A recent High Court appeal demonstrates the significance of the rule against hearsay evidence in the context of repossession proceedings where evidence of a debt must be given by an officer of the financial institution concerned.

Bank of Scotland (BOS) obtained an order in the Circuit Court for possession of a dwelling house after the borrowers had fallen into mortgage arrears. The borrowers had granted a mortgage over the relevant property in favour of Bank of Scotland (Ireland) Limited (BOSI) as security for facilities advanced by BOSI.  However, at the time of the hearing, BOSI had been dissolved following the transfer of its assets and liabilities to BOS which had in turn outsourced the management of its loan portfolio in Ireland to an independent service company based in Dublin.

An employee of the service company gave evidence in relation to the debt on behalf of the bank in accordance with a letter of authority from the bank.  The employee’s capacity to give such evidence was challenged by the borrowers on the basis that she was not directly employed by the bank and was therefore not an officer of the bank. The borrowers argued, unsuccessfully, that her evidence must be hearsay, given that she has no personal knowledge of the books and records of the bank, and that such evidence was therefore inadmissible.

The Borrowers appealed the decision to the High Court. The High Court considered whether the letter of authority was sufficient to render the witnesses’ evidence admissible or whether her evidence in that regard was inadmissible hearsay. The court concluded that evidence of a debt is permissible only where it has first been proved and that this proof must be provided by an officer of the bank. As the evidence provided in the Circuit Court was not provided by an officer of the bank such evidence was hearsay and inadmissible. The High Court added that the fact that is it inconvenient for a bank to provide oral testimony by an officer in circumstances where they no longer have a presence in this jurisdiction cannot absolve the bank from complying with the normal rules of evidence.

Accordingly, the High Court allowed the borrower’s appeal and cancelled the order of the Circuit Court for possession.