Credit servicing firms, the Bankers' Book Evidence Acts 1879-1959 (“BBEA”), and the evidential requirements of an application for summary judgment were recently considered by the High Court in Promomtoria (Aran) Ltd v Burns. 1 The decision issued by Noonan J shows a practical use of Order 37 of the Rules of the Superior Courts in managing evidential requirements, where the BBEA cannot be utilised.
The plaintiff acquired rights over the defendant’s loans and related guarantees with Ulster Bank Ltd as a result of a loan portfolio sale. In the plaintiff’s application for summary judgment, the affidavit was sworn by a senior asset manager employed by a third party credit servicing firm (Link ASI Ltd, “Link”), which has responsibility for administration of the loans owned by the plaintiff. The defendant did not substantively dispute the plaintiff’s ownership of his loans. The issue facing the Court was the admissibility of the documentary evidence supporting the plaintiff’s claim for judgment, where the affidavit exhibiting the documents was sworn by an employee of Link.
Order 37 and the BBEA
Order 37, rule 1 of the Rules of the Superior Courts requires a motion for judgment to be supported by an affidavit sworn by “a person who can swear positively to the facts” showing the plaintiff is entitled to the relief claimed. Noonan J reviewed the recent case law on this requirement when considering the admissibility of the affidavit grounding the plaintiff’s application. His description of the case law pointed to three broad categories:
- Banks: where a bank is the plaintiff, it has the advantage of being entitled to use the BBEA. The BBEA treat a bank’s books and records as an exception to the general evidential rule that a person referring to documents they did not prepare themselves is giving hearsay evidence, which is prohibited. The case law confirms that the BBEA exception only applies to evidence being given by a partner or officer of the relevant bank and that the exception available under the BBEA cannot be delegated by a bank to another entity.
- Loan Owners: loan owners other than banks (and banks for whom it is not practical to meet the criteria) cannot rely on the BBEA. However, Noonan J reviewed a number of cases (involving banks) which indicate that, even where the BBEA are not being relied upon, a suitably knowledgeable direct employee of a plaintiff can still refer to the plaintiff’s books and records as prima facie evidence of the plaintiff’s claim. As the evidence in each of those cases was uncontroverted, the court did not have to consider how it would address credible contentions by the defendant that such evidence was incorrect.
- Credit Servicing Firms: Noonan J then considered two cases that involved credit servicing firms.
The first was Bank of Scotland v Stapleton 2 (which was relied upon by the defendant). In that case, the court found that an employee of a third party credit servicing firm, which had been appointed by Bank of Scotland, could not give evidence as to amounts owing to the bank as this constituted hearsay. While not mentioned by Noonan J, it is worth noting that Stapleton was decided before the introduction of the credit servicing regime in 2015, following which credit servicing firms (such as Link) are required to be authorised by the Central Bank of Ireland and responsible for the day-to-day administration of certain in-scope loans.
The second case, heard a number of years later (following introduction of the credit servicing regime) and in light of developing jurisprudence, was Promomtoria (Arrow) Ltd. v. Burke & Ors.3 In this case an employee of a credit servicing firm was found to be sufficiently qualified for the purposes of order 37, rule 1 for a number of reasons. First, the deponent averred she had access to the books and records relating to the defendant’s accounts and their alleged liability. Secondly, the relevant facility letters had been exhibited and relied upon by both the deponent and the defendant (and so the defendant had accepted them as evidence). The court also noted that it was relevant that the credit servicing firm itself had issued the letters of demand following acquisition of the relevant loans by the plaintiff.
While the fact pattern in Burke was similar to that in the case before him, Noonan J distinguished it as the senior asset manager’s affidavit had provided less explanation than the affidavit considered in Burke. For example, no information was given on access to the books and records of the plaintiff, or the precise relationship between the plaintiff and Link.
Based on the available evidence, Noonan J found the circumstances in issue to fall squarely within the circumstances considered by the Court in Stapleton (and the subsequent cases of Criminal Assets Bureau v Hunt 4 and Ulster Bank Ireland Ltd v Dermody 5 )with the result that the affidavit sworn by the manager did not meet the requirements of Order 37 rule 1 (i.e. it was not sworn by a person who can swear positively to the facts). Noonan J noted specifically, however, the costs involved in adjourning the summary application to a plenary hearing where the plaintiff’s title was not in issue and when the primary issue of evidential admissibility could be remedied by further affidavit. Drawing attention to order 37, rule 7, of the Rules of the Superior Courts, which provides the Court may make “such order for determination of the action as may seem just”, he considered a more pragmatic approach could be adopted. He proposed to discuss further with the parties whether they wished to put any further evidence before the Court.
The next step in this case will be of great interest to credit servicing firms and loan purchasers as it should provide some further clarity on how those parties can meet the evidential requirements of order 37, rule 1 so as to be able to obtain summary judgment. It is encouraging that the Court, in circumstances where there is no substantive dispute that a debt is outstanding, is seeking a pragmatic solution for the parties involved so as to avoid the inevitable delay and cost that would be associated with further proceedings. It will be interesting to see also whether the fact that Link is a regulated entity, which is authorised by the Central Bank of Ireland to take responsibility for the day-to-day management of the loan in question, will be raised for consideration by the court.