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.