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NAMA Taken on by Property Developer

DATE: 23.06.2011

 

Paddy McKillen, a well known property developer with companies owning approximately sixty two properties, mostly spread across Ireland and the UK, including the UK hotels Claridges and the Berkeley, has brought judicial review proceedings against Ireland’s National Asset Management Agency (“NAMA”). Mr McKillen has exposure to some €2.1 billion worth of loans to the five institutions participating in NAMA.

A three judge divisional court was established to hear the case. Such courts are established when the matter being tried is of major constitutional or legal importance. Mr Killen’s loans have been taken over by NAMA. However, his case is that in doing so, NAMA has violated his property rights under the Constitution. He has also claimed that, in refusing to engage with him on the matter, there has been a violation of his rights to fair procedures. Mr McKillen has argued that his loans are performing and that, as such, they do not constitute ‘eligible bank assets’ for the purposes of the legislation establishing NAMA.

The architect of the NAMA legislation, Paul Gallagher SC, Attorney General, represented the State and defended the case by pointing to the fact that several of Mr McKillen’s loans have expired and that others were in breach of loan covenants.

Judgement against Mr McKillen in the case was delivered on 1 November 2010. The court ruled that it was not concerned with deciding if the policy options adopted by parliament as a solution to the banking crisis were the best solutions, rather, the court was concerned with the question whether there was a rational basis for the selection of those policy options. In this case the court was satisfied there was such a rational basis and that, therefore, Mr McKillen’s judicial review application failed. Mr McKillen was given leave by the High Court to appeal the constitutional law and fair procedures aspects of the High Court decision to the Supreme Court. Given the importance of these issues, it is expected that the Supreme Court will give the appeal a prompt priority hearing.

Julie Murphy O’Connor

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