Emails to Lynch family stated bank only wanted recourse to land, court hears

EMAILS sent by solicitors with the LK Shields law firm to the family of businessman Philip Lynch just hours before they signed up to a €25 million loan to buy development lands with developer Gerry Conlan stated Allied Irish Bank only wanted recourse to the land, not the family, the Commercial Court has heard.

A partner with LK Shields, Emmet Scully, said yesterday the emails sent by other solicitors with his firm were based on information given to them by Ronan McLoughlin, a partner in Matheson Ormsby Prentice solicitors.

In his evidence, Mr McLoughlin denied he provided information to LK Shields which could have led to the Lynch family being informed the loans were non-recourse. The information he passed on came from AIB and was to the effect the bank, on advice of its solicitors, had deleted a condition in a draft loan facility letter which provided for recourse to Philip Lynch and developer Gerry Conlan for the €25m, he said.

Mr McLoughlin denied a suggestion that he had not told the LK Shields side that AIB wanted to delete that clause because of concerns about enforcement issues for the bank if that was not done.

It is alleged the effect of deletion of that condition gives AIB recourse to all borrowers, the Lynch family and Mr Conlan.

Mr Justice Michael Peart heard evidence yesterday from Mr McLoughlin and has begun hearing evidence from Mr Scully in the continuing action by Mr Lynch, his wife Eileen and their four children, Judith, Phillippa, Paul and Therese.

In proceedings against AIB, LK Shields and MOP, the family claim the €25m loan gives AIB no recourse to them for repayment.

AIB insists the loan provides for full recourse to all borrowers and is counter-claiming for €25m judgment orders against the family.

It also wants €25m judgment against Mr Conlan in separate proceedings to be heard later.

The family have alleged negligence by both law firms in their dealings concerning the Waterford transaction and are claiming indemnities from both in relation to any judgment secured by AIB. Both firms deny negligence.

Yesterday, Mr McLoughlin, a partner in MOP who dealt with matters concerning the Waterford deal, was cross-examined by John Gleeson, counsel for LK Shields.

Mr McLoughlin agreed some correspondence sent by him concerning the transaction referred to his “clients” as Mr Conlan and Philip Lynch and one letter sent by him had referred to his clients as Mr Conlan, Mr Lynch “and others”.

He regarded Mr Conlan as his client and Mr Conlan and his team were the primary points of contact, he said. He understood Mr Lynch and Mr Conlan were in discussions directly and with AIB about completion of the deal.

Mr McLoughlin agreed the Lynch side paid half of a €50,000 bill sent by MOP related to Waterford. That was in accordance with the terms of a co-ownership agreement for the lands, the solicitor said.

Mr McLoughlin agreed there was “nothing documented” to indicate LK Shields was independently contacting AIB concerning the loan facility letter.

Mr Gleeson said there were 11 letters or emails between Mr McLoughlin and AIB about the deal in January and February, 2007, and Mr McLoughlin himself had told the court of numerous calls between himself and Derek O’Shea of AIB on the matter.

Mr McLoughlin said he was dealing with conveyancing issues and wanted to push the matter on.

Counsel suggested notes by Imdat Suleiman, then a solicitor with LK Shields, of contacts he had with Mr McLoughlin indicated Mr Suleiman believed Mr McLoughlin was dealing with matters related to the AIB loan facility letter.

Mr Gleeson put those notes to Mr McLoughlin who disagreed he did not tell Mr Suleiman that AIB had, on the evening of February 7, told him it had enforcement concerns about the condition in the draft loan letter confining recourse to Mr Conlan and Philip Lynch and, for that reason, had deleted that condition.

He agreed LK Shields did not get the final loan facility letter until he sent it to them about noon on February 8, 2007, with the deal to close at 3pm that day. He believed AIB had sent the letter to all parties and was dealing directly with the Lynchs.

Re-examined by Michael Cush, counsel for MOP, Mr McLoughlin said he knew nothing at the time about the Lynch family’s desire for a non-recourse loan.

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