Further to the oral judgment of the Judicial Committee of the Privy Council (JCPC) on 06 July 2023 as summarised here (The JCPC Overrules The Judgement Of The Supreme Court Of Mauritius In Stanford Asset Holding Limited V Afrasia Bank Limited And Grants Disclosure Order | Appleby (applebyglobal.com)), the JCPC has, on 10 October 2023, stated its reasons for granting a disclosure order in the case of Stanford Asset Holding Limited v/s Afrasia Bank Limited 2023 UKPC 35.
The case concerns an application made by Stanford Asset Holding Limited (Stanford) for the disclosure of information pertaining to its stolen monies in the sum of USD 11,145,000 which were allegedly fraudulently transferred to a third party, Key Stone Properties Ltd by Afrasia Bank Ltd (Afrasia Bank). The purpose for such an application was to trace, freeze and recover the misappropriated funds.
Following the setting aside of its application by the Supreme
Court of Mauritius on procedural grounds, Stanford applied to the
JCPC seeking among others, an order against Afrasia Bank to
disclose to them the names and other particulars of the recipients
of the stolen monies.
After having thoroughly analysed Section 64 of the Banking Act 2004
which governs the duty of confidentiality of banks in Mauritius,
the JCPC concluded that Section 64 does not impose an obligation of
confidentiality on banks themselves, as opposed to individual
employees and agents, regarding their customer's affairs but
rather, the duty arises, at the common law.
The JCPC also pointed out that the Mauritian Courts enjoy the same jurisdiction to grant equitable remedies, exercised in accordance with the same principles, as the High Court in England and Wales. Therefore, it was established that the Mauritian Courts enjoyed a free-standing jurisdiction to make either a Norwich Pharmacal disclosure or a Banker's Trust order (granted by virtue of the principles stated under Bankers Trust Co v Shapira [1980] 1 WLR 1274), irrespective of the Banking Act 2004.
The JCPC however made it clear that the purpose of Section 64 of the Banking Act 2004 does not have the effect of preventing the court from exercising what is an important and salutary jurisdiction to assist victims of fraud and other wrongdoing from recovering their property or obtaining other appropriate redress in cases where the relevant information was held by banks.
The JCPC clarified its interpretation of Section 64 of the Banking Act as follows:
- The provisions of section 64 of the Banking Act do not have the effect of excluding the Norwich Pharmacal jurisdiction in cases where disclosure is sought from a bank of information about the affairs of a customer.
- Section 64 of the Banking Act does not impose a duty of confidentiality on banks themselves (as opposed to on individual employees and agents). That duty arises, rather, at common law and there is accordingly no difficulty about giving effect to a common law (or, strictly, equitable) exception to it of the kind recognised in Norwich Pharmacal.
- Such a case is covered by the exception in subsection (3) (d) of Section 64 of the Banking Act, since a Norwich Pharmacal application clearly constitutes "civil proceedings ... involving the financial institution and the customer or his account". As regards the general understanding in Mauritius (as explained by counsel for respondent) that exception only applied to proceedings between a bank and its customer, the JCPC stated that the statutory language contains no such limitation. It is true that as drafted the scope of the exception is apparently very wide, and it may be necessary to imply some limitations to it; but the JCPC was satisfied that it must at least extend to a situation where the disclosure in question has been ordered by the court.
In determining whether the conditions of a Norwich Pharmacal relief have been satisfied, the JCPC referred to the following fourfold test:
- The applicant has to demonstrate a good arguable case that a form of legally recognised wrong has been committed against them by a person ('the Arguable Wrong Condition').
- The respondent to the application must be mixed up in so as to have facilitated the wrongdoing ('the Mixed Up In Condition').
- The respondent to the application must be able, or likely to be able, to provide the information or documents necessary to enable the ultimate wrongdoer to be pursued ('the Possession Condition').
- Requiring disclosure from the respondent is an appropriate and proportionate response in all the circumstances of the case, bearing in mind the exceptional but flexible nature of the jurisdiction ('the Overall Justice Condition').
The JCPC further explained that, the interests and priorities of law enforcement agencies in their investigation are "unlikely to be identical" to those of the victims of a suspected fraud seeking to recover their money. In addition, the statutory powers of the law enforcement agencies such as ICAC and the CCID may not be relevant where the stolen funds have been removed from the jurisdiction.
It has hence been clarified that the civil courts can afford appropriate and proportionate assistance to the victim of a fraud to pursue their own civil remedies while a criminal investigation is ongoing and not only in cases where it can be shown that there is cause for complaint about how the law enforcement agencies are performing their duties.
Though the Norwich Pharmacal jurisdiction is an exceptional one in view of the fact that it requires an innocent third party to supply (typically confidential) information to an apparent victim of wrongdoing to whom they would otherwise owe no duty, the JCPC elucidated it does not mean that it will only exceptionally be appropriate or proportionate to grant relief in a case where the first three conditions are satisfied nor that there is some specially high threshold to be crossed before a Norwich Pharmacal order can be made against a bank. Such a relief will depend on the circumstances of each case and will most likely be granted where it is appropriate, proportionate and necessary in the interests of justice.
This landmark judgment provided significant clarity and comfort to victims of fraud and other wrongdoing in restating the well-established legal position of banks in relation to their responsibilities to their customers. Although the bank secrecy is not absolute, the courts will strike a balance between the rights and interests of the bank's customer and the rights of victims of frauds who have limited routes available to trace their misappropriated funds through the banking system.
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