Jack Tchrakian has very kindly contributed another article for our blog:
For generations, the practice of creditors in seeking judgment against their debtors has been, in the case of large institutional creditors, to have a single witness give evidence as to the nature of the debt in question based upon the creditors books and ledgers. In general, where banks are concerned, this has meant that a bank official or collections clerk can give evidence of how much a borrower owes based upon his perusal of the books. In summary judgment applications, this means that the official or clerk swears an affidavit and exhibits copies of the relevant accounts. In full or plenary hearings, this means that the official or clerk actually takes the stand.
Until 2010, this all sounded very simple. However, in Moorview Developments Limited v First Active Plc (No. 13)  IEHC 275, Mr. Justice Clarke was faced with an argument from a borrower to the effect that the traditional practice of using bankers’ books to prove debt claims violated the so called rule against hearsay. What is this rule? Put simply, an out of court statement, including a written statement, cannot be used as a means of proving the truth of its own content. For example, if I am a witness at a murder trial and I claim that the defendant did it but I had previously made a statement out of court giving the defendant an alibi that put him nowhere near the scene of the crime, counsel could put to me the fact that I had made this previous statement. However, the statement could only be used as a means of undermining my credibility and demonstrating that I am a liar or have a poor memory. It cannot be used to prove that the defendant actually had an alibi exonerating him – for that, he would need other primary evidence.
In any event though, the borrower argued that the bankers’ books were being used for hearsay purposes (i.e. for the purposes of proving that the borrower owed the sums of money set out therein) and that the bank needed to use a cumbersome statutory mechanism for admitting hearsay evidence contained in the Bankers’ Books Evidence Act 1879, an obscure statute designed to allow bank officials to use certified copies as evidence in court cases generally not involving the bank itself (see, for example Criminal Assets Bureau v. Hunt  I.R. 168, where the bureau sought to use bank printouts to demonstrate what the defendant’s bank balance and cash movements were). Mr. Justice Clarke rejected the argument and described the bankers’ books as “prima facie evidence” and not hearsay.
However, it was never clear how this conclusion was reached. No matter, it seemed. In Bank of Scotland v. Fergus  IEHC 131 and Bank of Ireland v. Keehan  IEHC 631, Justices Finlay Geoghegan and Ryan respectively endorsed Moorview. However, in a decision which sent shockwaves through the industry, Mr. Justice Peart in Bank of Scotland v. Stapleton  IEHC 549, found that the evidence contained in the bankers’ books was in fact hearsay and that the Bankers’ Books Evidence Act had to be strictly complied with. To make matters worse for banks, Ms. Justice O’Malley endorsed this view in Ulster Bank Ireland Limited v. Dermody  IEHC 140.
For banks, the issue was simply cumbersome. They had to comply with the 1879 Act. However, what of a hedge fund that had bought an impaired loan? What about a package delivery company? What about a brewery? These are all large institutional-type creditors which have no ability to avail of the 1879 Act’s procedures. The solution that seems to have arisen is an elegant one which has been borrowed from the exciting world of criminal law.
In Ulster Bank v. O’Brien  IESC 96, Mr. Justice Charleton referred to the concept of an uncontested statement and the evidence of silence. To wit, he argued that where a bank presented a demand to the borrower in a particular amount and the borrower did not contest it, this was evidence that the amount was owed. Hence, he said, the bankers’ books were not being used for hearsay purposes, because they were not the evidence themselves per se, but that the evidence was contained in the fact of the demand and the lack of any contest.
So what’s the upshot? Well it would seem that creditors’ problems may have been solved and that they will continue being able to rely on written records as before. For borrowers and debtors, it would seem that one of the more interesting technical defences to a claim from a creditor is gone.
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