€31bn promissory notes were legally flawed, court told

Promissory notes amounting to over €31bn in financial support for financial institutions, including the former Anglo Irish Bank, were flawed, and payment on them cannot now be made, it has been claimed.

David Hall of College Grove, Castleknock, in Dublin, is seeking in a High Court action to prevent the Government from making payments on foot of the notes issued in favour of Anglo, the EBS, and Irish Nationwide.

Mr Hall, a founder member of the New Beginning group of business people and lawyers, said he has, for some time, had “grave reservations about the manner and way the public finances of the country have been run. The Irish people, having never been consulted about this and in circumstances where its representatives were bypassed, were being asked to honour a deal made in flagrant breach of the Constitution, with no democratic legitimacy and in breach of the treaty on the functioning of the EU”, he claimed yesterday.

John Rogers, counsel for Mr Hall, told Mr Justice Nicholas Kearns that the promissory notes were unlawful on various grounds, including that the Dáil had not specifically approved them as was required by the Constitution.

Mr Rogers said the minister for finance ought to have secured specific approval from the Dáil for the notes. He said all spending by ministers was regulated by a vote of the Dáil under very specific headings and sub-headings and the promissory notes were no different.

Mr Rogers said the Government appeared to be relying on a section in the Credit Institutions Financial Support Act, but he said that “if the section permits the minister to make payments without a Dáil vote, then we say the section is unconstitutional”.

Mr Rogers said spending was initiated by the Government bringing a “money message” to the Dáil signed by the Taoiseach, and the Constitution provided for the Dáil to be the body that voted through the process. He said the Constitution “can’t be set aside except by the people”.

He also said that without specifically naming figures and seeking approval of Dáil Eireann for them, the Government’s procedure on the promissory notes represented “a blank che-que” which was not provided for in the Constitution.

Mr Rogers said that in doing what it had done, the minister for finance and the Government had been acting ultra vires or beyond its powers, and he would be seeking a declaration from the court to that effect.

The defence rejects the charge that the promissory notes were unlawful and is expected to present its case to Mr Justice Kearns when the hearing resumes today.