A PROPERTY developer has lost his action for damages against struck-off solicitor Thomas Byrne over a €6 million loan which ended up as part of what a High Court judge described yesterday as “a lawyer’s version of a Ponzi scheme”.

Mr Byrne, who was struck off the Roll of Solicitors more than two years ago, had engaged in “disreputable” and “fraudulent” behaviour in his dealings with developer John Kelly of Hunter’s Moon, Kilquade, Co Wicklow, Mr Justice Frank Clarke ruled.

However, Mr Kelly was not entitled to the €6 million compensation sought by him and it was clear the way the two men did business “bore little resemblance” to the ordinary way one would expect a relationship between a businessman and a solicitor to operate, the judge ruled.

The case centred on two significant property transactions involving the two men who were involved in property dealings over a 10 year period.

Mr Kelly sought damages of €6.1 million on the basis of his claim Mr Byrne should have paid that sum to the EBS as part of a transaction involving the refinancing of an EBS loan for properties in James Street, Dublin.

He also sought to be declared the owner of a 16-acre development site in Oilgate, Wexford, which was bought for €3 million as part of the refinancing deal involving a €9 million loan from IIB/KBC bank.

The judge ruled that while Mr Kelly was entitled to be declared owner of the Oilgate lands, he would not order Mr Byrne to compensate him for the €6.1 million owed to the EBS.

The judge found there was no partnership involving the two men. He said Mr Byrne’s way of operating at the time seemed to be part of a widespread practise involving significant property transactions at the height of the property bubble whereby financial institutions, and their solicitors, were very slow in “chasing up” compliance of undertakings, such as Mr Byrne’s undertaking to pay off the €6.1 million EBS loan.

Mr Byrne had agreed a practice had developed with him where he would defer complying with undertakings until he came under pressure to do so. Given the lax attitude of some financial institutions towards following up undertakings, Mr Byrne would simply seek to set up another transaction where it might be hoped further undertakings from him would provide him with funds to comply with a previous undertaking.

This could be described as “a lawyer’s version of a Ponzi scheme where any funds needed to pay off earlier investors are secured from later investors”, the judge said.