[The judgment handed down this morning is now available here]
It was reported on the Courts Service website this morning that the judgment in the Treasury Holdings and NAMA case which was heard last month, was to be handed down. It is hoped that the judgment will be available here shortly, but meantime, Orla O’Donnell, RTE’s legal affairs correspondent has tweeted the following.
Looks like Treasury has won in its bid to have its dealings with NAMA subjected to a judicial review. That being the case, it will be bad news for NAMA and we may indeed see the constitutionality of some of NAMA’s actions tested.
(Much) more soon!
UPDATE (1): 22nd March 2012. NAMA has issued a statement in response to this morning’s judgment which says that it “notes the High Court decision to grant Treasury Holdings, at this first stage of the proceedings, leave on certain limited grounds to seek a judicial review of the Agency’s decision to appoint receivers to certain property assets owned by Treasury Holdings and a number of related companies” and a NAMA spokesman said: “The Agency appointed receivers to certain assets owned by Treasury Holdings and a number of related companies because we believe that this is the course of action that is most likely to deliver the best financial return for the taxpayer. The receivers will remain in place pending the outcome of the judicial review”.
UPDATE (2): 22nd March 2012. The judgment is now available, see top of this blogpost for link. Treasury Holdings has issued the following statement “We are pleased that the High Court has found that we have raised “substantial” legal issues concerning our treatment by NAMA and has granted our application for leave to seek a Judicial Review.
We note that the one of the grounds on which the Judge made her order is that NAMA failed to take into account the availability of investors/purchasers for the loans.
A deal with such investors or purchasers is not only in our best interests; it will help economic recovery by allowing us to provide the type and quality of commercial accommodation necessary to satisfy the needs of job-creating Foreign Direct Investment projects which continue to be attracted to Ireland.
We are willing to engage with any proposal to secure the future of our company and its 400 employees. Any deal must satisfy the Government, its agencies and the taxpayer whose support over the last two years has helped us continue to operate and for which we are very grateful.”
UPDATE (3): 22nd March, 2012. This is the analysis of the 83-page judgment.
This appears to be a far more serious judgment than acknowledged by NAMA this morning when it claimed the judicial review was going ahead on “limited grounds”. First off, it seems that NAMA has cost the taxpayers by objecting to a so-called “telescoped” hearing in February which would have conflated the application for judicial review, with the hearing of arguments for and against the matters that Treasury said gave rise to their application for a judicial review. The Paddy McKillen case in October 2010 was telescoped, and the aim of combining both stages into one hearing is to save costs and delay. And NAMA objecting to the telescoping – Treasury didn’t object – means that there will be both additional delay AND cost to the taxpayer now that the judge has green-lighted the judicial review. NAMA might say it hoped to win its case in February 2012 but given that Treasury won on four out of five grounds, that claim, if made by NAMA, doesn’t seem to demonstrate good judgment.
Treasury won its case on four of the five grounds in its application (1) that NAMA is a state company making decisions (2) that developers whose interests will be affected by a NAMA decision have a right to be heard before the decision is made (3) that NAMA had not treated Treasury in a fair manner (4) NAMA had not taken into account relevant considerations when making a decision affecting Treasury. NAMA will be pleased that the judge found that it had not acted in bad faith or for improper purposes. But because Treasury won on the other four points, there will now be a judicial review at Treasury’s behest.
One of the particularly interesting points in the judgment was the judge’s opinion on Treasury’s right to be consulted even though Treasury is insolvent and might have naturally expected foreclosure action. The judge said that even though Treasury’s loans are in default, because Treasury had a signed Memorandum of Understanding and was pursuing a process to sign term sheets and that it was expected that there would be some repayment of the loans when the assets were sold, the judge held that in these specific circumstances, Treasury had a right to be consulted on any NAMA action that might significantly interfere with Treasury’s property. Interesting.
The gossip: NAMA was criticised for failing to produce the minute of the board meeting on 8th December 2011 in which the NAMA board decided to foreclose Treasury’s loans, and also NAMA was criticised for not being open in how the recommendation to foreclose was presented to the NAMA board. Separately the judge found that there was confusion as to the precise terms of the so-called “stand-still” agreement in January 2012 with NAMA saying that it gave its approval to the agreement based on Treasury’s offer not to contest any subsequent foreclosure action. NAMA come across as eejits for not getting a proper stand-still agreement drafted. Lastly Treasury is still receiving rents and management fees today, despite NAMA chairman Frank Daly’s recent claim that NAMA had taken control of all rent rolls. And lastly there was an unreported judgment in the David Daly case last September 2011 which was referred to in this judgment today, and efforts will be made to get hold of, and report that David Daly judgment.
Next steps: the case comes back to the High Court next Tuesday 27th March 2012, and NAMA may seek security for any costs going forward but Treasury might contest that application. Treasury also now needs to decide what it wants to do, and if it should proceed with the judicial review.
UPDATE (4): 22nd March, 2012. Treasury has this afternoon released a longer- and some might say more political – statement in response to this morning’s judgment. “We are pleased that the High Court has found that we have raised “substantial” legal issues concerning our treatment by NAMA and has granted our application for leave to seek a Judicial Review.
However our case is much broader than a legal one.
A central part of Treasury’s position is that:
– there is ongoing demand from home and abroad for high quality office accommodation in Ireland;
– the availability of this accommodation will help secure job-creating foreign direct investment;
– a number of significant players are already seeking such high-spec commercial accommodation here and more will do so in the short and medium-term;
– the absence of suitable accommodation, developed to meet client needs, will send this FDI elsewhere and the potential jobs will be lost to Ireland;
– to provide this accommodation Ireland needs a properly functioning and highly skilled property development and management sector;
As Ireland’s leading property investment company, with extensive operations across two continents, we believe we can play a significant part in Ireland’s path to full recovery because:
– Treasury Holdings remains Ireland’s leading property asset management and world class development company and, kept intact, can provide the skills required;
– there are a number of international investors willing to buy our loans from NAMA at a higher price than NAMA paid for them, effectively financing Treasury Holdings and allowing the property investment and development that Ireland needs to happen;
– two of these, Hines and Macquarie, have already made bids and there is scope through negotiation to improve on these, or to secure bids from others.
We note that one of the grounds on which the Judge made her order is that NAMA failed to take into account, as a relevant consideration, the availability of investors/purchasers for our loans.
A deal with such an investor or purchaser is not only in our best interests; it will help economic recovery by keeping intact Ireland’s leading property management and development company, allowing us to provide the type and quality of accommodation necessary to satisfy the needs of job-creating FDI projects which continue to be attracted to Ireland.
The Irish property market has recently suffered the most fundamental shock it has experienced in the history of the State. At Treasury Holdings we accept that there is a new reality. We accept and are grateful for the fact that we have continued to operate over the past two years with the support of the Government, its agencies and the taxpayer. We know that any arrangement that allows the company to continue and play a role in rebuilding the Irish economy must reflect that, and that the terms of any agreement must be designed to satisfy the Government, its agencies and taxpayers.
The full hearing of our legal case is likely to take place some months hence. In the meantime we are willing to engage with any proposal to secure the future for our company and its 400 employees.
We would like to take this opportunity to thank our many staff and other stakeholders for their tremendous support and patience during this difficult period.”
UPDATE: 29th March, 2012. The Irish Independent reports that NAMA “is to”, that is “future tense”, seek security for costs from Treasury in advance of the judicial review. The newspaper reports that NAMA “may also” write to Treasury seeking a so-called “fortified undertaking” for damages should Treasury lose the judicial review.
NAMA Wine Lake 