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High Court of Ireland Decisions
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Cite as:  IEHC 530
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Judgment Title: ACC Bank Plc -v- Byrne & Anor
Neutral Citation:  IEHC 530
High Court Record Number: 2013 1965 S
Date of Delivery: 31/07/2014
Court: High Court
Composition of Court:
Judgment by: Cregan J.
Status of Judgment: Approved
Neutral Citation:  IEHC 530
THE HIGH COURT
[2013 No. 1965 S]
ACC BANK PLC
MICHEAL BYRNE AND SEAN O’TOOLE
JUDGMENT of Mr. Justice Cregan delivered on the 31st day of July 2014
2. The proceedings commenced by summary summons dated the 18th June, 2013. An Appearance was entered on behalf of the first defendant on 25th June, 2013. The plaintiff then issued a notice of motion seeking summary judgment on 24th July, 2013 which was made returnable to 14th October, 2013. This application was grounded on the affidavit of Niamh Kavanagh, an employee of ACC Bank PLC. sworn on 24th July, 2013. A replying affidavit was sworn by the first defendant and a further affidavit was sworn by Ms Kavanagh on 19th November, 2013.
3. The matter was heard before the Master on 23rd January, 2014. The Master refused the application. This matter comes before this court by way of appeal against the Master’s Order.
The factual background
(ii) It was a condition of the Letter of Sanction dated 29th September, 2003 that the bank would only make the facility available to the borrower if it obtained as security a Letter of Guarantee from each of the defendants up to a maximum of €250,000 each.
(iii) On 24th March, 2004 the first and second defendant entered into a contract of guarantee with the plaintiff wherein the defendants guaranteed the payment of all sums due and owing to the plaintiff by the borrower.
(iv) On 2nd March, 2004 the plaintiff advanced the sums of €3.9m. to the borrower.
(v) The terms of the loan agreement were not honoured by the borrower and on 29th February, 2012 the plaintiff demanded repayment of the sum of €3.3m. (approximately) from the borrower but the borrower failed, refused and/or neglected to repay the said sum.
(vi) On 8th March, 2012 the plaintiff demanded payment from each of the defendants on foot of the personal guarantees but the defendants failed, refused or neglected to pay the said sums. As result of the first defendant’s refusal to pay the sum of €250,000 to the plaintiff, the plaintiff has issued these proceedings.
5. The first defendant put forward two defences to the claim. These are:
(B) that the evidence produced by the plaintiff before the court does not satisfy the provisions of the Bankers’ Books Evidence Act 1879-1989.
The ADM Londis guarantee
(2) However, Mr. Byrne says, the plaintiff released ADM Londis from its guarantee after a period of two years without his knowledge or consent.
(3) Mr. Byrne also says that the plaintiff never disclosed to the first and/or the second defendant that it had released ADM Londis from its guarantee when the parties were negotiating a variation of the original 2003 facility in 2009.
(4) Mr. Byrne also submits that the standard form guarantee clauses do not give liberty to the plaintiff to release a co-guarantor without this impacting on the liability of any remaining surety.
(5) Mr. Byrne also submits that, as a matter of law, the release by a creditor of one of a number of co-sureties under a contract of guarantee discharges the other co-sureties.
(2) Secondly, the plaintiff and ADM Londis amended the Londis guarantee on 8th July, 2005 so that it provided, on its own terms, that it would expire on 5th March, 2006. (Again this amended ADM Londis guarantee is exhibited with her affidavit).
(3) Thirdly, Ms Kavanagh states that the plaintiff does not accept that the first defendant (or indeed the second defendant) was unaware that the ADM Londis guarantee was limited for a period of two years for a number of reasons as follows:
1. On 4th December, 2003 the plaintiff’s solicitor at that time wrote to the solicitor for China Girls Ltd. (of which Mr. Byrne was a director) and informed them that the ADM Londis guarantee was only for two years.
2. Moreover, on 22nd September, 2008 Smith Stapleton & Co. Solicitors (acting on behalf of both the borrower company and the defendants in relation to the variation of the loan facility in August, 2009) wrote to ACC Bank and specifically requested a copy of the ADM Londis guarantees. On 25th September, 2008 ACC Bank replied to Smith Stapleton & Co. and enclosed a copy of the ADM Londis guarantee.
10. Moreover, Ms Kavanagh also avers to the fact that the relationship between the borrower and ADM Londis ended in or about 2009. Thereafter the borrower entered into a new agreement with a new company in respect of the supermarket premises and that new company operated the supermarket premises under the “Costcutters” brand from 1st March, 2009. In those circumstances the plaintiff says there is no way in which Mr. Byrne could reasonably have believed that ADM Londis would have remained liable for the company’s borrowings indefinitely in circumstances where Londis’s link with the borrower had come to an end.
11. Finally, the plaintiff says that the terms of the guarantee itself (entered into with the first defendant) permits it, as a matter of agreement between the parties, to amend its guarantee obligations with any other party.
12. In my view, the above submissions comprehensively undermine the defendant’s claim in respect of the ADM Londis guarantee. It is clear that the ADM Londis guarantee was a separate and distinct contract of guarantee to that entered into by the first defendant with the plaintiff and therefore his arguments about the release of one surety operating to release all other sureties is to no avail. It is also clear that the first defendant had knowledge of the terms of the ADM Londis guarantee and, in particular, that it had expired. It was also clear that the first defendant either knew or must have known that the ADM Londis guarantee would have come to an end when ADM Londis was terminating its relationship with the borrower. Finally, in any event, the contract of guarantee between the plaintiff and the first defendant, on its own terms, provides that the liability under the guarantee would not be affected by any discharge or compromise which the plaintiff might have with any other person in respect of the obligations of the principal debtor.
13. In my view therefore these arguments on behalf of the first defendant must be rejected
The Bankers’ Books Evidence Acts 1879-1989
15. I turn now therefore to deal with the issue of the Bankers’ Books Evidence Act 1879 (as amended).
The provisions of the Act
17. Section 141 of the Central Bank Act 1989 provides that the Bankers’ Books Evidence Acts 1879 and 1959, and s.131 and s.141 of the Central Bank Act 1989, may be cited together as the Bankers’ Books Evidence Acts 1879 - 1989.
18. It is an Act whose eleven short sections have given rise to numerous difficulties of interpretations - particularly in recent years.
19. The original Act is entitled The Bankers’ Books Evidence Act 1879. Its long title is, importantly, “An Act to amend the law of evidence with respect to Bankers’ Books.”
Sections 1 and 2
21. Section 2 has been repealed.
Section 3 - Mode of proof
23. Section 4 also has not been amended. Its side note reads “Proof that book is a bankers book”, Section 4 provides as follows:
“Such proof may be given by a partner or officer of the bank, and may be given orally or by an affidavit sworn before any commissioner or person authorised to take affidavits” (Emphasis added)
24. Section 5 of the 1879 Act was amended by s.131 of the Central Bank Act 1989. The entire text of section 5 of the 1879 Act was effectively repealed and substituted by a new s.5 as set out at s.131 of the 1989 Act. The side note reads: “Verification of copy”.
25. The new s.5 of the Banker’s Book Evidence Act provides as follows:
(a) In the case where the copy sought to be received in evidence has been reproduced in a legible form directly by either or both mechanical and electronic means from a banker’s book maintained in a non-legible form, it has been so reproduced;
(b) In the case where the copy sought to be received in evidence has been made (either directly or indirectly) from a copy to which paragraph (a) of this section would apply:
(ii.) The copy so reproduced is a copy to which the said paragraph (a) would apply if it were sought to have it received in evidence;
(2) Proof to which subsection (1) of this section relates shall be given -
(a.) in respect of paragraph (a) or (b) (ii) of that subsection, by some person who has been in charge of the reproduction concerned,
(b.) in respect of paragraph (b)(i) of that subsection, by some person who has examined the copy with the reproduction concerned,
(c.) in respect of paragraph (c) of that subsection, by some person who has examined the copy with the original entry concerned,
and may be given orally or by an affidavit sworn before any commissioner or person authorised to take affidavits.” (Emphasis added)
26. Section 6 of the 1879 Act has also been amended by the Central Bank Act 1989 s.131 (b). The only amendment is the deletion after the words “legal proceeding” of the words “to which the bank is not a party”
27. The side note to s.6 states “Case in which banker not compellable to produce books”. Thus s. 6 now provides as follows:
28. Section 7 provides in its side note “Court or judge may order inspection”. It provides as follows:
Section 8 - Costs
31. Section 9 is the Interpretation section which seeks to define “bank”, “banker” and “banker’s books”. Section 9 was amended by the 1959 Act and amended again by the 1989 Central Bank Act.
32. Section 9 of the 1879 Act (as amended by the 1959 Act and as further amended by the Central Bank Act 1989) now provides as follows:
(a) The Bank of Ireland, the Hibernian Bank Ltd., the Munster and Leinster Bank Ltd., the National Bank Ltd., the National City Bank Ltd., Northern Bank Ltd., the Provincial Bank of Ireland Ltd., The Royal Bank of Ireland Ltd., and the Ulster Bank Ltd.
(b) Any other person who is the holder of a licence issued under s.47 of the Central Bank Act 1942
(c) The Post Office Savings Bank
(d) The Cork Savings Bank, the Dublin Savings Bank, the Limerick Savings Bank, the Monaghan Savings Bank and the Waterford Savings Bank
(2) Expressions in this Act relating to “bankers’ books”
(a.) include any records used in the ordinary business of a bank, or used in the transfer department of a bank acting as registrar of securities, whether
(ii) kept on micro film, magnetic tape or in any non-legible form (by the use of electronics or otherwise) which is capable of being reproduced in a permanent legible form, and
(3) [This sets out provisions on certificates as evidence for banking licences and is not relevant here.]
33. Section 10 of the 1879 Act has not been amended and provides an interpretation of “legal proceeding”, “court” and “judge”.
34. Section 11 deals with computation of time. This has also been amended by the 1989 Act.
Analysis of the Bankers’ Books Evidence Acts.
36. In my view, the purpose of the Act was to amend the law of evidence in two important respects. The first was to relax the stringent requirements of the “best evidence” rule and the second was to relax the equally stringent requirements of the hearsay rule.
37. The best evidence rule provides that where the original of a document is available, that original should be produced in court. Given that many civil cases concern proof of a debt and given that these entries of bank loans were originally recorded in large bank ledgers, it was clearly a matter of great inconvenience to the bank and indeed all parties (and presumably added to the expense of a trial) to have to formally prove these debts by producing the original bank ledgers in court.
38. This “best evidence” rule was therefore amended by s.3 of the Act to provide that a “copy” of an entry in a banker’s book “shall be received as prima facie evidence of such an entry”. (The fact that it is only prima facie evidence means that it can be challenged or disproved by an opposing party if it should prove necessary or possible to do so).
39. The other purpose of the Act was to amend the hearsay rule. Under the hearsay rule, the person who made the original entry into the banker’s book was the only person who could prove that he made such an entry and that the entry was a true and accurate record of the transaction.
40. However, in many cases, that employee might have left the bank; perhaps even on certain occasions it might not have been possible to discern who, in fact, made the entry into the banker’s book.
41. Section 4 seeks to “cure” the hearsay problem. It provides that proof of the copy of the entry may be given by a partner or officer of the bank and not necessarily by the person who made the entry.
42. However, given that these two rules of evidence were being relaxed, the Act also introduced two sets of safeguards into the process to ensure that the Act was not abused and to provide safeguards for debtors of the bank. These safeguards are set out in ss. 4 and 5.
43. Section 4 provides that a copy of an entry in the banker’s book shall not be received in evidence unless it is proved
(b) That the entry was made in the usual and ordinary course of business
(c) That the book is in the custody or control of the bank
45. Section 5 provides an additional safeguard. As its side note states, it deals with the verification of the copy entry.
46. The original s.5 of the 1879 Act is stated in terms of limpid clarity and provided as follows:
48. Despite the difficulty of the language in the new s.5 (1) (as inserted by the Central Bank Act 1989) I think the intention is clear. The copy must be compared with the original entry and it must be confirmed that it has been so cross checked with the original entry and that it is correct. Moreover if there is a copy of a copy, that too must be verified.
49. Indeed when one understands the logic of the Act the provisions are clear. The Act seeks to amend the law of evidence by amending the strict application of the best evidence rule and the hearsay rule. However, in return, there are certain safeguards to guard against abuse of the relaxation of the rules.
50. When viewed in this way, the Act seems a sensible and practical compromise between the needs of banks to prove their debts relatively easily (and the needs of debtors to be protected from bank mistakes that they may not be in a position to correct) and the application of the normal rules of evidence as they apply to proof of documents in civil trials.
Matters required by the Bankers’ Books Evidence Acts 1879 - 1989
2. Formal proof, given by an officer of the Bank,
(1) that the computer records (from which the copy of the bank statement was taken) are one of the ordinary computer records of the bank [see s.4]
(2) That the entry of the account details into the computer records was made in the usual and ordinary course of the business of the bank[see s.4]
(3) That the computer records are in the custody or control of the bank [see s.4]
3. Formal proof that the bank account statements printed off from the computer and adduced in evidence have been reproduced directly from the bank’s computer records [s.5 (1) (a)]
(This must be proved by the person in charge of the reproduction - see [s.5 (2) (a)]
4. Formal proof (if there is a copy of a copy) that the copy of the bank statement produced in court is a correct copy of the bank statement printed off from the computer (see 3 above) and that the two have been compared (see [s.5 (1) (b) (i)]
[This must be proved by the person who has compared the copy produced in court with the original copy (see s.5 (2) (b)]
5. Formal proof that the copy reproduced in court is also a copy which, in effect, could have been reproduced directly from the bank’s computer records [see s.5 (1) (b) (ii)]
[This must also be proved by the person in charge of the reproduction at 3 above [s.5 (2) (a)]
6. Formal proof that the copy of the bank statement produced in court has been examined with the original entry in the bank’s computer records and that it is correct [s.5 (1) (c) ]
(This must be proved by a person who has examined the copy with the original entry in the computer [see s.5 (2)(c))
52. If they are not proved, the Act is quite clear that the “copy of the entry” ….. “shall not be received in evidence.” (See s.4 and s.5.) (Emphasis added)
54. The Supreme Court held, on the facts of that case, that these bank statements were inadmissible. Keane C. J (with whom the other members of the court agreed) said at page 189:
56. Moreover at para. 4.7 Clarke J. stated “Subject to the individual points to which I will shortly turn, no challenge was made to any particular entry or to any of the calculations carried out.”
57. In my view therefore, it seems from the above, that Clarke J. was satisfied - on the evidence - that in fact all the relevant provisions of the Bankers’ Book Evidence Acts 1879 -1989 were properly and fully complied with. An appropriate officer of the bank gave all the appropriate evidence. Therefore the requirements of the Bankers’ Book Evidence Acts were fulfilled.
58. I think it is in that context that the statement of Mr. Justice Clarke at para. 4.8 should be understood. At para. 4.8 Clarke J. stated as follows:
60. Another related case is Bank of Scotland Plc. v. Fergus  IEHC 131 in which Finlay Geoghegan J. also considered the provisions of the Bankers’ Books Evidence Act - again however in the context of a plenary hearing.
61. It is clear from Finlay Geoghegan J.’s decision that Mr. Moroney, a manager of the plaintiff, gave evidence that he had checked the electronic records of the bank in relation to the company, that he had identified three subsisting accounts and stated that in his view these accounts were correct and accurate. Counsel for the plaintiff submitted that this was sufficient evidence of the debt. Finlay Geoghegan J. noted in para. 15 of her decision that there was no specific challenge to any aspect of the bank’s records in relation to the alleged indebtedness of the company. The learned judge also out the relevant paragraph (set out above) of Clarke J. in Moorview Developments and at para. 14 states:
63. In Ulster Bank Ireland Ltd v. Dermody  IEHC 140 O’Malley J. also considered the admissibility of bank statements and having considered the above authorities stated as follows:
45. “It is clear from the judgments cited above, that Clarke J., Finlay Geoghegan J. and Ryan J. are of the view that business records of this nature are admissible as prima facie evidence of the truth of their contents, without reference to statute. Unfortunately I find myself unable to reconcile this with the decision of the Supreme Court in Hunt and I have not been referred to any other authority which includes such records as exceptions to the rule at common law. (It is true that a number of 19th century decisions predating the Act of 1879 held that entries made in business records were admissible but this appears to have been so only where the person who made the entries was deceased).
46. The problems that can arise in non-banking cases as a result of the hearsay rule were highlighted in the decision of the House of Lords in the well-known case of Myers v. DPP  A.C. 1001. In the United Kingdom, legislation followed shortly afterwards in the shape of the Criminal Evidence Act 1965. Since then the common law rules relating to hearsay in both the civil and criminal law spheres have been supplanted in that jurisdiction by a series of legislative measures which have significantly affected the rigidities of those rules.
47. In this jurisdiction, the Criminal Evidence Act 1992 provides for the admissibility of business records in criminal cases. However there has been no equivalent legislation in relation to civil matters and the common law exclusionary rule continues to apply save where modified by statute or by recognised established exceptions.
48. In banking cases specific provision was made by the Banker’s Books Evidence Act as amended. It is certainly the case that the original Act in 1876 (repealed and replaced by the 1879 Act) was intended to relieve banks of the inconvenience associated with a subpoena duces tecum in litigation between third parties. However it is clear since, at least, the 1989 amendment (referred to at para. 18 above) the provisions of the Acts may also be availed of in proceedings to which a bank is itself a party. Both section 3 and section 6 are now applicable to all legal proceedings”.
49. Following, as I am of course bound to, the Supreme Court decision in Hunt, I find that in the instant case, the evidence of Mr. Evans is not admissible to prove the truth of the contents of the records unless it comes within the provisions of the Acts.
50. The issue that arises then is whether Mr. Evans can be said to be “officer” of the plaintiff bank within the meaning of the Acts. In my view he cannot. I accept for the purposes of the Acts an employee may be considered to be an officer of the bank. However Mr. Evans is not an employee of the plaintiff but of a separate legal entity.”
66. However the governing principles of the 1879 Act are still intact. It is an Act to amend the law of evidence with respect to Bankers’ Books. It is a law to simplify the giving and taking of evidence in relation to bank statements and the like. It means that the person who created the original document or who made the original entry into the computer record does not have to be called to give evidence. Another person in the bank can give that evidence when he has carefully reviewed the bank account statements. However the Act sets out in some detail what those proofs are and they must be complied with. If they are not complied with, then that evidence is not admissible. The Act is quite clear: “the copy” “shall not be received in evidence” unless the requirements of the Act are fulfilled.
67. The governing principles in the statute were applied in the Supreme Court in Criminal Assets Bureau v. Hunt and indeed by O’Malley J. in Ulster Bank Ltd v. Dermody to exclude evidence because the sections of the Act were not complied with. Likewise, the principles of the Act were applied by Clarke J. in Moorview, Finlay Geoghegan J. in Bank of Scotland v. Fergus and Ryan J. in Bank of Ireland v. Keehan because they were of the view that the relevant provisions of the Act had been complied with. The issue in each case is whether on the evidence before the court the relevant proofs required by the Act have been complied with.
68. With that in mind, I turn now to consider the averments in the plaintiff’s affidavits.
The Averments in the affidavit of Ms. Kavanagh
73. There is no evidence before the court that provisions of s.4 have been complied with i.e. there is no formal proof
(2) that the entry was made in the usual and ordinary course of business
(3) that the banker’s book was in the custody or control of the bank
76. I will hear further submissions from counsel on any further applications in respect of this matter and in particular on any application to file supplemental affidavit evidence to deal with the above matters.