The Irish High Court has decided a number of cases dealing with how a bank must prove its debt when suing for summary judgment to recover a defaulted loan. Not all of the decisions have been consistent in their approach. Some judges have held that the bank has to comply strictly with the requirements of the Bankers' Books Evidence Act 1879 (the "1879 Act"). In practical terms this requires a cumbersome chain of proofs where (as is invariably the case) proof of the debt is contained in computerised records.
Although the 1879 Act was amended on a number of occasions in recent decades, it is not in tune with modern technology. However other judges have held that a bank does not necessarily have to follow the 1879 Act procedures and so long as the individual giving evidence has personal knowledge of the borrower's account the evidence will not be hearsay.
Another recurrent issue has been whether an employee of a bank
group member engaged in recoveries can give evidence of debt owed
to the bank itself – the objection here being that the
witness is not employed
by the creditor and so the evidence is hearsay.
On 29 April 2015 in Ulster Bank Ireland Limited v Egan ( IECA 85) the Court of Appeal handed down a judgment which signals a sensible and pragmatic approach to these issues.
The bank applied for summary judgment to recover sums due on foot of loan and guarantee agreements. Although there were minor inconsistencies in how the bank's witness described himself in different affidavits, the court found on the evidence that he was in fact an employee of the plaintiff bank (and not a separate legal entity in the banking group). The court's judgment was given by Mahon J. He found that the witness "unequivocally states that he is an employee of the plaintiff..." He also noted that the witness said that he had sworn his affidavit after "diligent perusal" of the plaintiff's books and records. Mahon J held that this evidence was admissible and also satisfied the requirement in the Rules of Court dealing with applications for summary judgment that the deponent should be sworn by a person who can "swear positively" to the facts underlying the claim.
The court also noted that the defendants had acknowledged their debts to the bank and held that nothing would be achieved by sending the case for plenary hearing – i.e. a full hearing with exchange of pleadings, discovery (disclosure) and with oral evidence.
Mahon J comprehensively reviewed the main modern authorities in this area. The court was mindful of the various objections that have been taken in other cases to the admissibility of evidence and issues under the 1879 Act. The decision represents clear authority that a bank is not bound to follow the procedures under the 1879 Act in proving its claim. The Court of Appeal's decision will be binding on all future High Court cases where this issue arises. This provides welcome clarity in an area previously fraught with unnecessary complexity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.