Developer David Daly and his children have been granted leave by the High Court to challenge the demand by the National Asset Management Agency for them to repay €457 million they owe Allied Irish Banks.
Daly, his daughter Joanne and son Paul, failed in a bid to obtain injunctions restraining the activities of AIB-appointed receiver Jim Hamilton over their Irish assets, and Nama-appointed receivers Shay Bannon and Sarah Rayment over UK assets, including trophy properties in London’s Bond Street such as the Louis Vuitton building.
Mr Justice Michael Peart granted them leave to proceed with their legal challenges on the family’s contention they should have been heard by Nama prior to the agency deciding to issue letters of demand for repayment of the loans.
David Daly, of Estuary House, New Street, Malahide, Co Dublin, had told the court he had set up Manor Park Homebuilders with Jim Flavin and Joe Moran and had run it profitably for 15 years.
He had used his share of the profits to build a property portfolio, and in 1995 had been bought out and had set up Albany Homes Ltd and Trident Home Builders Ltd. He used AIB as his personal banker.
Mr Justice Peart said assets totalling €80 million had been transferred by Mr Daly into his wife Mary’s name, including about €17 million in cash. He had told the court this had been done in 2009 as part of tax planning and on the advice of his accountants and had asserted there had been nothing unlawful in doing so.
It was quite clear from correspondence between Nama and Mr Daly that Nama regarded it as fundamental to any consensus on a way forward that these assets would be transferred back by Mrs Daly so they would be available to Nama.
In negotiations, Nama had agreed with Mr Daly to reduce the cash hand-back element from €17 million to €10 million, but Mrs Daly had not been willing to transfer back all the assets Nama demanded.
Mr Daly had believed this was the main reason why Nama was unwilling to reach agreement with him, while Nama stated it was an important issue but not the only one that prevented agreement. He had considered this reason to be improper and indicative of bad faith and improper motive.
The Daly family claimed the decision to call in the loans and appoint receivers should be quashed on the basis they lacked proportionality and reasonableness for failing to await the conclusion of negotiations they believed had been ongoing between Nama and Deutsche Bank about a take-over of the loans.
The judge, who yesterday delivered a 133-page reserved judgment after a four-day hearing of the application to challenge Nama, said whether or not the loans were payable on demand had been hotly disputed by Michael Cush SC, for the Daly family, and Paul Sreenan SC, for Nama. He said Mr Daly had told the court the family’s Irish assets had been conservatively valued at €158 million and their UK assets at £269 million (€312 million). Mr Daly feared their assets would be sold off at a huge loss in a fire sale, which would cause complete loss of interest by any other bank taking over the loans.
The judge said his examination of the facts was for the purpose of being satisfied only that at a minimum a substantial issue had been raised which may be tried at a full hearing. Mr Daly had never stated precisely what was the nature of the loans he had signed for with AIB in 2007 and 2008, reviewed in 2009, but the evidence led inexorably to the conclusion there was no substance to the claim they were not repayable on demand.
“There is not a scintilla of evidence adduced by the plaintiffs of bad faith or improper motive on the part of Nama in the matter of calling in these loans and appointing receivers,” Mr Justice Peart said. He said the Dalys had merely asserted their view in that regard.
He said the picture painted to the court was one of mere assertion, speculation and groundless fear and opinion. There had been nothing of substance established and no substantial issue raised against the reasonableness of Nama’s actions in seeking repayment of the loans.
Mr Justice Peart said the plaintiffs were seeking leave for a declaration that the transfer of the credit facilities into Nama on July 11th, 2010, was null and void because they had not been afforded an opportunity to make representations in relation to that decision. There could be little if any doubt that the plaintiffs had at least raised a substantial issue in relation to the right to be heard.
(The Irish Times, 13th September 2011)