The Lynch family’s account of circumstances leading to their signing up on February 8, 2007 to a €25m Allied Irish Bank (AIB) loan with developer Gerry Conlan for the land deal in Waterford was not credible and contained “glaring omissions” and “multiple inconsistencies”, Paul Sreenan SC, for LK Shields Solicitors, argued.
Counsel was making closing submissions for LK Shields which, along with AIB and another law firm, Matheson Ormsby Prentice (MOPs), is being sued by Mr Lynch, his wife Eileen and four children in an effort to avoid AIB pursuing them over the €25m loan to buy development lands in Waterford.
The family allege the defendants were negligent in relation to how they dealt with the loan and contend they are entitled to be indemnified against any claim by AIB against them for repayment.
The defendants deny the claims. AIB contends the loan was full-recourse to all borrowers and is counterclaiming for €25m judgment orders against the Lynchs and, in separate proceedings, against Mr Conlan.
Evidence ended last month and Mr Justice Michael Peart is hearing closing submissions in the case. Those submissions are expected to conclude on Tuesday.
The final loan facility document was signed on February 8 2007 by Judith Whelan, daughter of Mr Lynch, on behalf of the family.
An earlier draft facility contained a special condition providing for recourse to Philip Lynch and Mr Conlan but that special condition was removed from the final loan facility with the effect, AIB claims, of giving it recourse to all borrowers for the €25m.
Yesterday, Mr Sreenan said Mr Lynch had claimed, were it not for assurances given by solicitors the deal was non-recourse, he would have walked away from the deal.
That claim had to be considered in circumstances including the absence of documents stipulating the requirement for the deal to be non-recourse, the fact that Mr Lynch had already paid a €2.5m non-refundable deposit and his saying he did not understand what non-recourse is, counsel said.
The claim also arose in circumstances where, before the family heard from LK Shields, Mr Lynch had told his family days earlier there was no risk attached to the deal, Mr Sreenan added.
Up to February 7, 2007, Mr Conlan had failed to arrange non-recourse terms with AIB for the €25m loan which terms, Mr Lynch had argued, Mr Conlan was obliged to arrange, counsel said.
In those circumstances, Mr Lynch was now asking the court to find he genuinely believed AIB changed its mind overnight about the terms of the loan, without any change in interest rate and with no extra security required, and that Mr Lynch could still have walked away from the deal. “That is a very big ask,” he said.
The Lynch side claimed they were assured by LK Shields the deal was non-recourse and would not have gone ahead with it otherwise, counsel said.
It was LK Shields’ argument that, irrespective of any assurances, Mr Lynch was contractually bound to go ahead with the deal and that non-recourse was not a “deal breaker”.
The court should not believe non-recourse was so fundamental that the Lynch side would not have closed the deal on February 8 and their story, on the balance of probabilities, was not credible, counsel argued.
When solicitors with LK Shields communicated with the family concerning the AIB loan on February 7 and 8, they were relying on information from MOP, he said.
LK Shields’ role regarding the loan was “very limited” compared to MOPs.
It seemed MOPs told LK Shields joint and several liability was going out altogether when that was “demonstrably wrong” and “misleading,” he said. MOPs did not communicate to LK Shields the bank’s intention when amending the final loan document was to extend recourse to all borrowers, counsel argued.