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Ireland: Evidence admissibility in recovery proceedings

John BreslinKarole Cuddihy
The Irish High Court decision in Ulster Bank Ireland Limited v Dermody (2014) has raised an evidential issue for financial institutions contemplating debt enforcement and possession proceedings. The issue is whether, in proceedings brought by a bank, evidence grounding the proceedings can be given by an officer or employee of a legal entity other than the bank. In a number of cases, the intended deponent will in fact be an employee of a related company (or in some cases an employee of an external service provider), even if they have carried out the day-to-day dealings with the customer.

In Dermody, the person who swore the affidavits grounding the application for summary judgment was not an employee of Ulster Bank Ireland Limited (UBIL), but rather of Ulster Bank Limited (UBL), a related company which dealt with the debt collection process of UBIL on its behalf. UBIL was a wholly owned subsidiary of UBL.

The borrower argued that under the Bankers' Books Evidence Act 1879 (BBEA – legislation designed to facilitate the production of banking records in court cases), the evidence was inadmissible, as it was hearsay. UBIL argued that the evidence was not hearsay: the deponent was giving evidence based on his knowledge and interpretation of the file. UBIL further submitted that, if the evidence were hearsay unless exempted by the BBEA, that both UBL and UBIL should together be considered part of "the bank", and therefore the deponent would be an appropriate person to give evidence, as an employee of the bank.

As to whether the evidence was admissible as an exception to the common law rule against hearsay, Judge O'Malley referred to a number of earlier authorities (including the judgment of Judge Finlay Geoghegan in Bank of Scotland v Fergus 2012) which appeared to hold that business records of this nature are admissible as prima facie evidence of the truth of their contents without reference to statute. In the Fergus case, Judge Finlay Geoghegan held that the bank's records were prima facie evidence of liability, and that if a specific element of the records were challenged, the court would have to decide on the factual dispute and the weight to be attached to the evidence of the relevant witness would depend upon his personal knowledge of the matter in dispute. This was a case where the witness had previously been an employee of the bank bringing the claim, but by the time the matter was at trial, the witness was employed by an external company which provided debt recovery services to that bank.

In Dermody, Judge O'Malley held that, whereas a statutory rule had been introduced in the UK to counteract the effect of the House of Lords' decision in the well-known case of Myers v DPP (1965), no such statutory exception had been enacted in this jurisdiction. Judge O'Malley found herself unable to reconcile the views expressed in the cases cited with the view of the hearsay rule expressed by the Supreme Court in Criminal Assets Bureau v Hunt (2003), and therefore was not of the opinion that the evidence was admissible by way of exception to the rule against hearsay.

As to whether the deponent was a bank officer or employee within the meaning of the BBEA, Judge O'Malley held that the proximity between the two relevant corporate entities did not alter their separate legal existence. She held that there was no legal or factual difference between a service provided by a separate but related company and a service provided by an external company. The court commented that presumably the structure operated by the bank was created because it was thought to be advantageous to the participants, and that the benefits accruing to the existence of separate legal identities sometimes entail inconvenient consequences. The court therefore took the view that the mechanism of seeking to have bank records proved by an officer or employee, under the BBEA, was not available to the plaintiff in this particular case.

The result of the Dermody decision is that a financial institution which is a plaintiff in debt-enforcement proceedings (and structured in such a manner that its deponents and witnesses are not employed by it) will have to carefully consider the strategy it wishes to adopt. It is understood the Dermody decision is under appeal, which will likely take a considerable period to be heard. In the meantime, the decision leaves uncertainty in its wake.

John Breslin and Karole Cuddihy

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