Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation
| Jurisdiction | England & Wales |
| Judgment Date | 1986 |
| Date | 1986 |
| Court | Chancery Division |
Evidence - Documentary - Bankers' books - Right to inspect and take copies as evidence - Books relating to account with American bank in New York - Ex parte order and subpoena requiring bank to produce books - Whether infringements of sovereignty of United States - Whether justified - Whether ex parte order appropriate -
In an action brought by the plaintiff against certain company and individual defendants alleging fraud, the plaintiff obtained an order ex parte under section 7 of the Bankers' Books Evidence Act 1879F1 against an American bank which was not a party to the action. The order required the bank to produce books and other papers, held at its head office in New York, which related to an account of one of the defendants, a Bahamian company, which, having been struck off the Bahamian register of companies since the issue of the writ, had ceased to exist. The plaintiff then issued a subpoena duces tecum against an officer of the bank at its London office.
On a motion by the bank to discharge the order and the subpoena on the grounds that they exceeded the Jurisdiction of the court and infringed the sovereignty of the United States:—
Held, discharging the order and the subpoena, that, save in exceptional circumstances, the court should not require a foreigner who was not a party to an action, and in particular a foreign bank which would owe a duty of confidence to its customers regulated by the law of the country where the customer's account was kept, to produce documents outside the Jurisdiction concerning business transacted outside the Jurisdiction; that the order and the subpoena, taking effect in New York, were infringements of the sovereignty of the United States; and that, in all the circumstances and particularly as legitimate alternative procedures were available to the plaintiff, such infringements were not justified (post, pp. 459D–F, 460A–B, E, 465D–F).
Per curiam. Orders under the Bankers' Books Evidence Act 1879 concerned with documents outside the Jurisdiction are so unusual that they should ordinarily be made on notice to the bank (post, pp. 462H–463A).
The following cases are referred to in the judgment:
Acrow (Automation) Ltd. v. Rex Chainbelt Inc. [
Bankers Trust Co. v. Shapira [
Bonalumi v. Secretary of State for the Home Department [
British South Africa Co. v. De Beers Consolidated Mines Ltd. [
Laker Airways Ltd. v. Pan American World Airways (
London & Counties Securities Ltd. (In Liquidation) v. Caplan (unreported), 26 May 1978, Templeman J.
Norwich Pharmacal Co. v. Customs and Excise Commissioners [
Reg. v. Grossman (
Societe Internationale pour Participations Industrielles et Commerciales S.A. v. Rogers (
South Carolina Insurance Co. v. Assurantie Maatschappij “De Zeven Provincien” N.V. [
Waterhouse v. Barker [
WE.A. Records Ltd. v. Visions Channel 4 Ltd. [
Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (No. 1 and No. 2), In re [
X AG v. A Bank [
The following additional cases were cited in argument:
Becker v. Noel (Practice Note) [
Boyle v. Sacker (
British Airways Board v. Laker Airways Ltd. [
Compagnie Generale Transatlantique v. Thomas Law & Co. [
Consolidated Rendering Co., In re (
Cook Industries Inc. v. Galliher [
Employers' Liability Assurance Corporation Ltd. v. Sedgwick, Collins & Co. Ltd. [
Farquharson v. Balfour (
H.M.S. Archer [
Haggin v. Comptoir D'Escompte de Paris (
Lhoneux, Limon & Co. v. Hong Kong and Shanghai Banking Corporation (
Luscar Collieries Ltd. v. McDonald [
Newby v. Colt's Patent Firearms Manufacturing Co. (
United States v. First National City Bank (
MOTION
By a writ dated 22 December 1983, the plaintiff, Kenneth Thomas Mackinnon, sought against the defendants, Donaldson, Lufkin and Jenrette Securities Corporation, Donaldson, Lufkin and Jenrette (Asia) Ltd., Investment Advisory Services (1979) Ltd., Alan David Shephard, G. Raymond Lanciault and the Martini Foundation inter alia, (1) damages for breach of an agreement made in October 1980 between the plaintiff and the fourth defendant as managing director of the second defendant whereby it was agreed that the first and/or second defendants would provide or procure finance for plaintiff; (2) damages for deceit in respect of false representations deliberately made by the fourth defendant to the plaintiff on behalf of the first and/or second defendants; (3) damages for breach of an agreement made in October 1980 between the plaintiff and the fifth defendant whereby it was agreed that the sixth defendant would provide finance for the plaintiff; (4) damages for deceit in respect of false representation deliberately made by the fifth defendant to the plaintiff on behalf of the sixth defendant; (5) damages for conspiracy to defraud the plaintiff; and (6) the return of U.S. $250000 paid by the plaintiff to the third defendant for a consideration which had wholly failed as money had and received by the defendant to the use of the plaintiff. The plaintiff obtained an order ex parte from Master Gowers on 2 October 1985 under the Bankers' Books Evidence Act 1879 allowing the plaintiff to inspect and take copies of entries in the books of Bank of America, Chase Manhattan Bank and Citibank N.A.
By a notice of motion dated 25 October 1985, Citibank N.A. and Barry Robinson applied to the court for orders that (1) Citibank N.A. be joined as seventh defendant to the action, pursuant to
The facts are stated in the judgment.
John McDonnell QC for the plaintiff.
William Hirst for the bank.
5 November. HOFFMANN J. read the following judgment. This motion raises a point of some importance to banks, especially foreign banks with branches in London. A plaintiff in an action before this court has served a subpoena and an order obtained ex parte under the Bankers' Books Evidence Act 1879 upon Citibank at its branch office in London. Citibank is a New York bank with its head office in Manhattan and with branches all over the world. It is not a party to the proceedings. The subpoena and the order require Citibank to produce books and other papers held at its head office in New York, relating to transactions which took place in New York on an account maintained there by a Bahamian company. Citibank has moved to set aside the subpoena and to discharge the ex parte order on the grounds that in principle it exceeds the international Jurisdiction of this court and infringes the sovereignty of the United States.
The background to the motion is international fraud. Mr. MacKinnon, the plaintiff in the action, alleges that he has been swindled out of U.S. $250000 by the two personal defendants, Mr. Alan Shepherd and Mr. Raymond Lanciault. He says that they pretended that through certain American and Hong Kong companies and a Liechtenstein foundation, they would procure for him a loan of U.S. $360 million to enable him to buy a property in Hong Kong. At their request he paid an advance fee of U.S. $250000 into an account of International Advisory Services (1979) Ltd. (“I.A.S.”), a Bahamian company represented by Mr. Lanciault, at Citibank, New York. In truth, says the plaintiff, there was never any intention or ability to procure a loan. The transaction was simply a scheme to defraud. His action is to recover the U.S. $250000 and for damages. The trial is due to begin on the 25th of this month.
I.A.S. is named as a defendant in the writ and ordinarily would have had to disclose on discovery the documents or copy documents concerning the operation of its account with Citibank. This would have shown, for example, on whose authority the account was operated and what happened to the U.S...
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