Exclusive! Latest documents in NAMA’s cases against Sean and Gayle Dunne – each side accuses other of trying to “annoy, embarrass and oppress”

NAMA’s pursuit of the Dunnes in Connecticut continues and throws up drama on most days with each side filing applications and affidavits. At its heart, NAMA which is owed €185m by Sean Dunne is trying to get its hands on money or assets in the possession of the Dunnes, Sean and his wife Gayle and claims that there were fraudulent transfers of wealth from husband to wife aimed at hiding the wealth from creditors. And at its heart, the Dunnes are saying they do indeed still have wealth, but it is Gayle’s own wealth, and this wealth comes about from perfectly lawful transfers between husband and wife during the good years. Today, we can exclusively bring you the latest filed documents in the case – there are two very large PDF files here and here.

In recent days, NAMA has succeeded in getting the case classified as a “complex case” which appears just to mean that the hearing will last about four weeks and will be heard by the same judge throughout. The Dunnes have filed a motion to dismiss some of the aspects of NAMA’s case and they are also trying to compel several NAMA executives, including its CEO Brendan McDonagh and recently-resigned asset manager, Kevin Nowlan, to individually produce witness statements and documentation – termed “deposition notices” in the US -and NAMA is very upset about this request.

So, what do we learn? Sean claims that by June 2007, he had a net worth of €500m. Gayle, who is now styled “Gayle Killilea-Dunne” was never indebted to NAMA. NAMA is accused of pursuing Gayle for “public relations” purposes. Sean says that Gayle was “never a shareholder or director of any of the corporate entities” that Sean owned/and or controlled.

As regards the Swiss property, the apartment at 48 Chemin de Grange-Canal, 1224 Chene Bougeries, Switzerland, Sean says this was bought in 2008 when he was still a very wealthy businessman but crucially it was financed by Gayle and it just happened that Sean’s name was on the title in order that both the Dunnes as a couple could establish a basis for seeking Swiss residency, and once that residency was established, Sean transferred his minimal interest to Gayle and was released from guarantees on a loan to fund the property. The property was financed with a loan from Credit Suisse and the balance was paid by Gayle from her own funds, says Sean.  Remember that the Swiss property was sold for more or less what the Dunnes paid for it.

Sean claims that the Connecticut courts have no jurisdiction over this transaction at all since at the time, Sean and Gayle were Irish nationals with Swiss residency, and Sean says that NAMA would not even be able to challenge the Swiss transaction under Irish law.

As regards Gayle’s application to force the NAMA executives to appear as witnesses, NAMA objects to having to produce documentation which it says is confidential and also claims the Dunnes can get the documentation more easily elsewhere. The Dunnes’ request says NAMA is “designed solely to annoy, embarrass or harass [NAMA] and cause [NAMA] undue burden and expense” There are 11 sets of documents sought by the Dunnes and each request gets the same stock response from NAMA – the documents are protected by attorney-client, work doctrine or other privilege and can be obtained elsewhere by the Dunnes.

We also see motions by NAMA seeking to compel production of information by the Dunnes which are also drafted in colourful language with NAMA claiming “the Court has already deposed of Killilea’s frivolous objections.  Thus Killilea no longer has any excuse for her non-compliance”. Poor old Gayle is also accused of filing “rote objections” and her objection is cattily described as “Objection [sic]” It seems Gayle has objected to producing documentation in terms which are almost identical to NAMA’s when she says “[NAMA] Interrogatories were designed to annoy, embarrass, oppress and cause undue burden and expense” Not only that but NAMA having previously succeeded in getting an order from the Judge compelling production of documents, NAMA says that Gayle continues to “stonewall” because the order obtained by NAMA was insufficiently specific, particularly with respect to dates and the judgment only apparently dealt with one aspect of Gayle’s objections. NAMA says that Gayle has “ignored and flouted the spirit..and letter” of the judge’s order directing production of documents.

It gets better – NAMA says that Gayle’s “assertion that [NAMA] has admitted that its claims of fraudulent transfer are speculative is flatly false. To the contrary, the allegations are well supported and [NAMA] is confident they will be born-out[sic] by the discovery which Killilea is preventing [NAMA] from obtaining” NAMA is after 43 sets of information which is pretty extensive and covers the dealings that are at issue in considerable detail. If you are a developer living in Ireland or elsewhere, this is the sort of discovery you can expect NAMA to seek if they suspect improper transfers.

As they say, “the case continues”, but at this juncture we wait to hear if the judge in Connecticut will compel NAMA to produce information, will compel the Dunnes to produce information and if it will dismiss part of NAMA’s case for lack of jurisdiction.

What may become an issue shortly is NAMA’s legal costs in the case. The Agency has employed firms and individuals known to be expensive, particularly McCarter and English, yet has only disclosed €8,000 of legal costs in its recent parliamentary response to a question, and not only that, says that these costs have been added to the debtors’ loans, presumably in this case Sean Dunne’s loans, and are recoverable. Regardless of what transpires in the case in Connecticut, if NAMA thinks it is getting €185m plus these US legal costs out of Sean Dunne, the Agency is crackers. Which begs the question why NAMA is saying the legal costs can be recovered and is booking them to its balance sheet rather than its profit and loss account. There may be a further issue that is specific to the US courts system, with costs being borne by each party regardless of case outcome, but that may be spurious if NAMA claims damages.

UPDATE: 11th February, 2013.  There is a key hearing in the Connecticut Superior Court today where the Dunnes are seeking to have the NAMA case thrown out on the grounds that the US courts do not have jurisdiction in  the case, with the €185m judgment obtained in Ireland, NAMA and the Dunnes being Irish and the Swiss apartment being in…. Switzerland. The betting is that the Dunnes are unlikely to succeed and that the next key milestone will be the deposing of the former NAMA employee, Kevin Nowlan later this month. The full case is not scheduled to be heard until September 2014.