Welcome Clarification from the Supreme Court on Evidence Required for Summary Judgment

The Supreme Court in the recent case of Ulster Bank v Rory O’Brien, Danny O’Brien & Michael McDermott [2015] IESC 96 has provided much needed clarity regarding the requisite proofs when a bank is seeking judgment and how banks can secure summary judgment without falling foul of the rule against hearsay.

Background

Ulster Bank sought summary judgment against the defendants in the sum of €888,920.89 before the Master of the High Court. Ulster Bank grounded its application for summary judgment on an affidavit of Mary Murray, describing herself as “Senior Relationship Manager with the Global Restructuring Group of Ulster Bank”.

That affidavit purported to prove the loan to the defendants by exhibiting relevant correspondence, extracts from computer records and a letter of demand. Neither the letter of demand, nor the affidavit, had been replied to by the defendants. The Master of the High Court refused to grant summary judgment for Ulster Bank and declared the affidavit of Mary Murray inadmissible.

The decision of the Master was overturned on appeal by Ulster Bank to the High Court where Hedigan J ordered that Ulster Bank should recover the sum claimed against the first and second named defendants.

The first and second defendants then appealed the decision to the Supreme Court asserting that the affidavit of Ms Murray had been incorrectly admitted as hearsay evidence given that her affidavit did not meet the requirements of sections 4 and 5 of the Bankers’ Books Evidence Act 1879 (as amended) (the “Act”).

Sections 4 and 5 of the Bankers’ Books Evidence Act

Sections 4 and 5 of the Act provide an exception to the rule against hearsay for banks by permitting a bank’s records to be admitted as prima facie evidence of the transactions and accounts in those records. To avail of this exception to the hearsay rule, section 4 of the Act provides that evidence must be given by a partner or officer of the bank that the books relied upon are from the ordinary books of the bank, that the entries were made in the usual and ordinary course of business, and the books are in the custody or control of the bank. Under Section 5, specific matters must be proven to show that the copy record presented to the court has been examined with the original entry and is correct.

Supreme Court Decision

All three Supreme Court judges found in favour of Ulster Bank and rejected the defendants’ argument that Mary Murray’s affidavit evidence was inadmissible.

Charleton J noted that the defendants had not responded to the bank’s affidavit and most importantly, the letter of demand. The learned judge stated that, as a consequence, an inference can be drawn where there is a failure to deny an allegation, whereby the absence of a denial or contradiction can amount to an admission against interest, which is one of the primary exceptions to the rule against hearsay. Charleton J also considered that the content of the documents exhibited in the affidavit of Ms Murray were reliable as she was in a position where she had the means of knowledge to support Ulster Bank’s claim. Charleton J concluded that Ms Murray’s affidavit was not inadmissible hearsay evidence therefore it was not necessary for Ulster Bank to rely on the exceptions provided for in the Act.

In her judgment, Laffoy J agreed that Ulster Bank did not have to rely on the Act to prove a loan contract and a borrower’s default simply because it was a bank. Ulster Bank was entitled to prove its case like any other litigant. Laffoy J referred to Order 37 Rule 1 of the Rules of the Superior Courts; the jurisdiction invoked by Ulster Bank to bring its motion for liberty to enter final judgment. This rule requires that the motion be supported by an affidavit sworn by a person who can swear positively to the facts showing that the plaintiff is entitled to the relief claimed, and stating that in the belief of the deponent there is no defence to the action. Laffoy J noted that given Ms Murray’s senior position in Ulster Bank with specific responsibility for managing the defendants’ loan facilities, it was difficult to envisage any person in a better position to swear the affidavit than Ms Murray.

MacMenamin J further commented that a defendant who opposes an application for summary judgment must provide clear evidence as to why the sum claimed is not owed. MacMenamin J went on to say that Ms Murray’s evidence was primary evidence of her actions as she had also signed the letter of demand.

Comment

This judgment is a welcome development that provides clarity to the application of the Bankers’ Books Evidence Acts 1879 (as amended). It makes it clear that:

1. an employee of a bank is entitled to give evidence on affidavit of matters such as loan agreements, account balances and transaction histories, from an examination of the bank’s books and records, and that this evidence will be prima facie evidence of debt;
2. when seeking summary judgment, ideally the person swearing the affidavit grounding the application should be the person who signed the letter of demand;
3. banks need not comply with the provisions of the Act 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;
4. all companies, including banks, can rely on the books and records of a company as evidence of the defendant’s liability for a debt, subject to any evidence to rebut such books and records that may be given in the defendant’s defence;
5. if credible evidence is given by the defendant that the bank’s records are inaccurate, further evidence from the bank may be necessary; and
6. in circumstances where the court finds that a defendant has a real or bona fide defence on the law, facts, or both, the matter will be sent for plenary hearing.