BUSINESSMAN PHILIP Lynch and his family have secured a stay preventing Allied Irish Banks moving to enforce €26 million judgment orders granted against them pending the outcome of an appeal to the Supreme Court.
The family had contended that the judgment orders would have potentially catastrophic consequences, including their being declared bankrupt. They also argued that assets of various family members came nowhere near €26 million.
Summary judgment was granted by Mr Justice Michael 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 €25 million loan made to them and developer Gerry Conlon to buy development lands in Waterford.
The judge reserved his decision on 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.
Mr Justice Peart said yesterday he would grant a stay pending appeal preventing the bank from taking steps to enforce the €26.1 million judgment personally against Mr Lynch, his wife Eileen and their 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 from taking any steps – including bankruptcy proceedings – to enforce the judgment personally.
He granted a further stay, pending appeal, restraining AIB from 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 Gerry Conlon, had previously accepted that the judge’s decision on the liability of the Lynchs meant Mr Conlon had no defence to a similar judgment against him. However, he argued, if the Lynchs 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 was made in February 2007 to buy development lands in Waterford, now valued at between €3-4 million.
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.
He found the family genuinely but mistakenly believed the AIB loan was non-recourse, meaning the bank’s recourse was confined to the lands, but rejected their claims that AIB negligently misrepresented that the loan was non-recourse.
He also found that while a solicitor with LK Shields had wrongly advised the Lynchs that the final loan facility letter was non-recourse, the scope of the firm’s duty of care to them did not extend to making it liable for the loan.
The judge also ruled that Matheson Ormsby Prentice, primarily Mr Conlon’s solicitors in the deal, breached no duty of care to the Lynchs.
