Judge criticises Nama over ‘slipshod’ handling of case

A High Court judge has strongly criticised Nama over a "slipshod" handling of its bid to secure € 109 million summary judgment orders against Galway hotelier and developer Michael Finn and his wife Claire over unpaid loans and guarantees.

Mr Justice Peter Kelly said he would have expected better of such a “well-resourced” body with “unprecedented” powers that in some respects eclipse those of the State.

His concerns included that a “most alarming” certificate, issued under Section 108 of the Nama Act 2009 purporting to show the couple’s loans with AIB were transferred to Nama, included a blank schedule of assets transferred.

This issue was important because such certificates, under the Nama Act, are conclusive of the matters set out in them and the court’s ability to look behind them was purportedly removed by the Act, he said.

In his view, that certificate, and another certificate relating to the couple’s loans with AIB, “certifies nothing”. The certificate relating to the AIB loans contained a blank schedule to which was stapled a document with a series of names and numbers, he said.

Given Nama’s “paucity of evidence” to show it had in 2010 taken over the AIB and Anglo loans to the couple, the judge said it was not surprising the agency had decided to withdraw its application for summary judgment against the couple and consent to the matter going to a full hearing. Had it not done so, he would have refused summary judgment.

He said he would not grant an application by Ben O’ Fhloinn, for Mr Finn, to dismiss the agency’s claim for judgment. The Finns had not argued the loans were not transferred but rather argued there was a “huge gap” in its evidence in that regard which remained unexplained. Nama may be able to address the shortcomings, he added.

Mr O’ Fhloinn had argued, despite having powers that would “make a Government blush”, Nama had failed to show it had legally taken over the loans in 2010.

Dermot Cahill, for Mrs Finn, who had also argued there was no evidence to support Nama’s claim to have taken over the loans, consented to the matter going to a full hearing.

Arising from Nama’s handing of the summary judgment application, the judge directed it to pay costs of that application to the Finns. Ciaran Lewis, for Nama, had objected to a costs order on grounds including the couple were being pursued for a large sum and, if Nama was successful at the full hearing, it may not be able to secure full repayment.

The judge also made directions for exchange of documents for a full hearing and returned the matter to December for mention.

Nama previously alleged the couple had invested € 600,000 in companies operating a high-end car resale business and transferred shares in their famiy home to their children rather than using funds to reduce their significant liabilities to it.

Nama has appointed receivers to various companies controlled by Mr Finn who is associated with several developments in Galway, including The House Hotel and Spanish Arch Hotel. It sought summary judgment arising from various loans advanced by AIB and Anglo to the couple on dates from 2008 and their guarantees over loans to two companies, Rathcotton Investments Ltd and Deveronne Investments Ltd.

In his ruling today, the judge said it was clear the Finn’s borrowings were from AIB and Anglo, not Nama, but the agency had taken the case on grounds it acquired the loans in 2010 udner provisions of the Nama Act. In affidavits and documents from Nama, “remarkably little” was said of how that occurred, he said.

Although the Finns had raised issues concerning how the acqusition occurred, documents provided by Nama, including documents prepared in recent days, did not answer those questions, he said. While the transferred loans were supposed to be listed in a schedule, one document entitled “schedule” was blank.

A document entitled “final acquisition schedule” required an elaborate execution process, involving signatures and seals of Nama being affixed, but what appeared to be a final acquisition schedule appeared not to have been executed, he said.