The Supreme Court has ruled that Patrick McKillen and his companies are entitled to be notified and heard before the National Asset Management Agency (NAMA) decides whether to acquire their loans under section 84 of the NAMA Act 2009.
In a judgment delivered on 12 April 2011, Mr Justice Hardiman said the borrowers were affected by the proposed discretionary decision and were not covered by any established exception to fair procedures. He said they must receive enough information, including the criteria NAMA intends to apply, to make their case. The court did not require an oral hearing, leaving the form of the process to depend on the circumstances. Hardiman J said a person affected would also “very probably” be entitled to reasons for any decision.
The ruling concerned a proposed fresh decision. A purported decision by four people to acquire the loans, made on 11 and 14 December 2009 before NAMA came into being, had already been held void by the Supreme Court on 3 February 2011. NAMA then said it intended to consider the matter again under section 84, but maintained that the borrowers had no right to a hearing. The fair procedures issue remained for the court to decide; other issues about relevant considerations had become moot, while the State aid issues had been resolved in NAMA’s favour.
Hardiman J noted that NAMA had discretion over whether to acquire particular eligible bank assets, and that section 84 allows it to consider factors including security, loan performance and other relevant matters. He also noted that banks had been invited to object to proposed acquisitions, including on commercial grounds, while borrowers had not been given that opportunity.
The judgment relied on evidence that the McKillen portfolio’s loans were performing and interest payments had been made. It described the properties as generating about €150 million in annual income, with about 96% occupancy. Those were findings recounted from the earlier Divisional Court judgment, not a fresh decision on whether the loans qualified for transfer or should be acquired.
Hardiman J said the court was deciding only whether the borrowers had a right to be heard before a new section 84 decision. It was not ruling on whether acquiring the loans would itself be lawful or constitutionally permissible, nor directing NAMA to acquire or reject them. The earlier purported acquisition decision remained void.