[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 
Wow…no fan of NAMA..but I didn’t expect that
I won’t say it. Ah shucks, yes I will…. “I told you so!”
Just further delaying the inevitable,will the dynamic duo post security for costs?
@jg, I doubt that they will be forced to post security for costs, John. It would be unusual for that to happen in Ireland (denial of access to the courts, justice etc.) But I do agree that the boys will not be able to stop the appointment of the receivers. The more esoteric issue – that NAMA did not follow fair procedures in its dealings with Treasury – will be won.
@WSTT agreed,posturing by NAMA,a hollow victory.Really,just further enriching lawyers and barristers.
time for a NAMA “legal bill clock”, which they could borrow form the Ireland “debt clock” people after Ireland defaults
The constitutionality of aspects of NAMA subjected to a much broader ‘testing’? Now, that will be interesting, because the McKillen case was way too restrictive.
@NWL
“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.”
Very interesting. Is there a lesson here?
It seems to me that it is now very simple. Write to all companies in NAMA, tell them if loans are not paid back by Dec 31st, NAMA will appoint a receiver.
Simple. What should have been done in the first place.
Any way you spin this, Treasury are taking Nama to court for not paying them money on demand. The Judge has effectively ruled that, as a bailout vehicle for the developer classes, Nama is obliged to give nine kinds of notice to the likes of Treasury should it it elect not to dole out pots of cash to Ronan and Co.
Treasury are basically going to argue that, in addition to the massive writedowns and bankruptcy protections they have already received, the state should be obliged though Nama to pay them even more money to fund their next dodgy venture. And considering just how dysfunctional the Irish legal system is, they may actually get their wish.
What we have in this country, is a banking/property aristocracy who views the public treasury as its own personal piggy bank. And we have a legal system that is prepared to give it to them. No wonder people aren’t paying the household charge.
@OMF
I think you hit the nail on the head on this one.
I would think NAMA has no idea what to do next.
It will have to produce discovery around its meetings on December 6th and December 8th last that will be deeply embarrassing to it. Its hubris is shot to pieces. It must feel very injured tonight following this judgment. The judgment itself is a damning indictment of NAMA’s practices.
Many debtors must be looking at the decisions that NAMA made in relation to their assets to date and thinking “me too”. If it doesn’t open the floodgates of litigation, it will at least provide ample fodder for defenses against NAMA writs.
So in essence NAMA would seem to have a duty of care to it debtors?
It must be galling that the debtors have the same rights as other citizens, to be heard and to appeal etc
Major internal ramifications for the Agency.
One of the grounds was “(1) that NAMA is a state company making decisions”. Why and how should this be a factor? Surely, as a State company Nama’s primary responsibility should be to the taxpayer/shareholders and not to the owners of insolvent businesses.
@Brian, if a State company, ANY State company, makes a decision which negatively affects your specific interests or property, then you get a right to be consulted in that decision.
@NWL
I don’t understand this need to distinguish between state and private companies in relation to commercial decision making. Reading between the lines, I sense that the board of Nama decided in December last that Treasury was beyond help almost irrespective of any rescue plans that might be offered. I don’t recall endless consultation and meetings with managements about decisions to appointment joint administrators to QI or a share receiver to the Quinn Group. Is there a danger that people unhappy with Nama’s commercial decisions will rush to the High Court, just as happened with the Tribunals, simply because Nama is State-owned? Who will pay for these excursions?
@Brian,
The difference between a State company and a private commercial entity is obvious. In this case, the State company has its own Act giving it enormous powers. However, the Constitution requires that the powers it has been given are used fairly and that those whom they are used against must have the right to have their views heard.
I’m not sure why the plonkers in NAMA just don’t phone Johnny, ask ask him to come in and give him the opportunity to be heard. It would end the whole farce. ….. Probably because, at this point, the court would look upon such an invitation very cynically. Or maybe they are just too dumb to think it at all.
@WSTT
I think you have been calling for Nama to act entrepreneurially and in a business-like manner. Here is a case where it makes such a decision and you are complaining about the absence of a bedside manner.
@BF, The learned Judge found that NAMA acted neither entrepreneurially nor commercially. It acted (as usual) arrogantly and deviously and with no regard for fair procedure and its duty of candour. NAMA failed in its duty to notify Treasury of its decision and failed to give them an opportunity to be heard. As a State entity such decisions are in the area of public law. And as a State company NAMA has received discretionary powers and it has to exercise those powers in a fair and reasonable manner. Whether it did that will be determined at the trial.
It is completely different from a commercial relationship. In any commercial relationship the parties have equal rights and have automatic recourse to the courts in civil law if one or other does not act in an equitable manner.
BTW, I was not complaining of the absence of a “bedside manner” – a visit there would show you that the parole officers look more like undertakers than nurses. I was complaining about the lack of a commercial culture in the Agency itself. If any commercial entity acted like NAMA, it wouldn’t survive.
The problem was that the owners of these insolvent businesses would rather have had their fate decided by commercially oriented banks.
Instead they got NAMA who decided to make arbitrary decisions on their future, based on what? Public mood, political influence? The process was closed and privy to those within and the personal attacks kept coming.
Yesterday’s ruling does nothing more than give a modicum of dignity and rights to the debtors.
@Garfunkel, before getting too carried away, remember that the judge yesterday was not issuing the results of a judicial review, merely confirming the grounds upon which Treasury had raised “substantial grounds” and to be substantial, the grounds must have been “arguable”, “weighty” and “reasonable”. A judicial review may yet judge that NAMA acted properly at all times in its dealings with Treasury’s loans, though because NAMA – and no-one else – objected to the hearing in February 2012 being “telescoped” we must now incur more time and cost to see if Treasury will be successful in its judicial review.
@Garfunkel one could suggest its because of business like this and their unquenchabable thirsts for more and more that you dont have any commercially orientated banks standing.
The numbers are just astounding,let’s not forget one of the founders did not provide an affidavit,the other was sworn in The Peoples Republic of China,where the vast majority of the alleged 400 employees actually work.
@WSTT it really won’t change anything,hopefully NAMA gets a bit street smart,but without a significant capital injection,assuming no funding from NAMA,they may not have the readies or apetiate to hang in here.So far,no additional capital or equity had been made available,can the boys afford the “principle” here,NAMA can money whip this situation,drag it out and turn up the temperature operationally too.
The price of their main vehicle in China,already trades at a significant discount to net asset value,contentious ongoing litigation is unlikely to enhance the price any time soon,despite the best efforts of GS.
In my opinion, the sequel will never see court. NAMA has too much to lose in discovery. A deal will be done with Hines / Macquarie.
@WSTT like Battery,where the agents are confident of selling it this year…
But,agreed its unlikely to get to court,to what prove a point.Its beyond salvageable as an operating company,the proposed deal terms will have to be improved on significantly.
In the interm,no funding from NAMA or the founders,how long has the patient got….
I would imagine they re buying time to do a bit of strategic “housekeeping”…They may of course get lucky and get more…….and on and on and on IT goes…
All that has happened here is that NAMA have been ‘done’ on the most basic procedural grounds. As I read it, they decided to appoint receivers to assets belonging to one of the biggest developers in the country. They didn’t give them the courtesy of a hearing before the decision was taken, and they didn’t even bother to inform them for weeks after the decision was taken.
I wouldn’t try that with an outfit like Treasury. It’s obvious that the NAMA execs saw no need to consult their in-house lawyers about fair procedure. They must have left that bit out of the ‘corporate governance module’.
When NAMA were duly hauled before the Courts, they couldn’t even produce the minutes of the relevant Board meeting. Sweet Jesus. These are the people who are charged with ‘strategic decision making’ over billion dollar assets. When will our state agencies learn to get the paper trail right ?
I note the fiftenn affidavits and the five lever arch files. Multiply that by ten if a hearing of the substantive issues goes ahead. This will now take the usual course. Treasury will seek discovery, because their briefs have scented blood. Have at thee, you varlet and so on. The ‘peoples’ champions (!)’ will be forced to engage in a damage limitation exercise behind closed doors.
Lovely lolly. No one accountable in NAMA and another great good day’s hunting down in the Law Library, but it’s a sort of cannibalism of the state at this stage.
By the way, anyone thinking of taking on state agency or being subjected to unfair procedure will find a rich trove of citations in this well written, readable judgement.
@paul quigley hopefully this is the END,my friend,treasury is completly fu..ed the numbers are horrendous.Its the last chance saloon,grab a drink.Its on the taxpayer sure why not.
With apologies to sf ca writer:
The legal wigs have won again
and you and I have lost.
They don’t know what the judgment means,
….but they’ll let us know the cost.
only one way to answer that
http://wp.me/p28tG9-ea
The decision is an indictment of the quality of the staff within NAMA. Anyone reading the judgement will be struck by how arrogant the agency is and how inexperienced NAMA is in managing its relationship with its borrowers.
When more than one fund manager that visited the agency told me that “NAMA is learning on the job and making it up as it goes along”, I did not realise the depth of the incompetence within the organisation.
The judgement proves it. It reads like a farce. The civil servants and failed solicitors that permeate the place and its culture should all be fired.
Perhaps the Tap will be turned off on Treasury very Quickly after this,,Has Treasury been asked how many of its 400+ employees are actually based in Ireland?
Why turn off the tap to Treasury? They know the game and collect rents that….NAMA gets. They get paid because they ferform… they get offers… they clients… they can begotiate. NAMA? Idiots and etting paid more than PM.
Sack them all.
Carlos Z
In my local motor tax office the guy at the desk can’t speak English. Being from Brazil, a different culture, he’s good at Portuguese, but the local citizens in County Kildare don’t communicate in Portuguese. It’s the same in NAMA, they speak civil service and are fluent in debt collection, but they can’t communicate with their borrowers who speak a more commercial language.
An organisation is only as good as the people who staff it. And those that staff NAMA are not qualified to do the job that they are tasked with under the NAMA Act, which BTW, is not primarily focussed on debt collection.
Following the Treasury ruling which requires NAMA’s staff to engage with their borrowers, they need to be retrained to speak and act in a fair and reasonable manner in relation to representations made to them by their clients as opposed to the bully-boy CAB “speak” employed to date.
Big culture shock, lads.
Apt little update,The Phoenix,23 March,available at newstands,reports on another high court case involving the dynamic duo.It involved Manor Park Homebuilders Ltd. and centered on a dispute over Kent Railway Station in Cork City.Treasury sought an order requiring security to be lodged by Manor Park,prior to the case proceeding.The case ended up getting struck out.
Todays,report in Indo brings the old biblical saying lex talionis or an eye for an eye to mind.
“NAMA is to seek security for legal costs from Treasury Holdings ahead of the insolvent developer’s forthcoming court challenge to the agency’s decision to appoint receivers over its properties here.”
http://www.independent.ie/business/world/nama-to-seek-costs-in-treasury-row-3063198.html