Treasury will use Constitution to challenge NAMA legislation
TREASURY Holdings has launched a constitutional challenge to NAMA that claims parts of the law that set up the bad bank are illegal.
The new action by the Johnny Ronan and Richard Barrett-owned firm comes as Treasury also begins a legal action seeking damages. The latest two cases mean Treasury is now juggling three NAMA-related court actions.
In March, the High Court gave Treasury the go-ahead to challenge the fairness of NAMA's appointment of receivers to much of its portfolio of Irish properties earlier in the year. That case is being taken through a judicial review.
The latest case will up the ante even further, with Treasury now seeking damages from NAMA for losses it claims to have suffered as a result of what is expected to be presented as unreasonable and unfair actions taken against the firm -- including placing its prized Battersea Power Station development in London into administration last year.
Treasury is expected to argue that NAMA acted in breach of its statutory duties as a state agency. It will also argue that NAMA acted in breach of Treasury's constitutional rights and in breach of contract in its deals with the developer in that case and in other actions, including taking control of a bank account containing €6.8m that is linked to the up-market Ritz Carlton development in Wicklow.
The scale of Treasury's boom-era activities and the value of the properties involved means NAMA could be hit for hundreds of millions of euro if Treasury succeeds with the damages case.
However, the developer faces a major hurdle because the 2009 legislation that originally set up the bad bank includes clauses that specifically rules out NAMA being liable to developers for damages as a result of actions taken in the course of its work.
Treasury's second legal action is aimed at addressing that point -- by challenging the constitutionality of the NAMA legislation, in particular where it rules out liability for damages but also the basis set out for the appointment of receivers.
Treasury is being advised by solicitors DAC Beachcroft and barristers Michael Cush and Michael Collins. A spokesman for NAMA said the agency would not comment on the individual case, but said it will defend its position vigorously.
While the details of the new cases have yet to emerge, Treasury's damages claim is understood to be focusing on a joint decision by NAMA and Lloyds bank to take control of Battersea Power Station.
Treasury believes NAMA damaged the company and acted unfairly and unreasonably, in particular by refusing to sell loans backing the project to a Malaysian investor who had been lined up to help complete the multi-billion euro development.
Treasury will claim that the Battersea loans could have been sold to Malaysia's SP Setia under a deal that would have immediately recouped cash for the State and at the same time boosted Treasury's longer term chances of paying back other NAMA borrowings. Treasury believes a deal would have allowed Treasury to share in billions from a successful development of the Battersea site.
NAMA and joint-lender Lloyds instead opted to place the development into receivership, and ultimately to put the site on the market without completing the development.
Treasury's action is expected to include a claim that it has suffered substantial reputational damage at the hands of NAMA, damaging its ability to get deals done as far afield as Russia and Ireland and hurting shares in a connected Singapore based entity.
NAMA argued in court last February that it has taken its actions against Treasury after the borrower became hopelessly insolvent.