[The judgment is now available online here]
It has taken over 30 days of hearings, the court room has been packed to the gunnels with nearly 40 solicitors and barristers, the saga encompassed Bono from U2, Tony Blair, princes, yachts and of course Derek Quinlan “sitting around on his fat arse”, and today we get one ruling on one small – but highly significant for NAMA – aspect of the Paddy McKillen versus the Barclay brothers case in London’s High Court. Earlier this year, a British High Court judge gave an interim ruling which supported Paddy’s claim on a peripheral point in the case. That ruling was appealed to the British Appeal Court. The point at issue was whether or not NAMA had the right to sell the loans in the way that it did. Paddy said it hadn’t. NAMA said it had.
Paddy has lost.
This is the case where secretive Irish property developer Paddy McKillen is trying to stop the 77-year old billionaire Barclay twins from taking control of the company which owns three of London’s most prestigious hotels – Claridge’s, the Connaught and the Berkeley. NAMA was dragged into it because NAMA had sold loans owed to the Agency by the hotel group to a company controlled by the Barclays, and the Barclays can call in the loans and acquire control over shares which will give them 64% majority control over the hotel group. Paddy had claimed that NAMA’s sale of the €800m of loans was improperly executed, and in particular he had not been consulted by NAMA prior to the sale being concluded.
In February 2012, Paddy won his argument on an interim point about whether or not he could rely on the original loan agreement which specified consultation before the transfer of loans, as well as restricting the purchaser to being a finance company. The ruling was appealed from the High Court to the British Appeal Court.
Three Appeal Court judges today overturned the earlier High Court ruling and said NAMA was not obliged either to give the hotel company notice of the sale, or to consult with the company, before transferring the debt to a company controlled by the Barclays.
Paddy had also argued that the company to which NAMA sold the loans was not a company specified in his loan agreement which seemed to confine sales to finance companies, whereas the Barclays company was a special purpose vehicle set up for the specific purpose of enabling the Barclays to take control over the hotel. The judges disagreed. They said ruled that restrictions on transfer of debts contained in the original loan facilities with the banks did not apply to NAMA.
Paddy said he had less than one hour’s notice of the sale, and that this didn’t constitute proper consultation. Again the judges ruled that the original loan facilities terms did not apply.
“Coroin was not entitled either to notice of or to be consulted about the transfer to Maybourne” said the judges, “Coroin” being the company which owns the hotels and whose loans NAMA sold.
Paddy was refused permission to appeal to the Supreme Court and was ordered to pay the legal costs of the case.
A bad day for Paddy. If you listen very quietly you might hear champagne corks popping in NAMA’s HQ. Except that’s not the culture of the place, and they’ll probably just breathe a sigh of relief that the biggest single transaction involving loans at the Agency has not been undermined, and that the Agency doesn’t face substantial damages or legal costs claims. Phew!
The main case between Paddy and the Barclays has not yet been ruled upon.
UPDATE: 27th June, 2012. The ruling from the UK’s Court of Appeal is now available online here.
NAMA Wine Lake 
[…] More Here: Victory For NAMA In Epic London Court Battle (Nama Wine Lake) […]
Significant implications for other borrowers,if I read the above correctly,NAMA is not bound by the original loan terms.Assume borrowers then are still contracturally bound to original loan terms,that were negotiated,very interesting decision.It is my understanding that the loans were not in default and performing.Looking forward to reading the decision.On what basis were the provisions in the original loans not applicable.
@John, hopefully the written decision will be made available later today so that it can be linked.
The judges seem to have concluded the NAMA Act grants NAMA powers to over-ride some original terms.
Retrospectively ride roughshod over legally binding agreements,I know you would link it NWL,assumed its not available.Will read it and review,assuming the borrower was performing and complaint with his obligations,gives NAMA tremendous leverage in interpreting loan documentation.
So they can use the original loan documents, to strengthen their position with borrowers? Enforce etc. But the can also disregard them as they see fit, whither fair procedure? Having read the judgement a very unusual argument…leaves more questions than answers!
@Garfunkel read it too,actually have to re-read it,section 50 was very interesting regarding allegations of NAMA’s fees,its not every day one reads about ‘fettering’ arrangements!
Appears,the NAMA Act,does in fact have precedence over any loan provisions. Also,in this case there were two additional agreements entered into subsequent too the original loans.One of them,the ‘KAF’ involved NAMA lending 35.5m to Coroin,to pay back Anglo on behalf of Goldrange Properties Limited and the Knightsbridge Property.
The Facilities Agreement-Anglo/B of I.
Knightsbridge Acquisition Facility-NAMA
Par 19.from part 9 of the Act.
“NAMA may validly transfer, assign, convey, sell on or otherwise dispose of an acquired bank asset to any person notwithstanding
(a) any restrictions on such a disposal at law or in equity,
(b) any contractual requirement, or any requirement under any enactment, for the consent of, for notice to, or for a document from, any person to such a disposal, or
(c) any provision of any enactment that would otherwise prohibit or restrict such a disposal.’
Link to ‘Goldrange Properties’ info.
http://www.cdrex.com/goldrange-properties-limited-2184826.html
Alden-CEO Maybourne.
Walker-Dir. Corp. Finance.
http://www.maybourne.com/page.aspx?id=4548
Funky transaction,why did NAMA need to lend over 35million to Coroin to pay Anglo off,from the judgement….
“Clause 3.1(h) provides that Coroin will apply the money lent under the Knightsbridge Acquisition Facility ‘to discharge the principal and interest owed to [Anglo] under the Original Knightsbridge Acquisition Facility Agreement’, which is in turn described in clause 1.1 as a loan of £35.5m ‘entered into’ by various parties ‘in relation to Goldrange Properties Limited [(‘Goldrange’)] and the Knightsbridge Property’. Those various parties (who included Mr McKillen) were, as I understand it, the shareholders in both Coroin and Goldrange. ‘The Knightsbridge Acquisition’ is defined in Clause 1.1 as ‘the acquisition of the Knightsbridge Property by way of the purchase of the entire share capital of Goldrange … and the purchase of the beneficial interest in Knightsbridge Property by Goldrange’
Bit odd,NAMA advancing 35 million here,not much info available on “Goldrange” will try find some more.
http://companycheck.co.uk/company/05365104
One wonders if such a decision would be reached in this jurisdiction.
What is the impact of a British court’s interpretation on forthcoming cases here?
The British Establishment has ruled and things look bright for their own, i.e. The Barclays. The tricolor will be lowered on Claridges and the rest.
I think this appeal win is being seriously overplayed. This was just an appeal on a pre-trial judgment that Paddy had won before the case started and is a small part of the overall case. When Paddy won this point it did not impact on the main case and equally if he has lost the point, the impact should not be so great. Afterall this was a decision that was made without taking any of the evidence into account and before the case started.
Paddy can appeal this decision to the Supreme Court in London as he did with his case here in Ireland which he won. It may not be worth the effort if the main judgment is handed down soon and he wins.
Surely if he was going to seriously take on NAMA about this he would do so in the Irish courts and not in London? My understanding is that he has taken on the Barclays with this particular case and NAMA got drawn into it by the UK court when it joined NAMA to the action.
I think NAMA might be jumping the gun a little by claiming victory just yet and the spin machine might have been a little too enthusiastic.
I hope justice is served well in this case as it was with his case here in Ireland. I enjoy following this case closely and find Paddy’s courage truly inspirational.
I looked for that too,para 31.
“The Facilities Agreement is expressly governed by Irish law, but it is common ground, as it was below, that, for present purposes, Irish law is the same as English law.”
@Garfunkel, given the very salacious revelations in the numerous lawsuits,the sooner the better.Some,litigation still pending,but one the bigger concerns here is the behavior of Ansley with his texts,did NAMA maximize recovery and what is still owed to the Irish taxpayer.Quinlan must be reaching the end of his usefulness, expect a move soon.
Any Link to ruling in Taggart Brothers Case in Belfast during week??
@Sam OB,it was a good win for NAMA,they should and will be very pleased here.But yes,Irish born “Paddy”-residency clearly not applicable- has certainly displayed tenacity,no doubt aided and abetted here by Ansley and Anglo.
“Under cross-examination, Mr McKillen was unable to say where he was domiciled in 2009 and 2010.”
http://www.rte.ie/news/2012/0320/mckillenp.html
@John Gallagher – this win could easily be overturned in the Supreme Court. Where Paddy lives is his own personal choice. His loans are performing, his businesses are strong and his business interests are a significant benefit to the Irish economy. We need people like him and should be supporting him. Of course he should be supported by his bank if he is a profitable customer. The Irish State should also support him as his businesses are creating significant employment and tax revenues here. We need to stop the destruction of wealth in this country and stop the small-minded defensive attitudes that leads to bad decisions for the Irish economy and taxpayer.
The evidence disclosed in this case shows that the Barclays were clearly aided and abetted by NAMA with their hostile take-over attempt. We will know shortly if this behaviour was unlawful. I don’t think NAMA should be using their extraordinary powers in this way. As I said before – I hope justice is well served and the Irish flag remains over these iconic hotels.
@Sam, we need to be careful in characterising the evidence in this ongoing case. “aid and abet” has a criminal overtone, but your comment is accepted with its fundamental meaning of “helping” and it is accepted that the sale of the Coroin loans to a company controlled by the Barclay brothers helps them in their stated intention of taking control over the Maybourne hotels.
Will leave it for now,as there is a judgement outstanding but it’s worth reflecting on Ansley’s and Anglo’s behavior here.
“BB have now been told that the bank has chosen a path to work consensually with you rather than to deal with them, I understand they are not happy.”
It was followed a few minutes later with another text: “Please keep that confidential I cant have board positions like this leaking out.”
The texts chime with McKillen’s assertion in court that Alan Dukes, IBRC’s chairman, had told him it would stand by him as a “customer of 25 years” who had “the best performing loans in the bank”.
http://www.irishtimes.com/newspaper/finance/2012/0326/1224313892578.html
No Ansley,you really really can’t be leaking board decisions,it’s not a good look!
This is the guy in charge at Anglo,communicating like a teenager by text,one has to wonder if he’s up for it and worth the hundreds and hundreds of thousands of Euro’s he’s clipping.
@John, IBRC has been invited to the Oireachtas finance committee at the behest of Fianna Fail’s Michael McGrath, where you might expect this and other matters that cropped up in the hearing, to get a public airing.
https://namawinelake.wordpress.com/2012/05/17/minister-defends-support-by-one-state-agency-for-developer-suing-another-state-agency/
I understand that IBRC has accepted the invitation, so presumably it’s just the logistics of arranging the hearing outstanding, but they might well be awaiting the judgment in the Barclay brothers and McKillen case which is expected any day now.
@NWL fair play to Deputy McGrath,his colleagues on the PAC have done some excellent work.Agreed,more interesting and sensible to have a chat after the ruling.Hopefully there is some type of “morals” clause that can be evoked in Ansley’s gargantuan pay and benefits package.
If the texts that are now in the public domain do not call his behavior into disrepute,then what does.Quite surprised given the revelations regarding surplus cash from properly sales and those texts,that Ansley has not taken the honorable route,but then again in these days of austerity just under a million a year to babysit a wind down is hard to come by.
http://en.wikipedia.org/wiki/Morals_clause
@Sam OB the green jersey or tri color argument is a little old at this point,last time I was in Claridges they weren’t selling too much Guinness or overtly supporting much “Irish”,it’s a bastion of snobbery and pretentiousness with pricing that only people with questionable residency status could enjoy.Now,what normal person can’t answer where they are/were domiciled ?
If “I don’t know where i live” Paddy wants to fly a flag agreed that’s his business,but how about paying back some of the over 300,000,000 million owed to Ireland,his country of birth.
Sam,I’m taking it easy here as there is a judgement outstanding!
But by all accounts his chateau la “coste” is exceptional.
“McKillen has set about transforming the already beautiful, 250-hectare estate to house an art, sculpture and architecture park of global scale and quality. Many upmarket wine estates have art galleries and collections, but not like this. McKillen has engaged the world’s top architects and has commissioned buildings from them, dotted around the estate. Tadao Ando, Ai WeiWei, Jean Nouvel, Frank Gehry, Sir Norman Foster, Renzo Piano and Oscar Niemeyer are just some of the names who either have buildings there already, or which are in construction.”
His contribution to France is outstanding,pity it’s not in Ireland but personally I prefer to have the cash back,call me old fashioned.
“These are just a few of the scores of installations and artworks on the estate. With so many more planned, Paddy McKillen is building an incredible legacy that for any wine, art or architecture lover is unmissable.”
http://www.wine-pages.com/features/wine-art-architecture.htm
@John Gallagher Sounds like you have an an axe to grind!
The man is an asset to Ireland and the Irish economy. From what I have read he is paying back his all his loans and this was clearly demonstrated without question by evidence disclosed in the Irish and UK courts.
We need to stop the destruction of the little wealth we have left in this country and keep the vultures away. The least we can ask is that our public servants behave honourably and in the public interest to preserve wealth that can help to rebuild our economy. It’s time to stop the back-stabbing and begrudgery. We don’t need the Barclays and others swooping in to grab assets that would be best left in Irish ownership.
@ Sam Ob I’m not a Irish hating Paddy,far from it!
He’s an embarrassment is what he is,where is Coroin registered ?
I’m not even touching for now the allegations regarding the ehm on going consulting/management arrangements he attempted.
“Yesterday London’s Royal Court of Justice heard how, after paying off some debt, McKillen had €50million (£40million) left over last year. The money was made from property sales.
But he never told IBRC about the money at his disposal.
Under cross-examination yesterday, a barrister asked McKillen: “Surely, as their best client, you would want to tell them about the £40 million?”
McKillen:“And give them all our cash?”
Barrister: “Yes.”
McKillen:” No, that is not the way business works, I am sorry. Sorry about that.”
It was also put to McKillen, who failed in his bid to have this part of his case heard in private, that he didn’t want the Irish taxpayer to know that he had assets which could be sold to pay off his bank debt.
McKillen said that assumption was nonsense and said his relationship with IBRC Chief Executive Mike Aynsley is excellent.”
http://www.broadsheet.ie/tag/paddy-mckillen/
@ John Gallagher You should take it easy. Keeping such a detailed list of media reports about someone that you can cut and paste so quickly into a reply on an anonymous is amazing unless you are doing it for commercial gain.
Sorry left out a word above – should read:
Keeping such a detailed list of media reports about someone that you can cut and paste so quickly into a reply on an anonymous blog is amazing unless you are doing it for commercial gain.
@Sam, I think there’s a risk of straying into ad hominem criticism of another commenter, which isn’t conducive to the open debate we encourage on here. Knowing John G’s history of commenting on here, his/her/their contributions on a range of topics from individual developers to developments are often accompanied by extensive linking.
@Sam OB just having some fun,like I said taking it easy here,gained all I need thanks,no requirement for a vineyard in Provience.
Hoping,to get a comp. next time in London or freebie at the famously over priced restaurant “Gordon Ramsey” now there is a very forgettable experience.
“In evidence today Liam Cunningham, who runs Mr McKillen’s office in Hume Street in Dublin, described negotiations at the beginning of last year when Mr McKillen was attempting to negotiate fresh finance for Coroin with the Qatari royal family.
Mr Cunningham said he had sought the consent of Anglo Irish Bank as the security holder for Paddy McKillen to reduce his shareholding in the company from 36% to 18%.
But he admitted under cross-examination that he had not informed Anglo Irish Bank that Mr. McKillen was also negotiating a five-year £5m management fee for the supervision of the refurbishment of the hotels.”
http://www.rte.ie/news/2012/0326/mckillen.html
@Sam OB enjoyed the exchange and your defensive of Paddy,is admirable the green jersey support the Irish against the vulture funds,is slightly irritating for me given how the “paddys” conducted business when they had cheap free easy credit,they were not different nor better.
Only difference now is they don’t,but correct some people do,it’s Darwinain,thinning the herd a little.
Paddy is well able to look after himself and deserves Quinlan as a partner,survival of the fittest and all that.My actual “target” was Ansley and his behavior,but getting back to where we started well done to the boys and girls at NAMA,nice work here.Off to the beach,have a nice weekend.