The Supreme Court allowed an appeal by a group of property companies and Patrick McKillen, setting aside the High Court’s findings on whether borrowers were entitled to be heard before the National Asset Management Agency (NAMA) decided to acquire eligible assets linked to their loans.
In a judgment delivered by Macken J on 12 April 2011, the court concluded that the proposed acquisitions could materially affect the appellants’ interests in underlying property, rental income and contractual arrangements with their banks. It held that fair procedures required a right to be heard and that NAMA had not provided sufficient justification for a blanket refusal of that right.
The case concerned NAMA’s proposed acquisition of eligible assets, including loans and the banks’ interests in related securities. The appellants argued that the transfers and powers available to NAMA under the National Asset Management Agency Act 2009 could affect property value, income streams, guarantees and their existing arrangements with lenders. NAMA argued that the legislation did not give borrowers a hearing, that adding one would burden and delay the scheme, and that transferring the assets would have no or minimal effect on the appellants’ rights.
Macken J said NAMA initially acquired bank debts and associated securities, rather than the underlying property itself. But the Act also gave NAMA powers, including the ability to seek a vesting order, that could alter the practical position of borrowers. The judgment discussed how a vesting order could end a borrower’s equity of redemption and allow NAMA to hold property without a specified sale deadline. It also raised potential effects on rental income and guarantors. These were part of the court’s analysis of possible interference, not findings that those consequences had already occurred in this case.
The court’s decision was limited to fair procedures and the right to be heard. It did not determine whether the appellants would persuade NAMA against acquiring the assets, or what the result of any hearing should be. Macken J said the form of a hearing could depend on the circumstances and could range from a court-like process to written submissions.
Other issues initially raised in the appeal had already been dealt with in earlier Supreme Court judgments: the original NAMA acquisition decision was held to be a nullity; a challenge concerning six specific considerations was moot; and the High Court’s interpretation of the European Commission’s approach was upheld. The constitutional issue remained among the matters before the court, but this judgment’s concluding order allowed the appeal and set aside the High Court findings on fair procedures.