“The receiver was not hidebound by any views of Nama concerning purchase offers made by Mansfield interests or by persons introduced to the receiver by those interests, the judge [Judge Kelly] added. There was no evidence the receiver would do the agency’s bidding.” – Mary Carolan reporting the Jim Mansfield case in the Irish Times
Breaking news this afternoon that a Dublin court has granted a €74m liability order in favour of NAMA against developer Jim Mansfield; nothing unexpected about that at all, and indeed next month Bank of Scotland (Ireland) is likely to secure an order for an additional €204m against the 72-year old developer, perhaps most associated with the Citywest development in west Dublin and Weston Airport (formerly Weston Aerodrome). Together the liability orders are understood to be the largest ever in the State which is interesting enough. But what was really interesting about the case today was what the judge reportedly had to say about NAMA’s receivers.
The judge in theMansfieldcase was Judge Peter Kelly, perhaps the most prominent commercial judge in the country. Jim Mansfield had opposed the application by NAMA for a liability order on a number of grounds, one of which was reported by the Irish Times to be the rejection by the NAMA-appointed receiver of “an offer of about €11.9million for Palmerston House and estate and concerning any sale of Weston Aerodrome and West Park apartments” The Irish Times reports that Jim was claiming that NAMA would not accept offers on foreclosed property from parties connected with the Mansfield group. There seems to have been a claim that this rejection was in violation of a NAMA code of practice.
The Irish Times reports the judge’s response to this defence which is reproduced at the top of this blogpost, and although there’s no claim that the judge is being quoted verbatim, “hidebound” is the sort of term that Judge Kelly would use. But if Judge Kelly is correct then the NAMA receiver might not in this case, or indeed any other case, need “do the agency’s bidding”. The implication is that a party associated with a developer may indeed be able to purchase assets from a NAMA receiver even if the developer is in default. Section 172 of the NAMA Act was supposed to stop this but on a strict reading of that section and also Section 70 which defines an “associated debtor”, it could well be argued that certain associates of Jim Mansfield are allowed in law to purchase foreclosed properties.
Sadly this issue seems not to have had a full airing in this case, as the judge held that Jim hadn’t sought to remove the receiver, so the receiver’s actions appeared to be moot. So we appear not to have NAMA’s side of the story, but on the face of it, the judge’s comments might be significant in future cases.
NAMA had previously appointed Kieran Wallace of KPMG as receiver to assets in several companies controlled by Jim Mansfield. The receivership is described in detail here.
UPDATE (1): 21st December, 2011. It is being reported that Jim Mansfield has appealed the NAMA judgment to the Supreme Court and that NAMA has apparently agreed not to seek Jim’s bankruptcy pending the outcome of that appeal, Meantime, Bank of Scotland (Ireland) has this morning secured a €214m judgment against Jim in respect of personal guarantees given to three companies - HSS, Jeffel and Park Associates Limited. Judge Kelly who was dealing with the case rejected Jim’s claim that he incurred loss following what Jim claimed was a commitment by BoSI to give him development advances – the Judge said there was no evidence of any contractual commitment to that effect.
UPDATE (2): 21st December, 2011. Judge Kelly’s judgment is now available online, in which he considers – and then dismisses – Jim Mansfield’s arguments advanced to support his wish to have a full hearing of the claim. Judge Kelly granted summary judgment in favour of Bank of Scotland (Ireland).