Bankers Trust Company v Shapira

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE WALLER,LORD JUSTICE DUNN
Judgment Date04 June 1980
Judgment citation (vLex)[1980] EWCA Civ J0604-1
Docket Number1980 B. No. 3166
CourtCourt of Appeal (Civil Division)
Date04 June 1980
Bankers Trust Company
Plaintiffs (Appellants)
and
(1) Walter Shapira
(2) Max Frei otherwise Max Frei Shaan otherwise Maximilian Frei
(3) Discount Bank (Overseas) Ltd.
Defendants (Respondents)
Before:

The Master of the Rolls (Lord Denning)

Lord Justice Waller and

Lord Justice Dunn

1980 B. No. 3166

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Division

(Mr. Justice Mustill)

MR. M. CHRYSTAL (instructed by Messrs. Linklaters & Paines) appeared on behalf of the Plaintiffs (Appellants).

MR. N. ELLIOTT (instructed by Messrs. Dawson & Co.) appeared on behalf of the Third Defendants (Respondents).

1

THE MASTER OF THE ROLLS
2

This is a new case. It illustrates something that happens from time to time - frauds made upon banks. It appears that last September - on the 20th September, 1979 - two men (Walter Shapira and Max Frei) went into a bank in New York, the Bankel. Trust Company. They went into the Middle East section. They presented two apparent cheques - each for half a million dollars - for payment. The cheques purported to be drawn by the National Commercial Bank in Saudi Arabia on the Bankers Trust Company of 16 Wall Street, New York. One of them was for £500,000 to be paid to Mr. Shapira. The other was also for £500,000 to be paid to Mr. Shapira.

3

The Bankers Trust Company of New York honoured the cheques. They let these men have £1,000,000. They acted on the instructions of the two men. I will not go into detail: but I will mention two particular matters. £600,000 was credited to Mr. Shapirafs account at a London bank in Hatton Gardens - the Discount Bank (Overseas) Ltd. They asked that another sum of £108,203 should be credited to Mr. Frei's account at a bank in the Cayman Islands. But, as he had no such account there, that sum was also transferred to the Discount Bank (Overseas) Ltd. in Hatton Gardens. So, on the face of it, £708,203 was sent over to the Discount Bank in Hatton Gardens. That was in September 1979.

4

In some way those cheques got over to the Mecca branch of the Saudi Arabian bank. They apparently honoured them at the time. But six months later, on the 10th April, 1980, the head office of the National Commercial Bank in Saudi Arabia found that those two cheques were forgeries. They immediately took the matter up with the Bankers Trust Company of New York. I will read part of the letter they wrote:

5

"On looking into these drafts you will find that signatures do not conform in any way to the signatures number 140 and 141 of our officers in our Mecca Branch, that the validating numbers in red do not compare in any way to our validity machine which has the name of our bank on it, that the draft forms are on poor quality paper while our drafts are printed on safety paper with our logo water mark. We therefore consider these drafts are clearly forged and you should have exercised care in encashing them".

6

When the Bankers Trust Company of New York received that letter, they felt that they were not free from blame themselves. It appears that they did re-credit the Saudi Arabian Bank with the money. So the Bankers Trust Company of New York have lost £1,000,000.

7

They then looked round to see if they could find these rogues. (I call them "rogues" although it has not been proved yet: but the prima facie evidence against them is strong). On the 20th May, 1980 the Bankers Trust Company of New York brought an action. The first defendant was Mr. Walter Shapira: the second defendant was Mr. Max Frei: and the third defendant was the Discount Bank (overseas) Ltd., with which the moneys were deposited. They did not serve the documents on either Mr. Shapira or Mr. Frei. We are told, on the evidence, that they investigated the matter. Mr. Shapira is now in gaol in Switzerland as a result of a fraud investigation by the Swiss police. Mr. Frei is presently believed to be in Liechtenstein. So they have not served those two. But they have served the Discount Bank (Overseas) Ltd. The action they have brought is quite clearly to trace and follow these funds which the Bankers Trust Company have been fraudulently deprived of. It operates in common lawand in equity as a right to follow and trace the moneys. So they brought this action on the 20th May, 1980.

8

The Bankers Trust Company obtained a Mareva injunction in the usual form to stop the bank from disposing of any of the moneys which they had at that time - which Shapira and Frei had a paid into the bank. That is common form nowadays in the Commercial Court when it is desired to prevent money being abstracted from the true creditor.

9

But this case brings out a new point which we have not had before: because the Bankers Trust Company of New York want more information from the Discount Bank (Overseas) Ltd. They want information as to these accounts. They want to know how much money is now in the accounts. Money has been taken out in the last six months. They want to know what has happened to the money in the accounts. It may have been paid over to third persons: and they may want to follow the money into the hands of those third persons. So they have asked for discovery of the documents relating to the moneys which the bank had, and what has happened to them.

10

As the question of the form of order has come into question in some of the cases, I would like to read the actual form of order which is sought in this regard by the Bankers Trust Company of New York:

11

"FOR AN ORDER

12

"(1) Against the first, second and third defendants that each of them do disclose to the plaintiffs forthwith the sums or balances at present standing in any account in either of the names of the first or second defendants at the third defendants.

13

"(2) Against the third defendants" - that is, the bank - "thatthey do disclose to the plaintiffs forthwith and permit the plaintiffs to take copies of the following documents:-

14

(i) all correspondence passing between the third defendants and the first and second defendants relating to any account at the third defendants in the names of either the first and/or second defendants from 20th September 1979 onwards.

15

(ii) all cheques drawn on any account at the third defendants in the names of either the first and/or second defendants from 20th September 1979 onwards.

16

(iii) all debit vouchers, transfer applications and orders and internal memoranda relating to any account at the third defendants in the names of either the first and/or second defendants from 20th September 1979 onwards".

17

That is what they applied for in addition to the ordinary Mareva injunction.

18

The matter came before Mr. Justice Mustill. He refused to make any such order, his reason being that he thought it should not be made whilst the first and second defendants (Mr. Shapira and Mr. Frei) had not been served.

19

Mr. Chrystal has come here to-day on behalf of the Bankers Trust Company of New York: and asks us to reverse that decision. He has brought to our attention - very usefully - three recent cases (none of them reported) in which a similar point has arisen. The first one was on the 26th May, 1978 before Mr. Justice Templeman (as he then was). London and Counties Securities (in Liquidation) v. Caplan. The plaintiff company had been defrauded by Mr. Caplan in the sum of £5,000,000. Mr. Caplan was said to have embezzled them. It was desired to obtain information as to the whereabouts of the moneys and what had been done with them. The plaintiffs wanted to trace the moneys to see where they hadgone. Mr. Justice Templeman, having considered the matter very A carefully, made an order under which the bank was to disclose all the documents and accounts showing where the money had gone.

20

Then there was a case before...

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12 firm's commentaries
  • International Fraud & Asset Tracing (3rd Edition), England & Wales
    • United Kingdom
    • JD Supra United Kingdom
    • 5 March 2015
    ...is now commonly known as a Bankers Trust order – after the case in which the order was fi rst devised: Bankers Trust Company v Shapira [1980] 1 WLR 1274. Such applications are often made ex parte, prior to the commencement of any substantive claim against the defendant, and accompanied by a ......
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    • Mondaq Cayman Islands
    • 6 March 2014
    ...Cayman Islands cases (e.g., Deutsche Bank v. Codelco [1996] CILR 1). 15 Named after the English decision Bankers Trust Co v. Shapira [1980] 1 WLR 1274 and recognised in the Cayman Islands (e.g., in Braga v. Equity Trust Company (Cayman) Limited [2011] (1) CILR 16 Quayum v. Hexagon Trust Com......
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    • JD Supra United Kingdom
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    ...Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. 2 [2001] EWCA Civ 1897. 3 [2018] UKSC 28. 4Bankers Trust Co v Shapira [1980] 1 WLR 1274. 5Z Ltd v A-Z and AA-LL [1982] QB 558, as now embodied in the model wording contained at PD 25A of the Civil Procedure [View source.] Charli......
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    ...the famous House of Lords decisions Norwich Pharmacal Co v Comrs of Customs and Excise [1974] AC 133, and Bankers Trust Co v Shapira [1980] 1 WLR 1274. The basic principle underpinning Norwich Pharmacal is that where "a person gets mixed up in the tortious acts of other so as to facilitate ......
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    • Emerald Journal of Money Laundering Control No. 4-2, April 2000
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    ...Processes Ltd [1976] Ch 55. (149) Norwich Pharmacal ν Customs & Excise Commissioners [1974] AC 152. (150) Bankers Trust Co. ν Shapira [1980] 1 WLR 1274. (151) R ν Brown [1996] 1 All ER 545 (HL). (152) Section 5(6). (153) This was assumed by Rix J in Dubai Aluminium Co. ν Al Alawi [1999] 1 A......
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    ...Kingdom, see JSC BTA Bank v A , [2010] EWCA Civ 1141 at para 14. 184 See Chapter 5, Section F(5). 185 Bankers Trust Co v Shapira , [1980] 1 WLR 1274 (CA). THE LAW OF EQUITABLE REMEDIES 206 5. that the plaintif has given an undertaking to reimburse the bank the cost of compliance and pay any......
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    • 19 June 2013
    ...7 Moo. P.C. N.S. 401, 17 E.R. 152 ................................................................ 305 Bankers Trust Co. v. Shapira, [1980] 3 All E.R. 353 (C.A.) ............................... 327 Banque Canadienne Nationale v. Boston Insurance Co., [1963] B.R. 487 (Que. C.A.) ..................
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    • 18 November 2023
    ...International Union of North America, Local 183, 2020 ONSC 4911 ..................................130, 131 Bankers Trust Co v Shapira, [1980] 1 WLR 1274 (CA) ..................................... 205 Banks v EMI Songs Ltd (No2), [1996] EMLR 452 (Ch) ......................................631......
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