Panic stations at NAMA in aftermath of Treasury ruling?

NAMA’s terse statement after yesterday’s judgment in the Treasury case reminded me of that old and slightly politically incorrect joke of the recently-widowed Mordechai who found that there was a five-word minimum spend when placing a death notice in the newspapers, and thus the notice appeared as “Esther dead Volvo for sale”. NAMA’s statement merely said “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”

And in truth, despite nominally winning the judicial review action, NAMA actually lost the judicial review itself with the judge ruling – in the circumstances of the Treasury case – that the decision to foreclose on Treasury’s loans was amenable to judicial review, that Treasury did have a right to be heard before NAMA foreclosed the loans and that NAMA’s procedures as a public body were unfair in the Treasury case. Were it not for Treasury apparently signing away its legal rights as a condition of the so-called “standstill agreement” in January 2012, then Treasury would seemingly have NAMA by the gooleys this morning. The “standstill agreement” meant that the appointment of receivers by NAMA was deferred pending NAMA’s examination of third party investors being brought to the table by Treasury in return for Treasury agreeing not to pursue legal action against NAMA.

What does the ruling mean for other foreclosure action? We learned in a recent Parliamentary Question from the Fianna Fail finance spokesperson Michael McGrath that “to the end of June 2012, 235 Receiver appointments had been made to 176 separate debtor connections” by NAMA and its banks.

Might some of these companies and individuals now consider legal action against NAMA claiming damages because NAMA did not offer them an opportunity to be heard, and that NAMA used unfair procedures in the appointment of receivers? Remember the judge was careful to stress that her judgment pertained to the facts and circumstances of the Treasury case, but it doesn’t seem on here that Treasury will be unique, and I would have said most NAMA debtors who had initially cooperated with the Agency and had evidence of cooperation from the Agency, could claim that their circumstances were practically the same as Treasury’s as set out in the present case. So it seems that there is the potential for a large volume of applications, in the aftermath of the Treasury ruling yesterday.

But would there be any point in such applications. Having the right to be heard and to be subjected to fair procedures doesn’t mean that if you are massively insolvent that NAMA cannot enforce loans – that would be a mockery of both the NAMA scheme and the NAMA Act. So developers may not in fact have incurred any legally assessable damages despite NAMA’s actions. On the other hand, if you were a developer who might have had third party investors or feasible plans to deal with your debt, and NAMA railroaded you into receivership, there may indeed be the potential for damages.

So, you might sympathise with the terseness of the NAMA statement yesterday and wonder if indeed the Agency is panicking at the prospect of floodgates of legal action in the wake of yesterday’s judgment.