Recent decisions of the High Court have confirmed that banks are required to satisfy strict proofs in enforcing claims against debtors, which will have significant practical implications for lenders contemplating the outsourcing of debt collection and the purchase of loans.  The provisions of the Bankers’ Books Evidence Act 1879 (as amended) (the “Act”) provide for the admissibility of copies of entries from the books and records of a bank against a defendant as prima facie evidence of their contents.  Where a bank fails to strictly comply with the provisions of the Act, the evidence of the bank will be inadmissible in enforcing its claim against the debtor.

The courts frequently experience difficulties in relation to the interpretation of the Act.  An earlier decision of the High Court seemed to indicate that a less rigorous approach would be taken by the courts to the interpretation of the Act (The Governor and Company of Bank of Ireland v Paul Keehan, [2013] IEHC 631).  This has now been cast into doubt in the recent decisions of Ulster Bank Ireland Limited v Dermody, [2014] IEHC 140 andACC Bank plc v Byrne & Others, Unreported, 31 July 2014 which held that the business records of a bank were inadmissible as evidence of the truth of their contents save where the rigorous provisions of the Act were complied with. 

The facts and outcome of Dermody will be of significant importance to the purchasers and servicers of loans.  In Dermody the High Court dismissed the claim of the plaintiff bank (Ulster Bank Ireland Limited (“UBIL”)) in circumstances where the person swearing the affidavit setting out the bank’s evidence was an employee of a third party (which was a related company charged with the collection of debts due to UBIL) and had been authorised by UBIL pursuant to a power of attorney to swear the affidavit.  This decision is in line with the High Court’s decision in Bank of Scotland plc v Stapleton [2012] IEHC 549 regarding Certus, the servicer charged with the management of the loans due to Bank of Scotland plc.

The cumulative effect of these High Court decisions (which appear to contradict earlier decisions of the High Court) is that:

  • The records of the bank are inadmissible save where the provisions of the Act are complied with.
  • The evidence must be provided by an employee of the bank and not a representative of some other company to whom the task of collecting the debt has been outsourced.
  • It remains open to the person in the bank who created the original document to give direct evidence.   

Until the conflicting approaches of the High Court are resolved by the Supreme Court or the newly established Court of Appeal, lenders ought to err on the side of caution and ensure that they are in full compliance with the rigorous provisions of the Act.