WELL-KNOWN BUSINESSMAN Philip Lynch, his wife Eileen and their four children are suing AIB and two firms of solicitors in a bid to stop the bank pursuing them individually over unpaid loans of €25.3 million to buy lands in Waterford for development.
A process leading to AIB’s deletion in its loan facility letter of a clause concerning the nature of the bank’s recourse for the €25.3 million loan raised the “most profound questions” about the ethics of AIB’s behaviour, Michael McDowell SC, for the family, said yesterday.
The proceedings arise from an alleged co-ownership and profit agreement between Gerard Conlan, Bridalwood House, Forenaughts, Naas, Co Kildare, and the Lynch family in relation to the purchase of 86 acres at Kilbarry, Waterford.
Mr McDowell argued that, between two law firms – LK Shields Solicitors, then acting for the Lynch family, and Matheson Ormsby Prentice Solicitors (MOPS), representing Mr Conlan – the family were led to believe on February 8th, 2007, they were signing up to a borrowing regime which would involve AIB having recourse only to the Waterford lands.
He said AIB, without telling the family, decided to remove a clause from the loan facility letter just hours before it was signed on February 8th, 2007, by Judith Whelan, daughter of Mr Lynch.
The bank deleted a clause confining recourse to Philip Lynch and Mr Conlan “with the intention of widening its recourse to everyone but without telling anyone”, counsel said. The family were induced into accepting revised loan facility documents which, although silent on the matter, did not exempt them from liability.
As a result of that deletion, AIB was claiming it had recourse to all six members of the family for €25.3 million.
Mr McDowell said the family always understood AIB’s recourse would be confined to the Waterford lands and Philip Lynch – chief executive of the One51 investment group – would say that, if he thought for a moment involvement in Mr Conlan’s development scheme for the Waterford lands would make him and his family liable, he would “emphatically” not have done that.
Counsel said 24 hours before the loan facility was signed by Ms Whelan for the rest of the family, a facility letter was put in front of them containing a clause confining recourse to Mr Lynch and Mr Conlan. That clause was later deleted and the family were entitled to rely on “apparently skilled and professional” lawyers who interpreted that deletion as meaning Mr Lynch and Mr Conlan were “out of the equation”, as were the family, and the recourse was limited to the lands.
E-mails between various Lynch family members in 2008 and 2009 showed they believed the only recourse AIB had was to the lands and it was “sad and remarkable” that LK Shields, in its defence, alleged the family never had a genuine belief recourse was confined to the lands, counsel said.
It was also “remarkable”, given AIB’s claims it had recourse to the entire family under the 2007 facility, that it sought unsuccessfully in late 2008 to have the family sign a new facility letter containing an amendment of the bank’s security to include a joint and several guarantee of Philip Lynch and Mr Conlan.
He was opening the action by the family against AIB, LK Shields and MOPS aimed at preventing AIB securing €25.3 million judgment orders against them.
The plaintiffs are: Philip and Eileen Lynch, Athgarvan Lodge, the Curragh, Co Kildare; their daughters Judith Whelan, Leinster Wood, Carton Demesne, Maynooth, Co Kildare; Therese Lynch, Ardoyne House, Pembroke Park, Dublin 4; Philippa Lynch, Burlington Gardens, Burlington Road, Dublin 4; and their son Paul Lynch, Oakley Road, Ranelagh, Dublin 6.
In an affidavit, Ms Whelan said a memo by LK Shields on February 7th, 2007, in relation to a message from MOPS about the nature of the loan, had stated “apparently the joint and several recourse condition in the facility letter is to be taken out in its entirety – confirmation of this to follow”.
The next day, just before she signed the loan documents, AIB sent an amended draft facility letter to various parties, including LK Shields, Ms Whelan said. She said LK Shields had said the amended AIB letter was “to reflect the fact that the bank now only requires legal recourse against the property being their security for the loan – they no longer require any legal recourse as against Philip, Gerry or the Lynch children”.
