Family members added late to loan face liability; court allows appeal to set aside judgment against them.

THE SUPREME COURT

Appeal No. 051/2012

High Court Record No. 2010 6866P

Fennelly J.

O’Donnell J.

MacMenamin J.

Between:

Judith Whelan, Therese Lynch, Philip Lynch, Eileen Lynch,

Philipa Lynch and Paul Lynch

Appellants/Plaintiffs

And

Allied Irish Banks p.l.c., Matheson Ormsby Prentice Solicitors,

And LK Shields Solicitors

Respondents/Defendants

Judgment of Mr Justice O’Donnell delivered the 30th day of January 2014

1 On the 8th of February 2007 in the offices of the firm of A & L Goodbody the solicitors to Allied Irish Banks (hereinafter “AIB” or “the

bank” and the first named defendants herein), the first named plaintiff, Judith Whelan, on her own behalf and on behalf of her siblings

(the second, fifth and sixth named plaintiffs), her mother (the fourth named plaintiff) and her father (the third named plaintiff, a well

known and very successful businessman), entered into a deal together with another then successful businessman, Mr Gerard Conlan,

for the joint purchase by them of 86 acres of land at Kilbarry, County Waterford. Crucially for the purposes of these proceedings, the

transaction completed that day also involved the execution and acceptance of a facility letter providing for the advance to the

plaintiffs and Mr Conlan of the purchase price of €25 million by AIB and the execution of a deed of charge securing the lands in

respect of the same borrowings.

2 The transaction was one that appeared very advantageous, and if it had been known at the time, might perhaps only have excited

the envy of any onlooker. The land in question was very likely to be rezoned, having been included in a draft development plan for

County Waterford, and on rezoning and the securing of planning permission, it would almost inevitably have become worth a

significant multiple of its purchase price. Indeed, even as the transaction was being negotiated, the value of the land was increasing.

The transaction was estimated as likely to produce a profit to the Lynch side of up to 20 million euro in a relatively short period of

time. It was anticipated that it would have been eminently possible to rapidly sell a portion of the lands, discharge the loan, and then

consider whether it was more advantageous to sell the remaining lands in parcels, or to seek to develop the land and secure even

more profits, or to do some combination of the two. The purchase itself was to be financed entirely by the loan, and there was no

requirement on any member of the Lynch family or Mr Conlan to risk any of their own funds.

3 Those who contend that the free market system promotes efficiency and rewards enterprise might find it difficult to explain why

such potential profits were being made available to members of the Lynch family who had contributed nothing to the sourcing of the

land, to the proposals for its development, or the securing of rezoning or planning permission. They were involved in the transaction

because of their family relationship to Philip Lynch, and he in turn was involved in the transaction because of his substantial net

worth, and his association with Mr Conlan.

4 Indeed, it is contended by the Lynch family, including Mr Lynch himself, that this transaction was a particularly advantageous one

because they argue that the loan itself was a non-recourse loan, meaning that they believed that in the unlikely event of default, the

lender would look solely to the security of the land itself and would not seek to recover any shortfall from the individual borrowers.

This is one of the central issues in this case. But even assuming for the moment that this was not so, this was still a very attractive

transaction for the members of the Lynch family with, it appeared, little if any downside risk. Indeed, that is no doubt why Mr Philip

Lynch sought to secure their involvement therein. Before there could be any risk to the individual family members (even on the

assumption that the loan was not non-recourse) there would first have to be a dramatic fall in the value of the property bringing it

below the price paid (and borrowed). Even if there was some shortfall in this regard, as a matter of practicality it was highly likely

that either or both Mr Conlan and Mr Lynch, themselves enormously successful and apparently wealthy individuals, would be in a

position to discharge any liability for any shortfall. Accordingly, before there could be a real risk to any of the individuals, there would

have to be a total collapse in the property values in Ireland, and a dramatic and total destruction of the wealth of those two

individuals. Looked at in 2006 and 2007, it would have been reasonable to assume that such an unlikely combination of events could

not occur, could it? We now know better.

5 This transaction, which appeared to promise considerable profit, has become a disaster, not only for the individuals involved but

also for the professional advisors whom they seek to blame. Following judgment against the plaintiffs on the 11th January 2012 Peart

J. made an order in favour of the bank, against all the plaintiffs, for the sum of €26,194,554.90 with interest accruing at a rate of

more than €2,262.59 per day. It appears to be common case that at that time at least, the land itself had a value of less than €5

million. The High Court also dismissed the plaintiffs’ claim in negligence against the two firms of solicitors and the plaintiffs therefore

became jointly liable for the costs of the successful defendants in what had been a very hard fought and contentious 27 day hearing

in the High Court. The plaintiffs now appeal to this Court.

6 The decision of the High Court is contained in the comprehensive and careful judgment delivered on the 8th December 2011. A very

full account of the events giving rise to the execution of the loan and the transfer of the land on the 8th February 2007 is contained

in that judgment which should be read together with this decision. In the circumstances, I will seek to limit this recital of the

background facts to those incidents which appear critical or which are in controversy in this appeal. Even so, it is a necessarily

lengthy account.

7 It should be said at the outset that of the dramatis personae involved in the process, Mr Conlan was not joined as a party to the

proceedings and neither he nor his associates, Mr Conor Gunne and Mr Richard Godsil, were called as witnesses by the plaintiffs. While

AIB was a defendant in the proceedings, a decision was taken in the course of the case not to call evidence and accordingly Mr Derek

O’Shea, the official in the bank involved in the loan and responsible for a significant change to the facility letter on the 7th February

2007 (the day before the loan was executed), was not called, nor indeed did the court hear from Mr Alan Roberts, the solicitor in A &

L Goodbody advising AIB and Mr O’Shea, and who had some contact with Matheson Ormsby Prentice, the firm then acting for the

purchasers of the land. This account of the events should therefore be read in the light of the fact that although documentation

referring to these individuals was admitted in evidence, they did not give evidence to the High Court, which accordingly did not hear

from these persons who, it will become clear, were significant participants in the events the subject of these proceedings.

The Transaction

8 Mr Philip Lynch is the central figure in this case. At the time of this transaction he was a very successful and prominent

businessman and was it appears, even by the overheated standards of early 21st century Ireland, an extremely wealthy man. He had

had business dealings with Mr Conlan and there was, it appears, mutual regard between them. Mr Lynch had, at Mr Conlan’s

invitation, joined the board of Mr Conlan’s Harlequin group. It appears that Mr Conlan suggested to Mr Lynch that as a mark of Mr

Conlan’s gratitude for his assistance, Mr Lynch might like to become involved in the Waterford transaction.

9 It now transpires that it appears Mr Conlan needed Mr Lynch, or someone like him, if he was going to be able to complete the deal.

Although very wealthy, he was over extended with AIB and might not have been in a position to borrow the money for the transaction

on his own and he was apparently anxious therefore, for his own reasons, to involve Mr Lynch. Much was sought to be made of this

on behalf of Mr Lynch in the course of these proceedings but the trial judge, correctly in my view, was not prepared to draw any

sinister inferences from the emergence of this information, particularly in the absence of Mr Conlan. The fact that Mr Conlan may have

had his own undisclosed motives for seeking to involve Mr Lynch in the transaction is not inconsistent with a genuine belief on his part

that this would be a beneficial deal for Mr Lynch. It is also difficult to believe that Mr Lynch would have been particularly surprised at

the time to learn that the transaction was one in which Mr Conlan saw some benefit for himself. The fundamental issue for the Lynch

interests was the assessment of the transaction on its merits, and at the time it must have looked very attractive. That fact, rather

than any belief as to Mr Conlan’s financial position, is no doubt why Mr Lynch became involved for himself, and thought it would be a

suitable vehicle for generating wealth for his family.

10 In mid 2006 matters had progressed to the point where Mr Conlan had executed the contract, a deposit had been paid to the

vendors and Mr Lynch had himself contributed €2.5 million as his half of the deposit which was to be, and was, ultimately repaid from

the loan. From the evidence he gave to the High Court it appears that Mr Lynch regarded his position at that stage as one which

generated only benefits and no obligations. He appears to have considered that he was not obliged to complete the transaction but

could do so if he wished. Furthermore, even if he withdrew, he appears to have considered he would still have been entitled to

participate in any intervening uplift in the value of the property. It is not necessary to conclude if he was correct in this regard. The

fact is that he did complete the transaction.

11 As the contract was executed by Mr Conlan in March 2006 “in trust”, the identity of Mr Conlan’s co-investors was not known to

the vendors until shortly before closing on the 8th February 2007. The contract had provided for a closing date of the 31st December

2006. Although that nine month time period provided ample time to seek finance and to structure the deal, very little was in fact done

by the Lynch side until almost the last moment. They appear to have been content to allow the Conlan side to make the

arrangements. Mr Conlan had a longstanding relationship with Matheson Ormsby Prentice and had negotiated a reduced rate for

conveyancing transactions. That firm had been instructed by him in relation to the conveyancing of the Waterford lands. Ultimately

Mr Lynch and his family were named as co-owners and paid 50% of that firm’s fees. Mr Conlan also had a relationship with AIB and it

was to that institution which he looked for finance. After some desultory consideration of whether a loan might be obtained from

another source, the Lynch side accepted that the finance would be provided through AIB. In reality, it appears that Mr Conlan’s side

made the running on the transaction in relation to the acquisition of the land and its financing and the Lynch side (originally Mr Lynch

alone), was to take a half share of, and half the responsibility for, whatever was negotiated.

12 The central feature of this case is the Lynch family’s contention that they would not have entered the agreement on the 8th

February 2007 if they had understood that the loan being advanced was not a non-recourse loan. Here, as elsewhere, Mr Lynch does

not distinguish between his own position and that of the other family members. The main factual contention is Mr Lynch’s assertion

that if he had understood that the loan was recourse to him, he personally would not have entered the agreement and the

transaction would not have occurred. The key evidence relied upon in this respect relates to conversations which took place on the

7th February 2007 on the eve of the closing when Mr Lynch was in transit through Heathrow airport on his way home from a business

trip. There is no evidence however, that either at this stage or later Mr Lynch or anyone on his behalf made it clear either to the

Conlan side, or still less to AIB, that Mr Lynch wanted, indeed if his evidence is to be accepted, had an absolute requirement for, a

non-recourse loan. This is only one of the features of the case which the learned trial judge found difficult to reconcile with Mr

Lynch’s evidence that he would not have entered the transaction unless it was a non-recourse loan. Nevertheless Mr Lynch

maintained, and the trial judge appears to have accepted, that at least by the eve of the closing of the transaction, he had made a

firm decision that he would not complete the transaction if it involved the possibility of recourse to him or his family in the event of

default. This finding is central to the plaintiffs’ case and was the focus of much attention on this appeal.

13 During 2006 Mr Lynch gave some consideration to utilising the Waterford transaction as a vehicle for family wealth management,

that is, passing wealth on to, or in this case generating wealth for, the members of his immediate family. Accountancy advice was

obtained and various investment structures considered. One, if not indeed the sole purpose of the advice was, it appears, to ensure

that the transaction could be carried out in a tax efficient way. Although no detail of the advice has been provided, it seems

apparent that the thrust of the advice was to seek to avoid either two layers of tax being incurred or an unnecessarily large liability

being incurred by the family members in the event that the investment was successful. In very simple terms, if the family members

were included as participants in the transaction at the outset, then that would assist in making them liable to pay tax only on the

increased value of the investment. From the outset therefore, it was the advice given to the plaintiffs, and their clear objective, that

all the Lynch family members were to be borrowers of the monies advanced. However, it is noteworthy that this tax strategy meant

the family members would have to become participants in their own right in the transaction, and crucially, in the loans.

14 It is worth observing at this stage that what appeared initially to be a relatively straightforward transaction for the acquisition of

land was becoming more complex. First, it was of course necessary to ensure that the land could be securely transferred to the

acquiring parties. Furthermore, it was necessary that there should be an ownership agreement regulating the relationship between Mr

Conlan and Mr Lynch (and later the Lynch family) to deal with the situations which might arise if there was disagreement as to the

best method by which to exploit the acquisition. In addition, Mr Conlan was seeking a “carry”, that is that either the ownership of the

investment, or the distribution of profits, should be apportioned more favourably to Mr Conlan than to the Lynch side because he had

found the transaction and brought it to them. All of this was something that required some commercial negotiation and legal

assistance in relation to the format of any agreements. In addition, Mr Lynch wanted the transaction to be a vehicle for wealth

management within his family, an objective which understandably he wished to achieve while minimising the taxation payable.

Furthermore, it is said that he wished that any finance for the transaction should be available on specific terms, and particularly,

should not involve any potential liability for him or his family. Finally, there was the possibility that some or more of the participants

might seek to structure their investment through some corporate vehicle.

15 While none of these matters may have posed particular difficulties on their own, the combination, particularly when required to be

performed under pressure of time, made this quite a complex transaction, although that was not necessarily recognised at the time.

The complexity was compounded somewhat because the structure most likely to minimise tax was not necessarily commercially

desirable since it involved exposing the members of the family to a joint liability on a very substantial loan. Nevertheless, no step was

taken by Mr Lynch or on his behalf to retain separate legal advice during 2006. The third defendants, LK Shields, a firm with which Mr

Lynch had a long standing relationship, were retained in the middle of January 2007, two weeks after the original closing date and

three weeks before the transaction in fact closed, and given the limited brief of dealing with the co-ownership agreement. Indeed,

even at that stage it appears that Mr Lynch had not finally decided to proceed with the transaction.

16 On the 22nd December 2006 AIB issued a document referred to as “Heads of Terms” setting out details of the loans and containing

special conditions including requirement of a net worth statement from Mr Lynch and “full joint and several personal recourse”. This, it

should be said, is consistent with other internal AIB documentation around this time. The significance of the Heads of Terms

document for these proceedings however, is that it was emailed to Mr Robert Burns, the assistant to Mr Lynch, by Richard Godsil who

was acting in a similar capacity for Mr Conlan.

17 It appears that Mr Burns did not revert to Mr Godsil. Around that time he was in Spain with Mr Lynch and other members of Mr

Lynch’s company, “One 51”. Mr Burns discussed the matter with Mr Lynch and it appears that this discussion generated a handwritten

memorandum of the 4th January 2007 containing somewhat enigmatic terms:

“ → Not NR/Joint + Several: Fall Apart

→ What value Now to go? 50 million

→ Talk to Godsil now about going

→ Play to Godsil

→ Impact elsewhere.

→ Divert problem.”

On the handwritten note there is also an arrow joining the line “Not NR/Joint + Several: Fall Apart” to the line “Impact elsewhere”.

The plaintiffs place reliance on this document as supporting their contention that they at all times understood the loan to be, or to be

required to be, non-recourse. Whatever this discussion involved however, it did not result in Mr Burns or anyone else on behalf of the

Lynch interest contacting anyone on the Conlan side, or in AIB, to seek a non-recourse loan and if one was not available through that

source, then to seek such a loan elsewhere.

18 At this stage it was thought that the deal was due to close imminently since the closing date on the contract was the

31/12/2006. On the 8th January 2007 Mr Burns emailed Mr Lynch in the following terms:

“Philip

Have you had any further thoughts on Waterford land? Godsil plans to close the contract on Wednesday. I am working

with Marion on the equalisation among the family in case you want to proceed with it.”

The reference to Marion is to Marion Bradley in Ernst and Young, which firm was providing taxation advice in relation to the

transaction. As the trial judge observed:

“One can see immediately that the question of whether or not the AIB loan was recourse or non recourse or whether it

was on the basis of joint and several liability with Gerard Conlan was not mentioned as an issue yet to be resolved. But it

is clear that if it was still an issue for Mr Lynch no steps had been taken with AIB or through Mr Conlan or his

representatives to address it. It seems to have been left in the air. There is no evidence that any such contact was

made around this time in order to address these issues which Mr Lynch has stated were crucial to his decision whether to

proceed or not.” (pp. 10-11)

19 On the 9th January Mr Ronan McLoughlin, the partner in Matheson Ormsby Prentice dealing with the conveyancing of the land,

wrote to Mr Burns confirming that he received details from Ernst and Young in relation to the shares of the Lynch family to be

reflected on the deed of transfer and continued:

“All parties should be listed on the facility letter and you might advise as to the current status of same as we are now

coming under increasing pressure to complete the transaction and expect a completion notice to be served on us in the

immediate future.”

The requirement that all parties be named in the facility letter was part of the advice given by Ernst and Young, on behalf of the

Lynch family, to Matheson Ormsby Prentice. It is significant in at least two respects. First, it shows that what is central to these

proceedings - the fact that the individual Lynch family members became borrowers from AIB - was a consequence of the tax strategy

being pursued by them. Indeed in early 2006 Mr Burns had noted a conference call with Ernst and Young which emphasised that it

was critical that the children were parties to the loan facility. It is also significant that at this stage Matheson Ormsby Prentice were

dealing with the Lynch family advisers in relation to the facility letter, which is of course the basis of the bank’s claim against the

plaintiffs in these proceedings.

20 AIB prepared a first version of the loan facility letter of the 9th January 2007 in which it named the borrowers as Mr Conlan and Mr

Lynch alone and did not limit recourse in any way. However, the evidence was that this version of the facility letter was not seen by

the plaintiffs until 2009.

21 On the 16th January 2007 the matter became more urgent. Matheson Ormsby Prentice received a completion notice from the

vendors dated the 12th January 2007. That notice required that the sale be completed within 28 days from the date of service

thereof, and accordingly, that the sale was to be completed on or before the 13th February 2010. However, Mr McLoughlin, in a letter

of the 31st January 2007 to LK Shields (who were by now acting for the Lynch family in relation to the co-ownership agreement),

stated that the completion notice had been received and that it was “incumbent upon us to complete this transaction no later than

Thursday 8 February”. Mr McLoughlin has explained both in correspondence and in evidence that he gave this date as a precaution “in

order to concentrate minds”. On the same day as Matheson Ormsby Prentice received the completion notice, AIB produced a second

version of the facility letter in which the borrowers were now named as Gerry Conlan, Philip Lynch and the Lynch children. Again this

version was not formally issued to the borrowers. The following day Mr Burns made contact with Mr Emmet Scully of LK Shields in

relation to that firm acting for the Lynchs in respect of the co-ownership agreement then being drafted by Ronan McLoughlin of

Matheson Ormsby Prentice. It was apparent that Matheson Ormsby Prentice could not act for both sides in the preparation of that

agreement.

22 By the 17th January 2007 therefore, LK Shields had been retained to represent the Lynch family on the co-ownership aspect of

the transaction. LK Shields had a long standing relationship with Mr Lynch. The initial point of contact within the firm was Emmet

Scully who passed the matter to Mr Jim Gollogley, his partner. An internal memo from Mr Scully to Mr Gollogley of that date refers to

the most sensitive issue being the “carry”. The memo informed Mr Gollogley that he would need to liaise with Robert Burns closely on

that aspect. What is significant about this document, as the trial judge observed, is that there was nothing to indicate that LK

Shields were informed by Robert Burns or anybody else on the Lynch side that issues surrounding recourse and joint liability to the AIB

loan were yet to be addressed, or were important, or indeed that the transaction might not proceed at all, if that was the Lynch’s

position.

23 There was a meeting of the Lynch family on the 26th January 2007. Robert Burns prepared a memorandum in which he said that

the balance of the purchase price together with stamp duty and fees was being “financed through a loan with AIB secured on the

land itself”. The trial judge found, with ample justification, that there was on the Lynch side, and indeed elsewhere in this transaction,

very considerable confusion as to the distinction between the concept of security on the one hand, and the question whether there

would be recourse to the individual borrowers on the other. Nevertheless the plaintiffs rely on this reference as reflecting their belief

at all times that the loan was to be non-recourse.

24 By the 2nd February 2007 LK Shields had still not received the facility letter. On that date, Robert Burns sent an email to LK

Shields clarifying certain matters. Of particular significance was the following aspect:

“Philip will provide a guarantee to the bank regarding the Children’s portion of the loan depending on whether the bank

(AIB) require it. The Children need to be reflected in the loan documentation, can you please ensure this is the case.”

As already noted, the need to reflect the children in the loan document appears to reflect the advice given by Ernst and Young.

However, the reference to Mr Lynch providing a guarantee is significant since it was arguably only consistent with the children having

an individual personal liability to be guaranteed.

25 On the evening of the 2nd February LK Shields emailed Robert Burns to ask if he knew when the facility letter was issued as

Matheson Ormsby Prentice (with whom LK Shields were now in contact) had not received it. The following day Robert Burns emailed

LK Shields stating that he was under the impression that the bank had reissued the loan facility with the names of the Lynch children

included in it. This was indeed the case, although at this time the facility letter did not appear to have made its way formally to the

Lynch side. This exchange illustrates the fact that it is likely that a number of the participants were in direct phone contact with

each other and may, by that process, have known more about the progress of the transaction than the documentary evidence now

available would necessarily record.

26 As it happened, on the 3rd February 2007 Judith Whelan took up an employed position in relation to the family’s business and

financial interests. One of the first things that she had to deal with was the Kilbarry land purchase. Robert Burns was due to go to

Switzerland, on business with Mr Lynch, and was not due to return until the evening of Wednesday 7th February, the day before the

closing date nominated by Mr McLoughlin. He sent an email to Judith Whelan updating her on the current position. It is necessary to

set that email out in full since it records Mr Burns’ understanding of the transaction at a key point just before closing, and can be

taken to represent Ms Whelan’s understanding at that time:

“Hi Judith,

Only picked up your message, I’m tied up during Monday but if you want to go ahead with Jim [Gollogley of LK Shields]

that’s great to move it along.

The key is that Richard Godsill (Jerry Conlons manager) wants to take the 20% profit carry on a per acre basis. This

needs to be redrafted with effect that bank debt is cleared first, then expenses, then remaining equity due to investors

and finally the carry to be paid.

Richard has approached it this way as he sees a 3 year timeframe to dispose of the land and wants to take profit as he

goes. However as the debt is joint and several to everybody it is critical that it gets taken out as quickly as possible.

Marion [Ernst and Young] is upto speed on events to date with the exception that the profit share has now been altered

on the Lynch side. The deal was signed in trust by jerry conlon last March so there are no issues as to who goes on the

final contract on Thursday.

The bank (AIB) should issue the loan letter with all your names on it as borrowers. If needs be Philip will need to

guarantee the Children’s borrowings but to date the bank have not yet requested it.

Give me a call anytime Monday to run through anything on it.”

27 As was observed by the trial judge this email is very difficult if not impossible to reconcile with the assertion on behalf of the Lynch

family, and in particular Mr Philip Lynch, that it was essential that the deal be a non-recourse loan. Instead it was apparent that the

nature of the loan was accepted to be joint and several with the possibility of Mr Philip Lynch guaranteeing the individual children’s

loans. Indeed this information was provided not because it was important in itself, but rather because it reflected on the position the

Lynch side had taken on what was seen as a critical issue, namely the manner in which the profit should be paid out. Judith Whelan

did not react to this email and in particular the reference to joint and several liability even though the same email indicated that the

loan letter would issue with her name as one of the borrowers incurring such liability.

28 There was considerable work to be done by the respective firms of lawyers to be in a position to close the transaction, both in

finalising the arrangements and putting them into legal form. While the focus of this case has been on the issue of the extent to

which the agreement provided for recourse to the individual borrowers and what was said in relation thereto, that was only one of the

issues which arose over this period and by no means the most important at the time. In particular, the parties spent a lot of time on

the terms of the “carry” to be allowed to the Conlan side, which was now to be arranged through the vehicle of a limited company,

Quinby Limited. That issue had a number of facets because it also involved the question of agreement with the bank as to

proportionate repayment of the loan on sale of a portion of the lands.

29 By the 5th February, the Lynch side had not seen any form of the facility letter. No anxiety had been expressed by any of the

Lynchs or Mr Burns as to its contents. LK Shields did want to see it in order that the co-ownership agreement could be completed,

which was that firm’s focus. Matheson Ormsby Prentice had also emailed A & L Goodbody who were the solicitors advising AIB, seeking

copies of the letter and the security documents. None of the firms involved at this stage had any reason to think that the terms of

the letter would be anything other than routine. The transaction had been in gestation for more than a year and was now

approaching completion without any suggestion that the terms of the letter would be controversial, still less that it could result in the

transaction not being completed at all.

30 On the afternoon of the 5th February A & L Goodbody emailed Matheson Ormsby Prentice attaching a copy of the mortgage which

appeared to provide that each mortgagor would be jointly and separately liable for the obligations of the other. These terms did not

provoke any comment precisely because no one had at that stage any idea that the Lynchs had any desire for non-recourse lending,

let alone an absolute requirement for that form of loan. On the same day, Mr Imdaad Sulaiman of LK Shields prepared a memo of a

conference call between Mr Gollogley and Mr Burns. Mr Sulaiman was to become the main participant on the part of LK Shields in the

events which followed.

31 On the 6th February Mr Sulaiman made a memo of a conference call between Jim Gollogley of LK Shields and Judith Whelan in

which he recorded that Jim had confirmed to Judith Whelan that LK Shields’s involvement was just in relation to the co-ownership

agreement and that Mr Gollogley, would not be getting “too involved” in what was described as the purchase transaction, and that

Judith agreed with this. It should be said that Ms Whelan disputed this in her evidence at the trial. At 18:58 that day AIB emailed A &

L Goodbody a version of the facility letter which contained all the Lynchs as parties and as borrowers but provided for “Full Joint and

Several Recourse of Gerard Conlan and Philip Lynch for all EUR 25,000,000 debt”. This draft was only exchanged between the bank

and its own solicitors and once again was not seen by the borrowers. It is however a troubling feature of this case that at all times it

appears that the bank did not have any requirement that the Lynch children and Mrs Lynch be liable for the loan. This of course is

consistent with the original structure of the transaction, its commercial underpinning and the development under which the Lynch

family became participants in it. If the bank was willing to lend to Mr Conlan and Mr Lynch alone (and understandably so given their

net worth), then the addition of the Lynch family for reasons internal to the Lynch side did not in any way increase the risk from the

bank’s perspective or create a commercial necessity to make them jointly and severally liable for the loan. It also seems likely that

while it may have taken some more time and attention, it would have been possible to draft both the facility and the mortgage letter

to reflect the bank’s desire to be able to recover the land in full if there was default on the loan, together with the possibility of

further recourse against Mr Lynch and Mr Conlan but without recourse against the other members of the Lynch family. That course

was never attempted, no doubt because it was never raised.

32 On the 7th February, Mr Lynch and Mr Burns were on their way back from Zurich and had a number of crucial conversations with

other participants in the transaction while at Heathrow Airport and subsequent to landing at Dublin Airport. In the early part of the

day the main issue was the arrangement of the Quinby carry and the related issue of securing the bank’s agreement to partial

repayment of the loan as parts of the land were sold. At 15:05 A & L Goodbody emailed the bank with a redraft of the facility letter

which provided amongst other things for “full joint and several recourse to all the borrowers”. The reason given for this change was

that A & L Goodbody took the view that the limited recourse provision in the AIB draft of the previous evening could cause difficulties

of enforcement. The relevant witnesses did not give evidence, but I infer, I hope correctly, that this advice took the view that the

version then in circulation could pose a difficulty for the enforcement of the mortgage security if the Lynch family members were

owners of the land and parties to the mortgage but had no obligation in relation to the debt. This, it should be observed, was a

technical and legal issue rather than a commercial one.

33 At 15:10 Mr Sulaiman emailed Mr Ronan McLoughlin of Matheson Ormsby Prentice requesting sight of the AIB facility letter when

received by that firm. At 15:40, Mr Sulaiman had a direct conversation with Derek O’Shea in AIB. His note records that the purpose of

the call was to ascertain that the bank agreed to proportionate repayment. The note also recorded that the latest draft of the

facility letter was then literally in the process of being printed. Again, the memorandum of this conversation is notable for the absence

of any reference to the recourse or non-recourse nature of the facility letter and is consistent with the view that that issue did not

loom large, or at all, at that time.

34 Mr Sulaiman was also in conversation with Mr Burns at Heathrow and it appears that conversation prompted his communication

with Mr O’Shea. Mr Sulaiman then had a further conversation with Mr Burns in which he confirmed the Lynchs’ agreement to the

question of proportionate repayment of the Quinby carry.

35 At 15:59 Mr O’Shea sent an email containing a facility letter to A & L Goodbody, Matheson Ormsby Prentice, to Mr Gunne directly

(representing Mr Conlan) and attempted to include Mr Sulaiman, but it appears an incorrect email address was used. However, that

error was corrected when Mr Ronan McLoughlin of Matheson Ormsby Prentice forwarded the email at 16:12 to Mr Sulaiman who in turn

forwarded it to both Judith Whelan and Robert Burns at 16:32. This was the first time that the facility letter was seen by the Lynch

side or by LK Shields or Matheson Ormsby Prentice.

36 There were a number of changes to the draft consistent with the discussion between the bank and A & L Goodbody. However in

respect of what is now the crucial issue of the contents of the clause dealing with recourse, it contained a formula similar to that

contained in the AIB draft of the previous day i.e. it provided for “Full Joint and Several Recourse of Gerard Conlan and Philip Lynch for

all of the EUR 25,000,000 loan plus interest, costs and charges”. Thus, by this stage, at 4pm on the eve of the closing date, it was

clear that the Lynchs had been apprised of these terms, particularly the possibility of full recourse against Mr Lynch. Matheson

Ormsby Prentice for their part were aware that all the Lynchs were now parties to the transaction and that the draft, on its face at

least, did not provide for recourse to those family members other than Philip Lynch. LK Shields for their part were also now aware of

the fact that the terms proposed required full recovery against Mr Lynch and did not, at least specifically, address the position of the

other family members.

37 On the plaintiffs’ evidence, by this stage Mr Lynch, while at Heathrow Airport, had coincidentally just made it clear to Robert

Burns, to Judith Whelan and, the High Court judge found, possibly to Mr Conlan, that he, Philip Lynch, would not complete the

transaction unless the loan was non-recourse to all the borrowers. It is not clear, even on the plaintiffs’ case as I understand it, what

gave rise to this declaration, but Ms Whelan in her evidence said that she was aware of her father’s position when she received the

16:32 email. If this is the case, one might have thought that this would have meant that she would both be alert to the terms as to

recourse, and, would also have reacted immediately when it became apparent that it provided for recourse albeit against Mr Lynch

himself. However, she accepted in her evidence that she saw the clause but did not react to it.

38 At 16:40 Mr Roberts of A & L Goodbody replied to Mr O’Shea’s email and once again addressed the format of the recourse clause.

He had recently advised his client on the format of the facility letter, and some of that advice was reflected in this draft. However,

although Mr Roberts had drafted a clause providing expressly for the recourse against all the borrowers, a different provision had been

included in the draft letter which issued, providing for the recourse against Mr Conlan and Mr Lynch. It is unsurprising therefore that

he returned to the issue again and repeated his advice. He stated:

“While I accept that commercially the intention of the bank is to have full recourse on a joint and several basis to Mr

Conlan and Mr Lynch only, the letter of sanction should state that the Bank’s recourse is to all borrowers for the full

amount of the loan plus interest etc. The only other option would be to have specific limited recourse language in both

the letter of sanction and the mortgage for Mr Lynch’s family.”

As already indicated this suggests that the issue was a technical and drafting issue rather than one of principle, and that the desire

of the bank and its advisors was merely to avoid imperilling the enforcement of the mortgage against the land, rather than a desire to

obtain the further comfort of personal recourse against members of the Lynch family. Apart from anything else, that was a commercial

matter and not something upon which Mr Roberts was likely to advise.

39 It is important at this stage to recall that neither Mr Roberts nor Mr O’Shea gave evidence at the trial. There is no doubt however,

that Mr O’Shea did effect a further crucial change to this clause. Mr O’Shea had prepared a witness statement for the trial. The

plaintiffs sought and obtained permission from the trial judge to introduce this into evidence. It stated that he had received a phone

call from Mr Godsil who observed light heartedly that since the draft in circulation had made express provision for full recourse against

Mr Conlan it must follow that all previous loans, which had no such express provision, were non-recourse loans. Mr O’Shea’s statement

then records that this prompted him to make what transpired to be a fateful alteration by removing all reference to recourse against

Mr Conlan and Mr Lynch, and with the consequence that there was full recourse against all the borrowers. It is important to say that

at this point that while the plaintiffs introduced Mr O’Shea’s statement into evidence, this did not mean that they accepted this

account of the reason for the change made by Mr O’ Shea. On the contrary they introduced the statement in evidence with a view to

inviting the court to disbelieve it and to infer that there was some other undisclosed reason for the change.

40 It appears that Mr Sulaiman prepared a further memorandum for his file which notes that he spoke to Robert Burns at 18:05. That

appears to be shortly after Mr Burns had landed in Dublin Airport, although the memorandum itself stated that Mr Burns was in transit

between connecting flights. The trial judge considered that this must have been an error since Mr Burns had landed at the time

recorded on the memorandum. The memorandum suggests that the call lasted for just over nine minutes. Mr Burns for his part stated

that he had no recollection of the telephone conversation, but he did say that a conversation could have taken place, although he

disputes the account given by Mr Sulaiman of the contents of the call. The memorandum sets out a number of matters which were

discussed and agreed, and then concluded “re possibility of Goodbody’s/bank wanting the joint/several clause to apply to both Gerry,

Philip and all the Lynchs, Rob felt this wouldn’t be a problem”. It is noteworthy at this point that a new facility letter had not issued.

However, it is true that at this point A & L Goodbody’s advice was (and had been) that the simplest course was to have full recourse

against all the borrowers. Given the degree of interaction between the parties and their respective lawyers, it is not at all implausible

that Mr Sulaiman should have become aware that it was A & L Goodbody’s advice that the joint and several liability should extend to

all borrowers and therefore that such a requirement might be made by the bank. However, as the trial judge noted, the precise

manner in which that important information reached Mr Sulaiman is not clear.

41 Mr Burns stated in evidence that he could not have said what he was recorded in the memorandum to have said about full

recourse not being a problem, since that itself was inconsistent with everything else. “Everything else”, in this regard, for Mr Burns,

appears to mean the conversations held at Heathrow Airport in which it was said Mr Lynch made clear his position that unless the

loans were full recourse, the transaction would not proceed. On the other hand, it might be observed that the statement that Rob

felt that full recourse “wouldn’t be a problem” is itself consistent with his email of the 2nd February 2007 to LK Shields suggesting that

Mr Lynch was prepared to provide a guarantee for his children’s liabilities and his email to Judith Whelan of the 3rd February 2007

recording that the debt was joint and several and that if need be, Philip Lynch would be prepared to guarantee the children’s

borrowings. There was however a sharp conflict about this issue at the trial.

42 At 18.56 Mr Sulaiman emailed Mr Jim Gollogley stating that:

“Ronan [of Matheson Ormsby Prentice] just left a message after speaking to Derek at AIB. Apparently the joint and

several recourse condition in the facility letter is to be taken out in its entirety – confirmation of this to follow.”

Mr Gollogley who was at that stage at a wedding in the country was in contact with Mr Sulaiman. He replied;

“Is the recourse limited to the property then. MOP [Matheson Ormsby Prentice] need to clarify.”

It appears that there was a phone call between Mr Sulaiman and Mr McLoughlin and at 19:04 he replied to Mr Gollogley stating:

“Just off the phone with Ronan – he confirmed that it is to be limited to the security being the property – the confirmation

of this will be evidenced by the revised facility letter which will have no mention of the joint and several recourse against

the individual borrowers.”

43 Mr Sulaiman’s 18:56 email was possibly ambiguous. It is true that the clause providing explicitly for joint and several recourse on a

limited basis was being taken out but it did not follow that the legal effect was that joint and several recourse was no longer a

consequence of the agreement. In the second email however, the matter becomes clearer. In this email it was suggested that

recourse was to be limited to the security of the property and this would be confirmed by the fact that the clause providing for joint

and several recourse against any of the borrowers would no longer be contained in the agreement. Again, there was sharp

disagreement about the conversation between Mr McLoughlin and Mr Sulaiman recorded in this email. Mr Sulaiman said that his email

simply repeated what Mr McLoughlin had told him, and if there was an error it originated with Mr McLoughlin. Mr McLoughlin for his

part agreed that he had spoken to Mr Sulaiman and maintained that he had merely passed on to Mr Sulaiman what he had been told

by Mr O’Shea of AIB, including that the reason for the change was because of enforcement difficulties.

44 Shortly afterwards, at 19:17, Mr Gollogley emailed Robert Burns in the following terms:

“I was concerned about that the suggestion that rather than AIB relying on a Philip Lynch and G Conlan full recourse

commitment and that they want to tie in each of the children as well. I don’t think this makes sense for either AIB or the

children. I now understand it may well be recourse to property only, which is a great help.”

This email was copied to Mr Sulaiman. Shortly after 10 pm that night Mr McLoughlin sent emails to Mr Godsil and Mr Burns enclosing

draw down requests to permit the loan to be made available the following day on the closing.

8th February 2007

45 The 8th February was the critical day on which the transaction closed and on which the principal communications upon which the

plaintiffs rely in these proceedings were made. Shortly after 8 o’clock Mr Robert Burns emailed Mr Sulaiman and asked “Is the loan now

recourse to land only?”. As the trial judge found, the reference to “now” suggests perhaps that up until then Mr Burns had not

believed that the loan was not limited to recourse to land, and rather was one of full joint and several recourse. Gillian Burdon, an

assistant to Mr Burns, then contacted Mr Sulaiman on Mr Burns’s instructions and asked him to draft a draw down request for the

sum. Ms Burdon also requested a copy of the final facility letter. It is worth noting here that both the Lynch side and LK Shields were

now engaged in dealing with matters outside the strict terms of the co-ownership agreement. At 9:33, Mr Sulaiman sent a draft of

the draw down request to Ms Burdon and stated:

“Further to our telephone conversation earlier this morning, I now attach the latest version of the AIB facility letter.

Please note that a further version should be following later this morning. This is to reflect the fact that the bank now only

require legal recourse against the property being their security for the loan – they no longer require any legal recourses

against Philip, Gerry or the Lynch children.”

This was an unequivocal statement. It was also, regrettably, wrong.

46 At 10:36 Mr O‘Shea emailed a final version of the facility letter to Mr McLoughlin of Matheson Ormsby Prentice. This was not

however copied to LK Shields or the Lynchs. Mr O’Shea asked Mr McLoughlin to confirm when he heard from “the Lynch’s solr that the

Letter of Sanction is ok”. Mr McLoughlin emailed Mr Godsil and Mr Gunne in the following terms: “Richard/Conor, See below. The

reference to Gerry and Philip only as being joint and several has been deleted as it may have caused issues on enforcement for AIB.”

This email is important because it seems to show that at this stage, Mr McLoughlin for his part did not consider that the loan had

been changed to one with non-recourse as far as his clients were concerned. At 12:03 Mr McLoughlin sent an email to Mr Sulaiman

attaching without comment the amended facility letter. At 12:16 Mr Sulaiman forwarded it to Robert Burns and Gillian Burdon stating

“you will note that the special condition regarding any recourse as against Philip and Gerry has been now been removed”. This email

was also copied to Ms Whelan, who was at that stage travelling around Dublin collecting powers of attorney from her siblings. In her

direct evidence she said that she had met Mr Burns in his office at Thomas Street earlier that morning and that he had informed her

of the 9:33 email. She also stated that she had gone back to Thomas Street and had reread her emails and so saw the 12:16 email.

However in cross-examination she accepted that she had no recollection of being told by Mr Burns about the 9:33 email, and

accepted that there was no mention in her witness statement of returning to Thomas Street. In the event the evidence of personal

knowledge on the part of Ms Whelan of the critical emails, still less reliance on them, was as limited as the evidence of Mr Lynch

imposing a requirement of non-recourse the previous day. The heart of the plaintiffs’ case against LK Shields was therefore the fact

that the trio of emails recorded above were sent by LK Shields to Mr Burns and Ms Burdon.

47 The closing of the transaction had now been put back to 3 o’clock. Mr McLoughlin had still not heard whether the Lynchs were

happy with the final facility letter. At 14:05 Mr McLoughlin emailed Mr O’Shea to find out if he for his part had heard anything in this

regard and at 15:46 Mr O’Shea replied stating that he had heard nothing except that a drawn down request from the Lynchs had

been received. At 3 o’clock the transaction was completed at the offices of A & L Goodbody, the solicitors for AIB. Mr McLoughlin was

there as the purchaser’s solicitor. Judith Whelan attended and executed all relevant documents on her own behalf and on behalf of

the other Lynch family members including the final facility letter. Mr Conlan for his part was not there but had executed all necessary

documents in advance. There was no discussion about the nature of the loan.

48 Two years later the loan was due for renewal. By that stage the market had of course deteriorated. It is perhaps of some

significance that AIB re-issued the facility letter but in the format originally favoured by Mr O’Shea, i.e. providing for full recourse

against Gerry Conlan and Philip Lynch only. It is not clear if an advertent decision was made to resile from the terms of the facility

letter actually executed, although that appears unlikely. Nevertheless, this was perhaps indicative of a continuing attitude of the

bank to the commercial reality of the loan. Had that facility letter been accepted, it seems likely that the other members of the Lynch

family would have no liability, or at a minimum would certainly have been in a stronger position than they were when proceedings were

commenced by the bank. However, the family took a very firm stance that they had been advised that the facility letter was non-

recourse against everybody and would not execute an agreement on any other terms. Accordingly, the loan became due, and AIB

commenced summary proceedings against all the members of the Lynch family and Mr Conlan. These proceedings were commenced

and the summary proceedings stayed pending the determination of these proceedings in which the Lynch family sought, as against

AIB, a declaration that the loan was not due. The proceedings also claimed that the loan had been procured by a misrepresentation

that it was a non-recourse loan. In the event that the loan was however found due, the plaintiffs claimed an indemnity from both

firms of solicitors.

The Judgment of the High Court

49 The trial judge had to seek to reconcile much conflicting evidence. While it is apparent that the amount of email correspondence

provided contemporaneous evidence to assist in this task, the fact remains that a number of the key players did not give evidence,

and some of the most important communications were oral. As between Mr McLoughlin and Mr Sulaiman, the trial judge concluded that

on the balance of probability Mr McLoughlin had not informed Mr Sulaiman on the 7th February 2007 that the loan was now non-

recourse, and that Mr Sulaiman had probably misunderstood whatever it was Mr McLoughlin had told him. There was no real question

but that Mr Sulaiman’s conclusion (shared, it appears, to some extent by Mr Gollogley) was, regrettably, simply wrong. The removal of

the provision in relation to limits or recourse had the effect that the loan reverted to the default position i.e., it was a loan advanced

to joint borrowers who therefore had a joint and several liability to repay.

50 The trial judge also had to deal with the central claim made by the Lynch family that in a series of phone calls to Mr Conor Gunne

and Ms Judith Whelan, and in personal conversations with Mr Burns, all while at Heathrow Airport on the 7th February 2007, Mr Philip

Lynch had made it clear that he would not complete the agreement unless the loan advanced was non-recourse, not just to his family

members but also to him (and consequently, presumably, Mr Conlon). This position was asserted to have been expressed on the 7th

February, but was said to represent Mr Lynch’s firm view in general, and the common understanding of the family members, including

Mr Lynch (shared by Mr Burns) in relation to the loan at all times.

51 The findings of the trial judge in relation to Mr Lynch’s assertion are important and accordingly worth quoting in full. At pp. 14-15

of the judgment ([2011] IEHC 544) he said:

“I must say I find it incomprehensible that a successful and experienced business such as Mr Lynch who, over a long

business career in which he has enjoyed enormous success, has borrowed many millions of Euro in the course of that

career, would be as confused as he appeared to be about what was meant by a recourse or non-recourse loan, the

concept of security, and the differences between them. One view of his evidence in this regard would be that he was

deliberately obfuscating, and by his answers trying to make sure that his knowledge of such concepts was at best

uncertain. A reading of the transcript of his cross-examinations in this regard makes for very difficult reading. But

nonetheless I was able to observe him in the witness box when he gave his answers, and I remain satisfied that,

unbelievable as it may seem to others, his understanding of the precise distinctions between these concepts, and his

understanding of these matters generally is vague and uncertain. Perhaps that is a consequence of being the sort of man

who having made a decision to pursue a particular course of action, leaves the detail and the fulfilment of his plans to his

trusted lieutenants. The evidence has been that this is his habit. A man who is as totally occupied with business interests

as Mr Lynch appears to have been at these times, and who has many ventures and investments ongoing at any particular

time, not just in this jurisdiction but abroad, perhaps must delegate details to others. But risks run alongside that modus

operandi, as it presupposes that the lieutenants know exactly what is to be done, and fully understand which matters he

regards as being of particular importance to the ultimate decision to proceed. They must be kept fully informed and up to

date at all stages, otherwise some matters of crucial importance to the decision maker may not be fully appreciated, and

may not be communicated to others who need to know.”

52 Later in the judgment at p. 32 the trial judge went further and described Mr Lynch’s evidence of the events of the 7th February,

and in particular his conversations at Heathrow Airport, as “hopelessly unreliable”. Having expressed the view that Mr Lynch, Mr Burns

and Ms Whelan were trying as best they could to recollect what may have been said he continued:

“I have read and re-read Mr Lynch's cross-examination by [counsel for LK Shields] about these telephone calls. While Mr

Lynch attempts to hold the line on the fact that he spoke to Judith Whelan and told her he would not be proceeding if the

loan was other than non-recourse, and called Mr Donnelly because he could not reach either Mr Conlon or Mr Gunne, and

asked Mr Donnelly to get either of them to call him, and that he spoke to Mr Gunne to tell him that he would not proceed

unless the loan was non-recourse, his recollection is hopelessly confused and unreliable.”

These are severe findings in relation to a prominent businessman who must have been engaged in numerous transactions and dealings

for sums far in excess of the very significant amounts involved here, but they appear, regrettably, to be amply justified, and if

anything understated.

53 In relation to Ms Whelan, the trial judge observed that if her evidence was correct and she was aware of her father’s view that

the entire deal could not proceed unless the loan was non-recourse to everybody, it was remarkable that she took no step to alert

anybody that there was a problem about recourse. He continued:

“She could have made contact with AIB directly if she had wanted to. She could have contacted MOP and/or LK Shields

to tell them that recourse was a problem. She did none of these things on the basis that she knew her father's views and

that they would not sign up to recourse. I find it extraordinary that she did nothing, if as she and Mr Lynch say, a

decision had been taken that day that if the loan was to be recourse they would not be proceeding. There must also be

doubt about the accuracy of their recollections about these phone calls given Mr Sulaiman's note of his conversation

[with Mr Burns] after he had landed at Dublin Airport at 18.05hrs on the 7th February 2007 in which the latter confirmed

that joint and several to everybody would not be a problem”. (p. 44-45)

54 Nevertheless, the learned trial judge seemed to accept that a decision was made at Heathrow Airport on the 7th February by Mr

Lynch not to complete the transaction unless the loan was non-recourse and accordingly that the decision to enter the loan was

made in reliance on Mr Sulaiman’s erroneous advice that the loan was indeed non-recourse. At p. 55 of the judgment the judge said:

“Mr Lynch appears to have become convinced by the 7th February 2007 that he would [not] involve his family in any risk

on this transaction. On balance I accept that this is so. He certainly left it very late in the day to arrive at such a

decision, but on the evidence which I have heard this seems to be the way in which he conducts himself in relation to

business decisions. He seems to keep all his options open until the very last minute before making a final decision. He is

entitled to operate in that way, even though it may speak to the question of contributory negligence and/or foreseeability

particularly where he keeps his relevant advisers in the dark”.

55 Accordingly the judge came to the following conclusions in relation to the cases advanced by the Lynchs against the respective

defendants. As against AIB, he dismissed the claim for a declaration that the loan was non-recourse. He also dismissed the claim that

Mr O’Shea’s alterations to the facility letter amounted to a misrepresentation. He concluded that the Lynchs had no defence to the

bank’s claim and permitted the bank to prove the amount of the debt by affidavit evidence and, as already set out, he entered

judgment in the bank’s favour against each of the Lynchs.

56 In relation to the claim against Matheson Ormsby Prentice, the judge’s decision followed largely from his conclusion of fact that Mr

Sulaiman had misunderstood what Mr McLoughlin had told him on the 7th February in relation to the changes being made to the

facility letter in respect of the non-recourse clause. The trial judge accepted that Matheson Ormsby Prentice could have a duty of

care extending beyond the strict terms of their retainer and which might arise by virtue of the nature of the transaction and the way

in which it developed. He observed:

“I have no difficulty in accepting that a solicitor's duty of care to his/her client may in some circumstances extend beyond

the specific terms of the initial retainer in certain circumstances. If, for example, it was established in the present case

that Mr O'Shea had informed Mr McLoughlin that this recourse clause was being removed in order to change the facility

from a non-recourse loan to a full recourse loan, and if Mr McLoughlin was aware, or ought to have known, that this was

a matter of importance to the Lynch side, he would be negligent if he failed to communicate that information to the

Lynchs, either through LKS [LK Shields] or to the Lynchs directly, or at least at latest at the closing of the transaction

itself, even though MOP’s specific retainer did not extend that far. It might be negligent also if Mr McLoughlin had known

or believed that until this change was made the facility was a non-recourse loan, and even in the absence of being

specifically told by Mr O'Shea of the purpose of the change to the facility letter, he nevertheless believed that as a

matter of law the change was altering the nature of the loan to recourse, and he failed to communicate that view to his

clients even where he had not been retained in relation to giving advices in relation to financing aspects of the

transaction, since it would be reasonable for him to appreciate that his clients needed to know”. (p. 48)

However, the trial judge considered that in the present case, the facility was at all times a recourse loan. The changes effected to

the facility letter did not alter this as a matter of law, and nobody on the Lynch side had told Matheson Ormsby Prentice that only a

non-recourse loan would suffice. Fundamentally, he considered that Mr Sulaiman was probably mistaken as to what Mr McLoughlin had

said. The trial judge concluded:

“I believe that Mr Sulaiman misinterpreted what he was told in this regard. He has shown a degree of confusion in his

understanding of the different concepts of security and recourse, and appears at times to have conflated the two”. (p.

50)

Accordingly, what Mr McLoughlin communicated was not mistaken, and it followed that he was not negligent in that regard. In relation

to the question of communicating information to LK Shields, the judgment concluded that Mr McLoughlin was entitled to do as he did

as he knew LK Shields were acting for the Lynch side and he had in fact never met the Lynchs or been in contact with them. The trial

judge stated:

“He was of course duty-bound to pass on information so that the Lynchs were made aware of the change to the facility

letter as communicated to him by AIB, but it was perfectly reasonable that he could do so by means of LKS, rather than

directly to the Lynch side with whom he had had no previous contact.” (p. 51)

Accordingly, that was a sufficient discharge of Matheson Ormsby Prentice’s duty in this regard. Finally, he concluded that Mr

McLoughlin had not been negligent in specifying the 8th February as the deadline in order to concentrate minds since there was no

reason to believe, and he had not been informed, that further time was required. (p. 52)

57 Finally, the trial judge considered the case against LK Shields. This was in many ways the most difficult of the cases, particularly in

relation to the findings made by the trial judge in respect of the conversation between Mr McLoughlin and Mr Sulaiman, and Mr

Sulaiman’s and Mr Gollogley’s communications with the Lynchs. He concluded that the involvement of LK Shields had moved into

matters beyond simply the co-ownership agreement and that a relationship of proximity undoubtedly existed between the parties.

However, referring to and relying on the judgment of Keane C.J. in Glencar Exploration p.l.c. v. Mayo County Council (No.2) [2002] 1

I.R. 84 (hereinafter “Glencar”) and adopting the observations of Brennan J. of the High Court of Australia in Council of the Shire of

Sutherland v. Heyman [1985] 157 C.L.R. 424 (hereinafter “Shire of Sutherland”), and those of Lord Bridge in Caparo Industries p.l.c.

v. Dickman [1990] 2 A.C. 605 (hereinafter “Caparo”), the trial judge considered that notwithstanding the existence of proximity and

foreseeability, there remained a question as to whether it was just and reasonable that the duty of care owed by LK Shields to the

plaintiffs on foot of their retainer should extend as far as the information and advice given in relation to the nature of the facility

letter. He concluded that it was not just and reasonable to impose a duty of care upon LK Shields in the particular circumstances in

this case. It was not reasonable to expect that Mr Sulaiman ought to have known that the advice which he gave was critical to make

a decision to proceed or not and that in particular if the loan was a recourse loan the Lynchs would not proceed. Furthermore, he

held that for the very same reason, it was not reasonably foreseeable that by acting upon the answer given, the plaintiffs would sign

up to a facility the nature of which they were unwilling to accept, since LK Shields were kept in ignorance in that regard. Accordingly,

the judge also dismissed the claim against LK Shields.

The Appeal

58 The plaintiffs appealed to this Court against the dismissal of their claims. The issues have been fully argued on this appeal by all

the parties. In addition to resisting the plaintiffs’ appeal, LK Shields have also sought to challenge the conclusion that Mr Lynch had

made a decision on the 7th February (and furthermore communicated such a conclusion) that he would not complete the transaction

unless the loan was non-recourse not only to members of his family whom he had introduced into the transaction, but also to himself.

The issues between the Lynchs and LK Shields are at the heart of this appeal and accordingly I propose to deal with them first and

thereafter to consider the appeal against the dismissal of the claim against Matheson Ormsby Prentice, and finally to deal with the

issues in relation to AIB.

59 The conviction of a trial judge who has had the opportunity of hearing and assessing the witnesses involved and the consequent

argument over a 27 day period that in some general way it is not fair and reasonable that the firm of solicitors in this case should

incur a liability potentially in the region €25 million and continuing interest, is something which is by no means irrelevant to the fair

resolution of this case. The circumstances which appear to have influenced him were that the solicitors were introduced very late in

the day on one small and specific aspect of the transaction (and their fees agreed on that limited basis) and that the particular

question arose on the eve of the closing in circumstances where the clients’ instructions gave no possible hint that the answer was

critical to the family’s involvement in the transaction. However, the trial judge’s conclusion here that as a matter of law, a solicitor

acting for a client in relation to a transaction owes no duty of care in giving advice about the legal nature of a document then in draft

form and intended to be part of the transaction, is more challenging.

60 In my opinion the trial judge was quite right to conclude that even though the relevant advice had been given on an occasion, and

in relation to a matter outside the original retainer, there was sufficient proximity between the Lynchs and LK Shields to give rise to a

duty of care, if all other requirements were satisfied. Similarly, it cannot seriously be doubted that if a duty of care arose, then the

firm was in breach of that duty and negligent in advising that the alterations effected on the 7th February meant that the loan was

non-recourse to all the borrowers. It is clear, therefore, that the plaintiffs’ claim against LK Shields failed because the trial judge

considered that it was necessary to take at least one further step and establish that in addition to proximity and the lack of care, it

would also be fair and reasonable to impose liability on the defendants. The finding that the damage was not foreseeable was based

on essentially the same considerations.

61 I regret that I cannot agree with the trial judge’s approach to the issue of the existence of a duty of care in this case. The cases

of Ward v. McMaster [1988] I.R. 337 and Glencar, particularly when set against the background, in other common law jurisdictions, of

cases such as Donoghue v. Stevenson [1931] A.C. 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465 (hereinafter

“Hedley Byrne”), Home Office v. Dorset Yacht Co. Ltd. [1970] A.C. 1004, Anns v. Merton London Borough Council [1978] A.C. 728,

the decision of the High Court of Australia in Shire of Sutherland and the later decision of the House of Lords in Caparo, are probably

by now well known to every student of tort, indeed law students more generally, since the emergence of the neighbour principle in

Donoghue v. Stevenson and its subsequent development and application is a favourite topic in introductory classes on legal systems

and methods. Lord Atkin’s elegant and memorable speech in Donoghue v. Stevenson had the effect of suggesting that there was a

single unifying principle which explained why liability arose not just in that famous case, but in other individual cases in which liability

had been established in negligence. Thereafter, the question increasingly became whether those areas, where it had hitherto been

thought no liability and no duty of care arose or which had not yet been the subject of any decided case, would also succumb to Lord

Atkin’s unifying principle. Those were areas such as liability for statements rather than actions (Hedley Byrne), liability for public law

actions of public authorities (East Suffolk Rivers Catchment Board v. Kent [1941] A.C. 74 and Anns v. Merton London Borough

Council), liability for auditors of companies to third party investors (Caparo), pure economic loss cases (Caparo and Glencar), liability

for nervous shock, and liability of builders and/or subcontractors to subsequent purchasers of buildings with whom they had no

contractual relationship (Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 A.C. 520), together with other favourite classroom examples

such as the potential liability of rescuers.

62 In Anns v. Merton London Borough Council in the United Kingdom and Ward v. McMaster in this jurisdiction, the position appeared

to have been reached where it was said that liability in negligence in such novel areas could be determined by the application of a

two stage test. First, whether, if there was foreseeability of damage owing to the careless act there was sufficient proximity to the

parties to establish a duty of care, and second, whether there were any possible policy considerations which should limit or negative

the existence of the duty of care, albeit, as McCarthy J. observed in Ward v. McMaster, it would require powerful considerations of

policy to deprive a plaintiff, who had suffered foreseeable damage as a result of the careless act of a sufficiently proximate

wrongdoer, of the damages to which he or she would otherwise be entitled.

63 In later cases however, and put again perhaps too simply, there emerged a concern that this approach would give rise to a

considerable extension of liability, and consequently cost, and make the tort of negligence the dominant vehicle for recovery in any

civil action, which would threaten, if not obliterate, the other torts and even recovery in contract and quasi contract. The High Court

of Australia in Shire of Sutherland pointed out that this approach gave rise to a significant risk of an approach which would result in a

massive extension of a prima facie duty of care restrained only by some indefinable considerations of policy. This was important

because a decision that a duty of care arose in any novel situation controlled not only the instant case, and all similar cases, but also

influenced all those cases in which such a situation or some plausible analogy could be advanced, giving rise to a risk of liability which

might have to be settled. Parties would have to seek insurance against such potential liability, and furthermore seek to recover that

additional cost from their clients and customers, or risk claims and additional costs. In Shire of Sutherland, an alternative approach

was mooted which was subsequently adopted both in the United Kingdom in Caparo and in this jurisdiction in the judgments in

Glencar. That was where injury or damage was reasonably foreseeable, and there was sufficient proximity between the parties, a

duty of care would nevertheless not arise in any such novel area unless the court considered that in all the circumstances it was just

and reasonable that the law should impose a duty of care on the defendant.

64 In the landmark case of Glencar this court, through the medium of two comprehensive judgments by Keane C.J. and Fennelly J.,

with which the other members of the court agreed, reviewed and provided clear guidance in relation to some of the most troublesome

areas of the modern law of torts. Thus, the judgments considered the law on the existence of a duty of care, the negligence liability

of local authorities for failure to use discretionary powers, the tort of misfeasance of public office, the limits of the tort of breach of

statutory duty, and the doctrine of legitimate expectations. In his judgment, Keane C.J. reviewed the development of the law on the

existence of a duty of care starting with the famous speech of Lord Atkin in Donoghue v. Stevenson and that judgment’s treatment of

the earlier decision of Lord Esher in Le Lievre v. Gould [1893] 1 Q.B. 491. The judgment then traces the development of the law of

negligence in England and Ireland and concludes that the oft cited portion of the judgment of McCarthy J. in Ward v. McMaster,

which appeared to endorse the approach taken by Lord Wilberforce in Anns v. Merton London Borough Council, could not be taken to

be part of the ratio of the decision in Glencar and accordingly, could not be considered to foreclose further consideration of the

underlying jurisprudence. Thereafter, in what has become the foundation stone of modern jurisprudence on the tort of negligence,

Keane C.J. stated:

“There is, in my view, no reason why courts determining whether a duty of care arises should consider themselves obliged

to hold that it does in every case where injury or damage to property was reasonably foreseeable and the notoriously

difficult and illusive test of “proximity” or “neighbourhood” can be said to have been met, unless very powerful public

policy considerations dictate otherwise. It seems to me that no injustice will be done if they are required to take the

further step of considering whether, in all the circumstances, it is just and reasonable that the law should impose a duty

of a given scope on the defendant for the benefit of the plaintiff, as held by Costello J. at first instance in Ward v.

McMaster [1985] IR 29, by Brennan J. in Sutherland Shire Council v. Heyman (1985) 157 C.L.R. 424 and by the House of

Lords in Caparo plc. V. Dickman [1990] 2 A.C. 605. As Brennan J. pointed out, there is a significant risk that any other

approach will result in what he called a ’massive extension of a prima facie duty of care restrained only by undefinable

considerations …’” (p. 139)

65 To the casual observer it might appear that there is little difference between an approach which imposes liability where there is

prima facie a duty of care unless considerations of policy negative the existence of such a duty, and one which imposes a duty of

care only when there is sufficient proximity and considerations of policy make it just and reasonable that such a duty should exist.

One approach might seem to be merely the negative image of another and to the mathematically minded, five minus two is exactly

the same as one plus two. However, there is and has been in practice a very significant difference between the two which might be

illustrated by this case. The formulation in Anns v. Merton London Borough Council and Ward v. McMaster of prima facie liability only

negatived by considerations of policy loads the balance heavily in favour of finding liability. Furthermore, it tends to ensure that the

general issue as to the existence of a duty of care in such circumstances will be addressed in the particular circumstances of the

case and the question becomes, almost imperceptibly, whether a plaintiff who has now been found to have been injured by the

carelessness of a person whose acts could foreseeably cause damage to the plaintiff, should nevertheless be deprived of damages.

66 Viewed in this way it is, I think, apparent that the judge’s conclusion that the firm of LK Shields owed no duty of care to Mr Lynch

when advising as to the nature of the facility agreement because to impose a duty of care in such circumstances would not be just

and reasonable cannot be maintained. First, this was not a novel area where liability was being asserted for the first time. The

essential components of the plaintiffs’ claim were well established. It has been beyond controversy for more than half a century that

an advisor may owe a duty of care when making statements which may be relied upon even if there is no contract or retainer

covering the advice. It is also well established that a solicitor may owe a duty of care independent of contract, and indeed, owe a

duty of care in respect of areas outside the original retainer. None of this is or was in controversy. Second, the just and reasonable

test in Glencar is also essentially a policy consideration and it has been determined long ago that it is just and reasonable that a

solicitor, or indeed any other professional advisor, should owe a duty of care in such circumstances. It is also important that the

question must be approached at that level of abstraction. As Lord Browne-Wilkinson observed in Barrett v. Enfield London Borough

Council [2001] 2 A.C. 550 (pp. 559-560);

“… the decision as to whether it is fair, just and reasonable to impose liability in negligence on a particular class of would-

be defendants depends on weighing in the balance the total detriment to the public interest in all cases from holding such

class liable in negligence as against the total loss to all would-be plaintiffs if they are not to have a cause of action in

respect of the loss they have individually suffered. … Questions of public policy and the question whether it is fair and

reasonable to impose liability in negligence are decided as questions of law. Once the decision is taken that, say,

company auditors though liable to shareholders for negligent auditing are not liable to those proposing to invest in the

company … that decision will apply to all future cases of the same kind. The decision does not depend on weighing the

balance between the extent of the damage to the plaintiff and the damage to the public in each particular case.”

The test does not mandate or permit a consideration of each individual case and whether the imposition of a duty of care, and

therefore liability, meets some undefined concept of fairness in the particular case. If that were so, then the law would be no more

than the application of individual discretion in different facts or circumstances which might well be decided differently from court to

court. In such circumstances, the law of negligence would be little more than the wilderness of single instances criticised by

Tennyson.

67 If indeed it is necessary to consider afresh the question of policy then at the appropriate level of abstraction at which that issue

must be addressed, it seems clear that the law has consistently and correctly held that an advisor such as a solicitor will owe a duty

of care when giving advice to a client on an area within his or her expertise and where the request for the advice, and provision of it,

is neither in casual circumstances nor entirely separate from the business then being transacted. It is not necessary that a client

make very clear that the advice is critical to any decision which he or she might make, or that it be the sole or decisive factor. The

obligation of a professional person is to give advice some of which may be unwelcome. Clients may be slow to appreciate advice,

which they are paying for, but which warns them against a course of action which they wish to follow. The practice of law and other

professions have developed considerably, and in many cases for the better, but there can be strong pressures on lawyers and other

advisors to take a “commercial” view of matters, and to bring only the good news to a client. It remains very important that advisors

give independent advice which, in an appropriate case, may counsel caution. The obligation to give independent and professional

advice which is important not just to clients but to society more generally, is reinforced if solicitors and other advisors understand

that they have a duty to be careful in the content of the advice which they give to clients. Looked at in reverse, it would be a

strange and surely undesirable outcome if it were to be determined that when in the course of a transaction a bank, having been

itself advised by its own solicitor, makes changes to a facility letter which may expose individual members of a family to a liability of

€25 million, those clients who are paying two firms of solicitors to represent them in the transaction, are not owed any duty of care

by either firm in respect of that change. Furthermore if owed no duty of care it would follow that even if advice is given to them by

their own solicitors, they cannot complain when it transpires that such advice is clearly incorrect, even if they rely on that advice to

their detriment and suffer substantial, even ruinous, loss.

68 As the trial judge recognised, his analysis of foreseeability relies entirely on the same factors which led to his conclusion on the

question of the fairness and reasonableness of the existence of a duty of care. It is, in my view, subject to the same frailties. The

question of foreseeability must be addressed at a general level. Is it foreseeable that when advice is given in the context of a

transaction and is incorrect, a person to whom that advice is given will suffer damage? Put in this way the question answers itself.

The purpose of legal advice when it is sought and given is so that a client can factor that advice into decisions which he or she may

take. If that advice is incorrect, it is plainly foreseeable that the client may suffer damage. The trial judge was clearly influenced by

the limited retainer which the firm had, and the fact that they were involved late in the day, and perhaps most particularly, the fact

that the Lynch family gave no hint as to the overwhelming significance which they now claim to have attached to the question of the

recourse of the loans. These are important factors in the case more generally, but they are not decisive on the question of

foreseeability. If, for example, there were no issue of the scope of the retainer, and LK Shields had plainly been retained to negotiate

and advise upon the facility letter and had given incorrect advice that the loan was now non-recourse, it could scarcely be argued

that damage was not foreseeable. Accordingly, the conclusion that the firm owed no duty of care to the Lynch family and Mr Lynch

when giving advice as to the nature of the facility letter cannot stand and must be set aside.

69 The setting aside of the finding that the firm owed no duty of care to the plaintiffs in respect of the advice does not mean that

the trial judge’s strong conviction that it would be unfair to impose liability in full or in part upon the firm in the context of this

transaction is by any means irrelevant to the proper resolution of the case. On the contrary, the conclusion of an experienced trial

judge who had the merit of observing the parties over an extended period of time in the setting of a trial, are of considerable value.

But they may be more relevant to the question of reliance in fact, and therefore causation, and contributory negligence, as indeed

the judge himself observed, than the legal issue of the duty of care.

The Cross Appeal by LK Shields

70 These matters are also of some relevance to the related question of the cross-appeal by LK Shields against the judge’s finding, at

p. 59, that Mr Lynch made a last minute decision while at Heathrow Airport on the 7th February not to proceed with the transaction

unless the loan was non-recourse to everybody. This finding is essential to any conclusion that the Lynch family relied on the

incorrect statements as to the nature of the loan.

71 In this regard LK Shields submit that the court’s determination is inconsistent with the primary fact as found by the courts. In so

contending, it is emphasised that in this regard the court is not being asked to revisit, in the words of Henchy J. in Northern Bank

Finance v. Charlton [1979] I.R. 149 (hereinafter “Northern Bank”) a “choice of alternatives arising out of divergent oral testimony” (p.

192). Instead it is suggested that the conclusion is one of secondary fact arrived at by consideration of the primary facts found. In

the alternative, LK Shields also submit that if the finding was treated as one of primary fact there was no credible evidence to

support it.

72 At the outset it should be observed that the relevant conclusion was arrived at in a context in which the court had held that LK

Shields owed no duty of care in this regard to the plaintiffs, and accordingly the finding as to Mr Lynch’s decision had no direct legal

consequences. Now however, it becomes particularly important to scrutinise this conclusion with considerable care.

73 By every known standard for the testing of oral evidence, the assertion that Philip Lynch made this last minute decision at

Heathrow must rank as highly implausible and therefore one which would require careful analysis and justification before it should be

accepted by this Court. The only people to whom this decision appears to have been communicated, and who gave evidence

supporting its existence, were Mr Lynch’s daughter, Judith Whelan (herself a plaintiff in these proceedings) and his close associate, Mr

Robert Burns. It is suggested that the decision was communicated by Mr Lynch to Mr Conor Gunne, Mr Conlan’s associate, but neither

he nor anyone on the Conlon side was called to give evidence. Even on this account it is not asserted that there is a single document

recording the existence of this decision. Indeed, documentary support for the suggestion that the Lynch family always believed the

loan to be non-recourse is itself extremely sparse.

74 Even if there was no contradictory evidence, the assertion in oral testimony of the existence of this last minute decision would

have to be tested against the known factual background and context. It should be remembered that what it is argued Mr Lynch

decided was not merely to reject a loan advanced to him upon terms he found unacceptable. Instead, the decision alleged to have

been made was not to proceed with the entire transaction including the purchase of the lands which was something that could have

had very significant legal and commercial consequences. As far as Mr Lynch, Ms Whelan and Mr Burns knew, Mr Lynch not only agreed

to buy the lands, but had advanced €2.5 million as his share of the deposit. The transaction was one in which the vendors had served

a notice to complete which the Lynch party believed would expire on the following day. Much argument has been addressed, both in

the High Court and this Court, to the question of whether, as a matter of law, Mr Lynch was legally bound to complete the

transaction. But this is perhaps beside the point. What is relevant is what the Lynch party knew and understood on the 7th February

and the central feature of this case is that they did not seek or obtain elaborate legal advice on any aspect of this transaction. They

had no advice that they were free to withdraw from the transaction. Thus as far as the three relevant actors, Mr Lynch, Ms Whelan

and Mr Burns were concerned, Mr Lynch’s last minute decision put him, and his family, at risk not only of failing to secure a

transaction which they considered highly advantageous, but also, of the loss of the deposit of €2.5 million and the possible exposure

to further litigation. Even if the legal consequences were not considered by Mr Lynch, the decision could have had significant

commercial and personal consequences since it threatened to scupper a transaction into which Mr Lynch had entered with Mr Conlan,

a businessman held in high regard by Mr Lynch and with whom he had a good relationship. As we now know, and indeed as the Lynch

plaintiffs emphasise, Mr Conlan was overextended with AIB and therefore unlikely to be able to finance the transaction on his own. It

is particularly unlikely therefore that the Conlan side would have received news of Mr Lynch’s last minute decision with equanimity if

communicated, as alleged. LK Shields argue that it is very unlikely in the context that Mr Lynch would have made the decision which

he alleges, but that if he did, and it was communicated, it is difficult to accept that such a decision would not have created

shockwaves reverberating through the different offices engaged in the transaction and leaving clear evidence of its existence.

75 It is also argued that the action, and relative inaction, of the relevant parties is incompatible with the alleged decision. Given the

background just discussed, it seems inconceivable that Mr Lynch’s last minute decision, if it was made and communicated, would not

have provoked a flurry of activity on all sides. Not only did this not occur, but when Ms Whelan actually received a copy of the

penultimate draft of the facility letter providing for full recourse against Philip Lynch, she did nothing. The trial judge observed that he

found it “extraordinary that she did nothing, if, as she and Mr Lynch say, a decision had been taken that day that if the loan was to

be recourse they would not be proceeding.” In addition to this eloquent lack of activity there is of course the conversation recorded

by Mr Sulaiman with Mr Burns at 18:05 on the 7th February after the flight from Heathrow. The trial judge accepted the accuracy of

Mr Sulaiman’s note which contained the passage: “re possibility of Goodbody’s/bank wanting the joint/several clause to apply to both

Gerry, Philip and all the Lynchs, Rob felt this wouldn't be a problem”. It might also be observed that this note was broadly consistent

with the prior correspondence from Mr Burns, itself inconsistent with any fixed position or indeed belief on the part of the Lynch side

that the loans were to be non-recourse. Mr Burns’s position in the transaction is particularly important because whatever might be

said about a very successful businessman who did not trouble himself with detail (which the judge considered Mr Lynch to be), or a

family member only recently taking up a position (in the case of Ms Whelan), Mr Burns’s function was precisely to attend to all those

details with which Mr Lynch did not concern himself. It was the essence of his position to be aware of the nature and detail of the

transaction and the position of the Lynchs in relation to it.

76 By the same token it is difficult to accept that if the last minute decision had been made and communicated by Mr Lynch, the

apparent compliance with that condition communicated by LK Shields on the 7th and 8th would not have received greater notice and

attention than it did. On the Lynchs’ case, the entire deal was in jeopardy once Mr Lynch made his decision at Heathrow. But there is

no evidence of the type of reaction which might be expected. Instead everything proceeded as normal towards closing. Draw down of

the loan was requested and Ms Whelan spent the morning on a lengthy circuit of Dublin and surrounding counties picking up powers of

attorney from her mother and siblings to allow the transaction to be closed. When Mr Sulaiman sent his email, it was not greeted with

relief and celebration. Indeed as already observed there is scant evidence that it was communicated to Ms Whelan, or Mr Lynch, and

none that it was discussed with the other members of the family.

77 LK Shields are entitled to point to all of these matters as very significant and indeed powerful. But the most obvious and telling

feature militating against the conclusion that Mr Lynch did in fact make a last minute decision on the 7th February is the trial judge’s

conclusion at p. 32, itself amply justified by the evidence, that Mr Lynch’s own recollection of exactly what he said on that afternoon

was “hopelessly unreliable”. Again, in relation to the alleged phone call with Mr Gunne to tell him that he would not proceed unless the

loan was non-recourse, the judge considered that Mr Lynch’s recollection was “hopelessly confused and unreliable”. The finding on p.

59 that, on balance, a decision was made on the 7th February is accordingly unsupported by any independent evidence, contrary to

all the objective evidence and the factual context, and relies upon the evidence of a witness which in that specific context is

regarded as hopelessly unreliable. In the circumstances of this case, it would be an injustice if LK Shields were bound by the finding

made at p. 59.

78 This unusual case falls therefore within that category of case contemplated by Henchy J. in Northern Bank, pp. 191-192, as

follows:

“The court of appeal will only set aside a finding of fact based on one version of the evidence when, on taking a

conspectus of the evidence as a whole, oral and otherwise, it appears to the court that, notwithstanding the advantages

which the tribunal of fact in seeing and hearing the witnesses, the version of the evidence which was acted on could not

reasonably be correct. For example, if the question of fact was whether a defendant was driving on his correct side of

the road at the time of the collision and, out of a welter of conflicting oral testimony on the point, the judge (or the jury,

as the case may be) expressly or by implication accept the defendant’s version to the effect that his vehicle was on its

correct side of the road at the time of the collision, then in that event a court of appeal will normally hold itself to be

debarred from rejecting that finding of fact on the ground that its fact-finding capacity in relation to conflicting oral

testimony cannot be equated with that of the trial judge (or jury) who heard and saw the witnesses. If, however, on a

review of all the evidence, it appears from uncontroverted evidence as to tyre marks or glass or mud or the road that the

defendant’s evidence (that his vehicle was on its correct side of the road) could not be correct, the court of appeal will

feel free to reject the finding of fact to that effect.”

Here, if anything, the position is stronger. While the state of a man’s mind is a matter of fact to be proved like any other, proof of a

state of mind is always inferential. It is deduced from something else, such as the statement of the person and his or her actions.

This is not a question of a conflict of oral evidence of perception as to whether certain matters occurred. In this case it is more a

matter of evaluation and deduction from the evidence as to the state of Mr Lynch’s mind and in particular whether he had made a

decision not to enter the transaction unless the loan was non recourse. While the trial judge made reference to observing Mr Lynch

while giving evidence, that cannot overcome the contrary objective evidence. As Lord Atkin observed in Société d’Avances

Commerciales (Société Anonyme Egyptienne) v. Merchants’ Marine Insurance Co. [1924] 20 Lloyd’s Rep. 140 (p. 152) “an ounce of

intrinsic merit or demerit in the evidence, … is worth pounds of demeanour”. To adapt the example given by Henchy J. in Northern

Bank, not only was all the objective evidence to be found on one side of the line, but the contrary oral testimony was found to be

hopelessly unreliable. In the circumstances, this finding cannot be sustained and must be set aside. This means that notwithstanding

the conclusion that the solicitors owed a duty of care to the Lynch family in relation to the facility letter, and were negligent, the

claim based as it was squarely on the decision to enter the loan must fail since there was no reliance on the advice, and therefore

any damage suffered was not caused by the error of the solicitors.

79 For completeness I should say that I do not lose sight of the point made in argument on this appeal that there are a number of

alternative theories and scenarios under which LK Shields might be liable to the Lynchs even if it were not accepted that a decision

had been made on the 7th February or communicated through the relevant parties. For example, it might have been suggested that

the concern of Mr Lynch, and of the Lynch family generally, was that the loan should be non-recourse only to those family members

who were being introduced simply for the purposes of benefiting from the investment. Furthermore, it was suggested that even if the

Lynchs did not rely in any serious way upon Mr Sulaiman’s characterisation of the loan when they entered it, they may have done so

thereafter and in particular when in 2009 they decided not to accept a renewal of the loan on terms that there would be recourse to

Mr Lynch. However, the issue of the conviction of Mr Lynch (and by extension Ms Whelan and the other members of his family) that

they would not enter any loan agreement which provided for any recourse against anyone and furthermore only entered this

agreement on the faith of Mr Sulaiman’s assurance that the loan was non-recourse, is central to this case, and not least, to the

credibility of the relevant parties. This was in fact the only case pleaded. It was the case made with considerable force and skill in

the hearing in the High Court. The observations of this Court in Vesey v. Bus Éireann [2001] 4 I.R. 192 and Shelley-Morris v. Bus Átha

Cliath [2002] IESC 74 and [2003] IESC 2 to the effect that it is not for the court to disentangle a case made by a party or to

hypothesise the best case the plaintiffs might have made, and furthermore, that a loss of credibility on one issue may make it difficult

or impossible to accept the parties account on other issues, are as relevant in this context as in the field of less complex personal

injuries actions. The outcome of this case is that LK Shields did owe a duty of care to the plaintiffs when interpreting the facility

letter, and were in breach of that duty when Mr Sulaiman was wrong in informing Ms Burdon that the bank no longer required recourse

against the Lynch family, Mr Lynch or Mr Conlan, but no reliance was placed on that error in entering the agreement and accordingly

it was not the cause of damage to the Lynchs. Their loss was caused if anything by a combination of the collapse in the property

market and by the fact that while it was their constant advice for almost a year that to minimise tax the individual members of the

Lynch family should be borrowers, little or no attention was paid to the terms on which that borrowing was to be provided.

The Case Against Matheson Ormsby Prentice

80 The plaintiffs made a number of cases against Matheson Ormsby Prentice. First, they contended that in so much as Mr McLoughlin

gave inaccurate and incorrect information to Mr Sulaiman on the evening of the 7th February 2007, Matheson Ormsby Prentice were

liable for negligent statements. That argument failed with the trial judge’s finding that Mr McLoughlin had not misrepresented anything

to Mr Sulaiman and that on balance it was probable that Mr Sulaiman misunderstood what was communicated to him, and it was not

pursued on this appeal.

81 The complaint made by the plaintiffs that Matheson Ormsby Prentice are liable to them by virtue of the fact that Mr McLoughlin

misrepresented the closing date can also be disposed reasonably easily. It is perhaps understandable why Mr McLoughlin might take

this course. This was a multi-party transaction which involved the agreement of Mr Conlan, Mr Lynch, the extended Lynch family, and

also the securing and agreement of finance. There was an absolute deadline created by the service of the notice to complete.

Deadlines such as one created by a notice phrased in terms of a number of days from the date of the notice are notoriously difficult

and create a real possibility of either a miscalculation, or worse, terminal procrastination on the part of one party to the transaction

leading to collapse of the transaction for everyone, and recrimination if not litigation. There are perhaps circumstances therefore in

which a competent solicitor might seek to protect the clients and parties from themselves by setting an earlier deadline. That is not

to say that in doing so he may not take a risk. In this case however the trial judge found that there was no suggestion in the

evidence that given more time any greater attention would have been paid to the question of the facility letter or to Mr Lynch’s

decision. The problem was not the closing date, but rather the brinkmanship involved in a last minute decision.

82 Of rather greater substance is the plaintiffs’ contention that since they were clients of Matheson Ormsby Prentice (and ultimately

paid half of Matheson Ormsby Prentice’s bill) that firm owed to them a duty of care, so that when the terms of the facility letter

changed late on the 7th February, and that change communicated to Matheson Ormsby Prentice, that firm should have apprised its

clients of the fact of that change and its legal consequences. This argument, it should be said, can only truly apply in the case of the

members of the extended Lynch family. As far as Matheson Ormsby Prentice were concerned the terms of the facility letter always

provided for recourse to Mr Lynch (and Mr Conlan). In the case of the extended Lynch family however, they had become parties to

the transaction (and therefore clients of Matheson Ormsby Prentice at least as far as the conveyancing was concerned) and shortly

thereafter the terms of the facility letter were changed for reasons explained to Mr McLoughlin, and in circumstances where the new

facility letter was sent to him for onward transmission to his clients. In those circumstances it is said that he had a duty to alert the

Lynchs either directly or through their agent, LK Shields, to the change of the facility letter and its consequences.

83 The trial judge dealt with this issue at pp. 48-49 of the judgment as follows:

“It is submitted also by the plaintiffs that by not communicating directly with the Lynchs on the evening of the 7th

February 2007 about the fact that Mr O'Shea had removed the recourse clause completely, and instead contacted LKS in

that regard, MOP acted negligently in breach of their duty of care which is submitted to have extended to ensuring that

the Lynch side fully understood that by the removal of that clause all the Lynch family members were becoming liable for

the amount of the loan. That submission was made by [counsel for the plaintiff] even though he acknowledged at the

time that Judith Whelan has stated that they regarded LKS as their solicitors for the purpose of advice in relation to the

financial aspects of the transaction.

I have no difficulty in accepting that a solicitor's duty of care to his/her client may in some circumstances extend beyond

the specific terms of the initial retainer in certain circumstances. If, for example, it was established in the present case

that Mr O'Shea had informed Mr McLoughlin that this recourse clause was being removed in order to change the facility

from a non-recourse loan to a full recourse loan, and if Mr McLoughlin was aware, or ought to have known, that this was

a matter of importance to the Lynch side, he would be negligent if he failed to communicate that information to the

Lynchs, either through LKS or to the Lynchs directly, or at least at latest at the closing of the transaction itself, even

though MOP’s specific retainer did not extend that far.

It might be negligent also if Mr McLoughlin had known or believed that until this change was made the facility was a non-

recourse loan, and even in the absence of being specifically told by Mr O'Shea of the purpose of the change to the facility

letter, he nevertheless believed that as a matter of law the change was altering the nature of the loan to recourse, and

he failed to communicate that view to his clients even where he had not been retained in relation to giving advices in

relation to financing aspects of the transaction, since it would be reasonable for him to appreciate that his clients needed

to know.

But in the present case the facility was at all times a recourse loan. The change effected to the facility letter did not

alter this as a matter of law, and nobody on the Lynch side had told MOP that only a non-recourse loan would suffice.”

84 The first paragraph quoted above with the omission of the clause “if Mr McLoughlin was aware, or ought to have known, that this

was a matter of importance to the Lynch side” accurately states the duty of a solicitor in such circumstances. In my view however

the subclause is not a requirement of the law of negligence. It is not necessary for a duty of care to arise that the solicitor must

have been aware that this was a matter of importance to the Lynch side in the circumstances of this case. On one view, and indeed

the assumption on which the case is conducted, the change was one which meant that there would now be recourse to the members

of the extended Lynch family where previously that had not been intended or provided. This was self-evidently a matter both of

commercial and legal significance, and therefore something which it was a solicitor’s duty to communicate, whether or not there had

been any prior communication indicating that it was a matter of particular importance to the Lynch side. Furthermore, it does not

appear to me that the case can be resolved as simply as suggested by this passage in the High Court judgment. It does not appear

correct to say, at least as regards the members of the Lynch family who had been added to the transaction, that the facility was at

all times a recourse loan. The assumption upon which the case and this appeal proceeded was that until the facility letter was

changed the format then in use gave rise, at the very least, to a strong argument that the loan was non-recourse against the Lynch

family members. Thus even on this view, the change to the facility letter did alter its nature as a matter of law from being one where

it was at least arguable that it was non-recourse, to one where that was unarguable. I would observe further that all the relevant

parties at the time acted on the assumption that the effect of the change was indeed to alter the legal status of the agreement.

That is, after all, why Mr Roberts of A & L Goodbody twice gave advice to Mr O’Shea. Accordingly if, therefore, the change made to

the facility letter affected somebody who was unambiguously Mr McLoughlin’s client (for example Mr Conlan) then there can be no

doubt in my view that as his solicitor he would have been under a duty to bring the matter to his attention.

85 However, the circumstances here are somewhat different. While two firms of solicitors were involved and acting on the Lynchs’

behalf, the fact is that there was nobody who had overall responsibility to advise the Lynchs as to the nature of the transaction.

That was as a result of the deliberate decision of Mr Lynch (and through him, his extended family) to share the cost of retaining

Matheson Ormsby Prentice for conveyancing and to retain LK Shields for the limited purpose (and cost) of advising on the co-

ownership agreement. Even so there is no doubt that as a transaction proceeds and develops, a solicitor may incur a duty of care

that extends beyond the strict terms of his or her retainer. It has already been held that this is what happened here in the case of LK

Shields but it becomes important, and indeed critical, to consider whether Matheson Ormsby Prentice incurred a duty of care to the

Lynchs in this specific respect.

86 A duty of care arises because of the proximity to the parties. That proximity is created in part by the existing legal and factual

relationship of the parties. Here, when the facility letter was introduced into the transaction, and with it the possible extension of the

duty of care, there were however two firms of solicitors involved. LK Shields were understood by the Lynchs, and indeed referred to

by the other parties, as representing the Lynchs’ interests in the transaction. The possibility of involvement of the Lynch family

members had only arisen as far as Matheson Ormsby Prentice were concerned, at a very late stage in the transaction. It seems to me

that when changes arose in relation to those individuals, Matheson Ormsby Prentice were entitled as a matter of law to do what they,

and everyone else, did as a matter of fact, which was to treat LK Shields as acting for the Lynchs in respect of those additional

matters. Thus, by passing on the information to LK Shields, Matheson Ormsby Prentice satisfied any duty which lay upon them. I do

not think it can be plausibly said that they had a duty to bring the change to the attention of the Lynchs either directly or indirectly

through LK Shields, so long as the basic information was provided which would allow LK Shields to give information and advice. That

was done, and the problem here arises because the advice then given was wrong. Of course, it is quite possible that Mr McLoughlin,

in informing Mr Sulaiman of the changes being made and the reasons for them, might have observed that this would make the

extended Lynch family liable for the loan. If he had done so, it is possible that Mr Sulaiman or Mr Gollogley might have scrutinised the

matter more carefully and therefore not have given the fateful assurance to the Lynch family. The fact that this could have happened

is however only one of the regrettable twists and turns of this unfortunate case, but does not mean that Matheson Ormsby Prentice

were under a duty to make it happen.

The Case Against Allied Irish Bank

87 The case challenging the judgment granted in favour of AIB against all plaintiffs depends largely on some procedural skirmishing

which occurred at the close of the plaintiffs’ case. Looked at realistically, the plaintiffs’ claim against AIB was always one with remote

prospects of success. Once it was determined that the loan and facility letter, whether on their own or together with the mortgage

entered into by all the plaintiffs, did indeed create a joint and several liability on the borrowers to repay, it would follow almost as of

course that since the borrowers had not repaid the loan, it would be due, together with all accrued interest. The real claim of the

plaintiffs if their evidence was accepted, was then against those who had either failed to advise them, or advised them wrongly, as to

the nature of the loan, and it would have been an understandable strategy to seek to forestall any judgment in favour of AIB until

such time as they might succeed in obtaining either full or partial indemnity from their professional advisors.

88 At the close of the plaintiffs’ case, counsel for AIB announced that the bank would not be going into evidence, but would seek to

rely on other evidence adduced on behalf of the other defendants in their defence. This had the consequence that Mr O’Shea who

had made the critical alterations to the facility letter, and in doing so had not followed the format proposed by the solicitors to AIB,

would not give evidence. He could not be cross-examined by the plaintiffs either to seek to explore matters which might give rise to

some defence against the AIB claim, or perhaps simply to strengthen the plaintiffs’ claim against the other defendants.

89 There are obviously consequences when a decision is made not to call any witnesses. In the first place it was open to the

plaintiffs to introduce the witness statement and/or any affidavit sworn on behalf of AIB and comment upon the matters contained

therein. Second, it was open to the plaintiffs to invite the court to draw inferences from the absence of the particular witness.

However, the plaintiff understandably preferred to have the opportunity of cross-examining a witness and their counter-move was

impressive, at least at the practical level at which the forensic struggle was taking place. Counsel for the plaintiffs responded to the

AIB move by then contending that since the bank was not going to go into evidence it was not in a position to prove its counter-

claim for €25 million together with interest, which accordingly should be dismissed. There was some debate then as to whether the

plaintiffs had acknowledged the amount due in their evidence and the trial judge, correctly in my view, held that the relevant

exchanges did not amount to any sufficient acknowledgement. However he also ruled that the structure of the case was one which

had commenced by way of summary proceedings brought by AIB in respect of the debt, which proceedings had been stayed pending

the outcome of the claim which represented the plaintiffs’ only defence, such as it was, to the AIB claim. Accordingly, if the plaintiffs’

claim against the bank failed then the bank would be entitled to adduce formal proof of the debt.

90 On this appeal the plaintiffs made two points. First, it was said that a party’s failure to call an available witness could in an

appropriate circumstance permit the court to draw inferences from that failure against the party so deciding. This at least in general

terms was common case, and had been established relatively recently and authoritatively in the High Court judgment of Laffoy J. in

Fyffes p.l.c. v. DCC p.l.c. [2009] 2 I.R. 417 (p. 507) (hereinafter “Fyffes”).

91 At the outset I should say that I deprecate the fashion of referring to the “drawing of an inference” in the abstract as if it was an

end in itself, akin to the deduction or addition of points which might or might not alter the result of a game. The drawing of an

inference in this context, as indeed in any other, is an exercise in logic: when one party asserts a given set of affairs, which the

identified witnesses available to the other party could be expected to rebut if untrue, then, if the second party does not call those

witnesses to give evidence, the court may draw the inference in support of the case made by the first party, that those witnesses

were not called to give such evidence because they would not in fact rebut the case made by the first party. Each case therefore,

involves a consideration of the specific inference which the court is invited to draw. The position is well put in two authorities relied

on by the bank in this regard. In McQueen v. Great Western Railway Company (1874 - 75) L.R. 10 Q.B. 569 Cockburn L.J. said:

“If a prima facie case is made out, capable of being displaced, and if the party against whom it is established might by

calling particular witnesses and producing particular evidence displace that prima facie case, and he omits to adduce that

evidence, then the inference fairly arises, as a matter of inference for the jury and not as a matter of legal presumption,

that the absence of that evidence is to be accounted for by the fact that even if it were adduced it would not disprove

the prima facie case. But that always presupposes that a prima facie case has been established; and unless we can see

our way clearly to the conclusion that a prima facie has been established, the omission to call witnesses who might have

been called on the part of the defendants amounts to nothing.” (para. 574)

In Wisniewski v. Central Manchester Health Authority [1998] P.I.Q.R. P324, Brooke L.J. set out four applicable principles which were

adopted in this jurisdiction in Fyffes:

“(1) In certain circumstances a court may be entitled to draw inferences from the absence or silence of a witness who

might be expected to have material evidence to give on an issue in an action.

(2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the

other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call

the witness.

(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question

before the court is entitled to drawn the desired inference: in other words, there must be a case to answer on that issue.

(4) If the reasons for the witness’s absence satisfies the court, then no such adverse inference may be drawn. If, on the

other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental

effect of his/her absence or silence may be reduced or nullified.” (p. 340)

92 In this case, it is important to identify the inference which the plaintiffs invited the High Court, and now this Court, to draw.

Having conducted a careful analysis of the sequence of correspondence and phone calls, and particularly the statement of evidence

of Mr O’Shea, counsel for the plaintiffs contended that the Conlan side through Mr Gunne, having been alerted by Mr Lynch of his

fixed intention not to enter the transaction if the loan was non-recourse, became alarmed and informed the bank. The bank in turn,

being overextended to Mr Conlan, and, it is suggested, needing Mr Lynch in the deal, decided in the person of Mr O’Shea to alter the

facility letter in such a way as to mislead the Lynchs into believing the loan was indeed a non-recourse loan. In effect the court was

asked to disbelieve the account given in Mr O’Shea’s witness statement of responding to Mr Godsil’s light-hearted comments and infer

instead, in the words of the plaintiffs’ submissions, “that what, in fact, happened was that the Conlan camp intervened with AIB in a

way that led AIB to change the facility letter so that the extent of recourse against the Lynch family (including Philip Lynch) was

deliberately and consciously obscured”.

93 There are a number of difficulties with this conspiracy theory. The first, and perhaps most fundamental, is that it amounts to an

allegation of deliberate misconduct amounting to fraud which was not pleaded. For well over a century these courts have been astute

to require that when any such allegation of deliberate misconduct is made it must be specifically pleaded and fully particularised, and

that evidence led should not stray outside that case. To permit a rolling inquiry which changes as a case develops is in itself a form of

injustice. While it may be difficult, even with the tools available to the modern litigant, to prove deliberate misconduct, and while

cases can change when witnesses give evidence, the requirement that deliberate wrongdoing be properly pleaded and particularised

should be adhered to, even if that necessitates applications to amend pleadings in the course of the trial. That is itself an important

and fundamental aspect of the just resolution of disputes.

94 Here, that course was not followed and for good reason. No case of such deliberate wrongdoing was pleaded or made. Therefore,

applying the test set out in the dicta above, there certainly was no prima facie evidence of the deliberate misconduct which the

plaintiffs invited the court to infer from the absence of Mr O’Shea. The only inference that could be properly drawn from the decision

not to call Mr O’Shea (or any other evidence) was that the advisors to AIB considered (correctly as it transpired) that the plaintiffs

had not established any case, prima facie or otherwise, against it. Accordingly the High Court was correct not to draw the inference

suggested on behalf the plaintiffs

95 The second point made by the plaintiffs relates to the fact that the bank was not required to call a witness, and in particular Mr

O’Shea, to prove the counter-claim. I would have a little more sympathy with this point if it was directed to ensuring that Mr O’Shea

gave evidence in the trial, and was cross-examined as to the plaintiffs’ claims. However, the plaintiffs asserted, and now maintain,

that the consequence of the decisions made at the close of the plaintiffs’ case was that no evidence could be adduced on the

defendants’ counter-claim which accordingly should be dismissed, that the bank should be at the loss of €25 million plus interest

advanced to the Lynchs, and which was, in the absence of some substantive defence, clearly due by them. This would be to bring

the school yard, game playing aspect of litigation to new heights. In my view it might perhaps have been helpful if the skirmishing

about evidence had the result that Mr O’Shea did indeed give evidence and was cross-examined. The bank was entitled to pursue its

own practical best advantage, but from the point of view of the litigation as a whole it might have been preferable, and have avoided

the more exotic conspiracy theorising, if as much of the evidence as was available was adduced. But this was a practical rather than

a legal issue, and not something which can give rise to any criticism of the trial still less a ground of appeal.

96 In relation to the argument now advanced on behalf of the plaintiffs that the counterclaim should have been dismissed, it is in my

view without any substance. The only question was the manner in which the bank should seek to formally prove its debt. As it

happened, we are informed that no witness addressed this issue in any witness statement, presumably because the whole posture of

the case was one in which the plaintiffs’ case was the substance of any defence or claim to indemnity it may have had in respect of

the bank’s claim. It was well within the discretion of the trial judge to direct that the trial would proceed, and that if at the

conclusion thereof it was established that the plaintiffs failed, the bank would be permitted to prove its loss. The bank was clearly

entitled to choose whatever witness it wished to prove that formal debt and the plaintiffs could not demand that it be proved by Mr

O’Shea.

97 One of the many difficulties for the plaintiffs in this regard was that they only raised this point for indirect advantage. They never

had any capacity to deny or challenge the quantum of the debt and they only raised the point as a way of attempting to force the

bank to call a particular witness. That ploy might have succeeded and they are not to be faulted for trying. Once it failed however

there is in my view no substance to the contention that it was wrong to permit the bank to prove its loss. Indeed if the court had

dismissed the bank’s claim and notwithstanding the bank’s willingness to call evidence, it would have been plainly wrong. Once it is

accepted that the court was right to permit evidence to be given, nothing turns on the format of that evidence. As the bank points

out, the plaintiffs had not filed a defence to the counterclaim and technically the bank was entitled to proceed for judgment in

default. Furthermore, the plaintiffs did not seek to cross-examine in relation to the evidence of debt, as it would have been entitled,

no doubt for the reason that there was never a dispute about the amount. Therefore the fact that the evidence was given by

affidavit is of no significance. I would accordingly dismiss this ground of appeal.

98 In my view it follows that Mr Philip Lynch in particular had no basis for seeking to resist the bank’s claim for judgment, and

consequently no basis for succeeding against the bank on this appeal. Accordingly I would dismiss his appeal in this regard and affirm

the judgment of the High Court against him. I have been troubled however by an aspect of the case which was not to the forefront

of the argument either in the High Court, or in this Court, largely because of the fact that the Lynch plaintiffs did not distinguish in

any way between the position of Mr Lynch and the broader Lynch family. All of them, it was said, required non-recourse borrowing,

and none of them would have entered the transaction otherwise. Apart from the credibility issues that this gives rise to, there is also

the fact that there is, and was, a significant difference between the position of Mr Philip Lynch and the position of his wife and

children. Mr Lynch was always a party to this transaction and he was the person to whom it was brought. It would not have been

possible without his significant wealth and the bank, it appears, was at all times happy to provide funding for the transaction on the

basis of Mr Lynch’s substantial net worth. When Mrs Lynch and the Lynch children were introduced into the transaction it was for Mr

Lynch’s own, understandable, private wealth management purposes. The bank had no interest in those parties, and their addition to

the transaction neither created additional risk for the bank, nor provided any additional security in terms of repayment. Indeed for

that reason, all the drafts until the final draft on the 7th February provided for recourse to Mr Conlan and Mr Lynch only, and Mr

Roberts’s correspondence with Mr O’Shea establishes that from a commercial point of view, the bank was focussed only on the

possibility of recovery from them. There is also the fact that when in 2009 AIB offered further facilities it was once again formulated

in terms in which there would be recourse to Mr Lynch alone. The position is that the extended members of the family were

introduced into the transaction and indeed the loan, at a very late stage. At the last minute a change was made by the bank which

was capable of causing confusion, and did, and which had the effect of exposing these individuals whose net worth may have been,

in relative terms, limited, to the possibility which transpired in the High Court, of a potential individual liability in excess of €25 million.

99 It might not be unduly harsh to conclude that persons who stood to gain very significant amounts of wealth for little risk, skill or

indeed involvement, do not deserve particular sympathy if the transaction turns unexpectedly sour and the undeserved profit turns

into an undeserved liability. Harsher things have been suffered by many individuals in recent years. It must also be recognised that

the key feature which gave rise to the potential liability of the Lynch family members was the tax driven requirement that not only

should they be parties to the land transaction, but should also be treated as borrowers. It was the failure to address or appreciate

the legal consequence of this step in the transaction which exposed the Lynch family members to liability on the loan in the first

place. Nevertheless the fact is that these individuals whose net worth may be limited now face a potentially ruinous personal liability

of which they were not advised, and which the bank never sought or relied upon at least from a commercial perspective and only

obtained in order to facilitate the enforcement against the principal borrowers. In those circumstances there may be a residual

question whether in all the very particular circumstances of this case, it would be equitable to permit the bank to enforce its legal

claim against the wider members of the Lynch family, or at least to do so without having first pursued execution against the principal

borrowers including Mr Lynch. I would accordingly, and to this limited extent, set aside the judgment obtained by the bank against the

first, second, fourth, fifth and sixth named plaintiffs. It will be a matter for the parties if there is any merit on either side in pursuing

the issue further.

100 In the circumstances I would dismiss the appeals of the appellants save that I would allow the appeal of the first, second, fourth,

fifth and sixth plaintiff against the Bank to the extent indicated above.