Businessman Philip Lynch and his family have secured a stay preventing Allied Irish Banks moving to enforce €26 million judgment orders against them pending their appeal to the Supreme Court.
The family had contended the judgment orders have potentially catastrophic consequences, including their being declared bankrupt, and also argued the assets of various members of the family came nowhere near €26m.
Summary judgment was granted by Mr Justice Micheal Peart last month on foot of his earlier finding that Mr Lynch, his wife and four children were all liable to AIB arising from an unpaid €25m loan made to them and developer Gerry Conlon to buy development lands in Waterford.
The judge reserved his decision whether the family were entitled to a stay on judgment pending their appeal to the Supreme Court. The bank opposed any stay and expressed concerns about a possible dissipation of assets.
Today, Mr Justice Peart said he would grant a stay pending appeal preventing the bank taking steps to enforce the €26.1m judgment personally against Mr Lynch, his wife Eileen and children Judith, Paul Philippa and Therese.
The stay was granted on foot of various undertakings from the family, including Mr Lynch’s undertaking to lodge €500,000 in court within 14 days. The family have also undertaken not to dissipate assets and to inform the bank of any other litigation against them.
The judge said the stay did not apply to entry or registration of the judgment, including registration as a judgment mortgage upon any property of the Lynchs, but rather restrained the bank taking any steps - including bankruptcy proceedings - to enforce the judgment personally against any of the family.
He granted a further stay, pending appeal, restraining AIB taking any steps to recover legal costs against the family.
The judge has also adjourned to next week the hearing of AIB’s application for a similar summary judgment order against Mr Conlon.
Rossa Fanning, for Mr Conlon, previously accepted the judge’s decision on the Lynch’s liability meant Mr Conlon had no defence to a similar judgment being entered against him.
However, counsel argued that if the Lynch’s won their appeal, that would get Mr Conlon “off the hook” and he should also get a stay pending that appeal on any judgment order made against him.
The AIB loan at the centre of the case was made in February 2007 to buy development lands in Waterford, now valued between at up to €4m.
Early last month, the judge rejected the family’s arguments they were not liable to AIB and also dismissed their claims they were entitled to be indemnified for the loan by two law firms - Matheson Ormsby Prentice Solicitors and LK Shields Solicitors - arising from advice and information given concerning the transaction.
The judge found the family genuinely but mistakenly believed the AIB loan was a non-recourse loan, meaning the bank’s recourse was confined to the lands, but rejected their claims AIB negligently misrepresented to them the loan was non-recourse.
He also found, while a solicitor with LK Shields wrongly advised the Lynch side the final loan facility letter was non-recourse, the scope of the firm’s duty of care to the Lynchs did not extend to a point of making it liable for the loan. The judge also ruled that MOP, primarily Mr Conlon’s solicitors in the deal, breached no duty of care to the Lynchs.
