The Supreme Court ruling that the board of Nama never acquired Paddy McKillen’s assets made his other arguments irrelevant

IN EXAMINING the decision to acquire the bank loans associated with Paddy McKillen and his companies, the Supreme Court took a very different tack to that pursued by the three-judge divisional court of High Court in considering his challenge.

This court had carefully examined his claim that his property rights had been infringed by the purported takeover of his assets. It found they had not and that the State was entitled to take extraordinary measures to avert a banking collapse.

The three-judge court acknowledged he had grounds for arguing that his right to fair procedure had been infringed by the decision, but ultimately rejected this argument also.

The Supreme Court focused on the initial decision to take over the loans, which had been taken, not by Nama, which had not yet been constituted, but by an interim team on December 11th and 14th, 2009. The National Asset Management Agency (Nama) came into being on December 21st, following the Minister for Finance making an order under the Act, and its board was appointed the next day.

While the decision to acquire the McKillen loans was taken by the interim team, nothing was done actually to acquire them, as provided for under section 87 of the Act. If the board of Nama had taken steps to acquire the loans, this would have constituted a decision by it under the Act and then the situation faced by the court would have been different, the Supreme Court stated.

These steps are spelled out in section 87 and include the service of an acquisition schedule on the relevant financial institution, based on a consideration of relevant issues. “If that stage had been reached, any examination of whether Nama had made a decision to acquire the appellant’s loans would have had to be considered from a different perspective,” the court said.

However no such steps were taken, the court found the decision of the interim team had not been formally ratified and the fact that Nama undertook a series of actions based on the assumption that the decision was made did not constitute a decision properly made by the board under the Act.

The decision made by the interim board had no legal effect and nothing done subsequently by the Nama board gave it legal effect, given that the board did not follow the procedures in the Act necessary to make a valid decision.

So there was no reason to quash the decision, which was “a legal nullity” and all the other points – whether Nama was constitutional, whether it failed to take into account relevant considerations and whether it applied fair procedures – did not arise.

It is now open to Nama to start all over again the process of taking over the McKillen loans, armed with full knowledge of the objections he might make and therefore able to counter them.

The court made specific reference to the issue of fair procedures, commenting that “whether the appellants are entitled to fair procedures does not affect this legal point [the legal nullity of the decision].”

This suggests the issue of fair procedures might have arisen if Nama had made the decision to acquire the assets, without permitting any representations from Mr McKillen.

Undoubtedly the board of Nama will have noted this point and will give it due consideration in their future deliberations.