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Hogan Lovells Successful in High Court Claim on Behalf of NAMA

10 August 2012

LONDON, 10 August 2012 - The English High Court has today given judgment against Patrick McKillen in a high profile court case brought by the Irish entrepreneur against the Irish National Asset Management Agency (NAMA), Derek Quinlan and Sir David and Sir Frederick Barclay. Hogan Lovells represented NAMA throughout the proceedings.

The dispute with Patrick McKillen involved a battle with the Barclay brothers for control of three prestigious London hotels, Claridge's, the Connaught and the Berkeley. Mr McKillen, a 36% shareholder in the hotel holding company Coroin Limited ("Coroin"), alleged that NAMA's transfer of Coroin's £660 million debt to a Barclay brothers-controlled company, Maybourne Finance Limited ("MFL"), was invalid because NAMA had not complied with a contractual requirement to consult with Coroin prior to transferring the debt.

Hogan Lovells litigation partner Hugh Lyons commented: "Today's judgment recognises that, in selling the Coroin debt to the Barclay interests, NAMA had achieved best value for the Irish taxpayer, and in so doing NAMA had acted both professionally and in accordance with its contractual obligations to Coroin."

The question of whether NAMA was legally required to consult with Coroin at all was heard at a preliminary stage in the proceedings, before the main trial. On 27 June 2012, the Court of Appeal gave a judgment holding unanimously that a bespoke clause in Coroin's loan agreement meant that NAMA was not required to consult with Coroin before transferring the debt to MFL. This meant the debt transfer was valid. The judgment held that the bespoke override clause operated to trump the consultation obligation and permitted transferee restrictions.

In today's judgment, Mr Justice David Richards held that NAMA's victory in the Court of Appeal on the consultation issue means that Mr McKillen cannot rely on his claim of invalidity against NAMA in the High Court proceedings.

The Judge found NAMA's evidence compelling and was satisfied that NAMA conducted itself fairly throughout the period during which it acquired, held and then sold the Coroin debt. He described NAMA's witnesses as "wholly reliable" and added that NAMA's disclosure and evidence was "invaluable" in helping to establish NAMA's approach and attitude at the different stages during which NAMA held Coroin's debt.

The Hogan Lovells team comprised litigation partner Hugh Lyons, finance partner Paul McLoughlin and litigation associate Oliver Humphrey. Hogan Lovells instructed Robin Dicker QC and William Willson of South Square chambers.

Background to the case

In October 2011, Mr McKillen brought a wide-ranging claim against a number of parties, including the Barclay brothers, Derek Quinlan, a number of Barclay-appointed directors and Barclay-controlled entities. The claim alleged that Mr McKillen's rights as a shareholder of Coroin had been unfairly prejudiced and that certain of the parties had conspired unlawfully to deprive him of his rights.

NAMA was added as a defendant to the claim solely for the purpose of determining whether its transfer of Coroin's £660 million debt to MFL, a Barclay brothers vehicle, was valid. NAMA had first acquired those debts in June 2010.

Mr McKillen alleged that the debt transfer from NAMA to MFL was invalid, arguing that NAMA had failed to comply with a contractual requirement to consult with Coroin before transferring the loans.

On 27 June 2012, the English Court of Appeal gave judgment in NAMA's favour in relation to the legal question of whether NAMA was required to consult with Coroin. The three judges held unanimously that NAMA did not have to consult, meaning that the transfer of the debt to MFL was valid.

In today's judgment, the Judge found that the Court of Appeal's decision meant Mr McKillen could not rely on his claim against NAMA. He also held that there had been no unfair prejudice against Mr McKillen's rights as a shareholder of Coroin, nor any conspiracy to act unlawfully. Accordingly, he dismissed in their entirety the claims against Derek Quinlan, and against the Barclay brothers, their companies and appointed directors. 

The full judgment and Judge's statement can be found here: http://www.judiciary.gov.uk/media/judgments/2012/patrick-mckillen-judgment-10092012

The Court of Appeal judgment can be found here:
http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2012/864.html&query=mckillen&method=boolean

ENDS

About Hogan Lovells

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