Dellway Investments & ors v NAMA & ors

Factual and Procedural Background

The Appellants are sixteen corporate and individual borrowers whose commercial property loans (totalling approximately €2.1 billion and secured on a portfolio valued between €1.7 billion and €2.28 billion) were held by two participating banks. On 3 February 2011 the Supreme Court declared void an earlier purported decision of the Respondent Agency (“the Agency”) to acquire those loans under the National legislation governing the transfer of “eligible bank assets.” After that ruling the Agency stated its intention to make a fresh acquisition decision pursuant to section 84 of the statute.

The Appellants sought judicial review, contending that any acquisition would adversely affect their constitutionally protected property, contractual, commercial and reputational interests. The High Court refused substantive relief, holding that the borrowers had no right to be heard before an acquisition decision and that any interference with their rights was either minimal or too indirect. Leave to appeal on a certified point of law was granted. The Supreme Court was asked, inter alia, to decide whether the borrowers are entitled to make representations to the Agency before it decides to acquire their loans.

Legal Issues Presented

1. Whether borrowers whose loans are eligible for acquisition under section 84 have a constitutional or other legal right to be heard by the Agency before the Agency exercises its discretionary power to acquire those loans.
2. Whether the statutory scheme, by conferring particular powers and immunities on the Agency (including vesting-order powers, enforcement immunities and transfer provisions), alters or threatens the Appellants’ property and contractual rights so as to trigger fair-procedure guarantees.
3. Whether any urgency associated with the national banking crisis, or the operational objectives of the statutory scheme, justifies excluding a borrower’s right to be heard.

Arguments of the Parties

Appellants’ Arguments

• The acquisition decision will directly affect their equity of redemption, the value of their property portfolio, rental income used to earn a livelihood, and the bundle of contractual rights under loan agreements.
• The Agency enjoys unique statutory powers (e.g., vesting orders, wide receiver powers, enforcement immunities) unavailable to ordinary mortgagees; those powers make the borrowers’ position materially worse than if the loans remained with the banks.
• Reputation will suffer because international commentary frequently labels the Agency a “bad bank,” signalling borrower distress.
• Under Irish constitutional jurisprudence (e.g., East Donegal; Re Haughey) any person whose rights are liable to be affected by a discretionary statutory decision is entitled to advance representations before the decision is made.

Respondents’ Arguments

• The statute obliges the Agency to act solely in the public interest of resolving systemic banking risks; borrower interests are irrelevant to the section 84 discretion.
• Transfer of a loan does not change the borrower’s legal obligations; therefore no legal right is interfered with so as to trigger audi alteram partem.
• Granting hearings to numerous borrowers would undermine the tight statutory timetable and the urgent objectives of the legislative rescue scheme.
• Any additional powers or immunities granted to the Agency are proportionate and constitutionally justified responses to the financial emergency.

Table of Precedents Cited

Court’s Reasoning and Analysis

The Supreme Court held that section 84 decisions are made by reference to specific borrowers; therefore those borrowers are “persons affected.” Irish constitutional jurisprudence presumes that statutory powers must be exercised fairly unless the Oireachtas has clearly excluded such protection, which the statute did not.

The Court identified multiple ways in which acquisition could materially prejudice the Appellants:

• The Agency wields unique statutory powers (e.g., vesting orders) that can extinguish the equity of redemption and allow the Agency to retain any future uplift in property value and rental income—advantages not available to ordinary banks.
• Sections 101, 139 and related immunities limit borrowers’ ability to enforce prior representations or to secure injunctive relief, thereby altering contractual protections.
• The potential use of consolidation rights, combined with short default triggers, could place the entire portfolio at risk even if only one facility falls into technical default.
• Association with the Agency, widely portrayed as a repository for distressed assets, is liable to damage commercial reputation.

The Court rejected the Respondents’ submission that urgency or systemic-risk considerations justified a blanket denial of hearings; the Agency itself had delayed many months before acting and had already afforded limited representational rights to the banks.

Consequently, procedural fairness requires that borrowers be given timely notice of an intended acquisition and a meaningful opportunity—typically through written submissions—to present reasons why their loans should not be acquired or should be treated differently.

Holding and Implications

Holding: The Appellants are entitled to be informed of any intention by the Agency to acquire their loans and to make appropriate representations before a section 84 acquisition decision is made.

Implications: The decision obliges the Agency, and by extension any public body exercising similar compulsory-acquisition powers, to incorporate a borrower-representation stage into its procedures. While the ruling does not invalidate the statutory scheme, it tempers its operation by injecting a fairness requirement, potentially influencing timelines and internal processes for future acquisitions but without thwarting the overall legislative purpose.