Siv Potayya
Wortels Lexus Law Firm, Curepipe
emailus@WortelsLexus.com

Introduction

The judgment from the Judicial Committee of the Privy Council (the ‘JCPC’) in the case of Stanford Asset Holdings Ltd (Stanford) and another v AfrAsia Bank Ltd (2023) UKPC 35, delivered on 10 October 2023, has shed new light on the court's jurisdiction in respect of the question of whether Norwich Pharmacal relief is excluded by the statutory regime under the specific provisions of the Banking Act 2004.

Facts of the case

Stanford Asset Holdings Ltd ('Stanford'), incorporated in The Seychelles, is wholly owned and managed by the second appellant, Greenway PCC, a private protected cell company incorporated in Mauritius. Stanford has an account with AfrAsia Bank Ltd in Mauritius.

On 17 February 2022, two employees of Stanford, were alleged to have, without any authority, fraudulently paid out the sum of $11,145,000 to another account at the bank belonging to a company called Key Stone Properties Ltd ('Key Stone'). The judgment proceeded on the basis that the money was indeed stolen, although this was not definitively determined. Stanford wanted to trace the money that it believed Key Stone had paid (all or most of the stolen money) to other parties either in Mauritius or abroad, but it had no knowledge of the identity of the payees.

Stanford had referred the matter to the Central Criminal Investigation Department and the Independent Commission Against Corruption. It had also obtained a Mareva order and had served a statutory demand on Key Stone.

Applications before the judge in chambers and the appeal in Mauritius

To be able to trace its money, Stanford made two successive applications before the judge in chambers of the Supreme Court for the disclosure of information, which were dismissed on procedural grounds. It subsequently went to appeal, where the Bank and the Financial Services Commission were put into cause as first and second respondent, respectively. There was no opposition to the making of the order, but the parties did not fully agree on the basis of the Court's jurisdiction, which was a question of potentially wider significance for both respondents. Before the Supreme Court, the appellants made their applications on two alternative bases: first, that the power to order the disclosure sought was embodied under section 64 of the Banking Act 2004 (the 'Act'); and, second, that the Court had jurisdiction to make such an order on the basis of the common law principles in the decision of the House of Lords in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133.

The Supreme Court dismissed the appeal and grounded its reasoning on the following questions, inter alia:

• is the Act a comprehensive statutory regime that exhaustively covers the whole question of confidentiality so that it precludes the application of any alternative common law remedy, such as Norwich Pharmacal relief?
• has Parliament legislated to delimit the only situations wherein the disclosure of confidential information in a banker's possession is permissible?
• would the application of the Norwich Pharmacal principles be tantamount to circumventing the intention of Parliament and would it be incompatible with or in violation of the statutory scheme under the Act?'

Appeal before the JCPC

There were five grounds of appeal. The first three were concerned with Norwich Pharmacal relief: ground one laid stress on the fact that the court enjoyed free-standing jurisdiction to grant such relief irrespective of the provisions of the Act, and grounds two and three challenged the basis on which the court declined to exercise that jurisdiction. The appellants made it clear that this represented their primary case. Grounds four and five proceeded on the alternative basis that jurisdiction to grant the necessary disclosure had to be found in the Act.

The matter was heard on 26 June 2023, and on 6 July 2023, in an oral judgment, the Board announced that the appeal would be allowed and had this to say:

'In the matter of the agreement between the parties to these proceedings the Applicants, companies based in Seychelles are the victims of a fraud as a result of which USD 11 M, were transferred from their account which they held at Respondent Bank, Afrasia Bank, to the bank account of another company called Keystone Property. The transfer into Keystone's bank account is the last that the Applicants know of what has become of their money. They made an application to the Supreme Court of Mauritius where the bank account is held, for an order referring Afrasia to disclose to them information about the identity and bank details of the recipients of the USD 11 M so that then they could hence, freeze and recover their money. The Supreme Court refused to make the order holding that it would be inconsistent with legislation governing a banker's duty of confidentiality. The Board has decided that the Supreme Court's interpretation of the legislation was mistaken and that there is no barrier to them making of such an order in the circumstances of the present case. The Board's reasons for reaching that conclusion will be sent on a judgment to be fixed at a later date. In view of the need for the Applicants to make progress as quickly as possible in tracing the missing funds, the Board is announcing its decision today in advance of handing down its judgment. We will also now make an order for the disclosure of the necessary information in terms which have been agreed between the parties. The Court will now adjourn.'

 The JCPC handed down its judgment on 10 October 2023.

In their judgment, their lordships analysed the statutory framework of the Mauritian Banking Act 2004 and the reasoning of the Supreme Court.

The position of the Supreme Court might primarily suggest that the Court was minded to hold that, in cases involving banking confidentiality, the Norwich Pharmacal jurisdiction was excluded by the statutory regime under the Act. Instead, it went on to hold that Norwich Pharmacal relief could not be justified in the circumstances of the present case. It cited English and Privy Council authority, which it said showed that the jurisdiction was 'exceptional and intrusive' and that 'Norwich Pharmacal orders are not granted on the mere asking especially against entities such as banks which are bound by a statutory duty of confidentiality to their customer'.

The Board analysed the duty of secrecy and who may apply for disclosure, as found under the statutory provisions of the Act.

Duty of secrecy

Subject to the Act, any person, whether a service provider, director or senior officer, who, by virtue of his or her professional relationship with a financial institution, has access to the books, accounts, records, financial statements or other documents, electronically or otherwise, of a financial institution shall take an oath of confidentiality or make a declaration of confidentiality, as his or her position so requires, in the prescribed from, before he or she begins to perform any duties under the banking laws.

Who may apply for disclosure?

Section 64 (9) of the Act stipulates that the Director-General under the Prevention of Corruption Act, the Chief Executive of the Financial Services Commission established under the Financial Services Act 2007, the Commissioner of Police, the Director-General of the Mauritius Revenue Authority established under the Mauritius Revenue Authority Act, the Enforcement Authority under the Asset Recovery Act, or any other competent authority in or outside Mauritius who requires any information from a financial institution relating to the transactions and accounts of any person, may apply to a judge in chambers for an order of disclosure of such transactions and accounts or such part thereof as may be necessary.

Under section 64 (10) of the Act, it is stipulated that the judge in chambers shall not make an order of disclosure unless he or she is satisfied that: (1) the applicant is acting in the discharge of his, her or its duties; (2) the information is material to any civil or criminal proceedings, whether pending or contemplated, or is required for the purpose of any enquiry into or relating to the trafficking of narcotics and dangerous drugs, arms trafficking, offences related to terrorism under the Prevention of Terrorism Act or money laundering under the Financial Intelligence and Anti-Money Laundering Act; or (3) the disclosure is otherwise necessary, in all circumstances.

The Supreme Court reviewed not only the terms of section 64 (9) of the Act but also a number of provisions in other laws permitting banks to disclose confidential information to statutory bodies on the basis of a court order, namely the Commissions of Inquiry Act 1944, Prevention of Corruption Act 2002, Mutual Assistance in Criminal and Related Matters Act 2003, Financial Services Act 2007, Asset Recovery Act 2011, Good Governance and Integrity Reporting Act 2015 and Financial Intelligence and Anti-Money Laundering Act 2002. The Supreme Court summarised the position as follows: 'It clearly emerges therefore that there is in Mauritius:

(1) a strict duty of confidentiality prohibiting banks from disclosing any information relating to the banking transactions of any of its clients;

(2) an explicit and special legal framework for the permissible disclosure of information to third parties by a bank. This is dictated essentially by the compelling public interest to safeguard the integrity of the national and international financial systems;

(3) a legal framework which precludes banks from making any disclosure except by compulsion of law or following a Court Order;

(4) a comprehensive and specific legislative framework which sets out the conditions in which confidential information relating to a customer's banking affairs may be disclosed to any of the designated authorities.'

On the basis of that background, the Court held that it was necessary for the appellants to identify a specific provision of the Act that authorised the disclosure that they sought.

Norwich Pharmacal relief

Referring to some recent case law and the more recent decision in Foondun MS v Banque des Mascareignes 2019 SCJ 58, the Supreme Court had this to say: 'Although reference to the Norwich Pharmacal principles has been made in a few cases in Mauritius, the question whether the common law principles enunciated in that case would apply in view of the provisions of the Act, has never been frontally addressed'. It held that in neither of the earlier cases had the Court explicitly based its decision on a distinct jurisdiction derived from Norwich Pharmacal as opposed to the Act.

In view of the avenues already resorted to by Stanford, as mentioned above, the Supreme Court held as follows:

'We consider that even in the context of the alleged wrong doing there are no sufficient valid reasons to justify the granting of a Norwich Pharmacal order which is of an exceptional nature. There is indeed a strong public interest element in allowing the law enforcement agencies to pursue their enquiries and obtain for that purpose any relevant and material banking information, subject to the stringent conditions which the Mauritian legislator has sought fit to impose by virtue of legislation which has been expressly enacted for that purpose, and which offers all the necessary safeguards and guarantees for the permissible disclosure of information which is secured by bank secrecy.'

The conclusive reasoning in the judgment of the Privy Council

In view of the doubt expressed in its judgment, and more particularly in Foondun, the Board should take this opportunity to make clear that, in its opinion, the provisions of section 64 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. The starting point is that section 64 does not impose a duty of confidentiality on banks themselves (as opposed to on individual employees and agents): paragraph 12 of the judgment refers to this. 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.

The Board went on further: 'it would in truth be remarkable if the 2004 Act had 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. It seems clear to the Board that that was not the purpose of section 64.'

Indeed, the Board had support under the same section 64 of the Act, where it found as follows: Subsection (3) begins, 'The duty of confidentiality imposed under this section shall not apply where...' A large number of exceptions follow, designated (a)–(p). It is only necessary to set out exceptions (d) and (h): '(d) civil proceedings arise involving the financial institution and the customer or his account' and '(h) any person referred to in subsection (1) is summoned to appear before a court or a Judge in Mauritius and the court or the Judge orders the disclosure of the information'.

In the Board's view, the case of Stanford is covered by the exception in subsection (3)(d) because a Norwich Pharmacal application clearly constitutes 'civil proceedings [...] involving the financial institution and the customer or his account.'

The Board added:

'The question then is whether the Court was right to refuse Norwich Pharmacal relief in the circumstances of the present case. It is unnecessary to review the relevant principles in any detail. The Board is content to adopt the helpful summary analysis at para 35 of Saini J's judgment in Collier v Bennett, where he suggested the following fourfold test:

(i) 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").

(ii) The respondent to the application must be mixed up in so as to have facilitated the wrongdoing ("the Mixed Up In Condition").

(iii) 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").

(iv) 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").'

It seems clear, and the Supreme Court did not suggest otherwise, that the first three conditions identified by Saini J are satisfied in the present case. The reason that the Norwich Pharmacal jurisdiction is referred to as exceptional is that it involves an innocent third party being required to supply (typically confidential) information to an apparent victim of wrongdoing to whom it would otherwise owe no duty. Depending on the circumstances of the case, such relief may well be appropriate and proportionate, and it is regularly ordered in the business and property courts in London, either as free-standing relief or an adjunct to a freezing order.

The Board concluded that the appeal should be allowed and the disclosure order sought should be made.