The Supreme Court has ruled that a group of companies linked to property businessman Patrick McKillen must be allowed to make representations to the National Asset Management Agency (NAMA) about the likely effects on them before it decides whether to acquire their loans.
The ruling, delivered by Mr Justice Fennelly on 12 April 2011, allowed the companies’ appeal and declared that NAMA must permit those representations. The Court did not direct NAMA to hold an oral hearing, prescribe a process, or decide whether the loans should be acquired.
The appeal concerned NAMA’s power under section 84 of the National Asset Management Agency Act 2009 to acquire eligible bank assets. The Court had previously decided that NAMA had not yet made an acquisition decision concerning the appellants’ loans. It was informed that NAMA’s board had decided on 1 March 2011 to acquire them, but that decision was not before the Court. The question whether the borrowers could be heard before an acquisition decision remained live.
The appellants argued that a transfer could materially affect their property business, including its financing arrangements, income, property interests and commercial reputation. Their evidence described a portfolio of about 62 properties and reliance on short-term loans, some of which had expired or breached loan-to-value covenants. The judgment recorded that interest payments had been met and no loans had been called in on those grounds at the time described. The Court did not determine whether the loans were impaired or resolve the disputed extent of any financial effects.
NAMA argued that its acquisition discretion was directed to the agency’s statutory purposes and did not require it to consider borrowers’ interests. The Court rejected the claim that the Act excluded such consideration where a borrower’s interests could be affected. It also held that the right to be heard was not confined to cases involving direct interference with the legal substance of a right: material practical effects on the exercise or enjoyment of rights could qualify.
The declaration is limited. The appellants may make representations about the likely effect of an acquisition decision on their particular interests. They cannot use that right to address other factors NAMA may consider. The Court left NAMA to decide the process, taking account of urgency; it said an oral hearing was not required by its ruling. The decision addressed the right to make representations before an acquisition decision, not the merits of acquiring the loans.