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Update: Recent Developments in Summary Judgments in the Superior Courts

  • Ireland
  • General

09-06-2020

Introduction

Our earlier updates this year on summary judgments1 focused on recent developments in the Superior Courts. The Court of Appeal recently delivered another important judgment in the area, which is discussed below. Summary Summons proceedings (“Summary Proceedings”) are a fast-track procedure used by those who claim to be owed what is known as a ‘liquidated sum’. In general, a large proportion of Summary Proceedings before the courts are issued by banks pursuing debts due by borrowers on foot of unpaid loans.

A necessary consequence of loan sales by banks means that increasingly, cases are being pursued by regulated financial services providers and credit servicing firms. The Court of Appeal decision in Promontoria (Aran) Limited v Burns2 (“Burns”) will be of relevance to such entities, as it highlights the evidential issues they face in proving debts assigned to them.

Background

Proceedings issued in 2013 by Ulster Bank Ireland Limited (“Ulster Bank”) against the defendants for monies owed on foot of guarantees initially agreed with Ulster Bank. The guarantees were subsequently transferred to Promontoria (Aran) Limited (“Promontoria”) by way of Global Deed of Transfer.

In December 2015, Promontoria was substituted in place of Ulster Bank as plaintiff in the case. Promontoria subsequently sought liberty to enter judgment for €27 million against the defendants. The motion for summary judgment was grounded on the affidavit of a senior asset manager at Link ASI Limited, which administered debt collection services on behalf of Promontoria. 

The defendants challenged the evidence in support of the plaintiff’s application for summary judgment on the basis that the senior asset manager was not directly employed by the plaintiff and that his evidence amounted to hearsay. In the High Court, Noonan J concluded that that the affidavit evidence of the senior asset manager was inadmissible hearsay, commenting that no reference had been made by him to the books and records of the plaintiff. Noonan J ultimately adjourned the cases to plenary hearing. Promontoria appealed to the Court of Appeal.

Court of Appeal

Baker J and Collins J gave concurring judgments specifically addressing the admissibility of the evidence adduced by Promontoria in the Summary Proceedings and the application of the hearsay rule in such proceedings.

The basic principle is that hearsay evidence is inadmissible to prove a fact. However there are various statutory and common law exceptions to the application of this principle, such as under the Bankers Book Evidence Act 1879, as amended (the “Bankers Book Act”). It is accepted that evidence of a debt, for example a bank statement, is admissible as prima facie evidence of the debt. However, as Promontoria is not a bank within the meaning of the Act, it could not rely on the Bankers Book Act to establish proof of the debt in this case.

Baker J observed that the dispute related to a “difficult” and “as yet not fully settled question” of whether an alternative route exists from which a court may accept evidence of a claim for debt. Promontoria sought to rely on the ‘course of dealings’ between the defendants and Ulster Bank (its predecessor in title) to admit the business records generated in the context of that relationship as evidence of the debt. The senior asset manager had sworn his evidence from his examination of the books and records of Promontoria and argued that the evidence was supported by a statement of account.

Noting the lack of any “clear line of authority” as to proof of debt other than under the Bankers Book Act , Baker J concluded that a debt claim can be established  “by credible evidence emanating from a course of dealing, from the nature of business records that show that dealing and which carry indications of reliability....which, taken together with evidence from an authorised person of an analysis and inspection of books and records, whether documentary or electronic, can in the absence of a denial or challenge which is more than a mere bald assertion, be sufficient to establish a claim.”

Baker J examined the affidavit evidence put forward by Promontoria and was not satisfied that the debt had been proved. Baker J observed that the senior asset manager in his affidavit had not:

i. stated that he had possession of the books and records of Ulster Bank nor that he had an opportunity to examine them

ii. stated when the assets were transferred from Ulster Bank to Promontoria

iii. stated where the books and records are maintained nor that he had inspected and drew conclusions from them

iv. confirmed how he obtained possession of the copies of the documents he exhibited

v. said that the evidence is drawn from an analysis of the historic books and records of Ulster Bank, nor whether the original or any certified copies are held by Promontoria or the debt collection agency

Baker J concluded that “at best” the evidence was simply evidence of the amount that Promontoria was told was due and owing by the defendants. Accordingly, the appeal was dismissed.   

Conclusion

Although Promontoria was unsuccessful, the Court of Appeal judgments evince an appreciation of the difficulties faced by plaintiffs such as Promontoria in terms of the high evidential burden on them in proving a claim in debt. The Court of Appeal accepted that an authoritative decision of the full Supreme Court is needed on what is acceptable evidence of proof of debt in these types of cases. Collins J goes so far as indicating that the issues “clearly deserve the attention of the legislature”.

For further information or to discuss the implication of these judgments on your business or any aspect of summary proceedings in general please contact:

Norman Fitzgerald, Dispute Resolution & Litigation Partner - NormanFitzgerald@eversheds-sutherland.ie

Rachel O'Connor, Dispute Resolution & Litigation Associate - RachelOConnor@eversheds-sutherland.ie

1 See Part 1 and Part 2 of our update on Summary Judgments produced earlier this year.

2 Promontoria (Aran) Ltd -v- Burns, Promontoria (Aran) Ltd -v- Burns [2020] IECA 87

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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