Paddy McKillen v NAMA – Supreme Court rules (again)

It was 3rd February, 2011 when the Supreme Court in Dublin handed down its partial judgment in the Paddy McKillen appeal. You may recall that Paddy has objected to his €2.1bn of loans transferring to NAMA and had originally battled NAMA in the High Court last year where he comprehensively lost. He appealed to the Supreme Court and the appeal was heard just before Christmas 2010. In February, 2011 the Supreme Court held that NAMA had not made a legally effective decision to acquire Paddy’s loans because the decision, such as it was, was made prior to NAMA coming into legal existence in December 2009. This was a major setback for NAMA in relation to Paddy’s loans and NAMA seemed to have gone away in a sulk saying that it would consider whether or not to make a fresh decision to acquire Paddy’s loans. The Supreme Court said that it would not wait for NAMA to make its decision and that it (the Supreme Court) would issue its judgment on the remaining parts of the appeal in due course. This is what we got this morning, the remainder.

In brief, Paddy seems to have partially won. The judgment is not yet online but will be linked to here shortly. It has been ruled that Paddy has the right to make representations before his loans are acquired. And whilst Paddy might be unusual (he has huge debts backing assets that seem not to have suffered as much as most and he is servicing the interest on his loans), it seems that ALL borrowers have the right to make representations. On the other hand there doesn’t seem to be anything which would prevent NAMA from acquiring the loans as long as it extends some consultation framework but given the provisions of the NAMA Act and the overarching provision that loans can be acquired if NAMA with the Minister for Finance deems them eligible, it is probably a hollow victory.

The analogy used on here with the February 2011 partial judgment was that Paddy was akin to the condemned man facing the firing squad at NAMA. NAMA had missed with their first shot in that they failed to make a legally effective decision. But all NAMA needs do is re-load and shoot again. And that still seems to be the case.

So it would seem that the way is now cleared for NAMA to acquire Paddy’s loans. That said, Paddy seems to have partially won the case and NAMA may face some meaty legal expenses. There will be further updates as the full decision is analysed.

Remember, you will find all the background, key personalities/companies, dates, arguments and updates in the Paddy McKillen case under the “Paddy McKillen v NAMA” tab here.

UPDATE: 12th April, 2011. The judgment, in four parts from different judges, is available here (am still awaiting the Chief Justice’s judgment and summary UPDATE: The seven documents below should be the comprehensive set from today’s judgment)

Part 1

Part 2

Part 3

Part 4

Part 5 (Summary and Introduction)

Part 6

Part 7

UPDATE (2): 12th April, 2011. NAMA has responded to the judgment today and is predictably pleased that the NAMA Act is judged constitutional. It notes the judgment’s requirement that there be consultation with Paddy before absorbing his loans. There is nothing rom NAMA as to its intentions now with Paddy’s loans. The Government has cleared the way for NAMA to absorb the loans though there has plainly been much activity on Paddy’s part to re-finance the loans. NAMA was to have had a special board meeting in February, 2011 after the first part of the Supreme Court decision, to decide whether or not to absorb Paddy’s loans. We are still none the wiser. However it must be said that today has been a good day for NAMA – if it was a listed company, its stock price would have received a boost. That said when we find out in May how much this action will have cost the State, the public might be less pleased with NAMA.