Some of Ireland's biggest developers were last night considering legal action against the Republic’s ‘toxic bank’ following a surprise victory against Nama by Belfast-born property tycoon Paddy McKillen.
The Supreme Court in Dublin found that Nama took a decision to take over Mr McKillen’s loans before the agency was officially set up in late 2009. As a result, it said this decision could not stand.
Other developers whose loans were taken over at the same time could now take a legal action against Nama, claiming the body’s actions were invalid.
However, Nama claimed last night the judgment specifically only related to Mr McKillen.
The judgment is the first time Nama has suffered a legal setback and it is also an embarrassment to the outgoing Irish government, which believed the agency's procedures would stand up to any legal test.
The Construction Industry Federation said it was studying the ruling to see what the implications were for its members.
Developers said they sympathised with Mr McKillen and welcomed the fact Nama's “extra- ordinary” powers were finally being scrutinised.
The ruling of the seven-judge Supreme Court said that a decision by an interim Nama team to acquire Mr McKillen's €2.1bn (£1.78bn) in loans had no legal effect because it was taken before Nama was formally established.
The interim team, led by Nama chief Brendan McDonagh, decided to acquire Mr McKillen's loans in early December 2009, weeks before the Nama Act came into force in the Republic and before its first board meetings took place.
Despite Nama’s insistence that the decision relates only to Mr McKillen's case, other developers whose loans were taken over in the first and second tranches by Nama are now querying whether the decision to do so was legal.
“We're going to take on Nama now,” said one whose loans have been transferred.