Philip Lynch
Philip Lynch (born 1946) is a prominent Irish businessman who has held the position of chief executive at two Irish public limited companies and multiple senior directorships including chairman of the board of An Post. In October 2010, he was forced by the then Irish minister for health, Mary Harney, to resign his position as chairman of the National Paediatric Hospital Development Board over his desire to relocate the new Irish Children's Hospital from Dublin City centre to a site near the M50 motorway.[1]
Background and education
Lynch was born at Innishannon, County Cork. He was educated at Hamilton High School, County Cork, Copsewood College in County Limerick and studied accountancy and economics at Waterford Regional Technical College.[2]
Business career
Former chief executive of IAWS Former non executive director ARYZTA AG Former non executive director A.Hiestand Holding AG chief executive officer and Executive Director One51 plc Director Irish Pride Bakeries Ltd. 1996–Present Independent non-executive director, Member of Nomination Committee and Member of Remuneration Committee FBD Holdings plc 2001–Present non executive director, Member of Nominations Committee and Member of Remuneration Committee Heiton Group plc 2003–2005 Former non-executive director and Director of Irish Food Marketing Irish Life & Permanent Group Holdings plc 2004–Present non-executive director, Chairman of Sub-Committee, Chairman of Remuneration Committee and Member of Nomination Committee C&C Group plc[3]
Children's hospital controversy
In 2007, he was appointed[4] by Minister for Health, Mary Harney as chairman of the National Paediatric Hospital Development Board. This was to be a €650m project to build a new national children's hospital adjacent to the Mater Misericordiae University Hospital in Dublin city centre. The new hospital would amalgamate the secondary and tertiary care functions of three existing children's hospital in Dublin: Our Lady's Children's Hospital, Crumlin, Temple Street Hospital and Tallaght Hospital.
In 2010, Lynch met the Crumlin Hospital Foundation to discuss the possibility of relocating the new hospital to the Crumlin Hospital site. He also met with property developer Noel Smyth to discuss relocating the hospital to a site outside the M50 owned by Smyth. When Lynch sought to present to the board a proposal to build the new hospital on Smyth's land, he was obliged to resign his position by Mary Harney. He was replaced as chairman by businessman John Gallagher.[5]
In March 2011, after a new health minister was appointed following a general election, Lynch went on radio to make the case that the a city centre location for the new hospital would be inaccessible and have parking difficulties. He said that the 'people who designed the M50, when that was agreed on, everything was going to happen outside of that' and described the city centre as a 'cul-de-sac'.[6] He described the decision to locate the hospital in the city centre as 'political'.[7]
One51 shareholder revolt
In 2010, Philip Lynch was paid €1.4m including bonus as chief executive of One51 plc. A shareholder revolt ensued at the company's AGM in July. Rebel shareholders led by Gerry Killen, Alf Smiddy, Mike Soden and Peter Brennan, criticised Lynch's remnueration in a year in which the company reported a loss of €11m and challenged his reappointment.[8] Lynch survived the revolt.
Court case over bank loan
In March 2011, a court hearing was held in relation to an unpaid loan for €25m owed to AIB by Lynch, his wife and four children. The loan was secured on land in Waterford. In his defence, Lynch says that the loan was made on a non-recourse basis.[9] On 8 December 2011 the Irish Courts found in favour of AIB.
One 51 Dismissal
On 1 July 2011 Lynch was apparently dismissed from One51.A dramatic drop in share price, shareholder discontent with his renumeration package and a Revenue investigation into the routing of patent royalties into a bonus scheme which was paid directly to himself and other individuals were believed to have contributed to Mr. Lynchs dismissal.
Court case Outcome 8 December 2011
Mr Justice Micheal Peart today dismissed claims by Mr Lynch, his wife Eileen and four children – Judith, Phillipa, Therese and Paul – they are not liable for the €25 million loan made to themselves and developer Gerry Conlon in February 2007.
The Lynch family claimed they always understood the loan would involve AIB having no recourse to them individually for payment and its recourse would be limited to the lands. The court heard the current value of the lands has been estimated about €4 million while in 2007 values as high as €80 million were suggested.
In a lengthy judgment, the judge found the family had failed to make out a case against AIB such as disentitled the bank to repayment. He also rejected the family's claims they are entitled to be indemnified against the AIB claim by two law firms – Matheson Ormsby Prentice Solicitors and LK Shields Solicitors – over alleged negligent advice concerning the loan.
"The family have only themselves to blame for the predicament in which they find themselves," the judge found.'
The case has been adjourned to 16 December when AIB is likely to seek judgment orders against the Lynchs, and the court will also deal with the bank's separate claim against Mr Conlon over the loan.
The long-running case is expected to have run up huge legal costs, with some experts estimating the bill could be as big as €5m.
APPEAL DECISION January 2014
The Supreme Court has described as "understated" a finding that businessman Philip Lynch gave "hopelessly confused and unreliable" evidence concerning the circumstances leading to a €25m loan being issued to buy development lands in Co Waterford.
Mr Justice Donal O'Donnell made the comment when dismissing Mr Lynch's appeal aimed at stopping Allied Irish Banks pursuing him to pay a €26m judgment obtained in 2011, with continuing interest.
It came after his failure to repay the loan made to him, his family and developer Gerry Conlan to buy the 86 acres at Kilbarry, valued in 2011 at less than €5m.
However, the three-judge court allowed the appeal of Mr Lynch's wife Eileen and four adult children, Judith, Paul, Philippa and Therese, to the extent of finding they are entitled to trial of an issue whether the bank is entitled to pursue them for the €26m judgment.
All of the Lynchs previously argued enforcement of the judgment would have potentially "catastrophic" consequences.
Giving the Supreme Court judgment, Mr Justice O'Donnell said the development deal appeared very attractive in 2007 as it was estimated to quickly produce about €20m profit for the Lynchs with apparently no risk attached.
Before there could be any real risk, there would have to be a total collapse in Irish property values and a "dramatic and total destruction" of the wealth of Mr Lynch and Mr Conlan.
It had seemed unlikely that would occur. "We now know better," the judge said.
The judge said the High Court finding Mr Lynch gave "hopelessly confused and unreliable" evidence he would not have gone ahead with the deal unless the loan was non-recourse appeared "amply justified and, if anything, understated".
Looked at realistically, the Lynchs' claim against AIB, particularly Philip Lynch's, always had a remote prospect of success given the terms of the loan documents, he found.
The real claim of the Lynchs, if their evidence was accepted, was against those whom they alleged had failed to properly advise them, or had advised them wrongly, he said.
He disagreed with the High Court that the LK Shields law firm owed no duty of care to the Lynchs when advising as to the nature of the €25m loan facility agreement.
The firm owed a duty of care to Mr Lynch and his family concerning the loan facility letter and breached that duty and was negligent because a solicitor with the firm mistakenly told the Lynchs the loan was a non-recourse loan when in fact it was recourse, he ruled.
However, the judge added that it would be an "injustice", given the particular circumstances of this case, to find LK Shields must indemnify the Lynchs against AIB's claim.
The particular circumstances included Mr Lynch's "highly implausible" claim he made a last-minute decision at Heathrow Airport hours before the deal closed he would not proceed with it if the loan was a recourse loan.
There was, he found, no reliance on the legal advice and therefore any damage suffered was not caused by the solicitor's error.
The Lynchs' loss was rather caused by a combination of the property collapse and the fact, despite their having had constant advice over a year that, to minimise tax, they should be borrowers in the deal, little or no attention was paid to the terms of the borrowing.
He rejected additional arguments that another law firm involved in the transaction, Matheson Ormbsy Prentice, had a duty of care to the Lynchs to ensure they were aware of the change in the loan documents which had the effect of giving AIB recourse to all the Lynchs.
Mr Justice O'Donnell said there was a significant difference between the position of Mr Lynch and that of his wife and
children in the transaction as the family were only brought in very late for Mr Lynch's own "understandable, private wealth management purposes".
The last minute change by AIB in loan documents concerning the issue of recourse caused confusion and led to the other family members being exposed to potential liability for €25m.
"It might not be unduly harsh to conclude that persons who stood to gain very significant amounts of wealth for little risk or involvement do not deserve particular sympathy if the transaction turns unexpectedly sour and the undeserved profit turns into an undeserved liability," he said.
"Harsher things have been suffered by many individuals in recent years."
However, the key feature which gave rise to the potential liability of Eileen Lynch and her children was "the tax driven requirement" they must be parties to the land transaction and be treated as borrowers of the loan.
It was the failure to address or appreciate the legal consequences of that step which exposed them to liability.
The family, whose net worth may be limited, now faced a "potentially ruinous" personal liability of which they were not advised and which AIB only obtained to facilitate enforcement of the loan against Philip Lynch and Mr Conlan.
In those circumstances, there may be "a residual question" whether it was equitable to permit AIB to enforce the judgment against the other members of the family.
To that limited extent, the judge said would set aside the judgment against the other family members and leave it to the sides to consider if there was any merit in pursuing that issue further.
Summary judgment against all of the Lynchs was granted in December 2011.
The High Court was previously told Mr Conlan accepted he had no defence to a similar judgment being entered against him unless Mr Lynch won his appeal.
References
- ↑ "Thu, Oct 14, 2010 – Developer met children's hospital chief on site move". The Irish Times. 10 October 2010. Retrieved 22 December 2012.
- ↑ "Esoc – University College Cork Entrepreneurship Society". Ucc.ie. Retrieved 22 December 2012.
- ↑ Philip Lynch. "Philip Lynch: Executive Profile & Biography – Businessweek". Investing.businessweek.com. Retrieved 22 December 2012.
- ↑ "Minister appoints Chairman-Designate of the National Paediatric Hospital Development Board". Dohc.ie. 8 March 2007. Retrieved 22 December 2012.
- ↑ "Minister for Health and Children announces resignation of Chairman of the National Paediatric Hospital Development Board". Dohc.ie. 7 October 2010. Retrieved 22 December 2012.
- ↑ "RTÉ.ie Radio 1: Morning Ireland Media Player". Rte.ie. Retrieved 22 December 2012.
- ↑ Children's hospital site 'a political decision' Irish Times
- ↑ Hero Worship. "One51 chief sees off bid by rebel investors to gain seats on board – Irish, Business". Independent.ie. Retrieved 22 December 2012.
- ↑ Alex Ferguson:. "Philip Lynch 'wowed' by prospect of €19m profit – Irish, Business". Independent.ie. Retrieved 22 December 2012.