Law firm was never retained by Lynch family over €25m loan deal, court told

A LAW firm being sued by businessman Philip Lynch and his family in an effort to prevent AIB pursuing them for repayment of a €25 million development loan was never retained by the Lynches in connection with that deal and owed no duty of care to them, the Commercial Court was told yesterday.

Michael Cush, counsel for Matheson Ormsby Prentice Solicitors, said the firm was never retained by the Lynch family in connection with the €25m loan issued to the family and developer Gerry Conlan to buy development lands in Waterford and never advised the family concerning the transaction.

It was “absolute crucial” to the case that the Lynches themselves never claimed Matheson Ormsby Prentice was retained by them and, in those circumstances, it was “absolutely untenable” in those circumstances for the Lynches to allege Matheson Ormsby Prentice owed them a duty of care.

A conclusion by the court that MOP had a duty of care to the family would “so radically alter the ambit of a solicitor’s duty of care as to be almost against public policy,” he counsel added.

Mr Cush also argued it was very difficult for another law firm being sued by the Lynches, LK Shields Solicitors, to say they were not retained by the family.

Counsel said LK Shields was asked for advice by Robert Burns, Philip Lynch’s adviser, on a specific issue at the heart of the legal action — if AIB only had recourse to the lands in Waterford for the €25m loan.

LK Shields had answered that question in the affirmative and its answer was “totally wrong”, counsel said. Irrespective of whether the court concluded the family had retained LK Shields to advise on the financial aspects of the transaction, this was the end of the issue as regards breach of duty of care by that firm.

Mr Cush said Ronan McLoughlin, a partner in Matheson Ormsby Prentice who was liaising with AIB for Mr Conlan, had reasonably believed LK Shields was advising the Lynches on the transaction and it would involve a “huge leap” for the court, in circumstances where the Lynches said they had not retained MOP, to find MOP owed them a duty of care.

Counsel was making closing submissions in the action by Mr Lynch, his wife Eileen and four children brought against AIB, LK Shields and Matheson Ormsby Prentice, in an effort to avoid AIB pursuing them over the €25m loan of February 8, 2007.

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 Lynches and, in separate proceedings, against Mr Conlan.

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 was removed from the final loan facility with the effect, AIB claims, of giving it recourse to all borrowers for the €25m.

Mr Justice Michael Peart will continue hearing closing submissions today.

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