Lynchs ‘can argue liability’ to €26m order

The wife and children of businessman Philip Lynch are entitled to a further hearing to determine whether AIB is entitled to €26m judgment orders against them over an unpaid development loan, the Supreme Court has ruled.

Lynchs ‘can argue liability’ to €26m order

The High Court had ruled Mr Lynch, his wife Eileen and adult children — Judith, Paul, Philippa and Therese — were all liable for the €25m loan advanced to the Lynch family and developer Gerry Conlan to buy 86 acres at Kilbarry, Waterford.

The proposed development was expected to lead to a €20m profit but the lands in 2011 were valued at less than €5m. It later ruled AIB was entitled to judgment for €26m against the Lynchs but a stay applied pending appeal.

Last January, the Supreme Court dismissed Mr Lynch’s appeal on all grounds but said his family were entitled to an opportunity to argue it would not be equitable to allow AIB enforce the €26m judgment against them or, at least, to do so without first pursing execution of that against Mr Lynch and Mr Conlan.

The matter returned to the Supreme Court for submissions on the implications of the judgment and other issues, including costs.

Yesterday, Mr Justice Donal O’Donnell said that to a large extent, the entire case in both the High and Supreme Courts turned upon issues of credibility in which, for whatever reason, no distinction was made between Mr Lynch and his family.

As the central issue in the case was resolved against Mr Lynch, and consequently “disastrously” against his family, the Supreme Court considered the justice of the case entitled AIB to judgment against Mr Lynch, but also required his family have an opportunity to either argue AIB was not entitled to judgment against them or, at least, not entitled to immediate judgment.

The court also ruled AIB was entitled to costs against Mr Lynch and his family of the proceedings in the High and Supreme Courts. It placed a stay on the costs order against the family pending a decision on whether they have an equitable defence against enforcement.

Arising from the family’s unsuccessful bid for indemnities against two law firms, LK Shields and Matheson Ormsby Prentice, Mr Justice O’Donnell ruled LK Shields was entitled to 75% of its costs in the High and Supreme Courts, while MOP was entitled to all its High Court costs and 75% of its Supreme Court costs.

The Supreme Court had upheld their claims LK Shields owed a duty of care to the Lynchs’ when advising on the nature of the €25m loan facility agreement, breached that duty and was negligent because a solicitor with the firm mistakenly told the Lynchs the loan was non-recourse when in fact it was recourse.

The court, however, ruled LK Shields was not required to indemnify the Lynchs against AIB’s claim after finding there was no reliance on the legal advice and any damage suffered was not caused by the solicitor’s error.

It found Matheson Ormsby Prentice had no duty of care to the Lynchs to ensure they were aware of a change in the loan documents which lead to AIB having recourse to all the Lynchs.

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