A SEVEN-JUDGE Supreme Court has begun hearing the appeal by property investor Paddy McKillen aimed at preventing the proposed transfer to the National Assets Management Agency (Nama) of some €2.1 billion in loans made to himself and his companies.
The proposed acquisition would be “a commercial disaster” for Mr McKillen and was based on a total denial of his constitutional right to fair procedures, Michael Cush, for Mr McKillen, argued yesterday.
While the State would argue the economic crisis justified the total abrogation of that right in the Nama Act 2009, legal cases from the McCarthy era in the US showed the courts must guard this right “in times of calm and of trouble”, counsel said.
Counsel stressed he was urging this right only on behalf of Mr McKillen in circumstances where, unlike many others going into Nama, he was not a loan defaulter, most of his loans were performing, and only a tiny percentage were land and development loans.
The Irish courts had never sanctioned a total denial of the right to fair procedures, and the High Court, in dismissing Mr McKillen’s bid to stop the loan transfer, failed to properly analyse the justification for the breach of fair procedures, confusing it with the justification for breach of property rights, he added.
Mr Cush said the value of the properties on which his clients’ loans were secured, after the clearance of mortgages and encumbrances, was some €200 million.
Mr Cush was opening the appeal by Mr McKillen and 15 of his companies against the rejection by a three-judge High Court last month of their challenge to the transfer to Nama of their loans with Bank of Ireland. The appeal, listed for three days, has implications for other loans held by the applicants with other participating financial institutions in Nama.
A central issue in the appeal is the fair procedures point – whether the High Court was correct in finding, under the Nama Act 2009, Mr McKillen had no right to be heard prior to the decision by Nama to acquire the loans.
The appeal raises all five issues which formed the basis of Mr McKillen’s case in the High Court.
The first issue, the fair procedures argument, is a claim the McKillen appellants were entitled to be heard before any decision was made by Nama to acquire the loans on the basis that such acquisition interferes with their constitutionally protected rights, including to property and to earn a living.
The second issue is that Nama failed to take into account relevant considerations when deciding to acquire the loans. The third issue is that Nama’s decision to acquire the loans is legally flawed, as it was taken prior to the agency coming into existence.
The fourth issue is a claim that the European Commission decision permitting the State to grant aid under the Nama Act imposed an obligation on Nama to only acquire loans from impaired borrowers. Mr McKillen contends he is not an impaired borrower.
The fifth, constitutional issue, raises two points. It is claimed that if Mr McKillen is correct he is entitled to fair procedures, but if the State is correct there is no implied entitlement to fair procedures in the Nama Act.
If there is no entitlement for Mr McKillen to be heard and if the Act permits loans to be acquired from impaired borrowers, it is argued those provisions of the Act defining “eligible bank assets” – bank assets capable of transfer to Nama – are unconstitutional.
