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Dublin: 13 °C Tuesday 29 July, 2014

Challenge to promissory notes dismissed, court says TD could bring case

The Dublin businessman David Hall had taken a case against the State arguing that the issuing of the €31 billion promissory notes to the former Anglo Irish Bank is illegal as there was no Dáil vote.

David Hall with independent TD Stephen Donnelly and People Before Profit TD Joan Collins at the Four Courts last week.
David Hall with independent TD Stephen Donnelly and People Before Profit TD Joan Collins at the Four Courts last week.
Image: Laura Hutton/Photocall Ireland

Updated 12pm

THE HIGH COURT has dismissed a case brought by a Dublin businessman challenging the legality of the promissory notes issued to the former Anglo Irish Bank.

The court ruled that David Hall does not have the standing or locus standi to take the case but said that a legal challenge could be mounted by a member of the Dáil.

Reacting on Twitter Hall, the director of the Irish Mortgage Holders Organisation, said: “Justice Kearns dismissed my case on the basis I don’t have standing to take the case that maybe it should be a TD! Jutted/democracy!”

In a detail judgement issued this afternoon, the High Court president Justice Nicholas Kearns said that Hall could not argue that he had been put in a position any different to any other citizen because of the promissory notes payment.

The judgement said that there was no evidence put before the court that declaring the notes illegal would “lead to only benefits for the plaintiff”.

Justice Kearns said there might be “every reason to suppose” that declaring the notes invalid would have “very serious adverse implications” for Hall, Irish citizens, the State’s finances and its financial reputation as well as Ireland’s ability to continue its recovery.

The judge also highlighted the significant delay there had been in bringing the action, two years after the issuing of the promissory notes and noted the “significant costs” arising from cases such as Hall brought which fall on the taxpayer.

The judge said that no member of Dáil Eireann was precluded from mounting the legal challenge that Hall had brought.

“Nothing in this judgment should be taken or construed as indicating what view the Court might take of the merits of such a claim if and when so brought,” the verdict states.

March repayment

Hall had brought a legal challenge against the €31 billion promissory notes, a form of IOU, arguing that they are illegal as their issuing in 2010 was not approved by a Dáil vote.

The notes were issued to Anglo Irish Bank and Irish Nationwide – now the Irish Bank Resolution Corporation – in 2010 after it emerged that the banks had a major funding shortfall as a result of mounting losses in the wake of the collapse of the property bubble.

Not having the money to lend the banks, the State agreed to back – through the use of promissory notes – loans that the IBRC drew down from the Central Bank of Ireland.

Under this arrangement the State agreed to repay these IOUs over a 21-year period with payments of €3.06 billion due every year for the next ten years. The money that is repaid, with interest, to the Central Bank is taken out of circulation and is effectively destroyed.

The next payment is due on 31 March and the government is currently in negotiations with the European Central Bank seeking to reduce the cost of repayments.

In the High Court case the State, represented by senior counsel Michael McDowell, argued that the issuing of the notes did not require Dáil approval as the then Finance Minister Brian Lenihan had already been given powers under the Credit Institutions Stabilisation Act 2010.

Read: Noonan still chasing ‘good deal’ in promissory note talks

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