Okay NAMA was really just an interested party, but yesterday in Dublin’s High Court, the redoubtable Mr Justice Peter Kelly upheld an arbitration ruling that was made late last year which said that Ireland’s second-largest grocery retailer, Dunnes Stores was liable to pay a NAMA developer, Holtglen Limited, €20.3m in respect of a shopping centre development, the Ferrybank Shopping Centre – pictured here – in Kilkenny. Judge Kelly’s judgment is here.
It was 2007, at the height of the Celtic Tiger property boom, that Dunnes entered into an agreement in respect of Ferrybank. Holtglen had then gone on to develop the shopping centre but had failed to comply exactly with the terms of the agreement and Dunnes refused to stump up the monies applicable under the contract. The arbitration ruling last year had found that, although Holtglen hadn’t delivered on the original contract, it did remedy the breaches and consequently the monies referred to in the contract were in fact payable. Dunnes appealed the arbitration ruling to the High Court.
NAMA was dragged into this because the Agency acquired the loans relating to the shopping centre in October 2010. Dunnes argued that because Holtglen is insolvent, a term in the agreement allowed it to repudiate the agreement, but this is where NAMA came in and eventually provided Dunnes with an undertaking which read “all obligations of Holtglen to Dunnes Stores under the Development Agreement whether in respect of matters arising before or after the giving of this Notice of Substitution shall be deemed to be obligations of NALM [National Asset Loan Management Limited] as if it had at all times been a party to the Development Agreement in place of Holtglen”
The judge criticised NAMA for delivering its Notice of Substitution late in the day – so late in fact that a hearing scheduled for February was deferred in order to give Dunnes an opportunity to consider the document. But alas for Dunnes, the judge has now dismissed the complaint about Holtglen’s insolvency and Dunnes must now pay more than €20m to Holtglen. NAMA will be pleased given the 65% decline in commercial property values since 2007 when the agreement with Dunnes was struck. According to the Irish Times today, Dunnes has until Friday to appeal Judge Kelly’s refusal of a stay on yesterday’s judgment to the Supreme Court.
The shopping centre itself is set to officially open next month.