Ireland: Supreme Court Sets Aside Judgment Against Co-Borrowers Named On Facility Letter And Rules On Duties Owed By Professional Service Providers

Judgment Against Named Borrowers Set Aside in Light of Commercial Rationale of the Transaction

The most surprising feature of this decision is the direction to set aside the judgment against Mr Lynch's wife, Eileen Lynch, and his children, Judith, Therese, Philipa and Paul. The entire Lynch family had argued that they had understood the loan was limited in recourse only to the land which had secured the loan and not to them personally. However, the clear terms of the facility letter demonstrated that the loan was full recourse against all the family.

The Court ruled that the terms of the facility letter bound Mr Lynch and that, on the face of it, it recorded joint and several obligations against all the Lynch family as co-borrowers. However, the Court observed that whilst they were indeed expressed as parties to the facility letter, their names were only added to the last draft of the letter on the day before financial close as they were co-purchasers of the relevant land. The Bank had been advised by its lawyers that to name them as borrowers would simplify enforcement of the security.

The Court found that "the bank had no interest in those parties [Mrs Lynch and the Lynch children] and their addition to the transaction neither created any additional risk for the bank, nor provided any additional security in terms of payment". And the Court found that the correspondence from the time "establishes from a commercial point of view [that] the bank was focussed only on the possibility of recovery from [Mr Lynch and his original co-purchaser, Mr Conlon.]"

Therefore the Court concluded that "in all the very particular circumstances of this case" it was questionable as to whether 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", being Mr Lynch and his original co-purchaser Mr Conlan. Accordingly the Court set aside the judgment and the issues between the Bank and the other members of the Lynch family may be relitigated, although this is not yet clear.


The startling proposition in this judgment for lenders is the suggestion that notwithstanding the plain terms of the facility letter, regard was had to the commercial focus of the Bank at the time and the Bank's own legal advice. These of course were all matters private to the Bank at the time. The judgment will likely encourage other co-borrowers, particularly family members of a dominant individual, to challenge claims on the grounds of lack of commercial intent by the Bank.

Such defences, if permitted, would undermine the clarity of the common law where the terms of the written documents signed by the parties have primacy. It would enable such defendants to seek to trawl through a lender's internal records to establish the commercial rationale for a transaction, which would be a process fraught with uncertainty and would cause considerable delay and expense in litigation. However, as the Court did restrict the decision to "all the very particular circumstances of this case" the decision may not become a precedent in this regard.

Extent Of Duties Owed By Professional Advisors

In dismissing claims against two solicitors' firms, LK Shields and MOP, the Court commented on the extent of the duty of care owed by solicitors, and other professional advisors, and how and, in particular, such duty can extend beyond the express terms of their retainer or engagement letter.

LK Shields had been instructed by Mr Lynch to advise on a limited basis in respect of the co-ownership agreement being negotiated between the Lynchs and Mr Conlan. MOP was acting for the Lynchs and Mr Conlon in respect of the purchase and the borrowing. However, over time, the role of LK Shields expanded. In this context, an LK Shields solicitor interpreted the facility letter and surrounding communications and wrongly advised the Lynchs that the facility letter was limited in recourse to the secured lands only. The Lynchs claimed that they relied on this advice and would not have entered the transaction were the loan full recourse to them personally.

The High Court had previously ruled that, whilst LK Shields' involvement had moved beyond advising on a co-ownership agreement such that a relationship of proximity existed between the parties, no duty of care arose in relation to the loss suffered. This was because it was not reasonable to expect the LK Shields solicitor to have known that the advice was critical to the Lynchs proceeding with the transaction. The Supreme Court disagreed with this finding, and held that a duty of care did exist. On an in-depth analysis of the authorities, Judge O'Donnell concluded 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 owes a duty of care independent of contract, and indeed, owes a duty of care in respect of areas outside the original retainer. ... [A]n advisor such as a solicitor will owe a duty of care when giving advice to a client on a matter within his or her expertise and where the request for the advice, and provision for 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".

However, while the Court found that LK Shields owed a duty and that it had given the wrong advice to the Lynchs, it did not impose liability on LK Shields. The reason being that the Court also found, as a matter of fact, that the Lynchs had not relied on this advice in deciding whether or not to enter into the transaction. The Court concluded that "notwithstanding the conclusion that [LK Shields 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 was not caused by the error of the solicitors".

The claim against MOP was dismissed because MOP was found to have properly passed on the relevant information regarding the terms of the facility letter to LK Shields, which had taken on an enlarged role in relation to advising the Lynchs. Therefore the MOP solicitor was entitled to consider his duty fulfilled once he had accurately imparted the information on recourse to LK Shields.


This case is a welcome exposition of the law of the obligations of professional advisors. It is clear that professional advisors will not be able to hide behind the four corners of their retainer if the facts of the case involve a mission-creep in the form of expansion of roles undertaken, and therefore duties owed. Once the professional advisor assumes a role within his expertise, even if that role is not provided for in the black-and-white of the retainer document, the advisor has a duty of care in relation to that role, which duty can found liability for negligence where a client relies on such advice to their detriment.

Reversal By The Supreme Court Of A Finding Of Fact

The exculpation of LK Shields turned on the Supreme Court's use of a rarely employed and limited jurisdiction to analyse and overturn a finding of fact made by the High Court. The Court ruled as incorrect the finding of the High Court that Mr Lynch had made a last-minute decision not to proceed with the transaction unless the loan was nonrecourse to him and his family. Therefore, the Lynchs did not rely on the flawed advice from LK Shields and so that advice was not the cause of their loss.

The Court reached this holding on the narrow basis that "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, notwithstanding the advantages which the tribunal of fact in seeing and hearing the witnesses [had], the version of the evidence which was acted on could not reasonably be correct."

Here the Supreme Court held that this high threshold was surpassed. The Court concluded that "by every known standard for the testing of oral evidence, the assertion that Philip Lynch made this last minute decision must rank as highly implausible and therefore one which would require careful analysis and justification before it should be accepted".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
21 Jan 2018, Seminar, Dublin, Ireland

We are delighted to sponsor Airline Economics Growth Frontiers 2018 Conference taking place in the Shelbourne Hotel in Dublin from 21 to 24 January 2018.

23 Jan 2018, Business Breakfast, Dublin, Ireland

We are pleased to sponsor a Dublin Chamber of Commerce breakfast briefing at 8am on Tuesday 23 January at our offices at South Bank House, Barrow Street, with Vanessa Tierney of Abodoo.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions