TREASURY HOLDINGS should never have taken a legal challenge to the takeover of its loans by the National Assets Management Agency which the insolvent developer ultimately lost but leaving Nama footing a heavy costs bill, the High Court heard yesterday.
Despite winning the action, Nama faces having to pay very substantial legal costs due to the insolvency of Treasury. Nama had sought to have funds lodged in court by Treasury as security for costs but a sum of €600,000 lodged by Treasury will not be sufficient, Paul Sreenan SC, for Nama, outlined to Ms Justice Mary Finlay Geoghegan yesterday.
The €600,000 was “certainly not” a full order for costs, the sum due to Nama was in excess of that and this action should never have been taken in the first place, counsel said. Both Mr Sreenan and counsel for KBC Bank said Treasury should not have taken the case given its agreement with Nama last January not to take legal proceedings if Nama entered into a two-week “standstill agreement” to consider alternative “investment” proposals advanced by Treasury.
Nama did agree to the standstill period but Treasury initiated legal action after Nama rejected the “investment” proposals.
Ms Justice Mary Finlay Geoghegan was dealing with costs issues arising from the litigation initiated by Treasury and 22 related companies last January challenging the takeover of some €1.7 billion of its loans by Nama. Treasury ultimately lost the case in July and earlier this month, in separate proceedings, consented to a bid by KBC Bank for orders winding up 17 companies.
Yesterday, the judge heard Nama had reached an agreement with the joint liquidators of some of the Treasury companies in relation to some costs of the action by the developer against the agency.
That agreement included release to Nama of a sum of €600,000 which Treasury had lodged as security, plus release of charges over four properties. The agreement provided for no order for costs in relation to some of the Treasury companies in the case, meaning each side pays their own legal costs. The release of the security would not meet all of Nama’s costs of defending the case, Mr Sreenan said.
Lyndon MacCann SC, for KBC Bank, which also opposed Treasury’s case, also sought the bank’s costs of the case. Treasury should never have brought the case given the existence of the standstill agreement and the fact it had not disputed its default on loans, he said.
Michael Cush SC, for Treasury companies not within the joint liquidators’ brief, opposed the KBC application. Treasury had won two-thirds of the legal issues raised and had also asked KBC not to come into the case as their position was adequately protected by Nama, he said.
The judge noted the costs agreement between the liquidators and Nama and said she would rule later on the KBC costs application and on a number of other issues arising from the proceedings.
