Paddy McKillen has a high mountain to climb in his legal challenge to Nama, writes CAROL COULTERLegal Affairs Editor
BUSINESSMAN Paddy McKillen is challenging the National Assets Management Agency (Nama) on a number of legal issues, including that its taking over of his loans violated his property rights under the Constitution.
He is claiming that this affects his business reputation, affects his ability to raise funds internationally, and that it violated his rights to fair procedure by refusing to engage with him on the matter.
Often cited though rarely fully discussed, Article 43.1.1 of the Constitution guarantees the right to “the private ownership of external goods”, and Article 43.1.2 guarantees to pass no law to abolish the right to own private property or to inherit it.
Article 43.2.1, however, which is less frequently quoted, qualifies this by recognising that these rights “ought…to be regulated by the principles of social justice” and Article 43.2.2 allows the State to “delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good”.
The State will undoubtedly rely heavily on “the exigencies of the common good” in its defence of Nama against any challenge based on the private property rights of an individual.
It has long been recognised by the courts that the right to private property is not absolute, and the State is entitled to regulate property rights in the interests of the common good even if it means certain people are discommoded as a result.
Mr McKillen is claiming that his loans are not “eligible bank assets” as they are performing, and he is concerned about the impact of the guilt-by-association of their transfer to Nama along with other non-performing loans.
However, according to a senior counsel who is an expert in property law, it was never intended that only bad loans would be taken into Nama. “If the common good is to be enhanced, which was the purpose of Nama, it involved taking over all development loans over €5 million. Everyone is going into Nama.”
Mr McKillen might have a case if Nama was only taking over bad loans, but this was not the case, the source said.“Nama is only a bank. There are no more stringent conditions attached to its loans than those of any other bank. It’s not necessarily a prejudicial contractual position. There has been no change in property law; it is all operating under existing mortgage law. It would be the same if a bank to which he owned money was taken over by another bank.”
However, the judicial review will also examine process, including the process whereby the loans were transferred. One of Mr McKillen’s complaints is that he was not allowed make representations to Nama.
This involves the issue of fair procedures. Fundamental to fair procedures is the right to be heard, and Mr McKillen may have a good case on this issue. If he wins on this issue, however, it will not be lethal for Nama as any defect in the procedures can be corrected by it adopting a more nuanced approach.
His central point, though, appears to be the reputational one, and the impact on his international business and credit reputation of being brought into Nama with the implication, according to him, that his loans are not performing. This will be examined in great detail in the court case, his financial affairs will be put into the public domain and his claims will be subject to cross-examination by some of the brightest lawyers in the land.
That should scotch any unwarranted suggestion that he is not solvent.
So even if he loses, he wins.
