Yes, but can you PROVE it?!
The recent case of Promontoria -v- Burns [2020] IECA 87, a High Court matter appealed to the Court of Appeal, highlights the difficulties for third parties who buy loans issued by another lender.
In this matter, Ulster Bank originally issued Summary Proceedings against Mr. Burns in 2013 on foot of loans to him. Subsequently in 2015, the loan was sold to Promontoria and Promontoria sought to have Summary Judgment ordered against Mr Burns for than €27 million.
Mr Burns denied the debt and placed Promontoria on full proof of the debt. This means that Promontoria would have to prove, to the Courts’ satisfaction, the entirety of their case being brought against Mr. Burns, to include the existence of the loan.
The request for Judgment was grounded by an Affidavit of Mr Harris, a Senior Asset Manager at Link ASI Limited, who administered the debt on behalf of Promontoria. Mr. Burns contended that the Affidavit of Mr. Harris was hearsay and therefore inadmissible.
Hearsay is evidence which is not within the direct, first-hand knowledge of the person giving the evidence. Any evidence which is to be presented to the Court must be from the person who can prove it with their own knowledge. For example, ‘A’ witnesses an accident first-hand. ‘A’ can give evidence to a Court as to the facts of the accident she has seen. ‘A’ tells ‘B’ her best friend all about her experience at the accident. ‘B’ however would not be in a position to provide evidence to the Court as to the accident as, although she may know the details from the original witness, ‘B’s information is in fact hearsay; indirect, second-hand knowledge of the accident.
If Mr Burns was successful in this argument and the evidence contained in the Affidavit was not allowed to be entered as evidence, Promontoria would be in a position where it had not proved the debt to the Court’s satisfaction and therefore would lose its action and be unable to have Judgment in its favour ordered against Mr. Burns.
And that is exactly what happened. The High Court found that the evidence presented to it in Mr Harris’s Affidavit was hearsay and therefore inadmissible.
Promontoria appealed this decision to the Court of Appeal and argued that it was entitled to an exemption under common law to the harsh rule of hearsay. The exemption states that, where documents show a ‘course of dealings’ between the parties i.e. account statements, loan facility letters, etc. that a person familiar with that account could attest to existence of debt, regardless of the fact that that person may not have been involved in the initial issuing of the loan facilities.
Judge Baker affirmed that a debt could be established from reliable business records and with credible evidence given in relation to same. However, Judge Baker noted that Mr. Harris’s Affidavit only showed that Mr Harris had authority to make the affidavit on behalf of the Plaintiff and that he had access to the books of account containing the business records. Crucially, the Affidavit did not state that Mr. Harris was providing the evidence having carried out a forensic analysis of the records showing a ‘course of dealings’ which would have made him a person familiar with the account and therefore, the Court was not in a position to allow the Plaintiff to avail of the exemption.
The Court commented that clarity was needed surrounding the hearsay rule as it was not within the public interest that simple, straight forward debt proceedings require plenary hearings to verify Affidavit evidence grounded on the basis of business documents /records.
This outcome is a warning to all parties seeking to pursue judgment against another for outstanding debt that they should ensure they have sufficient evidence available to prove the debt to the Courts’ satisfaction. All Affidavits grounding a request for Judgment should exhibit certified copies of customer accounts/statements and specifically state that the Deponent has carried out an investigation of the business records to assist the court in concluding that the debt exists.
If you have a query on any personal injury or litigation matter please contact Donna Phelan or Conor White on 01 2960666.
