In the last newsletter, we outlined the outcome of the High Court judicial review proceedings being taken by property investor Paddy McKillen against the decision of NAMA to take over his loans to the value of some €2.1 billion. The main basis of McKillen’s argument was that the decision to acquire his loans was made by an interim management team prior to the formal establishment of NAMA, and that the decision was not subsequently ratified by NAMA. The High Court rejected Mr McKillen’s application and the Supreme Court permitted a priority hearing of the appeal of the constitutional law and fair procedures aspects of the decision, which were heard in late December 2010.
A unanimous Supreme Court of seven judges ruled in Mr McKillen’s favour that, in the circumstances, the decision to acquire the loans was not valid and had no legal effect. In giving its decision, the Court rejected any suggestion of the decision being merely technical, and stressed the imperative for statutory bodies to act in accordance with their powers as set out in statute. As the court found the decision to be null and void, it deferred the outstanding issues in relation to the constitutionality of NAMA and whether it followed fair procedures to allow both parties to consider whether ‘justiciable’ controversy remained between them on these issues. Ultimately, having further heard both sides on this issue, the Supreme Court has decided to rule on both of these issues, though a date has not yet been given for such ruling. While the Supreme Court’s decision in McKillen’s favour was predicated on specific procedure adopted in acquiring Mr McKillen’s loans, and, as such, does not have widespread implications for NAMA generally in relation to other loans if acquired, the forthcoming ruling on the constitutionality of NAMA and whether it adopted fair procedures could have significant implications for the agency.