Stanford Asset Holdings Ltd and another v AfrAsia Bank Ltd

Heard on 26 June 2023

The circumstances giving rise to this appeal are not in dispute and can be sufficiently summarised as follows:

(1) The First Appellant, Stanford Asset Holdings Ltd (“SAH”) is a company incorporated in the Seychelles. It is wholly owned and managed by the Second Appellant, the Greenway PCC (“Greenway”), a private protected cell company incorporated in Mauritius.

(2) SAH has an account with the First Respondent, AfrAsia Bank Ltd (“the Bank”), in Mauritius.

(3) On 17 February 2022 the sum of US $11,145,000 was paid out of its account to another account at the Bank belonging to a company called Key Stone Properties Ltd (“Key Stone”). The payment was made on the purported authority of two SAH employees, Tayseer Goolbar and Mohammad Ah Seek, but it is common ground in these proceedings that they did not in fact enjoy the necessary authority and that the payment was fraudulent. This judgment accordingly proceeds on the basis that the money was indeed stolen, though that has not been definitively determined.

(4) There is reason to believe that Key Stone has paid all or most of the stolen monies to other parties either in Mauritius or abroad, but the Appellants have no knowledge of the identity of the payees.

Following two abortive applications which were dismissed on procedural grounds, on 15 April 2022 the Appellants filed a notice of motion with the Supreme Court seeking (among other things) an order that the Bank disclose to them the names and other particulars of the recipients of the stolen monies. Three co-respondents were joined in the application. The first, the Financial Services Commission (“the FSC”), is the regulator for non-banking financial services in Mauritius. The second, the Financial Intelligence Unit (“the FIU”), is the central agency in Mauritius responsible for, among other things, the request, receipt, analysis and dissemination of financial information regarding suspected proceeds of crime. The third, the Stanford Fund Manager Ltd (“SFM”), is a Mauritian company which owns the management shares in SAH. It has played no part in the proceedings.

The application was heard on 20 May 2022. The Appellants, the Bank and the FSC were each represented by counsel. The FIU indicated that it would abide by the Court's decision. There was no opposition to the making of the order, but the parties were not fully agreed as to the basis of the Court's jurisdiction, which was a question of potentially wider significance for both the Bank and the FSC.

By a judgment delivered on 29 September 2022 the Supreme Court (Mungly-Gulbul CJ and Aujayeb J) dismissed the application. This is an appeal against that decision, with the permission of the Supreme Court given on 19 October 2022.

The appeal was heard by the Board on 26 June 2023. The Appellants, the Bank and the FSC were represented by counsel. The FIU informed the Board that it did not wish to make submissions and it was not represented.

On 6 July 2023 the Board announced that the appeal would be allowed, with reasons to follow. These are its reasons for that decision. An order for disclosure of the information sought was made in terms agreed by the parties and is annexed to this judgment.

The effect of section 64 of the Banking Act 2004 (“the 2004 Act”), headed “Confidentiality”, is central to this appeal. The provisions particularly in issue are subsections (1)-(3). It will be convenient to analyse these at this stage before proceeding to consider the issues in the appeal. An issue also arises about subsections (9)-(10).

This group of subsections has been the subject of a number of amendments, made at various dates from 2006. The process of amendment has complicated the structure and it is best to start by setting out the terms of subsections (1)-(2) as originally enacted:

“(1) Subject to the other provisions of this Act, every person having access to the books, accounts, records, financial statements or other documents, whether electronically or otherwise, of a financial institution shall –

• (a) in the case of a director or senior officer, take an oath of confidentiality in the form set out in the First Schedule; or

• (b) in any other case, make a declaration of confidentiality before the chief executive officer or deputy chief executive officer of the financial institution in the form set out in the Second Schedule,

before he begins to perform any duties under the banking laws.

(2) Except for the purpose of the performance of his duties or the exercise of his functions under the banking laws or as directed in writing by the central bank, no person referred to in subsection (1) shall, during or after his relationship with the financial institution, disclose directly or indirectly to any person any information relating to the affairs of any of its customers including any deposits, borrowings or transactions or other personal, financial or business affairs, without the prior written consent of the customer or his personal representative.”

Although the Act refers to a “financial institution” it is more convenient in this judgment generally to use the term “bank”.

The terms of the oath set out in the First Schedule are as follows:

“I, …, being appointed …, do hereby swear/solemnly affirm/declare that I shall maintain during or after my relationship with … the confidentiality of any matter relating to the banking laws which comes to my knowledge in my capacity as … or in any other capacity with … and shall not, on any account and at any time, disclose directly or indirectly to any person, any matter or information relating to the affairs of … otherwise than for the purposes of the performance of my duties or the exercise of my functions under the banking laws or when lawfully required to do so by a Judge in Chambers or any Court of law or under any enactment.”

The third, fifth and sixth gaps are evidently intended to be filled by the name of the bank in question. The terms of the declaration in the Second Schedule are substantially identical.

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;

…

(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;

…”

The structure of those subsections is reasonably straightforward. Subsections (1) and (2) impose obligations on any “person having access to the books, accounts, records, financial statements or other documents of a financial institution”. The obligation in subsection (1) is to take an oath/make a declaration of confidentiality in the prescribed form as regards the affairs of the institution. Subsection (2) imposes a duty of confidentiality as regards information relating to the affairs of the customers of the institution. Subsection (3) provides for exceptions to the obligation of confidentiality imposed by section (2). Any contravention of the duty imposed by subsection (2) constitutes a criminal offence: see section 97 (20) of the Act.

It is in the Board's opinion clear that subsections (1) and (2) impose obligations only on natural persons and not on the institution itself. That appears from the facts that only a natural person can take an oath, as required by subsection (1), and that an institution cannot have a “relationship”, as referred to in subsection (2), with itself. Thus section 64 (2) does not impose an obligation of confidentiality on a bank (as opposed to on its employees or other individuals) as regards its customer's affairs; nor is such an obligation imposed by any other provision of the section or the Act to which the Board was referred. It does not of course follow that banks are under no such obligation. On the contrary, it is well-established that an obligation of confidentiality is owed at common law. As the Supreme Court noted in its judgment in the present case:

“It has been consistently held in Mauritius that in line with the well-established principles both in English common law and the approach adopted in French jurisprudence and doctrine, that there is an implied term of confidentiality between a banker and his customer ( vide for instance State Bank International Ltd. v Pershing Limited [ 1996 SCJ 331]).

The bank owes a duty of secrecy and confidence to its customer such that the bank is precluded from divulging or disclosing any information concerning the customer's account to any third party save in certain exceptional circumstances.”

After referring to Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 and to the judgment of the Cour d'Appel de Paris in Banque parisienne de crédit au commerce et à l'industrie c Mizon, delivered on 6 February 1975 and reproduced in the Recueil Dalloz-Sirey, 1975, 183, it concludes:

“It is therefore an implied term of the contract between the...