The redoubtable Mr Justice Peter Kelly is out of sorts. Not only is he a little upset that he is required to rule on matters in the Quinn saga, based on an Act, the IBRC Act 2013 rammed through the Oireachtas last week, without actually seeing a copy of the Act, because the bunch of drunks – literally in some cases based on the demeanor and outbursts of some and the fact the Dail bar was open until the wee hours – who voted to enact the emergency legislation early last Thursday morning to liquidate IBRC, has not bothered to make the Act available on the Government website. Judge Kelly has been operating on the basis that the Bill that he has sight of, was not amended before being signed into law – “not satisfactory” is the euphemism deployed by the Judge with having to rely on a Bill, but we know what he really means.
This morning, the Government may be equally concerned at the approach taken by Judge Kelly in a NAMA case yesterday. NAMA is pursuing a developer Kevin McNulty over €88m loan facilities provided in 2009, and Kevin and his legal team are manouevring to claim that, because Anglo was insolvent in 2009, the loans were consequently negligently advanced and that this fact would mitigate, if not indeed wipe out completely, any liability.
Whilst acknowledging that reckless lending has not been established in Irish law as a defence to liability, the Judge noted, according to Ann O’Loughlin in the Irish Examiner today “this case involved claims that loans were advanced negligently. He considered Anglo’s solvency relevant”
The upshot of the preliminary hearing yesterday at the High Court was that “an Anglo official” has to produce an affidavit in advance of the full hearing in June 2013, to confirm “yes or no” if Anglo was insolvent in 2009, and given the need to inject €25bn of promissory notes into Anglo in 2010, it is a safe bet that Anglo was indeed insolvent in 2009. And that being the case, the spectre has now been raised of the Judge dismissing NAMA’s application to recover €88m of loans, and Kevin McNulty walking away scot free.
If the Judge allows this defence to be pursued then AIB – which received a €20bn bailout – EBS – which received a €1bn bailout – INBS – which received a €5.4bn bailout – PTSB – which received a €4bn effective bailout and even Bank of Ireland – which received a €4.7bn gross bailout, might all find that they cannot enforce loans which were provided between 2008-2010.
Which may lead to further billions of loan losses in the banks – there will have been some new facilities in 2009, but other facilities will have been reconfirmed and received additional advances.
NAMA yesterday disputed that any of this was relevant and we know that there are draconian terms in the NAMA Act which absolve NAMA of responsibility for the actions of the lenders whose loans NAMA has acquired. But we are awaiting a ruling or view from the Attorney General, MAire Whelan, from a referral by Judge Charleton last October 2012 as to whether these terms in the NAMA Act are constitutional.
Time to sober up.
Dose this mean that any loans given out by the banks from 2004 onwards would be invalid as air and BOI were on paper insolvent from that time onwards
@Dan, at this stage, it means nothing other than Judge Kelly appears willing to consider the proposition in the case of Anglo, in the case of Anglo loans advanced in 2009, that if the bank was insolvent, and if the bank was negligent in its lending, then there might be a defence. Lots of “if” s in there!
http://www.irisheconomy.ie/index.php/2013/02/10/more-on-the-pro-note-deal/#comment-379061
@Grumpy, Judge Charleton’s referring of a section of the NAMA Act to the Attorney General won’t invalidate the whole NAMA Act. This is the blogpost on the matter, and as far as I know, the Attorney General has still not provided her view.
https://namawinelake.wordpress.com/2012/10/11/constitutionality-of-nama-act-questioned-by-high-court-judge/
There wont be a legal exit from this malaise I feel. Peter Kelly might huff and puff but intimately will do what he doesnt even need to be told to do.
If that happens, every mortgage in this country should be written off the following morning.
Let us be clear. There is a cohort of heavily indebted people in this country, mostly from the professions, who have been manipulating and lobbying for changes in the law to have their own personal debts written off at the expense of everyone else. These people should be immediately declared bankrupt as it is clear that leaving them to operate while under their debts has lead to a shocking corruption of the body politic.
Ireland was bad before and during the boom. But since the crash the civic and legal structure of the state has begun to slowly disintegrate. The cause is a rising damp of debt, seeping upward to the wigs of top barristers and judges, and already drowning senior solicitors, auditors, accountants, doctors and civil servants. The decisions of the professions cannot be trusted while they are saturated with these debts.
The PIA bill is not sufficient. There needs to be a wave of swift bankruptcies across the professions in Ireland. The sooner the better. Otherwise we may be subject to a wave of outrageous decisions from the courts, writing off the debts of the properly connected, and landing their losses on the backs of the rest of us.
Are there decisions by particular judges or actions already taken by particular professionals that you have in mind that indicate such a trend? Obviously no need to name names, but a very general description of the sort of thing you have in mind would be very interesting.
@omf
“But since the crash the civic and legal structure of the state has begun to slowly disintegrate.”
Interesting observation.
legislative structures are certainly a shambles, legal structures are in reactive mode with regard to ‘Dosh’, government bank & private.
Property rights are getting a bit of a bashing.
Civis structures; we are essentially a law abiding people, I wonder what will happen as more and more people are taken through the court system for non payment of household charges, rates etc. not because they don’t want to but because they can’t.The Can’t kick the Can Citizen crowd has to get larger; like I said we are essentially a law abiding race.
The law will say: “If the borrower had the benefit of the money he is liable for repayment of the money.”
The negligence thing is a red-herring: regardless of the state of solvency of the lender, the loan was advanced on commonly accepted terms + the borrower would have to show he was harmed in some way. By his own greed?
Trading while insolvent is against the law, but I can’t see it going to the root of a security, much less a credit agreement.