A British government hand-out of £800,000 to relatives of the Omagh bomb victims to help pay for a multi-million pounds compensation claim was unlawful, a judge ruled yesterday.
The payment was authorised by the Lord Chancellor in a civil action claiming compensation of £14 million against Michael McKevitt and four other men who are defendants in the case.
But his decision was challenged by lawyers for McKevitt who argued that the Access to Justice Order passed in 2003 did not give the Lord Chancellor the power to fund the Omagh families.
McKevitt (54), from Blackrock, Co Louth, is serving a 20-year sentence in the Republic for leading the Real IRA which carried out the Omagh bombing in 1998 in which 29 people were killed.
He applied for a judicial review in the High Court in Belfast and Mr Justice Coghlin made a declaration that the payment was unlawful.
The judge held that the Lord Chancellor had no legal power to order the Legal Services Commission - formerly the Legal Aid Department - to make the disputed payment.
He said the Lord Chancellor had exceeded his powers and it was up to Parliament to approve such expenditure. Bernard McCloskey, QC, appearing for the Lord Chancellor, said he would revoke his order to the Legal Services Commission and in the meantime would look at other ways of legally providing financial assistance, if necessary by changing the law.
He said that in order to comply with the judgement of the court it might be necessary to consult with other government ministers.
The court was told that lawyers had already incurred costs of over £400,000 and the judge said as the money had been spent in good faith he would not order repayment.