The betting is that the Treasury Holdings’ appeal of NAMA’s victory in the judicial review case, will now be abandoned now that KBC has had liquidators appointed to the group. A pity really, because Messrs Ronan and Barrett with their unsurpassed barrister Michael Cush SC might really have gotten stuck into the NAMA Act which received a body blow in the Paddy McKillen appeal at the Supreme Court in 2011. Today at the High Court in what is otherwise a seemingly common-or-garden case, the judge referred a section of the NAMA Act to the Attorney General, Maire Whelan
The case today involves a judgment order obtained by NAMA against a Limerick businessman, John Hegarty and borrowings he had with AIB for property in Clonmel and Maynooth. John Hegarty says that he is only responsible for 50% of the borrowings on the property, a shopping centre, in Clonmel as a result of representations he claims were made to him by AIB. In the High Court today, Mr Justice Peter Charleton, decided that John has an arguable case, and it seems that NAMA is potentially not going to be able to rely on section 101 of the NAMA Act which says that if NAMA wasn’t aware of assurances and the like given by the bank, in this case AIB, when the loan was acquired by NAMA, then NAMA is not bound by such assurance.
Judge Charleton seemingly disagrees and has referred section 101 to the Attorney General. We will now wait to see if she agrees that there is an issue with this section, and if she is, presumably the section will get referred to the Supreme Court to rule whether or not it is constitutional.
Looking at section 101 in the cold light of day in 2012, it is hard to accept that we drafted such draconian legislation in the depths of the crisis in 2009, that would deny a legitimate claim by a borrower that a bank had given him an assurance or representation which NAMA could then repudiate if NAMA was not made aware of the representation by the bank, when NAMA was acquiring the loan.