[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.