BUSINESSMAN PHILIP Lynch and his family have produced no evidence to show AIB misrepresented the nature of a €25 million loan made to them and developer Gerry Conlan, the Commercial Court heard yesterday.

Michael Collins SC, for AIB, said the “simple fact” was neither Mr Lynch nor his family ever asked AIB for a loan facility involving the bank having no recourse to them for the €25 million sum advanced to buy development lands at Kilbarry, Waterford.

Various versions of the loan facility documents issued from December 2006 all involved recourse and there was no dispute the final version of the loan facility, signed by the family on February 8th, 2007, was a full recourse facility, counsel said.

While they claimed they were induced to sign that final document as a result of negligent misrepresentation by AIB and two firms of solicitors, there was no evidence that AIB misrepresented the nature of the loan, he said.

Within two hours of releasing the final loan letter about 4pm on February 7th, 2007, AIB realised there was an “error” in that the inclusion of a special condition providing for recourse to Mr Lynch and Mr Conlan did not reflect the bank’s position, Mr Collins said.

On the advice of AIB’s solicitors, A L Goodbody, AIB had had that special condition removed from the final loan document so as to have recourse to all the borrowers. That change was effected because there was an inconsistency in specifying two borrowers out of six and AIB’s concern was to ensure recourse to all borrowers.

An AIB official had made clear to Ronan McLoughlin, a partner in law firm Matheson Ormsby Prentice (MOPs), the nature of the final loan facility document and Mr McLoughlin clearly understood the final letter would involve full recourse to all borrowers, counsel added.

Mr Collins also said it was apparent from the end of December 2006 or early January 2007 that Philip Lynch had the idea it would be effective tax planning to involve his wife and children in the loan with the intention profits would go directly to the children.

On January 15th, 2007, it was indicated Mr Lynch wanted to add the children as borrowers and it was clear, if the children were to be added to the loan, it was on exactly the same terms and conditions, he said. If Mr Lynch wanted it otherwise, he would have had to ask for and negotiate that with the bank but he “never did”.

Counsel was making closing submissions in the action brought by Mr Lynch, his wife Eileen and four children in an effort to avoid AIB pursuing them over the €25 million loan.

The family allege AIB and two law firms – LK Shields and MOPs – were negligent in relation to how they dealt with the loan and contend they are entitled to be indemnified against any claim by AIB against them for repayment.

The defendants deny the claims. Evidence ended last month and Mr Justice Michael Peart is hearing closing submissions from the parties, which are expected to conclude later this week.