

Mr Justice Michael Peart will rule on Tuesday on the application to dismiss the counterclaim.