By Victoria Tabut LLB (Hons)
Introduction.
Bankers have a number of duties and
liabilities to their customers[1].
One of the duties is that a banker owes the customer a legal duty of
confidentiality not to disclose information to third parties, and any breach of
this duty could give rise to liability in damages if loss results[2].
The landmark case for this principle is Tournier
v National Provincial and Union Bank of England[3]
.A duty of confidence arises when confidential information comes to the knowledge
of a person (the confidant) in circumstances where he has notice, or is held to
have agreed, that the information is confidential, with the effect that it
would be just in all the circumstances that he should be precluded from
disclosing the information to others[4].
In the vast majority of cases, the duty of confidence will arise from a
transaction or relationship between the parties[5].
The duty of
confidentiality.
This
duty arises between a banker and customer upon the opening of an account and continues
beyond the time when the account is closed[6]. In
essence it falls under the duty of non-disclosure of confidential information,
as seen in other fields such as marriage[7]. It
covers all transactions concerning the account and information obtained by
virtue of the relationship between the banker and its customer. Breach of this
duty may lead to a cause of action under libel and breach of confidentiality[8]. This
duty is not absolute and is subject to a number of qualifications[9].
Exceptions to the Rule.
1.
Compulsion
by law.
This occurs when the bank has a legal duty or
obligation to divulge the information. This could occur in 3 instances.
Firstly, that is where a banker is required to adduce evidence[10]
in court, and especially on books of account[11].
The second instance may occur where there is an official request for
information by person with authority, the precursor to this is that there must
be confirmation of said authority. Thirdly, where there is no express request
the information must be divulged if lack thereof would lead to the commission
of a crime. In essence, the information must be divulge for the prevention of a
crime when a banker is suspicious that an offence is about to be committed[12].
2.
Public
interest.
This is in regard to prejudice of public security by
regarding this duty of confidentiality. It could be for the preservation of
state security, or divulging of information of a customer trading with an enemy
alien[13]
during war[14].
3.
Disclosure
in the interest of the bank.
This shall occur when a bank is in need to prove its
own case or prevent a case that may arise out of a cause of action of the
non-disclosure[15].
4.
Consent
of the customer.
Where a customer gives consent, the duty of
confidentiality is negative by this. The consent may either be explicit or
implied. Whether or not consent has been given will lie with the fettered
discretion of the court on a case to case basis[16].
Conclusion.
It is the duty of the bank to remain
confidential to all activities undertaken by the customer. This is one among
other duties laid in the case of Joachimson
v Swiss Bank Corp[17]. This duty arises from any information
obtained by the bank in its capacity as the customer’s bank whether it arises
from the account or any external factors in relation to the banker-customer
relation. Despite this, the bank may be require to divulge information about
the customer in certain exceptions, and with plausible reason. These are
whenever there is a legal obligation demanding such, as a matter of public
interest, when the bank is defending its own case or where the customer
consents to this.
Bibliography.
1) N.
Gichuki, Law of Financial Institutions in Kenya, LawAfrica, 2nd Edition.
2) J.R.
Macey G. P. Miller, R.S. Carnell, Banking Law and Regulation ( Casebook), Aspen
Publishers; (April 2001) 3 Edition .
[1] Njaramba Gichuki, Law
of Financial Institutions in Kenya, LawAfrica, 2nd Edition.
[2] Tournier v National
Provincial and Union Bank of England [1924] 1 KB 461.
[3] [1924] 1 KB 461.
[4] Lord Goff, Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at
281.
[5] Ibid.
[6] Beverley Lacey, Jonathan
Speck, The duty of confidentiality: The rule and four exceptions (2009) http://www.mourantozannes.com/
accessed 9/11/2015.
[7] Argyll v Argyll [1967] Ch
302.
[8] Tournier v National Provincial and Union Bank of England [1924] 1
KB 461.
[9] Bankes LJ, Tournier v
National Provincial and Union Bank of England [1924] 1 KB 461.
[10] Evidence Act, Kenya,
Cap 80.
[11] Income Tax Act, Kenya,
Cap 470.
[12] Intercom Services Ltd & 4
others v Standard Chartered Bank [2000] eKLR
[13] In customary
international law, an enemy alien is
any native, citizen, denizen or subject of any foreign nation or government
with which a domestic nation or government is in conflict with and who are liable to be apprehended,
restrained, secured and removed.
[14] Libyan Arab Foreign Bank v
Bankers Trust Co [1989] 1 QB 728.
[15] Sutherland v Barclays Bank
(1963) LD 163.
[16]Hassneh Insurance Co of
Israel v Mew [1993] 2 Lloyd's Rep 243.
[17] [1921] 3 KB 110.
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