Supreme Court allows appeal finding NAMA must hear borrowers before acquiring loans under s.84 of the Act of 2009.

THE SUPREME COURT

[Appeal No: 396/2010]

Murray C.J.

Denham J.

Hardiman J.

Fennelly J.

Macken J.

Finnegan J.

McKechnie J.

BETWEEN/

DELLWAY INVESTMENTS LIMITED, METROSPA LIMITED,

BERKLEY PROPERTIES LTD., MAGINOTGRANTE LIMITED,

MAY PROPERTY HOLDINGS LIMITED, SCI 20 PLACE VENDOME, DIRECTDIVIDE TRADING LIMITED, SUBMITQUEST LIMITED,

BELFAST OFFICE PROPERTIES LIMITED,

THE FORGE LIMITED PARTNERSHIP,

FINNSBROOK INVESTMENTS LIMITED,

CONNIS PROPERTY SERVICES LIMITED,

FORMCREST CONSTRUCTION LIMITED,

CHESTERFIELD (THE PAVEMENTS) SUBSIDIARY LIMITED,

ABBEY DEVELOPMENTS LIMITED AND PATRICK MCKILLEN

APPLICANTS/APPELLANTS

AND

NATIONAL ASSET MANAGEMENT AGENCY,

IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

Judgment delivered on the 12th day of April, 2011 by Denham J.

1. This is one of a series of judgments delivered in these proceedings between the parties. The applicants/appellants are referred to

as "the appellants", except on a few occasions when it is more appropriate to refer to "Mr. McKillen". The respondents are referred to

as "the respondents" and on occasions reference is made to "NAMA".

The appellants applied to the High Court for certain reliefs by way of judicial review against the respondents. The application related

to a purported decision of NAMA to acquire from certain banks "eligible bank assets" within the meaning of s.69 of the National Asset

Management Agency Act 2009, hereinafter referred to as "the Act of 2009". These bank assets are substantial loans by the Bank of

Ireland to the appellants. The High Court refused the application.

The appellants have brought an appeal to this Court seeking to set aside the judgments of a divisional court of the High Court (Kearns

P., Kelly, Clarke JJ.) dated the 1st November, 2010, and the 8th November, 2010, and the order perfected on the 11th November,

2010.

The appellants raised five issues before this Court. These were as follows:-

(a) Whether the failure or refusal of NAMA to receive and consider submissions from the appellants prior to taking the

decision to acquire the relevant eligible assets constituted a breach of their constitutional right to fair procedures. This is

referred to as "the fair procedures" issue.

(b) Whether any decision taken by NAMA to acquire the loans of the appellants was invalid or unlawful by reason of the

failure of NAMA to consider and take into account six matters referred to at paragraph (e) (xvC) of the statement of

grounds contained in the appellants’ application for judicial review. This is referred to as "the relevant considerations"

issue.

(c) Whether the decision of NAMA to acquire the loans of the appellants with the Bank of Ireland was a nullity because

the actual decision was made prior to the establishment of NAMA and was one which could not have been, or

alternatively was not, ratified or adopted by NAMA after it was established pursuant to statute. This issue was referred to

by the parties and the High Court as the "timing issue", but this Court considered it to be more appropriately

characterised as an issue as to whether any decision having a legal effect was made by NAMA. In this particular context

a parallel question also arose as to whether s. 17 of the Interpretation Act 2005 could be relied upon by NAMA as

permitting it to rely on a decision to acquire taken by the interim team prior to the coming into force of the Act of 2009.

This issue is referred to as the question as to whether NAMA had made any decision to acquire the loans.

(d) As an alternative, and as the High Court pointed out, as a “fallback” position on the part of the appellants to the

above contentions, it was argued that if a proper construction of the Act of 2009 meant that NAMA was not under an

obligation to give a hearing to the appellants prior to a decision to acquire its loans, or that the Act conferred on NAMA a

power to acquire both impaired and unimpaired loans, this raised a question as to whether the Act is inconsistent with the

Constitution in either or both regards. This is referred to as the issue of "the constitutionality of the Act of 2009".

(e) Whether the decision of the European Commission dated 26th February, 2010, on the NAMA scheme, as state aid

requires that NAMA be precluded from acquiring loans from borrowers that are not impaired. This is referred to as the

"European state aid issue".

Decisions have been given on several of the issues. On the 3rd February, 2011, in a judgment of the Court delivered by Murray C.J.,

the Court held that NAMA had not made a decision to acquire the appellants' loans and that the appellants were entitled to a

declaration to that effect. Thus the issue set out in paragraph (c) above has been determined in the appellants' favour.

Also on the 3rd February, 2011, in a judgment delivered by Fennelly J., with whom the other members of the Court agreed, the

European state aid issue, referred to in paragraph (e) above, was decided. In relation to that matter the appellants lost their appeal.

On the 9th February, 2011, the Court heard legal submissions as to whether the remaining three issues were justiciable. In an ex

tempore judgment, Murray C.J., giving the determination of the Court, ruled that the "relevant considerations" issue arose only in

relation to the purported decision of NAMA which had been held to be a nullity. In those circumstances this issue is moot and it does

not require any further decision. In light of the submissions made by counsel, the Chief Justice indicated that the Court would proceed

to consider the other issues, either as to whether they are moot or on their merits.

Consequently, two issues remain outstanding. These two issues are "the fair procedures" issue and "the constitutionality of the Act of

2009". This judgment addresses the "fair procedures" issue.

Fair Procedures

Background

To consider the fair procedures issue it is necessary to revisit some of the background history. The factual background was set out in

the judgment of the High Court, in particular in paragraphs 5.1 to 5.20. These facts are not in issue and will not be restated in detail.

However, they are referred to in summary form to put the issue of fair procedures in context.

The general context of the national financial crisis includes the State’s three-pronged policy response to that crisis being:- (i)

enactment of the Credit Institutions (Financial Support) Act, 2008, which provided a statutory basis for the State to enter into the

guarantee; (ii) measures to recapitalise most of the main financial institutions in the State and to nationalise Anglo Irish Bank; and (iii)

the establishment of NAMA under the Act of 2009 to address significant losses suffered by banks in the State as a result of the

collapsing of the property bubble, through the acquisition of eligible assets from participating credit institutions in order to remove

uncertainty about those assets and to alleviate the effect of such uncertainty on the credit institutions in the State.

The High Court noted, at paragraphs 5.4 to 5.6, the context in which these three measures were taken, particularly concerning those

institutions with which the appellants, Mr. McKillen and his companies, have significant loans:-

"It must be recalled that the context in which the bank guarantee was given was the view that, at a minimum, most of

the Irish banks were, in September, 2008, arriving at a position where they would be unable to obtain adequate funding to

carry on their business. If there had been no major policy intervention, then it seems almost certain that the

consequences for some, if not all, of the institutions which became participating institutions in the NAMA scheme, would

have been severe. In the case of Anglo, it is now apparent that that bank had become insolvent and having regard to the

scale of the losses which have now been shown to have been incurred, it seems certain that, in the absence of major

intervention, Anglo would have ceased to trade in any way and would, as a matter of high probability, have gone into

liquidation. Mr. McKillen had, of course, significant dealings with Anglo. The other bank with whom Mr. McKillen had major

dealings was Bank of Ireland. There can be little doubt but that the scale of Bank of Ireland’s problems were less than

those in the other participating institutions but, nonetheless, were significant. The Government has been required to place

an additional sum of €3.5bn into Bank of Ireland as a recapitalisation.

[5.5] in the absence of some significant executive and legislative response to those problems, it is almost certain that the

existing banks operating in Ireland (including those with whom Mr. McKillen had long standing banking relationships) would

have ceased to function or, at least, function in any way remotely resembling the traditional model of a bank.

5.6 While the true scale of losses in at least many of the participating institutions was not apparent at the time when the

Act was passed, it does appear on the evidence to have been clear from an early stage that there were very significant

losses in the banks which needed to be dealt with in some fashion. In that context, the Government announced in the

Spring of 2009 (during the budget speech of the 7th April) that what has now become NAMA would be established. The

relevant legislation was published in a preliminary form in July of that year, with the Act being passed by the Oireachtas in

November and coming into force on the 21st December, 2009."

Prior to, and in anticipation of, the establishment of NAMA under the Act of 2009 a significant level of preparatory work was carried

out by senior officials of the National Treasury Management Agency (NTMA).

As to the appellants’ business activities, the appellants own a portfolio of approximately 62 properties, 26% of which are located in

Ireland, with the remainder in France, the United Kingdom and the United States of America. According to the expert evidence given

in the High Court, these properties were valued at between €1.7bn and €2.28bn and they generate an approximate income of €150m

per annum.

Loans secured on those properties with banks in the State which are participating institutions under the NAMA scheme amount to

approximately €2.1bn. The status of those loans, namely as to whether the loans could be considered as “impaired loans”, was

disputed by the parties in the High Court. However, the High Court, having concluded that the loans were “eligible bank assets” within

the meaning of reg. 2 of the National Asset Management Agency (Designation of Eligible Bank Assets) Regulations 2009 (S.I. No. 568

of 2009) (hereafter “the Regulations”), irrespective of whether they were deemed to be impaired or not impaired, considered it

unnecessary to express any view as to whether those loans were impaired or non-impaired.

The High Court did note that on the uncontested evidence of the appellants, 96% of those properties are let, the majority of the

tenants being described as “blue chip tenants on long leases predominantly with a 25 year duration”, and that the income stream thus

generated, at an aggregate level, appears to provide interest cover on the loans of between 1.7 and 1.8 times: that is to say, the

income is between 1.7 and 1.8 times the interest payable on the loans at current interest rates. As this is an aggregate figure, the

interest cover on certain individual loans may be lower.

At paragraph 5.13 of its judgment the High Court referred to one particular feature of the appellants’ business model. It noted:-

“Many of the loans in question are for a short term duration. It would appear that there has, in general terms, been a

practice for Mr. McKillen to successfully negotiate renewals of such loans from time to time. However, the legal position

does also need to be recorded. That legal position is to the effect that adopting a policy of financing long term property

investments by short term loans undoubtedly leaves the borrower, to an extent, at the mercy of his banks who are in a

position, on a regular basis, to revisit the question of whether they are to lend and, if so, on what terms. A party who, on

the other hand, has long term loans, has the added security that, provided the terms of the loan are met, the relevant

bank is given no opportunity to re-negotiate the terms of the loan until its expiry. It should also be noted that Mr.

McKillen’s property portfolio is geographically spread between Ireland, the United Kingdom, France and the USA with, it

would appear, approximately 26% by value representing properties in Ireland.”

Under the statute “eligible bank assets” may be acquired by NAMA. Regulation 2 of the Regulations provides a broad definition of

“eligible bank assets” which may be transferred from participating institutions to NAMA. The principal assets under this definition are

what may be termed land and development loans which are held by a borrower, but the definition also covers a wide range of other

types of loans held by a borrower who has land and development loans.

As acknowledged by counsel for the appellants, some 2.5% to 5% of the appellants’ loans proposed to be transferred to NAMA are

loans in respect of land and development; the remainder of the appellants’ loans are unrelated to land and development and come

within the definition of an “eligible bank asset” solely by reason of their being owned by Mr. McKillen or the companies or partnerships

in which he has an interest.

Fair Procedures Issues

The issue to be considered under the heading "Fair Procedures" was agreed by the parties in the form of two questions:-

is any constitutional right of the appellants to be adversely affected by the acquisition of the loans of the appellants with

Bank of Ireland by NAMA, such as to give rise to a right on behalf of the appellants to constitutional fair procedures in

connection with that acquisition; and

if the appellants have such a constitutional right of fair procedures in connection with such acquisition, can the Act of

2009 be construed so as to imply into that Act a right on the part of the person whose loans are to be so acquired to

make representations in connection with the exercise by NAMA of its discretion to acquire a loan under section 84(1)

thereof?

Counsel for the appellants stated that there was a consensus as to the approach to be adopted to this issue, it was a five step

analysis. These five steps are:-

Do the appellants have constitutionaly protected rights?

Is there an actual or potential interference with these constitutional rights?

If there is an actual or potential interference with constitutional rights, counsel for the appellants submitted that the

appellants are prima facie entitled to fair procedures.

Has there been an interference with those fair procedures? (It is common case that the appellants were not heard by

NAMA).

Can there be a justification for such an interference with fair procedures? Counsel stressed that this submission relates to

fair procedures and not to property rights.

Counsel for the appellants accepted the depth of the financial crisis in the State, but submitted that such a matter is relevant to the

issue of property rights and proportionality, and not to the issue of fair procedures.

Counsel listed the constitutionally protected rights of the appellants as follows:-

Interest in the underlying properties, which on current valuations is approximately €200 million; 26% of which are in

Ireland.

Interest in the income stream from the properties. This is how Mr. McKillen earns his livelihood, so there is a "right to earn

a livelihood" issue.

A bundle of contractual rights with the banks.

Mr. McKillen's reputation, which is critical in the field of commercial property.

There was no dispute between the parties as to the existence of these four rights.

When this issue was argued before the Court, NAMA submitted that it had decided to acquire eligible bank assets of the appellants,

pursuant to s.84 of the Act of 2009. In the making of that decision, NAMA submitted that the appellants were not entitled to be

heard. The appellants, on the other hand, submitted that they were entitled to fair procedures, and to be heard at that stage of the

process.

National Asset Management Agency Act, 2009

The Act of 2009 provides for several stages in the process of acquisition. Section 84 enables NAMA to acquire eligible bank assets

and provides:-

" 84.— (1) NAMA may acquire an eligible bank asset of a participating institution if NAMA considers it necessary or

desirable to do so having regard to the purposes of this Act and in particular the resources available to the Minister.

NAMA is not obliged to acquire any particular, or any, eligible bank asset of such an institution on any grounds.

(2) For the avoidance of doubt, NAMA may acquire, from a participating institution, performing or non-performing eligible

bank assets.

(3) For the avoidance of doubt, NAMA may, subject to Chapter 1 of Part 7, take steps to acquire an eligible bank asset

even though the participating institution concerned has indicated in information provided to NAMA under section 80 that it

does not consider the bank asset to be an eligible bank asset and that it objects to its acquisition."

Section 84(4) states that without prejudice to the generality of subsection (1), NAMA may, in deciding whether to acquire a

particular eligible bank asset, take into account matters listed in paragraphs (a) to (n). Also, s.84(5) provides that where NAMA

determines that the long-term economic value of the property comprised in the security for a credit facility that is an eligible bank

asset is less than the market value of the property, NAMA shall not acquire the bank asset.

Section 87 sets out the next step after NAMA has decided to acquire an eligible bank asset. It provides for the service of an

acquisition schedule in the following terms:-

"87.— (1) When NAMA has identified an eligible bank asset of a participating institution that NAMA proposes to acquire,

and has determined the acquisition value of that asset, NAMA shall serve on the institution a schedule (referred to in this

Act as an “acquisition schedule”).

(2) NAMA may nominate a NAMA group entity as the entity that is to acquire a bank asset identified for acquisition.

(3) An acquisition schedule shall set out for each eligible bank asset to be acquired—

(a) a statement of the eligible bank asset and the interest to be acquired,

(b) a statement of any obligations or liabilities excluded from the acquisition,

(c) the acquisition value,

(d) details of how the acquisition value was calculated,

(e) any obligations, additional to those imposed by this Act, to be imposed on the participating institution after the

acquisition that are to take effect after the acquisition,

(f) the date of acquisition, and

(g) if the eligible bank asset is not to be acquired by NAMA itself, the NAMA group entity that will acquire it.

(4) In addition to the matters required by subsection (3), NAMA may set out in an acquisition schedule any other matter

(including any terms and conditions) that it considers necessary in the particular case.

(5) For the avoidance of doubt, an acquisition schedule may specify any number of particular eligible bank assets.

(6) For the avoidance of doubt, NAMA may serve more than one acquisition schedule on a participating institution.

(7) The date of acquisition of a designated bank asset shall be at least 28 days after the relevant acquisition schedule is

served on the participating institution concerned unless NAMA specifies a shorter period in the acquisition schedule."

It is clear from the terms of this section that it was anticipated that in identifying and determining the value of an asset NAMA would

undertake considerable work prior to serving an acquisition schedule.

An important aspect of the statutory scheme is the provision in s.103 as to litigation. Section 103 provides:-

"No cause of action lies or is maintainable against NAMA or any NAMA group entity by reason solely of the acquisition of a

bank asset by NAMA or a NAMA group entity."

Thus once an acquisition schedule has been served, litigation is limited. This places the prior decision under s.84 in critical perspective

and the limitation on litigation is a relevant factor in analysing rights and section 84.

On the 3rd February, 2011, the Court held that NAMA had not made a decision under s.84 to exercise its discretion to acquire from

the relevant banks their interests in the appellants' loans.

At meetings on the 11th and 14th December, 2010, an interim management team, formed prior to the establishment of NAMA,

following a direction by the Minister for Finance to the Chief Executive Officer of the National Treasury Management Agency to

provide staff for such a team, decided to exercise a discretion to acquire the appellants' loans. However, this was not a decision by

NAMA.

The issue of fair procedures in these proceedings arises in relation to the powers given to NAMA under section 84. Thus that section

is central to the analysis.

When this matter was before the Court on the 9th February, 2011, counsel for the respondents said that NAMA would make a

decision as to whether to acquire or not to acquire the appellants' loans under section 84. It was stated by counsel that it was

anticipated that there would be a board meeting within the two following weeks at which a decision would be taken.

Moot

The issue of fair procedures arises in circumstances where the Court has held that NAMA has not made a decision under s.84 to

acquire the appellants' loans, and where the Court was informed that NAMA would be making a decision, whether to acquire the loans

or not to acquire the loans, in the future. The question arises as to whether, NAMA having lost the issue in these proceedings as to

whether a decision had been made, the remaining issues are live between the parties.

Under the doctrine of mootness it is well settled that a court will not deliver advisory judgments when an issue is no longer live

between parties. In this case the Court has determined that NAMA did not make a decision pursuant to s.84 to acquire the loans.

Consequently, as of the 9th February, 2011, that issue had been determined on the pleadings between the parties as to the decision,

and there was no certainty as to the future actions of NAMA.

However, after the hearing of the 9th February, 2011, and consistent with a request by the Chief Justice that the Court be informed

of any relevant steps, the Court was informed that NAMA made a decision on the 1st March, 2011, under s.84, to acquire the

appellants' loans. While that decision is not formally before the Court in these proceedings it is the reality of the situation.

The question then is whether in the circumstances the issues are moot. If they are moot, then the question would be whether the

Court should exercise its discretion and determine the issues.

The matter of mootness was considered in Irwin v. Deasy [2010] IESC 35 (unreported, Supreme Court, 14th May, 2010) where Murray

C.J. stated:-

"The question is therefore raised as to whether this appeal should be allowed to proceed, having regard to the doctrine of

mootness.

Hardiman J.’s definition of the doctrine in G. v. Collins [2005] 1 I.L.R.M. 1, cited in O’Brien v. The Personal Injuries

Assessment Board (Supreme Court, unreported, 16th November 2006), is a useful starting point: “proceedings may be

said to be moot where there is no longer any legal dispute between the parties”. The mootness doctrine is applied by the

courts to restrain parties from seeking advisory opinions on abstract, hypothetical or academic questions of the law by

requiring the existence of a live controversy between the parties to the case in order for the issue to be justiciable.

…

The general practice of this Court is to decline, in principle, to decide moot cases. In exceptional circumstances where

one or both parties has a material interest in a decision on a point of law of exceptional public importance, the Court may

in the interests of the due and proper administration of justice determine such a question.

However, the discretion to hear an appeal where there is no longer a live controversy between the parties should be

exercised with caution, and academic or hypothetical appeals should not be heard. Exceptions may only arise where there

is a question of exceptional public importance at issue and there are special reasons in the public interest for hearing the

appeal."

In this case, the Court held that the purported decision of NAMA in December, 2010 to acquire the loans of the appellant was void.

However, the situation is more complex than that single issue. The factual context built upon by the appellants for the court hearings

related to the purported decision of NAMA in December, 2010. But when the proceedings initially commenced the appellants did not

know of the purported decision of 2010. Subsequently NAMA informed the appellants of the purported December decision and the

appellants amended their proceedings to include this fact. The statutory scheme is such that a potential hearing would be required

prior to the s.84 decision, as once, under s.87, an acquisition schedule is served, the Act explicitly by s.103 limits litigation against

NAMA. Further, at all times the respondents indicated that they intended making a decision as to the appellants' loans. And indeed,

after the hearings the Court has been informed that a decision was taken on the 1st March, 2011, to acquire Mr. McKillen's loans. In

addition, this is an issue of exceptional public importance to NAMA, to banks, and to borrowers; and as NAMA has been developed as

an important institution in the current fiscal crisis it has a central role in the management of the crisis. In all the circumstances I am

satisfied that the issue of fair procedures is not moot. Thus there is no bar to proceeding to determine the matter.

High Court on Fair Procedures

As the High Court pointed out, the issue of fair procedures turns on the fundamental question as to whether the appellants have an

entitlement to be heard. The High Court held that it was not satisfied that any of the asserted rights are exposed, by the acquisition

of the appellants' loans, to any, or any sufficient and proximate, risk of an interference with a constitutionally protected right, so as

to require fair procedures to be adhered to, prior to the acquisition of the appellants' loans.

The High Court considered, in case it was wrong in that view, what the situation would be if the appellants had constitutionally

protected rights which were potentially interfered with in a significant and proximate way. Reference was made to East Donegal Co-

Operative v. Attorney General [1970] I.R. 317. The High Court considered whether, in the event that the appellants had

constitutionally protected rights which were exposed to interference in a significant and proximate way, a right to fair procedures

could and should be read into the Act of 2009. The High Court held that it did not seem that an ordinary construction of the Act

could lead to an implied entitlement on the part of a borrower to be heard in the process.

The High Court heard this judicial application in a telescoped hearing. All arguments were heard from the parties on the basis that if

leave were granted to apply, then one hearing could be treated as dealing with all matters.

The High Court was satisfied that the issues raised in relation to fair procedures did raise a substantial issue which was sufficient to

meet the statutory test for the grant of leave. Thus the High Court granted leave to apply for judicial review on this issue. However,

the High Court held that the issues raised under this heading did not entitle the appellants to succeed in relation to any of the reliefs

sought.

The above decision was made subject to the query as to whether an entitlement should be "read in to" the Act of 2009. On this latter

issue the High Court held that the Act of 2009 did not interfere with any constitutionally protected rights of the appellants and that it

followed that the Act of 2009 was not inconsistent with the Constitution by reference to the appellants' rights. Further, the High

Court held that even if its analysis of the interference by the Act with the appellants' rights was incorrect, it did not seem to the High

Court that any such interference could be placed at a very high level. Also, the High Court held that even if it was wrong in its view

that no constitutionally protected rights of the appellants were interfered with, then that analysis must, at a minimum, lead only to a

conclusion that any interference with the rights of the appellants is at the lower end of the scale. The High Court held that any

interference that might derive from the absence of a right to be heard did not infringe the principle of proportionality. The High Court

refused leave to seek judicial review on this aspect of the case.

Thus, on the issue of fair procedures, the High Court was of the view that any constitutionally protected rights which the appellants

may have are either not interfered with by the Act of 2009, or are interfered with in such a minor or tangential way so as not to

require that the appellants be heard prior to acquisition by NAMA, of their loans.

The appellants sought leave to appeal to this Court. The High Court certified the following point of law:-

"Whether the Court was correct in concluding that the [appellants] did not have a right to be heard prior to a decision of

NAMA to acquire loans in respect of which the [appellants] are borrowers."

The High Court held that such a point of law is of public importance and that it is desirable in the public interest that an appeal should

be taken to the Supreme Court.

Submissions

I shall set out in broad brush only the submissions. Counsel for the appellants focused primarily on the issue of fair procedures. It was

contended that the appellants enjoy certain rights connected to the bank loans and that due to interference, or potential

interference, with these rights arising from NAMA’s decision to acquire the said loans, the appellants are entitled to be heard before

the decision to acquire is made by NAMA. The appellants contended, in this context, that the Act of 2009 can, and should, be

interpreted as affording the appellants an entitlement to be heard prior to that decision being made.

It was also submitted that the High Court erred in its judgment under this heading, in that the High Court misunderstood the

constitutional position concerning what constitutes an interference with constitutional rights sufficient to trigger an entitlement to fair

procedures; that the High Court incorrectly applied the test for interference with constitutional rights; and that in its assessment of

the facts and its interpretation of the Act of 2009, the High Court failed to address the facts peculiar to the appellants' case by

reference to the evidence.

The appellants submitted that they have rights that may be affected by a decision of NAMA to acquire the appellants' credit facilities

from the participating banks. Irrespective of whether that decision could be justified, the appellants submitted that they have an

entitlement to be heard by NAMA prior to the taking of the decision under section 84. The issue turns on the effect (actual or

potential) on the appellants' rights of NAMA's decision to acquire the loans.

It was submitted that the appellants were engaged in private business with the banks, and that the Oireachtas stepped in to provide

legislation that gave powers to NAMA radically to alter the basis upon which the appellants conduct their business. It was submitted

that a decision of NAMA under s.84 to acquire the appellants' loans is a decision that interferes with the rights of the appellants and

gives rise to a right to fair procedures. The appellants identified an impact on their rights in three main guises, as follows:-

NAMA is fundamentally different from a bank; NAMA is not licensed under Irish law to operate as a bank and will not

operate in the same manner as a bank; NAMA is a work-out vehicle.

Association with NAMA has cost implications for the appellants, in particular, tenants will be able to strike harder bargains,

the appellants will need to incur the immediate expense of refinancing efforts and higher refinancing fees are likely.

There will be an effect on the appellants' reputation; NAMA is viewed (primarily) as a bad bank, acquiring bad loans; any

decision of NAMA to acquire the appellants' loans adversely affects the reputation of the appellants.

The Attorney General, on behalf of the respondents, submitted that the conclusions of the High Court on fair procedures were

correct. It was submitted that there is no interference or potential interference with any constitutional right which triggers an

entitlement to fair procedures in favour of the appellants, that the test for interference with constitutional rights was correctly

applied by the High Court and that, if this Court on appeal was to find that acquisition of the said loans does constitute an

interference with the appellants' constitutional rights sufficient to trigger a right to a fair procedures, the exclusion of an entitlement

to fair procedures in the Act of 2009 is proportionate and justifiable. It was submitted that the Act of 2009 cannot be interpreted as

requiring or permitting an entitlement to be heard.

The respondents adopted the conclusions of the High Court and submitted that:-

In considering whether a right to fair procedures exists, the Court must first be satisfied that a constitutional right in fact

exists before it even considers whether there has been interference. This is conceded by the appellants. It is submitted

that there is no constitutional right which entitles the appellants to resist transfer to NAMA or which protects non-

contractual “benefits” associated with banking relationships – what the appellants now term “commercial value of banking

relationships”.

The threshold for determining whether there is an interference is whether there is a real prospect of an adverse effect to

the appellants’ constitutional rights.

Applying that threshold, that there is no interference with the appellants': (i) right to earn a livelihood; (ii) right to

ownership of the underlying properties; or (iii) property rights in the form of contractual rights.

Without prejudice to the foregoing, if there is an interference with a constitutional property right such as gives rise to a

right to fair procedures, the exclusion of fair procedures under the Act is proportionate and justified.

Constitutional Rights

The right to be heard, audi alteram partem, is a fundamental right at common law, being one of the principles which were known as

natural justice. Another principle, that no one could be a judge in his own cause, nemo index in causa sua, was also considered to be

part of natural justice. These two fundamental principles were at the root of natural justice. In Ireland these principles have been

subsumed into constitutional justice. I agree with the observation of McCarthy J. in The State (Furey) v. Minister for Defence [1988]

I.L.R.M. 89, at 99:-

"In my view the two principles of natural justice as they pre-existed the Constitution are now part of the human rights

guaranteed by the Constitution."

In Ireland these principles have evolved into fundamental principles of constitutional law. They are strong strands in the fabric of

constitutional justice.

Although the right to be heard is not stated explicitly in the Constitution of Ireland, 1937, it is an inherent part of fair procedures and

in that context, and as part of due process, is woven into the fabric of rights in the Constitution. There is a right to fair procedures,

which includes the right to be heard.

The right to be heard, as with other constitutional rights, is not absolute. In referring to the personal rights under Article 40, Kenny J.

in Ryan v. Attorney General [1965] I.R. 294 stated at pp.312 to 313:-

"None of the personal rights of the citizen are unlimited: their exercise may be regulated by the Oireachtas when the

common good requires this. When dealing with controversial social, economic and medical matters on which it is notorious

views change from generation to generation, the Oireachtas has to reconcile the exercise of personal rights with the

claims of the common good and its decision on the reconciliation should prevail unless it was oppressive to all or some of

the citizens or unless there is no reasonable proportion between the benefit which the legislation will confer on the

citizens or a substantial body of them and the interference with the personal rights of the citizen."

This analysis may be applied to other constitutional rights, such as the right to be heard.

In any analysis of the Act of 2009, it is presumed that procedures permitted by the Act are to be conducted in accordance with the

principles of constitutional justice. This principle was described by Walsh J. in East Donegal Co-Operative Ltd. v. Attorney General

[1970] I.R. 317 at p.341:-

"… the presumption of constitutionality carries with it not only the presumption that the constitutional interpretation or

construction is the one intended by the Oireachtas but also that the Oireachtas intended that proceedings, procedures,

discretions and adjudications which are permitted, provided for, or prescribed by an Act of the Oireachtas are to be

conducted in accordance with the principles of constitutional justice. In such a case any departure from those principles

would be restrained and corrected by the Courts.

This approach is central to the determination of the issue of fair procedures in this appeal. Thus, in construing the Act of 2009, it is

presumed that the Oireachtas intended that procedures are to be conducted in accordance with constitutional justice. This includes

the right to be heard, in essence that there will be fairness.

NAMA has a discretion under s.84 to acquire loans, which it is presumed will be exercised fairly. The procedure to be adopted is for

NAMA to determine in the first instance. NAMA is required to establish procedures, for appropriate cases, so as to comply with

constitutional justice. In The State (Irish Pharmaceutical Union) v. Employment Appeals Tribunal [1987] I.L.R.M. 36 at 40, McCarthy

J. stated:-

"Whether it be identified as a principle of natural justice derived from the common law and known as audi alteram partem

or, preferably, as the right to fair procedures under the Constitution in all judicial or quasi-judicial proceedings, it is a

fundamental requirement of justice that person or property should not be at risk without the party charged being given an

adequate opportunity of meeting the claim, as identified and pursued.

If the proceedings derive from statute, then, in the absence of any set or fixed procedures, the relevant authority must

create and carry out the necessary procedures and if the set of fixed procedure is not comprehensive, the authority must

supplement it in such a fashion as to ensure compliance with constitutional justice ..."

Thus applying that analysis, as the proceedings here derive from statute, there being no fixed procedures, NAMA must create and

carry out the necessary procedures, NAMA must supplement it in such a fashion as to ensure compliance with constitutional justice.

Rights

At issue is whether the exercise of this statutory discretion by NAMA has an effect on the rights of the appellants. The test was

described by Walsh J. in McDonald v. Bord Na gCon [1965] I.R. 217. That case was about the making of an exclusion order to exclude

a person from being at any greyhound racetrack, any authorised coursing meeting, or any public sale of greyhounds. Walsh J. stated,

at p.242:-

"It is correct that when such exclusion order is enforced in the manner described it could affect the rights of the

prohibited person in that it might restrict his existing right to trade or his right to enjoy some benefits contracted for.

Such a possible result is sufficient to require that the procedure which can lead to that result must conform to the

principles of natural justice. In the context of the Constitution natural justice might be more appropriately termed

constitutional justice and must be understood to import more than the two well established principles that no man shall be

judge in his own cause and audi alteram partem".

Applying that statement of the law, the appellants are entitled to fair procedures in the s.84 decision-making process if the exercise

of the statutory discretion by NAMA could affect the rights of the appellants or restrict their existing rights.

Procedural Justice

The right to be heard is a fundamental right in procedural justice. The fact that the right is a procedural right does not diminish its

importance. The right requires fairness in procedures. It may vary from process to process. As Barron J. stated in Flanagan v. U.C.D.

[1988] I.R. 724 at pp.730 to 731:-

"Procedures which might afford a sufficient protection to a person concerned in one case, and so be acceptable, might

not be acceptable in a more serious case."

So what is sought is fairness, which will depend on all the circumstances of a case, and vary from one type of procedure to another.

In Doupe v. Limerick County Council [1981] I.L.R.M. 456 at 463 Costello J. stated:-

"The rule of [audi alteram partem] does not require that every administrative order which may adversely affect rights

must be preceded by a judicial-type hearing involving the examination and cross examination of witnesses. It requires that

adequate notice of the case which an applicant has to meet be given to him, and that an adequate opportunity be

afforded to answer any objections which may be taken to his application. And it is clear that the requirements of the rule

may be fully satisfied by the adoption of quite informal procedures. In some cases an applicant may be entitled to make

his submissions orally, in others a written submission will meet the requirements of the rule."

Thus the right to be heard requires an analysis of the Act of 2009 and the circumstances to determine what type of hearing is

appropriate prior to a decision under s.84, if the appellants' rights could be affected by the decision of NAMA.

Exclusion of right - Exceptions

Urgency

There are exceptions to the general principles as to rights. A right may be excluded in exceptional circumstances. Thus a right may be

excluded if there is a great urgency in the circumstances. These are usually situations where there is a need for extraordinary

expedition. As O'Higgins C.J. stated in O'Callaghan v. Commissioners of Public Works [1985] I.L.R.M. 364 at pp. 373 to 374:-

"Here, an emergency had been created by the plaintiff's own action in defiance of his legal obligations. If the

Commissioners had hesitated in acting as they did, the monument which it was their duty to preserve would have been

seriously damaged or destroyed. Further, it was not possible to contact the plaintiff because his address was not then

known and did not become known to the Commissioners until some time later."

In that case the plaintiff had instructed a contractor to recommence ploughing a field which threatened an historic site.

In this case the respondents have submitted that even if there is a risk of an adverse affect on the rights of the appellants, which

would otherwise trigger an entitlement to fair procedures, the exclusion is justified. The respondents stressed the need for expedition

and the unworkability of the exercise of fair procedures.

However, the argument for expedition, for urgency, is not borne out by the facts of the case. The Act of 2009 expressly states that

it is for the expeditious transfer of loans. It is clear that such procedures are complex. In this case six months elapsed in the process

between the purported decision of NAMA in December, 2010 to acquire the appellants' loans, and the institution of these proceedings.

In that time the Bank of Ireland was heard, albeit on limited grounds, and there was a review. In that time also, NAMA was required to

carry out a detailed analysis of the loans. Thus while the Act of 2009 seeks expedition, it is not of the category of "emergency" such

as in O'Callaghan v. Commissioner of Public Works. The framework of the Act of 2009 envisaged considerable activity by NAMA in the

time prior to the service of the acquisition schedule. So NAMA would have been in a position to hear any relevant borrowers whose

rights have been affected. Relevant borrowers would be few, being those such as the appellants who have very particular

circumstances. Borrowers such as the appellants are very different to a borrower, for example, whose loans are in default, who has

no value in his equity of redemption, or who has no income stream.

Unworkable

The submission by NAMA that a hearing by Mr. McKillen would be unworkable also fails on an analysis of the facts. The facts have

been set out earlier in this judgment and in the judgment of the Court delivered on the 3rd February, 2011. The relevant facts include

the length of time taken by NAMA to process the analysis prior to a decision to acquire, the hearing given to the bank, and a review

of that decision. The type of hearing necessary to a borrower such as the appellants would be limited and workable within the

timeframe anticipated under the Act.

Necessity

In considering the issue of the exclusion of a right, in extremely rare circumstances the rule of necessity may apply. However, that

does not arise in this case. It is a rule which has on occasion been considered in relation to the principle that no one should be a

judge in his own cause, when a court may have a special relationship with a party: see O'Byrne v. Minister for Finance [1959] I.R. 1;

Flynn v. Allen (Unreported, High Court, Lynch J, 2nd May, 1988). However, it is rarely applicable, and is not relevant to the issues in

this appeal.

Exceptions to a General Rule

In Ireland, when analysing a concept and determining a general rule, it is not, however, uncommon to state that, the general rule may

not apply in certain exceptional circumstances. The Constitution refers to exceptions, to exceptional cases, but these are the

exceptions to a general principle.

Such cases are an exception in the system, not a system which is an exception. Such cases are exceptional cases which may arise

contrary to the general rule. The justice of a case may require that it be regarded as an exception to a general rule.

The Act of 2009 is not exempted from the requirements of the Constitution. It is not legislation pursuant to Article 28.3.3º of the

Constitution; in other words it is not a law enacted for securing the public safety and the preservation of the State in time of war or

armed rebellion.

Rule of Law

The State is addressing a financial crisis principally arising out of a failure of the banks. In a democratic society, where the rule of law

governs, the right of a state institution to interfere with the rights or vested interests of a person on the basis that there is an

emergency, is a matter for very careful consideration. Certainly, while the Act of 2009 addresses issues of a financial crisis, there is

no suggestion in the legislation that the Oireachtas was abandoning the rule of law.

The Act of 2009 requires to be construed in accordance with the Constitution. Clearly the Act of 2009 was part of government policy

introduced to meet the very serious banking crisis within the State. However, this does not exempt it from the principles of the

Constitution.

Section 103

In considering the submissions on an exclusion of the right to be heard, it should be analysed in context, i.e. the limitation of the

appellants' cause of action once the acquisition schedule is served. This is a consequence of s.103 of the Act of 2009, which limits

litigation after the acquisition schedule is served. This limiting provision on the right of access to the courts is a relevant factor in

analysing the process.

Other Borrowers

Finally, the respondents argued this case on the basis of a total exclusion of the right to be heard. However, it is apparent that, in

fact, on occasions, other borrowers have been heard by NAMA.

No Exception Applies

I am satisfied that in all the circumstances, in relation to the appellants, who have rights in their own property, none of the

exceptions apply. While the Act of 2009 is drafted to meet the financial crisis and the banking and fiscal crisis, the structures put in

place in the legislation are not of such a nature as to expressly exclude fair procedures and the appellants from being heard. Thus the

legislation must be construed from the aspect of constitutional justice to see if the appellants have a right to be heard.

Decision

Ireland is suffering from a severe banking and financial crisis with extremely harsh financial and economic consequences. In response

to this crisis the Government introduced a tripartite policy, which includes the Act of 2009. The Act of 2009 is specifically stated, in

the long title to the Act, to be:-

"An Act -

To address a serious threat to the economy and to the systemic stability of credit institutions in the State generally

by providing, in particular, for the establishment of a body to be known as the National Asset Management Agency

for the purposes of –

The acquisition by that agency of certain assets from certain persons to be designated by the Minister

for Finance,

Effecting the expeditious and efficient transfer of those assets to that agency,

The holding, managing and realising of those assets by that agency (including the collection of interest

and capital due, the taking or taking over of collateral where necessary and the provision of funds

where appropriate),

The taking by that agency of all steps necessary or expedient to protect, enhance and better realise

the value of assets transferred to it,

The performance by that agency of such other functions, related to the management or realisation of

those assets, as provided in this Act or as directed by the Minister, and

The facilitation of restructuring of credit institutions of systemic importance to the economy, and

To provide for the valuation of the assets concerned and the review of any such valuation,

To give the National Asset Management Agency certain powers and other functions in respect of land or

an interest in land acquired by that agency, including powers relating to the development of land,

To provide for the issue of debt securities by the Minister for Finance and by that agency in the

performance of its functions under this Act,

To provide for certain legal proceedings relating to assets acquired by that agency, to amend the

Central Bank Act 1942, and to provide for related matters."

The purpose of the Act of 2009 is further explained in s.2, where, inter alia, it is stated to be to address the serious threat to the

economy and the stability of credit institutions, to facilitate the availability of credit in the economy of the State, to resolve the

problems created by the financial crisis in an expeditious and efficient manner, and to achieve a recovery of the economy. There can

be no doubt but that Ireland faces a banking and financial crisis and that the Act of 2009 is one of the remedies advanced by the

Government.

The appellants have advanced four relevant constitutional rights, as set out earlier in this judgment. The existence of these rights

was not contested. What is contested is whether there has been or is potential interference with those rights such that the

appellants are entitled to be heard on the s.84 procedure under the Act of 2009.

Evidence

The evidence before the High Court was on affidavit, there was no oral evidence. Thus this Court is in the same position as was the

High Court as to the evidence.

There were affidavits deposed on behalf of the appellants and the respondents. Many economists deposed learned affidavits, often

with conflicting views. I have found it most interesting to read these opinions. Thus, for example, Joseph P. Belanger was of the view

that the transfer of the appellants' loans to NAMA would result in immediate and lasting adverse economic consequences to the

appellants owing to:-

"• the extraordinary non-commercial powers granted to NAMA that will serve to deprive [the appellants] of contract rights

under the loan agreements;

• the adverse consequences for [Patrick McKillen's] reputation by virtue of an association with NAMA; and

• the resulting decline in [the appellants'] property values and consequential loss of net worth."

The affidavit of Marcus John Sewell Trench also considered matters in detail. He referred to the affidavit of Aideen O'Reilly sworn on

the 30th July, 2010. As to paragraph 54 of her affidavit, where she states "borrowers should experience no effects as a consequence

of the change" he deposed:-

"At both banks [the appellants are] now dealing with NAMA officers and the previous relationship management team,

where all the goodwill and trust rested, no longer manages the account. There has been a considerable change in attitude

to facility renewals since NAMA took control. [The appellants are] now being managed like a recoveries situation by

recoveries managers who report directly to NAMA."

The affidavit of Dr. Michael I. Cragg makes interesting reading on the issue of systemic risk.

Professor Stiglitz commenced his erudite affidavit by deposing:-

"I make this affidavit at the request of the [appellants] in the above entitled proceedings, for the purpose of providing an

expert opinion to the Court. I understand that the duty and the role of an expert witness are to assist the court and that

experts have a duty to be impartial. I have abided to this duty and make this affidavit from facts within my knowledge,

save where otherwise appearing and where so appearing I believe the same to be true."

While much of Professor Stiglitz's affidavit is addressed to issues which are not under consideration for determination by this Court, he

does analyse the due process issue from the aspect of an economist. Having discussed NAMA and its incentives system, and that

some private entities may be the beneficiaries of the powers granted by NAMA, he deposed, commencing at paragraph 77:-

"Public policy structures that allow - or even worse, provide incentives - for this kind of transfer of wealth should be

particularly suspect. The fact that NAMA's conduct in transferring performing assets to itself is consistent with its

incentives should be even more troubling.

Governments always have an incentive to underpay for assets, and even more so when there are private beneficiaries

(e.g. when the assets are sold to private developers). This is why systems of checks and balances, judicial scrutiny and

the like, are important. These longstanding legal doctrines are grounded in concerns of equity; but they also are

motivated by economics: security of property rights and the "sanctity" of contracts - both explicit and implicit - are

foundational to a market economy. Involuntary transfers of assets represent a "taking" which should be undertaken only

when there is a compelling public interest. Even then, it is important that there be full and adequate compensation. So

too for the breaching of long-term relationships.

If these basic principles are not followed, there is a serious risk to Ireland's reputation as a country respecting the rule of

law, with consequent adverse short-term and long- term effects on its economy. It is striking that NAMA's only defences

are the argument regarding systemic risks and the more troubling argument that transparent and due process in a

democratic society can be ignored because they may complicate the implementation of the policy objectives embodied in

NAMA.

A relatively straightforward and expeditious model of due process that includes borrowers can be easi1y designed for

NAMA and applied broadly on a voluntary basis, or, more narrowly just to borrowers that are deemed to be potential

systemic risks."

The concern expressed for the economy in the absence of due process, from an economist's point of view, is noteworthy. This view

is, of course, from the purely economic angle. However, the rule of law is fundamental to the State, not just from the economic

aspect.

It is not necessary to decide the conflicting evidence given on the many issues addressed in the affidavits filed on behalf of the

appellants and the respondents to determine the matter before the Court.

Trading Nation

We are a small open economy, a trading nation, whose international trade is vital to the State. The fact that our legal system is

based on common law, with constitutional underpinnings, with easy access to the courts, including the Commercial Court, is important

to those who do business in, and with, Ireland. The rights protected by the Constitution are central, indicating as they do the general

constitutional framework of our society. Also, in the context of commerce, it is critical for those who engage in trade and business in

this jurisdiction, and with the State, that the due process applies.

Rights Affected

While the right to be heard is not expressly stated in the Constitution, it is woven into the fabric of the Constitution in both fair

procedures and due process. It is a procedural right of fairness.

It is presumed that the Oireachtas intends that procedures provided for in legislation will be conducted in accordance with the

principles of constitutional justice. To paraphrase Walsh J. in East Donegal Co-Operative Ltd. v. Attorney General [1970] I.R. 317 at

p.341, the Oireachtas intended that procedures and discretions provided for in the Act of 2009 are to be conducted in accordance

with the principles of constitutional justice. A fundamental principle of constitutional justice is the right to be heard. Thus any analysis

of the Act of 2009 should be made in light of these constitutional principles.

The Act of 2009 addresses the insolvency of the banking sector in Ireland and the consequent economic crisis. That of itself does not

exclude fair procedures. The process established under the Act of 2009 is not analogous to any of the exceptions provided under the

Constitution or the law, so as to exclude the right to fair procedures. Nor are there any other factors, such as urgency, so as to

exclude the right in light of the facts of the case. The relevant facts include both the length of time between the purported decision

in December, 2010 and the issuing of the proceedings, the necessary time for NAMA to undertake the process required before

exercising its discretion under s.84, the fact that the bank was heard, and there was a review, and the fact that on occasions other

borrowers have been heard. I am satisfied that the Act of 2009 should not be construed as excluding the rights of the appellants.

The next question is whether the appellants' rights have been affected or would be affected so as to entitle them to be heard prior to

NAMA making a decision pursuant to section 84. To determine whether the appellants would be affected by such a decision of NAMA

it is necessary to consider the potential effect of such a decision on their rights

The appellants identified several matters which would impact on their rights if NAMA acquired the appellants' loans. I am satisfied that

the appellants have successfully raised matters which could affect the rights of the appellants. The remit of NAMA is different to that

of a bank, thus a change from a bank to NAMA is such that it could affect the appellants' rights. These include the following:- (a)

NAMA is not a bank, it is a particular State institution, it is a work-out vehicle, which is contrary to the business model of Mr.

McKillen's business. Its modus operandi will affect Mr. McKillen's business, including his income stream. (b) NAMA will move on the

properties in a manner different to the banks, and this raises potential expenses and losses to the appellants. (c) There will be an

effect on Mr. McKillen's reputation. Mr. McKillen earns his livelihood in the commercial world. It is a fact that NAMA is referred to in

commercial circles as a "bad bank". This implies bad assets and consequently a bad borrower, which reflects adversely on Mr.

McKillen's reputation. (d) I have read the judgment of Finnegan J. and agree with his comments on two aspects of the appellants'

submissions, namely NAMA's statutory exemptions and powers in relation to mortgages, and the commercial consequences for a

mortgagor of the transfer of a mortgage to NAMA.

Consequently there is clear evidence which shows that a decision of NAMA to acquire the loans of the appellants will affect the

constitutional rights of the appellants, any such decision by NAMA under s.84 of the Act of 2009 directly affects the appellants, and

this triggers a right to be heard.

Also, the commercial relationship between the appellants and the bank has been altered by the actions of the bank. The appellants

submitted that the Bank of Ireland wished to continue with the appellants as customers. However, the Bank of Ireland had taken a

step which deprived it of control of the loans. Bank of Ireland decided, in the vernacular, to go into NAMA. This was a commercial

decision on its behalf. It is an important aspect of the case as the situation, at the bank's request, is now governed by NAMA and the

Act of 2009. Consequently, when it was stated that the bank wished to continue to do business with the appellants, this must be

read as subject to their prior decision that the bank join the NAMA process. The relationship between the bank and the appellants

was thus changed forever by the bank's decision to join the NAMA process. The appellants have been affected by this unilateral

action of the bank.

This analysis may also be stated as follows. The appellants have constitutionally protected rights. An order under s.84 of the Act of

2009 directly affects the appellants and could affect the rights of the appellants, in that it might restrict their interest in the

underlying properties; it might restrict the income stream from the properties, thus it might restrict Mr. McKillen's right to earn a

livelihood; it might restrict their rights in contract; and it might damage Mr. McKillen's reputation. Thus there is potential interference

with these constitutional rights. Such a possible result is sufficient to require that the procedures conform to constitutional justice,

and so the appellants are prima facie entitled to fair procedures. These rights are not displaced by the Act of 2009, nor is there any

justification to exclude the rights.

The Context

When analysing a potential decision of NAMA to acquire a loan under s.84 of the Act of 2009, the process requires to be considered in

the context of the scheme of the Act. Thus if NAMA decides to acquire a loan, it may then proceed to serve an acquisition schedule

under section 87. After that the appellants' cause of action is limited by section 103. Consequently, in the process under the Act of

2009, a window of opportunity in which the appellants may be heard is prior to the decision of NAMA under s.84, which therefore

places an emphasis on the importance of the procedures prior to a decision under section 84.

The Bank Heard

Provision is made for the banks to be heard in the process. Indeed the Bank of Ireland was heard in relation to these loans. Under

s.85 if a bank does not consider a particular bank asset that NAMA proposes to acquire to be an eligible bank asset and it objects to

its acquisition, then NAMA may either not acquire the bank asset or "continue with the proposed acquisition and refer the matter to

the expert reviewer". Where it is provided expressly in the Act of 2009 that a bank may raise certain, albeit limited, issues, but that

no express provision is made for a borrower to be heard, then the question arises as to the implicit rights of a borrower.

Triggers Right to be Heard

In light of the constitutional right to be heard, to fair procedures, the question is whether any such right to be heard by the

appellants arises implicitly in the Act of 2009 and in the circumstances of the case.

For the reasons given I am satisfied that a decision by NAMA to acquire the appellants' loans affects the rights of the appellants and

triggers a right to be heard. It arises in the particular circumstances of this case where the appellants are directly affected, where,

for example, Mr. McKillen has an income stream from the property, which is his livelihood, and where he has an equity of redemption,

amongst other matters.

The Act of 2009 does not exclude the appellants from being heard in the section 84 process. I construe the Act of 209 as enabling

the appellants to be heard prior to a decision being made under section 84. This right arises in the particular circumstances of this

case. The decision is fact specific. It is not a general right to all borrowers. It is a right limited to the appellants and to Mr. McKillen,

in the particular circumstances. Further, while the nature of the procedures is initially a matter for NAMA to decide, it appears to me

that in general it is not a right to an oral hearing. It is a right to make written representations as to the appellants' particular

circumstances to NAMA. As a matter of constitutional justice these submissions should be considered by NAMA prior to any decision

being made to acquire the loans.

I would answer the point of law certified by the High Court in the negative. The High Court was not correct in concluding that the

appellants did not have a right to be heard prior to a decision of NAMA to acquire loans in respect of which the appellants are

borrowers.

Therefore, I would allow the appeal of the appellants on the issue of fair procedures. I would make a declaration that NAMA should

receive and consider submissions from the appellants prior to NAMA making a decision pursuant to section 84 of the Act of 2009.

Conclusion

This judgment addresses the issue of fair procedures. The decision in this case is based on a fundamental constitutional principle.

When an order could affect the rights of a person in that it might restrict his existing right to trade or his right to enjoy some benefits

contracted for, such a possible result is sufficient to require that the procedure which can lead to that result must conform to the

principles of constitutional justice, which includes the right to be heard. In this case an order under s.84 of the Act of 2009 could

affect the rights of the appellants in that it might restrict their rights to trade or to enjoy some benefit contracted for in the manner

submitted by counsel, in relation to the four constitutional rights of the appellants raised, which are set out earlier in this judgment.

Such a possible result is sufficient to require that the procedure under s.84 of the Act of 2009 conform to constitutional justice,

including the right to be heard. Section 84 should be considered so as to imply into the Act of 2009 a right to the appellants to make

representations in connection with the exercise by NAMA of its discretion to acquire loans under section 84.

Consequently, the appellants are entitled to fair procedures. This means that, in the circumstances of the case, the appellants are

entitled to make representations which should be considered by NAMA prior to NAMA making a decision under s.84 of the Act of 2009.