Dellway Investment Ltd & Ors -v- National Asset Management Agency & Ors, [2010] IEHC 364 (2010)

Docket Number:2010 909 JR
Party Name:Dellway Investment Ltd & Ors, National Asset Management Agency & Ors
Judge:Kearns P., Kelly J., Clarke J.
 
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THE HIGH COURT

COMMERCIAL

JUDICIAL REVIEW

KEARNS P.

KELLY J.

CLARKE J.

2010 909 JR

BETWEEN

DELLWAY INVESTMENT LIMITED, METROSPA LIMITED, BERKLEY PROPERTIES LIMITED, MAGINOTGRANGE LIMITED, MAY PROPERTY HOLDINGS LIMITED, SCI 20 PLACE VENDOME, DIRECTDIVIDE TRADING LIMITED, SUBMITQUEST LIMITED, BELFAST OFFICE PROPERTIES LIMITED, THE FORGE LIMITED PARTNERSHIP, FINBROOK INVESTMENTS LIMITED, CONNIS PROPERTY SERVICES LIMITED, FORMCREST CONSTRUCTION LIMITED, CHESTERFIELD (THE PAVEMENTS) SUBSIDIARY LIMITED, ABEY DEVELOPMENTS LIMITED AND PATRICK MCKILLENAPPLICANTSAND

NATIONAL ASSET MANAGEMENT AGENCY, IRELAND AND THE ATTORNEY GENERALRESPONDENTS

JUDGMENT of the Court delivered the 1st November, 2010

  1. Introduction

    1.1 It is hardly surprising that the economic crisis which has affected the country over the last two to three years has generated much debate and controversy, both as to its causes and cures. Likewise, it is hardly surprising that the policy measures put in place to attempt to solve the problem have themselves generated significant controversy. As this is the first occasion in which the courts have been called on to deal with important issues concerning those measures, it is important to start by setting out what the proper role of the courts in such a controversy actually is.

    1.2 In opening the case counsel on behalf of the applicants (respectively “Mr. McKillen” and where the context so requires, his companies) emphasised what this case was not about. Counsel was undoubtedly correct when he indicated that the case is not about whether the National Asset Management Agency (“NAMA”) is the best or even a good solution to the problems with which the country is faced. It is important to emphasise how the Constitution divides the powers of the State. The executive power of the State is conferred on the government (Article 28.2). The legislative power is conferred on the Oireachtas (Article 15.2). The judicial power is conferred on the courts (Article 34.1).

    1.3 While there may from time to time be some debate as to the precise demarcation lines between those powers, the broad thrust of the constitutional arrangement is clear. Within the bounds of what is constitutionally permissible, it is for the government to determine the solutions to any problem, large or small, which the political process may decide requires attention. If the solution determined on by government can be put into practice in exercise of the executive power of the State or under existing legislation then the government may, again subject to the limitation of what may be constitutionally permissible, implement such solutions. To the extent that any solutions decided upon may require legislative intervention then it, of course, follows that the Oireachtas must be persuaded to pass the necessary legislation. Again, subject to the bounds of what is constitutionally permissible, it is for the Oireachtas to determine whether it wishes to pass that legislation and it is no function of the courts to determine what legislation should be passed.

    1.4 In addition to determining the limits of what may be constitutionally permissible where measures put in place affect legal rights, the interpretation of any such measures (including if necessary an interpretation consistent with the Constitution under the so-called double construction rule) is, of course, a matter for the courts. Likewise, the question of how legislation, properly interpreted, is to be applied to the facts of any individual case is a judicial matter for the courts.

    1.5 The courts do, therefore, have a significant role but it is important to note the limitations of that role. The courts can consider the boundaries of what may be constitutionally permissible, the interpretation of legal measures, and the application of the law to the facts of individual cases. Within the bounds of what is constitutionally permissible, it is no function of the courts to consider whether measures adopted by either Government or the Oireachtas are the best or even a good solution to the problems which they seek to address.

    1.6 It is also important to emphasise that within the role properly conferred on the courts by the Constitution, the courts will, in the words of the declaration required of any judge on appointment, fulfil the Courts judicial role “without fear or favour” and will “uphold the Constitution and the laws” (Article 34.5). The Court must, therefore, approach this case without fear or favour either to the State and its authorities or to Mr. McKillen and his companies. The Court’s role is to determine the boundaries of what may be constitutionally permissible, to interpret the legislation and any other relevant law, and to apply that law to the facts of this case. It is no more and no less than that.

    1.7 To the extent that questions of European law, which are part of the function of national courts to apply, may be relevant it is, of course, also the function of the courts to apply that law in the course of any determination.

    1.8 Finally, it is appropriate to note that this case is limited in one other important respect in its scope. What the Court has already noted represents the boundaries of the Court’s role in any case. However, in most litigation it is the function of the court solely to address those issues which the parties choose to raise. In that context, it is important to note that Mr. McKillen does not, primarily, mount a challenge to NAMA and the National Asset Management Agency Act 2009 (“the Act”). Rather, his challenge is more narrowly focused to a number of specific issues to which the Court will shortly turn. While Mr. McKillen does seek, as a fallback position, a declaration that certain aspects of the Act are inconsistent with the Constitution, it was made clear by counsel on behalf of Mr. McKillen that the constitutional challenge aspect of the case was an ultimate fallback position and did not represent the primary claim brought.

    1.9 On the basis of the case made on behalf of Mr. McKillen, the constitutional challenge only arises in the event that the Court concludes, contrary to other aspects of Mr. McKillen’s case, that the proper interpretation of the Act allows for the transfer of loans currently existing as and between Mr. McKillen and various banks who are within the NAMA scheme in circumstances where such transfer is permitted under the Act, notwithstanding Mr. McKillen’s contention that the relevant loans are not impaired and are also permitted in circumstances where Mr. McKillen is not entitled to be consulted or heard prior to the relevant acquisition. Against that general background, it is appropriate to turn first to the issues which do arise.

  2. The Issues

    2.1 In opening the case counsel for Mr. McKillen suggested that there were five issues or groups of issues which arose. The Court did not understand the Attorney General on behalf of NAMA and the State defendants to disagree. In those circumstances, it is appropriate to set out those issues in the order in which counsel placed them.

    The Fair Procedures Argument

    2.2 Under this heading Mr. McKillen argues that the Act interferes in a significant way with his constitutionally protected rights. In those circumstances it is said that the Act can, and should, be interpreted as affording Mr. McKillen an entitlement to be heard before any decision to acquire loans to Mr. McKillen (“McKillen loans”) from qualifying financial institutions is made. NAMA contests the assertion that the acquisition of any McKillen loans amounts to an interference with a constitutionally protected right and also asserts that, on a proper construction of the Act, no entitlement to be heard is either required or can be permitted. It should be pointed out at this stage that the challenge which Mr. McKillen mounts is, strictly speaking, only to some of the loans which NAMA proposes to acquire. This point will be addressed briefly later.

    The NAMA Decision

    2.3 Under this heading it is said on behalf of Mr. McKillen that NAMA did not take into account appropriate considerations when coming to its conclusion that the McKillen loans should be acquired by NAMA. There was some debate between the parties as to the manner in which it was appropriate to characterise the considerations actually given by NAMA in its decision making process. In addition, there is a dispute between the parties as to what were the proper considerations which NAMA was required to take into account in deciding to include a loan in its acquisition process.

    The Timing Issue

    2.4 Under this heading Mr. McKillen argues that, on the evidence, the decision to acquire the McKillen loans was taken before NAMA came into existence. On that basis it is said that the decision is not legally capable of ratification and has not, in fact, been either ratified or retaken by NAMA in a legally permissible fashion. NAMA argues that a proper characterisation of the events that occurred does not bear an interpretation which renders the decision to acquire the McKillen loans invalid.

    The European State Aid Issue

    2.5 Under this heading it is agreed between the parties that the European Commission has determined that the acquisition of loans by NAMA under the Act amounts to state aid for the purposes of Article 107 of the Treaty on the Functioning of the European Union (“TFEU”). On the basis of a Commission decision (State Aid Reference No. 725/2009 – 14.4.2010 OJC 94/10) determining that the state aid contained in the Act is permitted under Article 107(2)(b), Mr. McKillen argues that, on a proper construction of that Commission decision, same imposes an obligation on NAMA only to acquire what can properly be described as “impaired loans”. NAMA and the State defendants argue that this Court has no jurisdiction to consider the issues raised, that even if the Court has such jurisdiction, a proper interpretation of the relevant Commission decision does not impose the limitation contended for, and...

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