The Supreme Court in the case of Ulster Bank v O’Brien holds that banks need not comply with the provisions of the Bankers’ Books Evidence Acts when proving a claim for monies due from a defaulting borrower. A bank may prove its claim in the same way as any other corporate creditor.

In summary

The Supreme Court decision in O’Brien establishes that to focus on the procedures under the Bankers’ Books Evidence Acts 1879-1959 (the “Act”) is misconceived because:

  • a bank does not necessarily need to rely on "bankers' books" in order to prove a contract of loan, a breach by the borrower and the amount due; and
  • a bank should not be precluded from proving its case in the same way as any other commercial creditor.

Background

There were a number of recent High Court decisions which introduced undue complexity and doubt to this issue. The Court in these cases held that unless a plaintiff bank could show that it had complied with the Act its evidence would be hearsay. O’Malley J. in Ulster Bank Ireland Ltd v. Dermody [2014] IEHC 140 and Cregan J. in ACC Bank plc v. Byrne [2014] IEHC 530 expressed the view that the Act had a dual purpose of relaxing the: (i) “best evidence” rule; and (ii) hearsay rule. That is to say, the Act allowed a copy of an entry in a banker’s book to be produced, rather than the original entry itself, and it allowed the entry (which could be proved by a duly authenticated copy) to be admitted as proof of the truth of its contents. O’Malley J. was clearly of the opinion that, absent compliance with the Act, an entry in a bank’s books is not admissible in evidence to prove the truth of its contents, and that such an entry has to be proved by its author, as is the case in relation to other documents.

For further information on these cases, click here.

If the reasoning in these cases was upheld by the Supreme Court, it would have meant that there would have been a very serious lacuna in the law. The High Court’s approach was not consistent with the earlier High Court decisions of Moorview Developments Ltd v. First Active plc [2010] IEHC 275 and Bank of Scotland v. Fergus [2012] IEHC 131], in which it was held that a witness could give evidence by reference to the books and records of a company in order to demonstrate liability, subject to any rebutting evidence. The key point is that it is not just banks that rely on records to prove debts. Many companies rely on records to inform them who are indebted to them and in what amount. In many instances there would be no-one available who could give first-hand evidence of a debt being incurred.

Facts in O’Brien

In O'Brien the bank claimed repayment of three loans totalling €888,000. It grounded its application for summary judgment on an affidavit of a relationship manager that the facilities were offered to the defendant borrowers who subsequently defaulted. The affidavit set out the amount due and exhibited a print-out of the relevant accounts. The defendants did not put forward any evidence in defence of the claim.

The Master of the High Court agreed with the defendants’ argument that the bank's evidence was hearsay because it had not complied with the Act. The decision of the Master was overturned on appeal by the bank to the High Court. The defendants then appealed the decision to the Supreme Court.

Supreme Court decision in O’Brien

The defendants’ appeal to the Supreme Court failed. Although different approaches were taken by each of the Supreme Court judges, the consensus was that the bank had proved its case by giving admissible evidence. Evidence had been furnished of the making of the loan and the borrowers' default. The borrowers had advanced no evidence that disproved or undermined the bank's claim.

Laffoy J held that the Act had no relevance to the case and the bank did not have to rely on the Act simply because it was a bank. It was entitled to prove its case like any other litigant. Laffoy J approved previous High Court decisions stating that a bank witness is entitled to give evidence of the bank's records showing the amount due by a customer of that bank. Charleton J concluded that the absence of a denial of the loan and default was significant given the bank's evidence. MacMenamin J held that there was no contest whatsoever on the facts in this case and the contention that the witness' evidence was hearsay was wrong in circumstances where she had signed the demand letter.

Conclusion

It is now clear that all companies, including banks, can refer to and rely on the books and records of a company as evidence of the defendant’s liability for a debt, subject to any rebuttal evidence that may be given by the defendant in its defence.