The Supreme Court dismissed most of the appeals brought by the Lynch family over a €25 million loan for land in Kilbarry, County Waterford, but set aside the bank’s judgment against five family members to a limited extent. It upheld the judgment against Philip Lynch and left the parties to decide whether to pursue the remaining enforcement issue.
The dispute arose from a 2007 purchase of 86 acres by the Lynch family and businessman Gerard Conlan, financed by Allied Irish Banks (AIB). The family argued that they understood the loan to be non-recourse, meaning the bank could look only to the land if the borrowers defaulted. The High Court found that the facility imposed joint and several liability and entered judgment for AIB against all the plaintiffs for €26,194,554.90, with interest.
The family also sought relief against the two law firms involved in the transaction. The Supreme Court held that LK Shields owed the family a duty of care when advising about the facility letter and was negligent in conveying that the bank no longer required recourse against the borrowers. However, it overturned the High Court’s finding that Philip Lynch had decided not to proceed unless the loan was non-recourse. The Supreme Court said that finding could not stand in light of the evidence, including the trial judge’s conclusion that Lynch’s recollection was “hopelessly unreliable”. It therefore found no reliance on the incorrect advice when the family entered the agreement, and no resulting liability for the loss claimed.
The court rejected the appeal against Matheson Ormsby Prentice. It held that the firm had passed information about the facility letter’s changes to LK Shields, which was acting for the family on those matters, and had met its duty. It also rejected the family’s arguments against AIB, including their challenge to how the bank proved the debt.
The court distinguished Philip Lynch’s position from that of his wife and children, who had been added to the transaction late and for family wealth-management purposes. It noted that the bank had not commercially relied on those relatives as borrowers, although their names in the facility documents exposed them to substantial potential liability.
The court set aside AIB’s judgment against the first, second, fourth, fifth and sixth plaintiffs. It left open whether it would be equitable to permit enforcement against those family members without first pursuing the principal borrowers, including Philip Lynch. The court did not decide that question; it said the parties could pursue it if they considered there was merit.