Re Norwich Pharmacal

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 07 February 2017
• Court: Grand Court (Cayman Islands)
• Date: 07 February 2017

Grand Court

(Smellie, C.J.)

IN THE MATTER OF THE CONFIDENTIAL RELATIONSHIPS (PRESERVATION) LAW (2009 REVISION)

IN THE MATTER OF A NORWICH PHARMACAL APPLICATION IN RESPECT OF THE STATE OF ARGENTINA

J. Walton, A. Gilbert and L. Cohen, Q.C. for the applicant;

D. Schofield, Assistant Solicitor General, for the Crown.

Cases cited:

(1) ABC Ltd., In re, 1984–85 CILR 130, dictum of Summerfield, C.J. considered.

(2) Ansbacher (Cayman) Ltd., In re, 1998 CILR 169; further proceedings, 2001 CILR 214, followed.

(3) Imerman v. Tchenguiz, [2010] EWCA Civ 908; [2011] Fam. 116; [2011] 2 W.L.R. 592; [2011] 1 All E.R. 555; [2010] 2 FLR 814; [2010] 3 F.C.R. 371, considered.

(4) Kuruma, son of Kaniu v. R., [1955] A.C. 197; [1955] 2 W.L.R. 223; [1955] 1 All E.R. 236, distinguished.

(5) NML Capital Ltd. v. Banco Central de la República Argentina (2011), 652 F.3d 172, considered.

(6) Norwich Pharmacal Co. v. Customs & Excise Commrs., [1974] A.C. 133; [1973] 3 W.L.R. 164; [1973] 2 All E.R. 943; [1973] F.S.R. 365; [1974] R.P.C. 101, referred to.

(7) Telesystem Intl. Wireless Inc. v. CVC/Opportunity Equity Partners L.P., 2001 CILR 444, considered.

Legislation construed:

Confidential Relationships (Preservation) Law (2009 Revision), s.2: The relevant terms of this section are set out at para. 17.

s.3(1): The relevant terms of this sub-section are set out at para. 18.

s.4(1): “Whenever a person intends or is required to give in evidence in, or in connection with, any proceedings being tried . . . by any court, tribunal or other authority . . . any confidential information within the meaning of this Law, he shall before doing so apply for directions . . .”

s.5: The relevant terms of this section are set out at para. 23.

Confidential Relationships—confidential information—information relating to bank accounts—application under Confidential Relationships (Preservation) Law (2009 Revision), s.4 for directions permitting use in civil proceedings of improperly obtained bank account details (based on mere suspicion that funds in fact belong to foreign state, not account holders) refused—public policy to protect confidential financial information

The applicant sought directions from the court pursuant to the Confidential Relationships (Preservation) Law (2009 Revision), s.4 permitting the use of confidential information in evidence in civil proceedings.

The applicant had a judgment debt in the sum of US$1.68 bn. against the Republic of Argentina, which it sought to enforce in jurisdictions in which Argentina held assets. Investigators employed by the applicant had identified a Cayman Islands bank account in the names of an Argentinian public official and his wife, which contained US$602,000. The applicant contended that the assets should in fact be considered to belong to Argentina and therefore to be available for the enforcement of its judgment.

The applicant applied for directions from the court pursuant to the Confidential Relationships (Preservation) Law (2009 Revision), s.4 permitting it to use information obtained by the investigators—namely a screenshot from online access to the bank account and a summary of theaccount that appeared to bear the bank’s letterhead and logo—in proceedings in the Cayman Islands to enforce the judgment debt, including a Norwich Pharmacal order. The applicant stated that it could not testify as to the provenance of the information nor how it had been obtained.

The applicant submitted, inter alia, that as the information had already been obtained, the court should not be concerned with addressing the public policy concerns of the Law but with the question of the admissibility of the evidence even if it might have been illegally obtained, and that such evidence was admissible if relevant to the matters in issue.

Held, dismissing the application:

(1) The bank account information was confidential information within the meaning of the Confidential Relationships (Preservation) Law (2009 Revision). Section 2 of the Law provided that such information generated in the course of banking business and relating to a bank account of customers who were also principals within the meaning of s.2 was clearly information to which the Law applied. In respect of such information, s.3(1) confirmed that the duty of confidentiality continued to be attached, irrespective of whether the information was obtained within the Islands or brought into the Islands, and was binding on all persons coming into possession of such information at any time thereafter, whether they were within or outside the jurisdiction of the Islands (paras. 17–20).

(2) The application to permit the use of the information in subsequent proceedings would be refused. The directions sought would involve the court not only condoning the breach of the Law by the investigators but compounding it by directing the disclosure of information thereby obtained. It would not be in the public interest in a jurisdiction such as the Cayman Islands that depended on the integrity of its financial systems for the court to condone and facilitate the abuse of confidential information obtained in circumstances such as the present. The public interest in the protection of the legitimate affairs of persons who transact banking business in this jurisdiction was not unique. The confidential information that had been obtained in prima facie breach of the Law and of the banker/customer relationship that was sought to be deployed was information that would be entitled to protection in any country that shared the Cayman Islands’ common law heritage. In the absence of any suggestion of criminal misconduct on the part of a principal, the abrogation of the right to confidentiality could only be justified in the clearest and most deserving circumstances. In the present case, the inference upon which the applicant relied in seeking to abrogate the right and duty of confidentiality and to defeat the public policy of the Law was transparently thin. It was merely a supposition based on the relationship of the principal with his country and the notion that he and his wife should not be expected to have acquired the sums in the bank account in their own right. Mere supposition of this sort would not justify the court disregarding the public policy of the Law. Directions for the use of the material in evidence would have sanitized information that must at least inferentially be regarded as havingbeen obtained by subterfuge and in breach of the Law as well as of the well-respected banker/customer confidentiality. The application would therefore be refused (paras. 42–55).

1 SMELLIE, C.J.: This is an application under s.4 of the Confidential Relationships (Preservation) Law (2009 Revision) (“the CR(P)L”) for directions permitting the use of certain confidential information in evidence in subsequent civil proceedings in this jurisdiction.

2 The evidence would comprise information about a bank account held in this jurisdiction with the Bank of America Merrill Lynch (“the bank”) in the names of Mr. A.B., a...