Re Bank of Credit v Re Bank of Creditxs

• Jurisdiction: Cayman Islands
• Judge: Harre, C.J.
• Judgment Date: 26 January 1994
• Court: Grand Court (Cayman Islands)
• Date: 26 January 1994

Re Bank of Credit

and

Re Bank of Credit

Harre, J.

Grand Court

Practice and procedure - Precedent — Grand Court — Grand Court normally follows own previous decisions as matter of judicial comity unless obiter or wrong.

Practice and procedure - Banker—customer relationship — Use of confidential information in English proceedings — Confidential Relationships (Preservation) Law, s.3(2)(b)(v) not confined to transactions for, or with, customer.

H. St.J. Moses for the plaintiff;

I.F. Archie, Senior Crown Counsel, for the Attorney General.

Harre, C.J.

1 In its application by originating summons the plaintiff asked the court to make a determination with regard to two matters of construction of the Confidential Relationships (Preservation) Law (“the Law”) in relation to the seeking, divulging or obtaining of confidential information by the plaintiff in certain English High Court actions against its auditors or any consolidated proceedings arising therefrom.

2 The matter concerns s.3(2)(b)(v) which reads as follows:

“This Law has no application to the seeking, divulging, or obtaining, of confidential information—

• …

• (b) by or to —

• …

• (v) a bank in any proceedings, cause or matter when and to the extent to which it is reasonably necessary for the protection of the bank's interest, either as against its customers or as against third parties in respect of transactions of the bank for, or with, its, customer ….”

3 The first question for determination is whether the words “any proceedings, cause or matter” refer only to proceedings, causes or matters within the Cayman Islands. That fell for consideration by the former Chief Justice, Summerfield, C.J., in Att. Gen. v. Bank of Nova Scotia. The issue before him is set out as follows ( 1984–85 CILR at 426):

“Whether the first defendant can rely on s.3(2)(b)(v) for the purpose of making disclosure of the confidential information … to a United States court on the ground that to do so is reasonably necessary for the protection of the bank's interest.”

4 The following is the relevant passage from his judgment (ibid., at 429):

“The first point that should be made is that, in contrast with s.3A(1), which makes express references to proceedings within and without these islands, s.3(2)(b)(v) makes no reference to proceedings outside these islands. In my view s.3(2)(b)(v) has application only in relation to proceedings, causes or matters within these islands.”

5 Mr. Moses asks me to take the view that this and other observations of my learned predecessor to which I shall refer later were in part obiter, in part distinguishable and should not in any event be followed. I would not lightly adopt the last of these alternatives, although it is open to me to do so. The principle is to be found in the following passage from the judgment of Lord Goddard, C.J. in ( Huddersfield Police Auth. v. Watson [1947] K.B. at 848):

“… I can only say for myself that I think the modern practice, and the modern view of the subject, is that a judge of first instance, though he would always follow the decision of another judge of first instance, unless he is convinced the judgment is wrong, would follow it as a matter of judicial comity. He certainly is not bound to follow the decision of a judge of equal jurisdiction.”

6 It is by now abundantly a matter of record in these courts that many Cayman banks have customers and employ many professionals outside these islands. The nature of their business frequently involves litigation of an international kind and their being required to protect their interests, whether against customers or third parties. Actions of this nature may be both complex and protracted with issues possibly involving additional evidence and new parties arising along the way. It would be most onerous for banks to have to make successive applications of uncertain outcome under s.3A of the Confidential Relationships (Preservation) Law during the conduct of litigation of this kind, simply because that litigation was taking place outside the Cayman Islands. The essence of the matter, in my judgment, and the ratio decidendi of that part of the judgment of Summerfield, C.J. from which the passage to which I have referred is taken, lies in the question whether or not disclosure is reasonably necessary for the protection of the bank's interests within the terms of s.3(2)(b)(v). That is so whether or not the disclosure is to be to a Cayman court. If that view is right, the words “to a United States court” in the question before Summerfield, C.J. do not go to the main issue and his dictum that s.3(2)(b)(v) has application only to proceedings, causes or matters within these islands may be considered obiter. I have come to a different view of that for the reasons which I have expressed.

7 As a matter of drafting I considered whether I should draw the conclusion from the omission of the words “whether within or without the islands,” which appear in s.3A(1) of the Law, from s.3(2)(b)(v) that proceedings outside the islands were intended to be excluded. I concluded that I should not. Section 3A(1) deals with a very different situation. It expresses the circumstances under which an application must be made for directions from a judge. Section 3(2)(b)(v) expresses a total exemption, for a specific purpose, from the application of the Law. The scope of the exception should not be dependent on territorial considerations but on the extent to which disclosure is reasonably necessary to protect the bank's interest and what is the ambit of the interest which it is entitled to protect.

8 That is the question which I now have to determine in relation to a second declaration sought by the applicant which I made in the following amended form:

“It is hereby declared that the Confidential Relationships (Preservation) Law (as amended) has no application to the seeking, divulging, or...