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Cite as: [2012] EWCA Civ 864

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Neutral Citation Number: [2012] EWCA Civ 864
Appeal Nos: A3/2012/0295 and 0302

The Hon Mr Justice David Richards
Claim No HC11C03437

Appeal Nos: A3/2012/0295 and 0302
Royal Courts of Justice
Strand, London, WC2A 2LL

B e f o r e :



- and -




Mr. Jeffrey Onions QC, Mr Sa'ad Hossain and Mr Edmund Nourse (instructed by Weil Gotshal & Manges) for the appellant, Maybourne Finance Limited
Mr Robin Dicker QC and Mr Willam Willson (instructed by Hogan Lovells International LLP) for the appellant, National Asset Loan Management Limited
Mr. Philip Marshall QC and Mr. Gregory Denton-Cox (instructed by Herbert Smith LLP) for the respondent, Mr McKillen
Hearing date: 28 May 2012



Crown Copyright ©

    The Master of the Rolls:

  1. This is an appeal against a decision of David Richards J on a preliminary issue of law, which arose in the context of a petition brought by Patrick McKillen against a number of different defendants under section 994 of the Companies Act 2006 and a related Part 7 Claim. The facts giving rise to the petition are irrelevant to the preliminary issue, which is concerned with the correct interpretation of an Agreement made on 1 April 2011 ('the Facilities Agreement'), made between Coroin Limited ('Coroin'), Anglo Irish Bank Corporation Limited ('Anglo'), the Governor and Company of the Bank of Ireland ('BoI'), and National Asset Loan Management Ltd ('NALM').
  2. The basic issue and background

  3. The 'serious and well-publicised problems' which arose in Ireland's banking sector, and which came to light during 2008 as a result of the global financial crisis, threatened 'the viability of the financial system of Ireland and the wider economy of the country' to quote from the evidence below. Accordingly, the Oireachtas, the Irish parliament, enacted the National Asset Management Agency Act 2009 ('the Act'), which established the National Asset Management Agency ('NAMA') in December 2009. NAMA and its affiliates, which included NALM (as its wholly owned subsidiary), were given wide powers by the Act.
  4. As explained by Aideen O'Reilly, head of legal and tax affairs at NAMA, in her witness statement filed in these proceedings:
  5. '10. [NAMA's] role is to acquire loans from those financial institutions that applied to participate in [NAMA]'s scheme and which were designated by the Minister for Finance of Ireland as participating institutions, to deal expeditiously with the loans acquired by it and to protect or otherwise enhance the value of those acquired loans for the purpose of contributing to the achievement of the public policy objectives of the [Act].
    11. As set out in the recitals to and section 2 of the [Act], those public policy objectives include "to address the serious threat to the economy and the stability of credit institutions in the State generally and the need for the maintenance and stabilisation of the financial system of the State", "to facilitate restructuring of credit institutions of systemic importance to the economy" and "to remove uncertainty about the valuation and location of certain assets of credit institutions of systematic importance to the economy".'
    12. As at 1 January 2012, [NAMA] has acquired loans (including land and development and associated loans) with a nominal value of €74,072,543,452 from five participating financial institutions, including [BoI] and Anglo … . Ultimately, [NAMA's] objective is to obtain the best achievable financial return for the Irish State on this portfolio, and, in the case of each individual loan, to achieve such a return as soon as practicable in order to reduce the value of the portfolio to zero as soon as commercially practicable…'.
  6. On 28 June 2010, NAMA exercised the power conferred on it under the Act to acquire certain loans ('the Facilities') which had been made to Coroin, pursuant to arrangements entered into with Anglo and BoI in 2005 and 2008. As a result, the Facilities were 'deemed to be assigned to' NAMA, pursuant to section 90(3) of the Act. The parties proceeded on the basis that Anglo and BoI remained legal owners of the Facilities, but NAMA acquired the beneficial interest therein.
  7. On 1 April 2011, the Facilities Agreement was entered into; its purpose and effect was to amend and extend the Facilities, and to consolidate them into a single loan of around £625m. In addition, under the Facilities Agreement, NALM provided a new facility to Coroin, the so-called Knightsbridge Acquisition Facility, amounting to around £36m, effectively replacing a pre-existing loan granted by Anglo, thereby enabling the sums due thereunder to be repaid.
  8. On 27 September 2011, NALM, Anglo and BoI transferred, or purported to transfer, all their rights under the Facilities Agreement to Maybourne Finance Limited ('Maybourne') pursuant to a loan sale agreement ('the Transfer').
  9. The preliminary issues which the Judge had to decide were (i) whether clause 40.3 of the Facilities Agreement applied to the Transfer of the Facilities and the Knightsbridge Acquisition Facility to Maybourne (ii) whether the restrictions on transfer in clause 24.2 and/or clause 24.3 of the Facilities Agreement applied to the Transfer. Although there are a number of other defendants to the section 994 petition, only Maybourne is concerned with this issue; NALM has been joined in the proceedings solely in connection with the preliminary issue.
  10. In a clear and carefully reasoned judgment, the Judge found in favour of Mr McKillen's argument that clause 40.3 did not apply, and the restrictions on transfer in clauses 24.2 and 24.3 did apply, to the Transfer, but, sensibly, he gave NALM and Maybourne permission to appeal.
  11. The structure of the remainder of this judgment is as follows. I shall first set out the relevant provisions of the Act and of the Facilities Agreement (which are largely taken straight from the judgment below); I shall then identify, more precisely, the nature of the issue between the parties; next, I shall consider the effect of the Act, which, as the Judge said, is a relevant factor when considering the effect of the Facilities Agreement; and finally I shall turn to the central issue on this appeal, namely whether the Transfer was in breach of the Facilities Agreement, first in relation to the Facilities and then in relation to the Knightsbridge Acquisition Facility.
  12. In the rest of this judgment, (i) all references to sections are to sections of the Act, (ii) all references to clauses are to clauses of the Facilities Agreement, (iii) I propose to adopt the same approach as the Judge and treat NALM as NAMA, as it is unnecessary to distinguish between them, whether for the purposes of the Act, the Facilities Agreement or the Transfer.
  13. The National Asset Management Agency Act 2009

  14. The definitions in sections 4(1) and 4(2) include 'acquired bank asset', which means a bank asset acquired by NAMA, 'bank asset', which includes a credit facility and security relating to it, 'credit facility', which is defined in such a way as to include the Facilities and the Knightsbridge Acquisition Facility, and 'acquire' and 'acquisition', in relation to a bank asset, which are defined so as to include, among other things, 'any form of legal or beneficial transfer', novation or assignment.
  15. Section 10(1) states NAMA's purpose as being to contribute to the achievement of the general economic and financial purposes specified in section 2 (already quoted in the extract from the evidence of Ms O'Reilly) by:
  16. '(a) the acquisition from participating institutions of such eligible bank assets as is appropriate,
    (b) dealing expeditiously with the assets acquired by it, and
    (c) protecting or otherwise enhancing the value of those assets, in the interests of the State.'
  17. Section 11(1) sets out NAMA's functions, and they include (a) the acquisition of eligible bank assets in accordance with Part 6 of the Act, (b) holding, managing and realising acquired bank assets, and (d) taking all steps necessary or expedient to protect, enhance or realise' the value of those assets, including (i) their 'disposal … in the market for the best achievable price'.
  18. Section 12(1) confers on NAMA 'all powers necessary or expedient for, or incidental to, the achievement of its purposes and performance of its functions'. Section 12(2) sets out a large number of specific powers without prejudice to the generality of section 12(1), including the powers to:
  19. '(s) acquire or dispose of property' and
    '(w) sell or dispose of the whole or any part of the property or investments of NAMA, either together or in portions, for such consideration and on such terms as the Board thinks fit'.
  20. Part 6 of the Act contains detailed provisions relating to the acquisition by NAMA of bank assets (in sections 80-98) and the effect of such acquisition (in sections 99-111). Section 90 provides for the acquisition by NAMA of bank assets by service of an acquisition schedule and for the deemed assignment of all related contracts to which the transferring bank is a party. Section 90(6) states that these provisions have effect notwithstanding:
  21. '(a) any legal (including contractual) or equitable restrictions on the acquisition of the bank asset or any part of it,
    (b) any legal or equitable restriction, inability or incapacity relating to or affecting any matter referred to in the acquisition schedule (whether generally or in particular) or any requirement for a consent, notification, authorisation, licence or document to similar effect (by whatever name and however described), in each case,
    (c) any insignificant or immaterial error or any obvious error, or
    (d) any provision of any enactment to the contrary.'
  22. As regards the effect of acquisition of bank assets by NAMA, relevant provisions are contained in section 99, subsections (1) and (2) of which provide:
  23. '(1) After NAMA or a NAMA group entity acquires a bank asset, ….
    (a) NAMA and the NAMA group entity each have and may exercise all the rights and powers, and subject to this Act is bound by all of the obligations, of the participating institution from which the bank asset was acquired in relation to
    (i) the bank asset,
    (ii) the debtor concerned and any guarantor, surety or other person concerned,
    (iii) any receiver, liquidator, or examiner concerned, and
    (iv) the participating institution ceases to have those rights and obligations except to any extent to which this Act provides otherwise.
    (2) The reference in subsection (1) to the rights, powers or obligations of a participating institution in relation to a bank asset is a reference to the rights, powers or obligations, as the case may be
    (a) derived from the bank asset, and
    (b) arising under any law or in equity or by way of contract.'
  24. So far as "rights and powers" are concerned, section 99(1) would be unnecessary in a case where NAMA acquires a bank asset by legal assignment or novation, as the relevant rights and powers would thereby be exercisable by NAMA without the need for section 99(1). However, where the acquisition of the asset is only equitable, not legal, so that the rights and powers would otherwise remain those of the original party so far as the debtor is concerned, section 99(1) confers on NAMA a direct right to exercise those rights and powers. I also agree with the Judge at [2012] EWHC 129 (Ch), para 41, when he said that he could 'see no reason why this provision would not apply also to powers, rights or obligations of lenders contained in any amendments to the terms of the acquired facility after its acquisition pursuant to the Act, such as those contained in the Facilities Agreement'.
  25. Section 110 deals with the '[e]ffect of acquisition of bank assets on certain other rights'. Subsection (1) defines 'relevant instrument' very widely, and it includes any 'document, security, obligation or other instrument … to which [a participating institution] is a party or by which [it] is bound.' Section 110(2) states that a provision in such an instrument 'is of no effect, without the express consent of NAMA, except to the extent to which the Minister provides', if it 'would [otherwise] cause any of the consequences specified in subsection (3) to follow by virtue of', inter alia, '(e) any disposition by NAMA … of any acquired bank asset' or '(f) any other thing done by or authorised to be done under … any provision of this Act.' The many consequences specified in subsection (3) include:
  26. '(b) the suspension or extinction (however described …) of a right or an obligation or the becoming subject to a right or obligation;
    (c) the termination of the relevant instrument concerned or a right or an obligation under it;
    (d) a right becoming exercisable to terminate or modify the relevant instrument or a right or obligation under it; …
    (q) any other right or remedy (whether or not similar in kind to those referred to in paragraphs (a) to (o)) arising or becoming exercisable;
    (r) the termination or modification of an obligation to provide a service or product.'
  27. Part 9 of the Act deals with NAMA's powers in relation to acquired bank assets, and it includes section 139, which provides that:
  28. 'NAMA may validly transfer, assign, convey, sell on or otherwise dispose of an acquired bank asset to any person notwithstanding
    (a) any restrictions on such a disposal at law or in equity,
    (b) any contractual requirement, or any requirement under any enactment, for the consent of, for notice to, or for a document from, any person to such a disposal, or
    (c) any provision of any enactment that would otherwise prohibit or restrict such a disposal.'

    The Facilities Agreement

  29. The Facilities Agreement had three purposes. First, it amended the original agreements pursuant to which the Facilities had been granted. Secondly, it introduced new provisions relevant specifically to the position of NAMA. Thirdly, it contained the terms of the new Knightsbridge Acquisition Facility provided by NAMA, for the purpose of repaying Anglo what was due under an existing facility which it had granted direct to the shareholders of Coroin.
  30. Anglo and BoI were parties to the Facilities Agreement, as security trustees and original lenders, and NAMA was a party as the lender under the Knightsbridge Acquisition Facility. In relation to the Facilities, NAMA was not a direct party, but clause 40.3(a) provides that Anglo:
  31. 'continues to manage each Loan other than a Knightsbridge Acquisition Facility … on behalf of and for the benefit of NAMA and is authorised to enter into this Agreement with the Borrower on behalf of NAMA.'

    It is common ground that the effect is to make NAMA a party through the agency of Anglo, in particular for the purpose of enabling it to enforce the provisions directly applicable to it relating to the Facilities.

  32. Clause 1.1 is the main definitions clause, and it defines 'NAMA' as including any relevant group entity. The clause also defines 'Lender' to mean:
  33. '(a) any Original Lender
    (b) any Knightsbridge Lender and
    (c) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with the relevant Existing Facilities Documents or Clause 24 … of this Agreement,
    which in each case has not ceased to be a Party in accordance with the terms of this Agreement.'

    The 'Original Lenders' are Anglo and BoI, and the 'Knightsbridge Lender' is NAMA. 'Loan' is defined as any of the advances made under the facilities to which the Facilities Agreement applies. Further, the expression 'Finance Documents' is defined so as to include the Facilities Agreement itself.

  34. Clause 1.2 is headed 'Construction', and provides that, '[u]nless a contrary indication applies' certain specified references in the Facilities Agreement shall be construed in a certain way. In particular, subclause (a) provides that certain words, including 'Lender', 'Party', and 'NAMA' 'shall be construed so as to include its successors in title, permitted assigns and permitted transferees' including under the Act.
  35. Clause 3.1(h) provides that Coroin will apply the money lent under the Knightsbridge Acquisition Facility 'to discharge the principal and interest owed to [Anglo] under the Original Knightsbridge Acquisition Facility Agreement', which is in turn described in clause 1.1 as a loan of £35.5m 'entered into' by various parties 'in relation to Goldrange Properties Limited [('Goldrange')] and the Knightsbridge Property'. Those various parties (who included Mr McKillen) were, as I understand it, the shareholders in both Coroin and Goldrange. 'The Knightsbridge Acquisition' is defined in Clause 1.1 as 'the acquisition of the Knightsbridge Property by way of the purchase of the entire share capital of Goldrange … and the purchase of the beneficial interest in Knightsbridge Property by Goldrange'.
  36. Clause 24 deals with transfers of the Facilities and the Knightsbridge Acquisition Facility, which are thereby made subject to restrictions and conditions, which, by clause 24.1, are to be 'subject to the terms set out in clause 40.3'. Clause 24.2 makes provision for transfers and contains a restriction on the class of permitted transferee:
  37. 'Subject to this Clause 24 a Lender (the "Existing Lender") may:
    (a) assign any of its rights and benefits; or
    (b) transfer by novation any of its rights, benefits and obligations,
    to another bank or financial institution or a trust fund or other entity regularly engaged or established for the purpose of making, establishing or investing in loans, securities and other financial assets (the "New Lender").'
  38. Clause 24.3 is headed 'Conditions of assignment or transfer', and, so far as relevant, it is in these terms:
  39. '(a) A Lender may not effect an assignment or transfer under Clause 24.2(a) … without:
    '(i) the prior written consent of NAMA; and
    (ii) having first notified and consulted with [Coroin] in relation to such proposed assignment or transfer.'
    (b) An assignment will only be effective on:
    (i) receipt by the Facility Agent of written confirmation from the New Lender … that the New Lender will assume the same obligations … as it would have been under if it was an Original Lender; and
    (ii) performance by the Facility Agent of all … checks relating to any person that it is required to carry out in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.
    (c) A transfer will only be effective if the procedure set out in Clause 24.5 … is complied with.'
  40. Provisions as to the procedure for transfers are included in clause 24.5, which includes the following:
  41. '(a) Subject to the conditions set out in Clause 24.3 … a transfer is effected in accordance with paragraph (b) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon as reasonably practicable …., execute that Transfer Certificate.
    (b) ….
    (c) On the Transfer Date:
    (i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights, benefits and obligations …, each of the Obligors … and the Existing Lender shall be released from further obligations towards one another … and their respective rights against one another … shall be cancelled (being the "Discharged Rights and Obligations");
    (ii) each of the Obligors … and the New Lender shall assume obligations towards one another and/or acquire rights and benefits against one another … in place of that Obligor and the Existing Lender;
    (iii) the Facility Agent, the relevant Security Trustee, [and] the New Lender … shall acquire the same rights and assume the same obligations between themselves … as they would have acquired and assumed had the New Lender been an Original Lender …; and
    (iv) the New Lender shall become a Party as a "Lender".'
  42. Clause 26 is concerned with the appointment and duties of the Facility Agent. By clause 26.10, the Agent may resign 'with the prior written consent of NAMA' and appoint one of its affiliates in its place, subject to certain provisions, which include, in para (f), that the Facility Agent is discharged from the date of the appointment of a successor, who should have all the rights set out in Clause 26.
  43. Clause 27 is concerned with the Security Trustees. Clause 27.17 provides for the resignation of a Security Trustee, and states that '[s]ubject to Clause 40.3 … and the prior written consent of NAMA, each Security Trustee may resign …', subject to certain provisions, including, in para (f), that the resignation will not take effect until a successor Trustee is appointed.
  44. Clause 40.3 provides as follows (and I have subdivided clause 40.3(b) in the same convenient way as the Judge did – see [2012] EWHC 129 (Ch), para 56):
  45. '(a) [Anglo and BoI] hereby give notice that … each Loan other than a Knightsbridge Acquisition Facility Loan is held by [them] for the benefit and to the direction of NAMA pursuant to the [Act]. Anglo … continues to manage each Loan other than a Knightsbridge Acquisition Facility Loan on behalf of and for the benefit of NAMA and is authorised to enter into this Agreement with [Coroin] on behalf of NAMA.
    (b) Without limiting the generality of paragraph (a),
    (1) the provisions of Clause 24 …. (other than Clause 24.5(c) and Clause 24.7), Clause 26.10 … (other than Clause 26.10(f)) and Clause 27.17 … (other than Clause 27.17(e)) shall not apply in relation to
    (i) the assignment or transfer of any rights, benefits and obligations to NAMA or its Affiliates or
    (ii) the exercise of any rights, powers and discretions by NAMA or its Affiliates under the Finance Documents in place of any Lender, the Facility Agent or the relevant Security Trustee; and
    (2) any change or resignation under Clause 24 …, Clause 26.10 … and Clause 27.17 … shall be effected by notice in writing from NAMA to [Coroin].'

  46. The Facilities Agreement is expressly governed by Irish law, but it is common ground, as it was below, that, for present purposes, Irish law is the same as English law.
  47. The preliminary issue to be determined on this appeal

  48. Following the passing of the Act, NAMA acquired the Facilities on 28 June 2010, in accordance with Part 6 of the Act. As the Judge said, all parties "proceeded on the basis that" NAMA only acquired a beneficial interest of Anglo and BoI in the Facilities but not their legal title, but it was nonetheless an acquisition for all the purposes of the Act. Accordingly, the Facilities became 'acquired bank assets', because of the definition of 'acquisition' in section 4(2). Further, by reason of section 90(6), the restrictions and conditions applicable to transfers contained in the various Facilities did not apply to their acquisition by NAMA, and equally would not have done if full legal title had been transferred.
  49. After the acquisition, the Facilities were then consolidated and amended by, and on the terms contained in, the Facilities Agreement, which also created the Knightsbridge Acquisition Facility.
  50. The Facilities were due to expire at the end of September 2011, unless extended by NAMA. On 27 September 2011, three days before the scheduled expiration date, NAMA, Anglo and BoI transferred, or purported to transfer, by way of novation, all their rights under the Facilities and under the Knightsbridge Acquisition Facility to Maybourne. The Transfer referred to the fact that 'the benefit of the [Facilities and the Knightsbridge Acquisition Facility] has been acquired by NAMA pursuant to the [Act]', and that NAMA, Anglo and BoI 'now wish to effect an absolute and unconditional transfer of the [Facilities and Knightsbridge Acquisition Facility]'. The body of the Transfer contains such a purported outright transfer.
  51. Mr McKillen alleges that Maybourne was not within the class of permitted transferee in clause 24.2, and that there was a breach of the requirement of consultation with Coroin under clause 24.3(a)(ii), as a result of which the Transfer is ineffective. The contrary case, as advanced by NAMA and Maybourne, is that clause 24.3(a) does not apply to assignments or transfers effected by NAMA, relying, at least in part, on clause 40.3.
  52. In those circumstances, the issue which the Judge ordered should be determined was expressed in these terms:
  53. 'On a true construction of clause 40.3 of the Facility Agreement:
    (i) Did clause 40.3 apply to the transfer of [the Facilities and Knightsbridge Acquisition Facility] to Maybourne; and
    (ii) Did the restrictions on transfer in clauses 24.2 and/or 24.3 apply to the transfer of [the Facilities and Knightsbridge Acquisition Facility] to Maybourne?'
  54. As the Judge said at [2012] EWHC 129 (Ch), para 32, although the issue is to be decided by reference to the wording and meaning of the Facilities Agreement, the Act is 'part of the admissible context' when interpreting it, not least because 'NAMA's involvement [is] explicable only by reference to its functions and powers under the Act, [and] the Act contains powers and provisions which may be directly relevant to the clauses to be construed. Moreover, clause 40.3(a) and other provisions of the [Facilities Agreement] expressly refer to the Act'.
  55. In particular, so far as the preliminary issue which the Judge had to decide is concerned, if the impediment which, on Mr McKillen's case, was imposed on NAMA by clause 24.3(a)(ii) would have been overridden by the terms of the Act, that would tend to tell against Mr McKillen's case that the clause imposed such an impediment .
  56. Accordingly, I propose first to consider whether the Transfer would have been permitted under the Act notwithstanding a provision such as clause 24.3(a)(ii), and then turn to the central issue of whether the Transfer was permitted under the Facilities Agreement in the light of the terms of the clause.
  57. The effect of the Act

  58. The central issue concerning the effect of the Act is whether section 139 entitled, or would have entitled, NAMA to conclude the Transfer without reference to Coroin, notwithstanding a provision such as clause 24.3(a)(ii). As just explained, if section 139 did have that effect, then it is unlikely that NAMA would have voluntarily agreed, in the Facilities Agreement, to an impediment on its ability to effect such a transfer. However, although it would be a significant point, it would not necessarily determine the preliminary issue against Mr McKillen, as that issue ultimately turns on the meaning of the Facilities Agreement, and the effect of section 139, while important, is ultimately merely part of the context in which that agreement is to be interpreted.
  59. The Judge held that none of the three limbs of section 139 would have applied to a provision such as that contained in clause 24.2 and may well not apply to a provision such as that contained in clause 24.3(a)(ii) if it were to extend to a transfer of the Facilities by NAMA. In summary terms, his reasoning (as set out at [2012] EWHC 129 (Ch), paras 45-50) was that:
  60. (i) paras (a), (b), and (c) of section 139 were concerned, respectively with restrictions imposed by (a) 'case law', (b) 'contract and legislation as they relate to consent, notice or a document', and (c) 'legislation',
    (ii) therefore clause 24.3(a)(ii) would have to fall within section 139(b),
    (iii) 'section 139(b) is directed to those provisions, commonly found in contracts, expressly requiring the consent, notice or documents to which section 139(b) refers' and
    (iv) 'contractual restrictions on the permitted categories of transferee do not therefore fall within the terms of para (b)'.
  61. I do not agree with that analysis. It seems to me that a more purposive approach than that adopted by the Judge to section 139 is appropriate. NAMA's 'objective' under the Act, as Ms O'Reilly said, was not merely 'to obtain the best achievable financial return for the Irish State' on the various loans, but, 'in the case of each individual loan, to achieve such a return as soon as practicable in order to reduce the value of the portfolio to zero as soon as commercially practicable….'. Even in the absence of Ms O'Reilly's evidence, it is clear that NAMA was formed in order to acquire, and then to sell, many of the bank loans which were causing such difficulties for the Irish banks, and it is obvious that both the arrangements set out in the Act to achieve that aim, and their implementation, had to be completed as quickly as possible.
  62. This meant that NAMA and its affiliates had to be able to acquire such loans, and dispose of such loans, as easily as possible. In my judgment, therefore, it is plain that the purpose of a provision such as section 139 was to remove impediments on disposals of such loans by NAMA and its affiliates. Accordingly, I consider that the interpretation of section 139 should be approached with that purpose firmly in mind, rather than in the rather more linguistically analytical way adopted by the Judge. The proper approach involves, therefore, assuming that the draftsman had the intention of removing any impediment standing in the way of NAMA effecting a speedy disposal of any loan which it had acquired pursuant to its powers under the Act.
  63. I consider that such an approach is consistent with the drafting of section 90, which was concerned with facilitating the task of NAMA and its affiliates at the earlier stage of acquiring the loans. On the Judge's analytical approach, the differences in the drafting of section 90(6)(a), (b) and (d), on the one hand, and section 139(a), (b) and (c), on the other, are hard to explain, as both sets of provisions are intended to perform effectively the same function, albeit at different stages, namely to do away with potential impediments, in one case on acquisitions and in the other case on dispositions, by NAMA and its affiliates. However, once one looks at the circumstances, the differences in drafting are easily explicable by the haste with which the Act had to be composed, coupled with the inevitable complexity of the drafting process. The two sets of provisions were clearly intended to have the same effect, and yet they are somewhat differently worded: that strongly supports an approach which concentrates on commercial purpose rather than a more linguistic analysis.
  64. Based on that approach, it appears to me that clause 24.3(a)(ii) represents a 'restriction on … a disposal at law', falling squarely within section 139(a): it is a 'restriction' in that it would fetter, and could prevent, the ability of NAMA to effect 'a disposal', and it arises 'at law', because it is both imposed and enforceable in, and as a matter of, law. It is true that this approach involves accepting a significant overlap between paras (a) and (b) of section 139, but I am unconvinced that that is a significant point against the approach. As the Judge accepted, there is an obvious overlap between paras (b) and (c), and, if, as appears to have been the case here, the purpose of a provision is to avoid restrictions however they may arise, one might positively expect a careful draftsman to have a degree of overlap in the categories of restriction which he drafts.
  65. Quite apart from this, as Toulson LJ said during the argument, it is a little difficult, as a matter of logic and principle, to distinguish between restrictions imposed by case law and restrictions imposed by contract. I would have thought that, at least to some extent, issues such as what a contract means and whether a term is to be implied are matters of case law. And, if they are not, it is very difficult to see what 'case law' would cover, and, therefore, what purpose the reference to 'law' in section 139(a) could have (a telling point on the Judge's linguistically analytical approach).
  66. I also consider that, even on his approach, the Judge was wrong in holding that clause 24.3(a)(ii) did not fall within section 139. As Mr Dicker QC and Mr Onions QC submitted on behalf of NAMA and Maybourne respectively, the requirement in the clause that Coroin be 'notified and consulted' about a transfer involves 'a contractual requirement … for … notice to … any person', which is what section 139(b) specifically overrides. The provision for notification is plainly 'a … requirement … for … notice', and it will not have been overridden if the requirement for consultation survives. Furthermore, it would be very odd if the effect of section 139(b) was to override a requirement for a person having to consent while not overriding the much weaker and less valuable requirement of that person having to be consulted.
  67. For these reasons, therefore, I conclude that, if clause 24.3(a)(ii) does apply to a disposal such as that effected by the Transfer, it would mean that NAMA had thereby voluntarily accepted an impediment in the Facilities Agreement to effect a transfer or disposal of the Facilities which was inconsistent with its statutory rights – an acceptance which would have been perfectly proper, but, at least on the face of it, inherently unlikely.
  68. Clause 24.3(a)(ii), ignoring clause 40.3, in relation to the Facilities

  69. Concentrating on clause 24.3(a), and ignoring for the moment clause 40.3, there are, on the basis of the analysis so far, three arguments to suggest that clause 24.3(a)(ii) should not apply to a disposal by NAMA. First, as just mentioned, it seems inherently improbable that NAMA would have agreed to such an impediment, when section 139 of the very Act which created it states that it should be able to effect disposals free of such impediments. As the Judge said at [2012] EWHC 129 (Ch), para 46, if (as I have concluded) NAMA and Maybourne are correct in their 'reading of section 139, it would be a powerful consideration in Maybourne's favour' when it comes to deciding whether clause 24.3(a) applies to the Transfer. Secondly, given the expedition with which NAMA was intended to be able to act, it is unlikely that such an impediment would have been agreed. Thirdly, if clause 24.3(a)(ii) applies, so does clause 24.3(a)(i), which seems most improbable: it makes no sense to require NAMA's consent to its own disposals.
  70. While powerful, these arguments would not necessarily be decisive, for instance if there were powerful factors pointing the other way. The first argument (and the second) may be answered by the familiar point that a fetter such as Mr McKillen contends exists may have been included as part of the give and take of negotiation: NAMA may have obtained a valuable concession on another aspect when agreeing the Facilities Agreement. However, nobody has suggested what that concession might have been, although it was said on behalf of Mr McKillen that NAMA was paid substantial fees under the Facilities Agreement. The second argument can fairly be said to overlap with the first. However, it nonetheless has some independent validity. The third argument may be answered by the fact that the clause applies to all transfers, and the fact that it is somewhat paradoxical to require the consent to an assignment of the assignor itself does not mean that it is a nonsense. I see the force of that, but, given that transfers by NAMA were the only types of transfer which were bound to occur, it still seems odd that the parties provided for NAMA's consent in clause 24.3(a) unless they did not intend the clause to apply to a transfer by NAMA.
  71. The hearing before David Richards J proceeded on the basis that, in the absence of clause 40.3(b), clause 24.3(a) would apply to transfers effected by NAMA. However, as Lewison LJ pointed out in argument, it is 'the Lender' who is precluded from effecting an assignment or transfer without complying with paras (i) and (ii) of clause 24.3(a) and, pursuant to clause 1.2, 'Lender' only includes an assignee or transferee of a Lender (as defined in clause 1.1) '[u]nless a contrary indication applies'. It appears to me that there is a powerful case for saying that, where it is NAMA who is the transferee, there is an 'indication' which contradicts the notion that it is included in the expression in clause 24.3(a), namely the need for NAMA's consent in clause 24.3(a)(i), particularly when seen in the light of the other two factors mentioned in para 49 above.
  72. In these circumstances, subject to considering the effect of the fact that clause 24 also applies to the Knightsbridge Acquisition Facility (which is discussed in the next but one part of this judgment), I am attracted by the argument that clause 24 does not apply to transfers made by NAMA. However, I would have some difficulty in allowing this appeal on that basis, because, although it was raised in argument, it was not discussed in great detail. Accordingly, as it makes no difference to the outcome, and as the parties (and in particular Mr McKillen) have not had the opportunity of adducing full argument on the point, I prefer to decide the appeal on the basis on which it was argued and decided below and fully argued before us.
  73. Clause 24.2(a)(ii) in the light of clause 40.3(b) in relation to the Facilities

  74. I turn, then, to the basis upon which the case has been primarily put on behalf of NAMA and Maybourne, namely, assuming that clause 24.3(a)(ii) would otherwise have applied to the Transfer in relation to the Facilities, it was effectively disapplied by clause 40.3(b).
  75. The argument advanced for NAMA and Maybourne centres on clause 40.3(b)(ii), and it proceeds as follows:
  76. i. The Facilities Agreement is one of the 'Finance Documents' (which is not in dispute);
    ii. In entering into the Transfer, NAMA was exercising one of its 'rights [or] powers' under the Facilities Agreement;
    iii. That right or power was exercised 'in place of [a] Lender', namely Anglo and/or BoI;
    iv. So, 'the provisions of clause 24 [did] not apply', and in particular the requirements of clause 24.3(a)(ii) did not apply.
  77. The Judge rejected that argument, for reasons principally given in [2012] EWHC 129 (Ch), paras 68-9, 79-84. In summary, he thought that the opening words of clause 40(3)(b), '[w]ithout limiting the generality of paragraph (a)', coupled with the inclusion of the later expression 'in place of any Lenders', strongly suggested that clause 40.3(b) was only intended to apply while NAMA was beneficial, and not the legal, holder of the Facilities, and that the purpose of clause 40.3(b)(1)(ii) was to enable NAMA to exercise the powers of Anglo and/or BoI, as the original lenders under the Facilities, without first obtaining formal legal title to the ownership of them.
  78. The Judge also considered that this conclusion was reinforced by three further points. First, that if NAMA and Maybourne were right as to the effect of clause 40.3(b)(1)(ii), clause 40.3(b)(1)(i) would be redundant; secondly, the contrast between the drafting of clause 40.3(a) and clause 40.3(b); and thirdly, the absence of any power to transfer if the whole of clause 24 was disapplied.
  79. The Judge observed at [2012] EWHC 129 (Ch), para 76, 'clause 40.3 is not as clearly drafted as it might have been. No construction advanced to me, or indeed any that has occurred to me, fits perfectly with all aspects of the clause. Any result will have some ragged ends.'
  80. While I agree that clause 40.3 is not as well drafted as it might have been, I do not agree that clause 40.3(b) has the limited meaning which the Judge ascribed to it; in my view, it has the effect for which NAMA and Maybourne contend. I refer back to the points already made in paras 49 and 50 above. Given the commercial and statutory background, and the requirement in clause 24.3(a)(i) for NAMA's consent, one would have expected the restrictions in clause 24.3(a) not to apply to any disposal or transfer by NAMA, and, if it otherwise would do so, an interpretation of clause 40.3(b) which disapplies it in such a case would seem appropriate, especially as clause 24 is expressly stated to be 'subject to the terms set out in clause 40.3'.
  81. In any event, I consider that NAMA and Maybourne's interpretation of clause 40.3(b)(1)(ii) is more natural than that advanced by Mr McKillen, given the words of the provision. The reference to NAMA exercising 'any rights, powers or discretions …. under the Finance Documents' (which include the Facilities Agreement itself) would seem plainly to include the right to transfer or assign the Facilities themselves - including a novation, in the light of clause 24.5(c). It is true that those words are immediately followed by an expression on which the Judge placed great weight, namely 'in place of any Lender'. He read those words as meaning that clause 40.3(b)(1)(ii) only applied while NAMA was the equitable, rather than the legal, owner of the Facilities. I am unpersuaded that the words 'in place of any Lender' should be given such a meaning. In my view, they are simply descriptive of NAMA's position, whether it was exercising its rights as an equitable assignee or as a legal assignee of the rights of Anglo and BoI under the Facilities. Under section 99(1), as the Judge rightly said (at [2012] EWHC 129 (Ch), para 41), there was 'confer[red] on NAMA a direct right to exercise [the powers of Anglo and BoI under the Facilities]' even where 'the acquisition is equitable, not legal'. Thus, the extent and nature of NAMA's rights to stand in the shoes of Anglo and BoI were the same whether it was a legal or equitable assignee, and, in particular, it could effect assignments of the Facilities. Accordingly, if Mr McKillen's interpretation is correct, it is hard to see the point of limb (ii) being limited to cases where NAMA was an equitable assignee.
  82. Indeed, on that interpretation, it is also hard to see what the point of limb (ii) was at all. I suppose that it could fairly be said that it was sensible to include such a provision for the avoidance of doubt, and I accept that arguments based on redundancy are of questionable value, as discussed in para 63 below. However, if one adopts the relatively linguistically analytical approach to the interpretation of clause 40.3(b) which Mr McKillen's argument involves, it seems to me that the fact that limb (ii) would be, strictly speaking, unnecessary, is a more telling point than it would be in relation to a more commercially based argument.
  83. It appears to me that there are two other aspects of clause 40.3(b) which tend to call the construction favoured by the Judge into question. First, as Mr Marshall QC accepts on behalf of Mr McKillen, the express retention of clauses 24.5(c), 26.10(f) and 27.17(f) in clause 40.3(b)(1) would 'serve little purpose' in relation to Clause 40.3(b)(1)(ii) if the interpretation for which he contends is correct: it could only apply to limb (i). It also appears to me that the reference in clause 40.3(b)(2) to 'any change' tends to support the construction favoured by NAMA and Maybourne. As the Judge said, on Mr McKillen's interpretation, it would only apply to a change under clause 40.3(b)(1)(i), as it could not apply to any arrangement falling within clause 40.3(b)(1)(ii), and, furthermore it would therefore only apply to a transfer to NAMA. To my mind, both features represent a surprisingly restricted effect for the apparently general words of clause 40.3(b)(2), which, at least on their face, seem to cover any change within either limbs of clause 40.3(b)(1).
  84. Further, I do not agree with the Judge that any assistance can be derived from the opening words of clause 40.3(b). All that they mean is that clause 40.3(b) is not to be invoked to cut down what would otherwise be the effect of clause 40.3(a). Whether clause 40.3(b) has the meaning contended for by NAMA and Maybourne, or the meaning advanced by Mr McKillen, it does not cut down the effect of clause 40.3(a). Accordingly, the opening words of clause 40.3(b) are of no assistance in resolving the dispute on this preliminary issue.
  85. Having said that, I agree with Mr Marshall that limb (i) of clause 40.3(b)(1) would be redundant if limb (ii) has the effect for which Maybourne and NAMA contend. However, that is a point of limited force, particularly if one is approaching the issue of interpretation with the commercial purpose in the forefront of one's mind. Draftsmen are concerned above all to ensure not merely that they have hit their target, but that they have hit the whole of that target. Experience shows that, however careful one is, it is hard to think of every contingency. It is therefore unsurprising that a sensible draftsman will sometimes express himself in a way which covers the same part of the target more than once.
  86. As to the points which are set out in para 56 above, I am unpersuaded by the argument that limb (ii) would have been differently, or more clearly, expressed if it had been intended to have the effect for which NAMA and Maybourne contend. In the present appeal, as is frequently the position in a case involving two competing interpretations of a contractual provision, it is a point which can be made equally validly by, and against each of the two interpretations, and consequently it goes nowhere. For the same sort of reason, any argument based on the contrast between the drafting of para (a) and para (b) of clause 40.3 appears to me to take matters no further. Nor do I accept the argument that there would be a gap if clause 24 were disapplied in accordance with NAMA and Maybourne's interpretation of clause 40.3(b) is correct: the argument overlooks the fact that clause 40.3(b) specifically retains clause 24.5(c)(i).
  87. Both Mr Dicker and Mr Marshall respectively relied on a few other small points to call into question their opponent's interpretation. They took these points commendably briefly, and rightly so. The Judge, as I have mentioned, referred to the fact that either interpretation gave rise to arguable problems or 'ragged ends'. Particularly when it comes to a detailed document such as the Facilities Agreement, detailed sophisticated analysis of every implication arising from the inter-relationship between the clause under discussion and other provisions can serve to obscure the wood for the trees.
  88. I should mention at this stage a further argument raised on behalf of Mr McKillen which the Judge, in my view, rightly rejected. This argument is that, even if clause 40.3(b)(1)(ii) could otherwise be relied on by NAMA, the way in which it effected the Transfer was outside the ambit of the provision, because Anglo and BoI were parties to that transfer (albeit in addition to NAMA) and transferred their own interests; hence, it is said, NAMA did not effect the transfer 'in place of' Anglo and BoI.
  89. I agree with what the Judge said about that argument at [2012] EWHC 129 (Ch), para 55:
  90. 'It proceeds as if the Facilities Agreement provided NAMA with two methods of transfer, under clause 24 and under clause 40.3, but this is not in my judgment the effect of the Facilities Agreement. If clause 40.3 applies to a transfer by NAMA, it disapplies clause 24, leaving clause 40.3 as the sole contractual method of transfer. That NAMA in fact purported to effect the transfer in accordance with clause 24 is nothing to the point. The questions are, as posed by the preliminary issues, whether clause 40.3 applied to the transfer to Maybourne and whether the restrictions on transfer in clauses 24.2 and 24.3 applied to that transfer.'
  91. Accordingly, subject to the conclusion being called into question by the discussion in the next section of this judgment, I would hold that NAMA and Maybourne are right as to the effect of clause 40.3(b), if clause 24.3 would otherwise apply to the Transfer.
  92. The Knightsbridge Acquisition Facility

  93. Mr Marshall suggests that this conclusion cannot apply to the Knightsbridge Acquisition Facility, and, as it is unlikely that the parties intended clause 24.3(a)(ii) not to apply to the Facilities, but to apply to the Knightsbridge Acquisition Facility, this should lead to the conclusion that the clause does in fact apply to the Facilities.
  94. I agree that, as the Judge said at [2012] EWHC 129 (Ch), para 86, it would be 'commercially implausible' that the parties would have intended a different disposal regime to apply to the Knightsbridge Acquisition Facility from the other Facilities. However, I do not accept that that view leads to the conclusion that clause 24.3(a)(ii) applies to the Facilities because it applies to the Knightsbridge Acquisition Facility. Even though NAMA was the original lender under the Knightsbridge Acquisition Facility, it can, in the context of the Facilities Agreement, be described as exercising its rights thereunder 'in place of any Lender', and hence clause 40.3(b)(1)(ii) applied to the Transfer of the Knightsbridge Acquisition Facility just as it applied to the Transfer of the Facilities, so that clause 24.3(a)(ii) did not apply.
  95. The Knightsbridge Acquisition Facility was granted to Coroin by NAMA to replace a loan made by Anglo to individuals who were shareholders in Coroin, and that is clear from the terms of the Facilities Agreement itself – see the provisions discussed in para 24 above. Accordingly, in a commercial, if not in a strictly legal, sense, the Knightsbridge Acquisition Facility can, in my view, be said to stand 'in place of' that earlier loan, and NAMA, by the same token to be a lender thereunder 'in place of' Anglo. It is all the easier to take this view in the light of (i) the fact that the Facilities Agreement itself treats assigned loans as being novated, and was made in the context of a statute which treated assigned loans in the same way, (ii) as Mr Marshall says, one would not expect clause 24.3(a)(ii) to apply to the Knightsbridge Acquisition Facility if it does not apply to the Facilities, and (iii) the points made in paras 49, 50, 60 and 61 above are equally applicable to the Knightsbridge Acquisition Facility as they are to the Facilities.
  96. On the face of it, at any rate, Mr Marshall's case in relation to the Knightsbridge Acquisition Facility would have been stronger if NAMA and Maybourne had succeeded in relation to the non-applicability of clause 24.3(a)(ii) to a disposal of the Facilities on the grounds discussed in paras 49 to 52 above. While the points made in paras 49 and 50 would apply with equal force to the Knightsbridge Acquisition Facility as they do to the Facilities, NAMA was not merely the original lender under the Knightsbridge Acquisition Facility, but was defined as the 'Knightsbridge Lender'. Accordingly, clause 1.2 would not apply, and so it would not be possible for NAMA and Maybourne to invoke the fact that the definition of 'Lender' in that clause 1.2 includes a successor or assignee '[u]nless a contrary intention appears'.
  97. Nonetheless, even though it is true that, on this assumption clause 40.3(b)(1)(ii) would not apply to a transfer of the Facilities by NAMA, it seems to me that would not necessarily prevent the provision being invoked by NAMA in relation to a transfer of the Knightsbridge Acquisition Facility. Essentially for the reasons already discussed, I consider that it could be so invoked.
  98. Accordingly, I reach the same conclusion in relation to the Knightsbridge Acquisition Facility as in relation to the Facilities.
  99. Conclusion

  100. For these reasons, I would allow this appeal.
  101. Lord Justice Lewison:

  102. I agree with the comprehensive judgment of the Master of the Rolls. I add a few short comments of my own. My starting point is the position as it would have been before the changes made to the contractual arrangements. I take that as my starting point, because I cannot see what incentive there would have been to NAMA, in the light of its statutory objectives, to give up any freedom that it had to dispose of acquired bank assets for the benefit of the Irish taxpayer. As I have said, as I read the original finance documents, and accepting (for the time being) the narrow construction of section 139 of the NAMA Act preferred by the judge, NAMA would not have needed Coroin's consent to a transfer to Maybourne. Second, I look at the conditions that have to be satisfied under clause 24.3 of the current finance documents if it is not disapplied in the case of a transfer by NAMA. The first condition is that NAMA's own consent must be obtained. What, I ask, is the point of that if NAMA is the transferor? The reasonable reader would surely understand that the document cannot mean that NAMA had to seek its own consent to a proposed transfer or novation by it. Third, it seems to me that if the narrow construction of section 139 is correct, it is itself a pointer in favour of NAMA's construction of clause 40. On the basis that the narrow construction is the correct one, there was every reason for NAMA to ensure that it would not be bound by fetters on its ability to transfer acquired bank assets which was one of its main statutory objectives. In my judgment the detailed linguistic points relied by each side must be seen in that context. As Lord Mance observed in Re Sigma Finance Corporation [2009] UKSC 2 [2010] 1 All ER 571 (§ 12):
  103. "I … think that caution is appropriate about the weight capable of being placed on the consideration that this was a long and carefully drafted document, containing sentences or phrases which it can, with hindsight, be seen could have been made clearer, had the meaning now sought to be attached to them been specifically in mind… Even the most skilled drafters sometimes fail to see the wood for the trees, and the present document on any view contains certain infelicities, as those in the majority below acknowledged … Of much greater importance in my view, in the ascertainment of the meaning that the Deed would convey to a reasonable person with the relevant background knowledge, is an understanding of its overall scheme and a reading of its individual sentences and phrases which places them in the context of that overall scheme."
  104. As the judge acknowledged, any interpretation of the document would leave "ragged ends"; so Lord Mance's approach is all the more appropriate.
  105. However, for the reasons given by the Master of the Rolls, I agree that the narrow construction of section 139 is incorrect. I also agree with him, for the reasons that he gives, that Coroin was not entitled either to notice of or to be consulted about the transfer to Maybourne.
  106. I too would allow the appeal.
  107. Lord Justice Toulson:

  108. I agree with both judgments.

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