Re BCCI (Overseas) Ltd

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

Grand Court

(Harre, C.J.)

IN THE MATTER OF BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LIMITED (in liquidation)

H. St.J. Moses for the plaintiff;

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

Cases cited:

(1) Att. Gen. v. Bank of Nova Scotia, 1984–85 CILR 418, not followed.

(2) Huddersfield Police Auth. v. Watson, [1947] K.B. 842; [1947] 2 All E.R. 193, dictum of Lord Goddard, C.J. applied.

(3) Tournier v. National Provncl. & Union Bank of England, [1924] 1 K.B. 461; [1923] All E.R. Rep. 550, applied.

(4) X A.G. v. A Bank, [1983] 2 All E.R. 464; [1983] 2 Lloyd”s Rep. 535, applied.

Legislation construed:

Confidential Relationships (Preservation) Law (Law 16 of 1976), s.3(2)(b)(v), as substituted by the Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979), s.3: The relevant terms of this section are set out at page 58, lines 19–29.

s.3A(1), as added by the Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979), s.4:

‘Whenever a person intends or is required to give in evidence in, or in connection with, any proceeding being tried, inquired into or determined by any court, tribunal or other authority (whether within or without the Islands) any confidential information within the meaning of this Law, he shall before so doing apply for directions and any adjournment necessary for that purpose may be granted.’

Confidential Relationships-protection of bank”s interest-use in foreign proceedings-Confidential Relationships (Preservation) Law, s.3(2)(b)(v) applies to proceedings outside Cayman Islands to which bank a party

Confidential Relationships-protection of bank”s interest-scope of interest-as against customer Confidential Relationships (Preservation) Law, s.3(2)(b)(v) not confined to transactions for, or with, customer-as against third parties is so confined

Courts-Grand Court-precedent-Grand Court normally follows own previous decisions as matter of judicial comity unless obiter or wrong

The plaintiff bank sought a declaration that it was entitled to disclose confidential information for the purpose of proceedings against the bank”s auditors in England.

The plaintiff”s liquidators wished to pursue litigation in England against the bank”s auditors and named partners and employees of those auditors to recover compensation for alleged negligence, breach of duty and/or breach of contract which resulted in the collapse of the bank and the leaving of liabilities to customers. The bank wished to disclose information, which would be caught by the Confidential Relationships (Preservation) Law, to protect its interests as against these customers and it sought a declaration in the present proceedings that it was empowered to do so under the terms of s.3(2)(b)(v) of that Law, which allowed confidential information to be divulged in ‘any proceedings, cause or matter’ where it was reasonably necessary for the protection of the bank”s interest.

The information concerned was contained in documents relating to borrower groups which were alleged to be relevant to the matters involved in the English proceedings. They were not confined to ‘transactions by the bank for, or with, its customer’ within the meaning of the sub-section but extended to such matters as the growth of high-risk activities and the losses incurred; the heavy dependency of the Group in general on a small number of major borrowers or groups of borrowers; and the increasing number of numbered accounts in relation to which there was no recorded identification of the relevant borrower or depositor.

The plaintiff submitted that (a) the bank was a party to the proceedings through its liquidators; (b) the ‘proceedings, cause or matter’ in which the confidentiality rules did not apply by virtue of s.3(2)(b)(v) were not limited to those commenced in the Cayman Islands; (c) the bank”s interest, which it was entitled to protect as against its customers was not limited to ‘transactions of the bank for, or with, its customer’; and (d) a previously expressed opinion of the Grand Court was obiter, in so far as it stated that the ‘proceedings, cause or matter’ were limited to the Cayman Islands and wrong, in so far as it held that in protecting itself against its customer the bank”s interest was confined to ‘transactions of the bank for, or with, its customer.’

Held, granting the declarations sought:

(1) The plaintiff was entitled to disclose the confidential information for use in the English proceedings, since the bank was a party to the proceedings through its liquidators and the ‘proceedings, cause or matter’ within the meaning of s.3(2)(b)(v) for which the information was to be used did not need to be limited to one arising within the Cayman Islands (page 59, lines 34–44;page 60, lines 39–45).

(2) Similarly, it was entitled to protect its interests and disclose the information concerned under the same provision because the interest to be protected as against customers did not need to be confined to ‘transactions of the bank for, or with, its customer,’ since its interest was only confined in this way as against third parties (page 61, line 10 – page 62, line 26).

(3) In reaching these conclusions, the court was prepared to depart from the previously expressed opinions of the Grand Court because, although they would normally be followed as a matter of judicial comity, the first was in fact obiter and the other wrong (page 59, lines 4–32;page 62, lines 12–26).

HARRE, C.J.: 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
15	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.
The matter concerns s.3(2)(b)(v) which reads as follows:
‘This Law has no application to the seeking, divulging, or
20	obtaining, of confidential information-
. . .
(b)

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