NAMA builder to pay damages if legal bid fails
Published 21/07/2010 | 05:00
DEVELOPER Paddy McKillen promised to pay NAMA damages for any financial losses it suffered as a result of delays caused by his legal challenge to the toxic bank.
NAMA demanded a pledge from Mr McKillen -- who originally sought to stop the agency from taking over an €80m tranche of loans he holds with Bank of Ireland -- that he would pay NAMA damages for losses it suffered as a result of not being able to take over his loans.
Potential losses include a drop in the market value of the properties or if tenants tried to stop paying rent.
Under the 2009 NAMA Act, anyone wishing to challenge the agency must agree to compensate it if their defence fails, as part of a comprehensive set of measures designed to prevent vexatious claims.
The promise-to-pay damages issue lapsed this week after NAMA told Mr McKillen that it would not transfer any of his loans pending the outcome of his judicial review proceedings, the first challenge against NAMA, which will be heard in the High Court in October.
Mr McKillen, who claimed the transfer of his loans would result in "irreparable" prejudice that could not be remedied by way of damages to his companies, is engaging a host of constitutional law, banking and property experts to assist him in his fight.
He will argue before the High Court that he is a property investor rather than a developer and will claim his loans are not suitable for transfer as they are commercial rather than land and development loans.
The litigation comes as Mr McKillen's Maybourne Hotel Group is locked in talks to refinance some €700m in bank loans split between Anglo Irish Bank and Bank of Ireland.
The Maybourne owns Claridges, the Connaught and Berkeley hotels in London. Although the hotels are not in themselves development properties, they have been described as associated assets financed by NAMA banks of developers.
Mr McKillen will seek to distinguish himself from other developers who are being transferred to NAMA by claiming that the only assets capable of being transferred to the agency are land and development loans.
Three senior counsel have been engaged by Mr McKillen, including company law expert Michael Cush who steered developer Liam Carroll's Zoe Group through its examinership odyssey.
Shane Murphy and John Gleeson -- brother of former attorney general Dermot Gleeson -- are also helping him in his challenge against NAMA's power to decide what assets are suitable for transfer.
The Government has sought to thwart legal attacks on NAMA through a range of planned restrictions on judicial review, injunctive relief, rights of appeal and legal costs.