Property investor Paddy McKillen has won his Supreme Court appeal aimed at preventing the National Assets Management Agency acquiring some €2.1 billion loans of his companies.
Legal sources believe the impact of today's court decision is that, if Nama still wants to acquire the loans, it will have to start the entire process again.
The seven judge court unanimously ruled today that Nama made no valid decision in December 2009 - or since then - to acquire Mr McKillen's loans.
A purported decision of December 11th-14th 2009 to acquire the loans by an interim management team set up following a direction of the Minister of Finance to the National Treasury Management Agency was taken before Nama itself came into existence on December 21st 2009 and was not valid, it ruled.
The agency had argued its board effectively adopted the decision of the interim management team later but no decision to that effect was ever made, the court noted.
In those circumstances, the court did not address several other issues raised by Mr McKillen, including whether the agency had breached his right to fair procedures. The court did however reject Mr McKillen's claims that the agency had breached the terms of a European Commission decision permitting the State to grant aid under the Nama Act 2009.
The court has adjourned to next Wednesday consideration of whether the other issues, regareded as central to the functioning of Nama, require to be determined given the court's finding no valid decision was ever made by the agency to acquire the loans.
Minister for Finance Brian Lenihan said he needed to study the judgment before making a comment. "He may have won on a technical issue but lost on the merits," he said. A spokeswoman for Nama said it was not yet commenting on the outcome of the case.
Mr McKillen had argued no valid decision was made to acquire his loans by the agency itself. While a decision was made by an interim management team to acquire the McKillen loans between December 11th and December14th 2009, he claimed this was made prior to the formal establishment of Nama itself on December 21st 2009.
Today, the Chief Justice, Mr Justice John Murray and the six other Supreme Court judges upheld those arguments. What was at issue was the legal status and effect of the decision of the interim team between December 11th-14th and the court was satisfied that decision had no legal effect, he said.
Contrary to what the High COurt had decided, the interim decision was not given legal effect by any subsequent act or series of acts by the agency, he added.
"This is no mere matter of form," he said. "It is fundamental to the functioning of a statutory body that it, itself, take such decisions as it is empowered to make by the statute and exercise any discretions conferred on it. Consequently, Nama has made no decision to acquire the appellant's loans."
The court was giving its reserved judgment last December on Mr McKillen's appeal against a decision of a three judge High Court rejecting the challenge by himself and 15 of his companies to the acquisition of their loans with Bank of Ireland.
The case has implications for some €2.1 billion loans held by the McKillen companies with the participating institutions in Nama which had argued the McKillen loans acquisition was necessary because that extent of exposure to the financial institutions participating in Nama created a "systemic risk" to those institutions.
