[The judgment is now online here.]
This morning in Dublin’s High Court, Ms Justice Finlay Geoghegan dismissed Treasury Holdings’ application for a judicial review of NAMA’s dealings with its €1.7bn of loans. It is hoped the judgment will be available shortly and will be posted here as an update, but immediate reporting by Mary Carolan at the Irish Times suggests that the key point in the case was the offer made by Treasury in January 2012 of not pursuing a case through the courts with NAMA on condition that NAMA enter into a standstill agreement to allow for the examination of third party offers for Treasury’s loans. The judge appears to have held that Treasury was in fact entitled to be consulted before NAMA took action. So although this might be a NAMA victory, I don’t think the Agency will be jubilant.
No word yet from Treasury as to any appeal, but you might recall that in a previous NAMA court case, the developer Paddy McKillen lost comprehensively at the High Court but then went on to secure a draw at the Supreme Court, which reversed some of the lower court’s judgment.
Treasury had to offer up unencumbered assets as security for costs in this case, and it won’t have been a cheap undertaking, with little change on NAMA’s side out of €1m I would have said.
The judicial review hearing was preceded by a Treasury offer to NAMA to enter into mediation, to which there was no apparent response from NAMA. Treasury then sponsored a Peter Bacon review of the Irish economy featuring NAMA. And NAMA hasn’t relented on its pursuit of the Treasury founders, the colourful Johnny Ronan and understated Richard Barrett, with fresh applications last month seeking €3m from each pursuant to personal guarantees.
So, a bad day for Treasury and its founders, and somehow, I don’t think there will be 4,000 on the street(s) of Enniskerry this evening marching in solidarity with Messrs Ronan and Barrett…
UPDATE (1): 31st July, 2012. Still awaiting judgment and Treasury/NAMA reactions to the judgment, but RTE’s seasoned Legal Correspondent, Orla O’Donnell gives her (more than) tuppence worth here on prospects for an appeal by Treasury.
UPDATE (2): 31st July, 2012. NAMA has issued a terse and work-manlike statement which merely says “NAMA welcomes today’s decision from the High Court and will continue to work with the NAMA-appointed receivers in this case to maximise the return to the taxpayer”
UPDATE (3): 31st July, 2012. The judgment is now online here.
UPDATE (4): 31st July, 2012. Treasury has now issued a statement, available here, in which it confirms it “will now mount an appeal” – the statement pulls out the positives from the judgment, the right to be consulted, the obligation on NAMA to consider proposals and the unfair procedure of NAMA having a meeting on 6th December 2011 where it apparently committed to a course of action before Treasury had submitted its “final” plan.
UPDATE (5): 31st July, 2012.
“Conclusion on Standstill and Estoppel 167. I have concluded that in accordance with the foregoing principles and on the finding of facts herein, the Court must hold that Treasury is estopped from pursuing its claim for the orders of certiorari of the decisions of 8th December, 2011, and 25th January, 2012.”
“it appears to me that NAMA was under a duty to give Treasury an opportunity to be heard and Treasury had a concomitant right to be heard in advance of the taking of the decision to enforce”
“I am satisfied, therefore, that NAMA acted in breach of its obligation to act fairly and reasonably in the taking of the decision to enforce on 8th December, 2011”
Extracts from the judgement from Judge Finlay Geoghegan, although Treasury has lost this battle, NAMA may have suffered serious damage to its abilities generally in the war.
Having now studied this judgment, it looks like a pyrrhic victory for NAMA in that it has escaped with its skin – just about – in this specific instance with Treasury Holdings because of the commitment given by Treasury not to pursue legal action in return for NAMA granting a standstill period to allow for the examination of third party bids for Treasury’s loans. BUT the Judge has seemingly opened the floodgates for legal action by any developer whose loans have been enforced. There are specific facts that apply in the Treasury case that mightn’t apply elsewhere, but it doesn’t seem on here that these are narrow, esoteric or highly unusual facts.
Ray and Danny Grehan are probably studying this judgment closely!
The Judge states
“I have concluded, applying the principles in Beirne and O’Donnell, that NAMA has failed to establish that its decision to enforce is not a decision amenable to judicial review. In my judgment, on the statutory framework and facts, it fails both limbs of the applicable test set out in Beirne and applied in O’Donnell.”
In other words, every single decision taken by NAMA to enforce is amenable to judicial review. And in the circumstances of Treasury’s loans, the Judge pours more oil on the fire by judging that Treasury had a right to be heard before NAMA appointed receivers.
“I have come to the conclusion that Treasury did have a right to be heard in December 2011 before NAMA took a decision to enforce by making demands, and if, as was inevitable, such demands were not met, by appointing receivers. If considered from the perspective of NAMA obligations, I am of the view that NAMA was under an obligation by reason of the then factual circumstances to give Treasury an opportunity to be heard prior to taking a decision to enforce.”
The Judge also concludes that NAMA’s actions weren’t fair in that Treasury didn’t have an opportunity to make representations to NAMA, eg to present third party investment proposals.
This may not be a good day for Treasury, but it’s a pretty dreadful day for NAMA also.
UPDATE: 1st August, 2012. The judgment makes for intriguing reading and refers to a NAMA claim that litigation with which Treasury is presumably involved, with an entity designated “AIAC”, is set to fail. An unusual inclusion in a court judgment, reproduced below.
http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/f7de4f889aee0f2880257a4c003b4d19?OpenDocument
@Patrick thanks for that,will make for some fun reading!
Regarding the ‘rally’ some suggestions…how about starting the day riding to hounds with the Ward Union,lets hope its not a drag.In fairness the hunting season is over,but pencil that in for the “Fall’.Looks like some of the members,are going to find out what its like to be hunted by a pack of baying dogs,just watch the press turn.
http://www.banbloodsports.com/ln120321.htm
Now the skin and blister Gillian Ronan,hopefully will organize a little ‘do’ at her place Town,famously purchased off Treasury!
Linked the ST article but behind a pay wall…go away out that Gillian do they,stop no way………………………really !
“I always adored Town Bar and Grill as a customer. Then my brother, Johnny Ronan, of Treasury Holdings, owned it. When it went up for sale last summer, it went out to public bid.
People think that just because I’m Johnny’s sister I might have got it as a present, but I most certainly did not. My life savings have gone into this restaurant, and anyway I strive to be removed from Treasury or anything to do with them.”
http://www.thesundaytimes.co.uk/sto/news/ireland/article991577.ece
Your not the only one Gillian,looks like most of the board in China also striving to do just this !
Check out the deck chairs,looks like they are getting rearranged, Cessation of Appointment,section for directors.
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-news&nyo=0
Reading it too,but lets demolish one popular myth.
“It has 45 employees based in its offices in Dublin.” para 29.
http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/f7de4f889aee0f2880257a4c003b4d19?OpenDocument
IT statement linked above.
“Our shareholders have said already that they recognise that any deal with foreign investors will involve their losing control of Treasury Holdings. However, it will ensure that the unique skills and expertise this company has will be kept together, that the 300 jobs in Treasury Holdings are safeguarded….”
@John
“It has 45 employees based in its offices in Dublin. The operations of the Group are stated to be interdependent. The Group as a whole employs approximately 400 persons globally. The applicants are part of the Group.”
@NWL comment stands 45 employees in Dublin/Ireland,can the state hope for some emigrants remittances from Russia or China..
Depressing reading,100 million in new funding and still arguing in November 2011-para 51- about assignment to NAMA of rental income from secured assets.
Cut the blood supply off to the patient day ONE,garnish/grab/get assignment of ALL rental income-its101 loan work out,prior to ANY additional funding.
Only 45 Jobs in Ireland? The local sweet shop would employ more
Who would have thought that Treasury lost this case with an “own goal”.
A wise old lawyer once told me that when litigating “Never give the other side a break that weakens your position”. Having won every significant point in their case, Treasury were found to have done exactly that – and lost.
Talk about amateurs!
The High Court decision:
Conclusions:
169. In summary, the conclusions reached on the issues identified in paragraph 15 and determined are as follows.
(1) The decision to enforce taken by NAMA on 8th December, 2011, is a decision in the realm of public law, and as such, amendable to judicial review.
(2) On the facts herein, in December 2011, Treasury had a right to be heard or, as alternatively put, NAMA was under an obligation to give Treasury an opportunity to be heard prior to taking the decision to enforce.
(3) Treasury was not given an opportunity to be heard and heard by NAMA prior to it taking the decision to enforce.
(4) NAMA was under a duty to act fairly and reasonably in taking the decision to enforce. Further it was in breach of that obligation by reason of its failure to hear Treasury; its failure to consider a relevant matter, namely, investor interest in the acquisition of the Treasury loans or underlying secured assets and the unfair procedure in the timing of the Credit Committee meting on 6th December, 2011.
(5) In relation to the standstill arrangements in January 2012:
(i) The standstill agreement was concluded on 11th January 2012.
(ii) NAMA entered into the standstill agreement expressly in reliance upon Treasury’s representation or undertaking that should the discussions during the 14-day period not prove to be satisfactory from NAMA’s point of view, that Treasury would not object to the appointment of receivers and that it would not commence any application in that regard seeking to have the Group placed in examinership or any like application.
(iii) In reliance on the representation NAMA acted to its detriment in entering into the standstill agreement and committing resources to and incurring expense in evaluating the Hines and Macquarie proposals.
(iv) Treasury acquiesced in the ‘ground rules’ set out by NAMA on 12th January, 2012, and participated without objection insofar as it was required to do so in the discussions and evaluation by NAMA of the proposals from Hines and Macquarie during the standstill period.
(6) In accordance with the applicable constitutional, public law and equitable principles set out in the judgment and on the finding of facts made, the Court must hold that Treasury is estopped from pursuing its claim herein for the orders of certiorari of the decisions of 8th December, 2011, and 25th January, 2012.
(7) If Treasury were not now estopped from pursuing its claim the Court would exercise its discretion against granting orders of certiorari of the decisions of 8th December, 2011, and 25th January, 2012.
Having read the judgment for a second time, I’m still in awe of the stupidity that allowed Treasury to lose this having won all salient points.
However, there is one discordant and inconsistent note in the conclusion:
“(7) If Treasury were not now estopped from pursuing its claim the Court would exercise its discretion against granting orders of certiorari of the decisions of 8th December, 2011, and 25th January, 2012.”
Is the Judge saying what I think that he is saying? – that even if Treasury was not estopped, he (the Judge) would have exercised his discretion and refused Treasury’s application despite the fact that NAMA was in breach of its obligations?
@WSTT, I believe the judgment is raising quite a few eyebrows for a number of reasons, and the estoppel point in relation to the standstill agreement might be one of the weakest that may be the subject of the Supreme Court appeal.
BTW, Ms Justice Mary Finlay Geoghegan is all woman!
It is the first judgment that I can recall which discloses what you might have thought would be a highly confidential commercial fact, when it reveals NAMA’s Portfolio Management department claiming “Borrower has indicated that they have no legal defence against AIAC litigation” (the relevant extract is reproduced as an update to the blogpost above)
Now we don’t know who AIAC is, maybe Anglo Irish Assurance Corporation, maybe some different entity entirely but this revelation in a judgment seems cack-handed and thoughtless on Judge Finlay Geoghegan’s part.
@NWL. Mea Culpa. Of course she is. I did not mean to cast doubts on her femininity! I shouldn’t blog so late at light.
P.S. Her grammar is atrocious. Switches from plural to singular in the same sentence. I know I do it on some occasions – but have they no editor down in the Four Courts?
And if I read Conclusion (7) correctly she is saying that she would rule against her own findings of fact.
Peculiar lady.
I’ve never read such a badly drafted Judgment. Full of inaccuracies. Just one example:
“153. That letter elicited a response from the current solicitors for NAMA, DAC Beachcroft……”
DAC Beachcroft act for Treasury.
Agreed the judgement is actually a great read,Tresaury is a formidable opponent.NAMA should never have gone down the road with “CIM” it was a trojan horse,set a very unfortunate precedent in this case.Also,way too much cloak and daggers stuff by NAMA.They should also stop using emails,excessive phone calls from junior inexperienced staff.In writing or in person when litigation pending or on the horizon,so is NAMA a “public” body then.Very very perplexing case and judgement,no reference or reliance on the commercial reality of the situation,none.
The offers are derisory and involve significant loss to the state,with the deadbeat borrower having an ongoing role,ludicrous,ridiculous,the Judge spent too much time on procedural issues,dates,meetings not enough on the fact that the borrower is insolvent and in default on its loans.
NAMA will prevail here,does anyone think the loans are getting paid at par,that’s a different animal.Tresaury played a crap hand very well,but so what the math does not change.
“Treasury Holdings had acted as guarantor to certain loans made by KBC to companies in the Spencer Dock group, a sub-group within the Treasury Holdings group of companies. KBC has presented petitions for the winding-up of certain companies in the Spencer Dock group and also Treasury Holdings, as guarantor. The petitions are listed to come before the High Court of Ireland in Dublin on August 8, 2012 and will be fully defended by Treasury Holdings.”
Another big day out……..interesting comparison as KBC is most defiantly not in anyway a ‘public’ company.
http://ir.treasurychinatrust.com/phoenix.zhtml?c=237568&p=irol-IRHome
Numerous references and some confusion in the judgement relating to Ronan,being in NAMA in a separate capacity to Treasury,NAMA has 1.7BILLION loans here,how much could Ronan owe on top of this.Why has NAMA not moved on him in a personal capacity ?
Any news on KBC Wind up of treasury,One of the Largest Property Companies in ireland is facing a wind up order and the Dublin Media dont even cover it to the same extent that they have hounded Quinn these last few weeks
@Patrick, RTE’s Legal Correspondent, Orla O’Donnell, who you can follow on Twitter at @OrlaOdo has tweeted to say that “essentially” the case has been adjourned until 27th August, 2012.
https://twitter.com/Orlaodo