The Supreme Court has recently clarified the evidence required for summary judgment applications, and the decision is of particular relevance to firms which deal in arrears management, corporate debt recovery and loan servicing.1 The case considers how lenders can secure summary judgment without falling foul of the rule against hearsay.2
Ulster Bank had sought summary judgment against Rory and Danny O’Brien before the Master of the High Court. The bank based its application on an affidavit sworn by a senior relationship manager, who exhibited the bank’s letters of offer, the letters of demand which the manager had signed and computer print outs showing the amounts due. The O’Briens did not challenge the facts put forward but argued that the bank’s affidavit evidence constituted hearsay and was inadmissible. This was argued successfully before the Master but on appeal to the High Court summary judgment was granted. On appeal to the Supreme Court the O’Briens argued that the bank’s evidence was inadmissible because book entries relied on by the bank did not meet the requirements of sections 4 and 5 of the Bankers’ Books Evidence Acts 1879 – 1959 (BBEA) which provide an exception to the hearsay rule for banks.
Sections 4 and 5 provide that a copy of an entry in a banker’s book, including computer records, shall not be received in evidence unless it is first proved that: (i) the book was at the time of making of the entry one of the ordinary books of the bank; (ii) that the entry was made in the usual and ordinary course of business; and (iii) that the book is in the custody and control of the bank. The BBEA permit a partner or officer of the bank to give such evidence orally or by affidavit. Officers of NAMA and IBRC Limited (ISL) can swear to bank records once the requirements of Section 4 and 5 are met.3
As pointed out by Mr. Justice Charleton in his judgment, the intended purpose of the BBEA was to replace the old practice whereby a bank official would have to attend court and bring bank ledgers with him.
Recent Decisions that confused the admissibility of Bank Evidence
A number of recent decisions4 held that the bank records relied on by the plaintiffs were inadmissible because the person swearing the affidavit was not a ‘partner or officer’ of the bank as required under the BBEA. In Bank of Scotland Plc –v- Stapleton5, evidence was given by an employee of Certus, rather than an official of Bank of Scotland. In Ulster Bank Ireland Limited–v- Dermody6 the evidence was given by an employee of Ulster Bank Limited, rather than an official of the plaintiff.
In the O’Briens’ appeal, the Supreme Court upheld the High Court’s decision and rejected the contention that the bank official’s affidavit evidence was inadmissible. The Court found that the BBEA did not apply because the bank had put forward uncontroverted evidence showing that it was entitled to summary judgment against the O’Briens. Charleton J. held that a key consideration was that the O’Briens had submitted no rebuttal evidence to the bank’s affidavit and had not responded to the letter of demand. MacMenamin J. held that the senior relationship manager’s evidence was primary evidence of her actions as she had signed the letter of demand which sought immediate repayment of the sums due and owing on foot of the facility letters. Laffoy J. held that a bank is entitled to prove its case in the same way as any other commercial creditor and did not have to rely on the processes in the BBEA to prove a loan contract and a borrower’s default, just because it was a bank.
When seeking summary judgment ideally the person swearing the affidavit grounding the application should be the person who signed the letter of demand. Where that is not possible due to changes in personnel or where loans have been sold, care must be taken to ensure that the proofs are in order before issuing enforcement proceedings.
Provided that the party seeking judgment has its proofs in order the court will be likely to grant summary judgment if the defendant does not challenge the accuracy of the facts grounding the application. If, however, the court finds that there is a fair or reasonable probability that the defendants have a real or bona fide defence on the law, facts, or both, the matter will be sent for plenary hearing.