Since the establishment of NAMA in 2009, the personal finances of individual developers have come under the spotlight. Focus is now shifting to their spouses, particularly to assets which were transferred to them in recent years. In a recent High Court case, NAMA attempted to negotiate the return of some €10 million of a total of €17 million in cash that was transferred by developer David Daly to his wife. During the hearing, in which Mr Daly unsuccessfully sought an injunction preventing NAMA from appointing a receiver over his UK properties, the Court heard that he had transferred €80 million in assets (which included €17 million in cash) to his wife in 2009.
Legislation is in place to combat such transfers where the intention is to defraud creditors or others. The Land and Conveyancing Law Reform Act 2009 provides that any transfer of property made with the intention of defrauding a creditor or other person is voidable by any person who is prejudiced by it. This provision is not limited to land and also encompasses personal property. A person seeking to rely on this legislation must prove that the transfer was intended to defraud a creditor or other person.
NAMA is afforded specific powers under the NAMA Act 2009 to ask the court to declare the transfer of assets by NAMA debtors void where it considers it just and equitable to do so. Once again, the legislation refers to “assets” and is not limited to land. NAMA only needs to prove that the effect of the disposition was to defeat the acquisition of eligible assets by NAMA. This is a lower threshold than the creditors’ requirement to prove an intention to defraud.
In the wake of recent publicity surrounding transfers to spouses, and given the relatively low burden of proof on NAMA, it is likely that the courts will see many petitions for declarations that transfers of property to spouses within recent years are void. That being said, the NAMA Act and the Land and Conveyancing Law Reform Act were only introduced in 2009 and transfers before that date may be subject to different considerations.
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