BANKING SECRECY & DISCOVERY OF ENTRIES IN A BANKER'S BOOK
The High Court in La Dolce Vita Fine Dining Company Ltd v Zhang Lan and others [2022] SGHC 89 considered the discovery of entries in a banker’s book, and specifically, whether the bank’s record of the beneficial owner of an account forms part of its transactional record.
Facts. This is an appeal against a decision of the assistant registrar to grant the plaintiff – La Dolce Vita Fine Dining Company Limited (“LDV”) – discovery orders concerning documents in the possession of the fourth defendant’s – Success Elegant Trading Limited (“SETL”) – bankers (at [4]).
LDV is a judgment creditor of, among others, the first defendant, Mdm Zhang Lan (“Mdm Zhang”), under a Hong Kong judgment, for which a registration order had since been obtained (at [6] – [8]).
Pursuant to the registration order, LDV filed an application seeking the appointment of receivers to receive monies and securities in two bank accounts held in the name of SETL, one with Credit Suisse AG (“CS”) and one with Deutsche Bank AG (“DB”) (collectively the “Bank Accounts”) (the “receivership application”), on the basis that the monies and securities in the Bank Accounts are beneficially owned by Mdm Zhang (at [10]).
LDV took up these discovery orders against the Bank Accounts because many years prior to this application, LDV had obtained a freezing order which, when served on CS and DB, led to CS and DB freezing the Bank Accounts. This was apparently because CS and DB considered Mdm Zhang to be the beneficial owner of these bank accounts, even though the freezing owner was only directed against Mdm Zhang (at [11]).
Hence, LDV sought discovery from CS and DB of documents relating to the beneficial ownership of the Bank Accounts which caused the banks to believe that the Bank Accounts were subject to the freezing order against Mdm Zhang (the “discovery application”) (at [12]).
While CS and DB did not oppose the discovery application and left it to the court, SETL opposed it and appealed against the assistant registrar’s decision when the assistant registrar granted LDV’s application (at [13]).
Issue on appeal. On appeal, the High Court only considered LDV’s request for “forms, declarations and correspondence between the banks and either SETL or Mdm Zhang identifying the beneficial owner of the Bank Accounts (the “Second Category”)” as LDV’s other request was “a new and differently framed category” that was not sought in the discovery application below (at [14] – [15]).
The High Court did not accept other objections raised by SETL (at [17]), and accordingly, the issue on appeal was reduced to “whether the documents sought are protected by banking secrecy or fall within the exception of entries in bankers’ books.” (at [18])
Banking secrecy in Singapore. Banking secrecy in Singapore is legislated through s 47 of the Banking Act 1970 (“BA”) (at [20]). According to s 47(1) BA, “Customer information must not, in any way, be disclosed by a bank in Singapore or any of its officers to any other person except as expressly provided in this Act.”
The exceptions to the above rule are set out in the Third Schedule of the BA, of which para 7 of Part 1 to the Third Schedule is relevant in this case. It provides that customer information may be disclosed where:
“Disclosure is necessary for compliance with an order of the Supreme Court or a Judge sitting in the Supreme Court pursuant to the powers conferred under Part 4 of the Evidence Act 1893.”
Paragraph 7 further provides that such customer information may be disclosed to:
“All persons to whom the disclosure is required to be made under the court order.”
For the court’s power to order disclosure, see s 175(1) of the Evidence Act 1893 (the “EA”):
“On the application of any party to a legal proceeding, the court or a Judge may order that such party be at liberty to inspect and take copies of any entries in a banker’s book for any of the purposes of such proceedings.”
Bankers’ books are defined in s 170 EA to include:
“… ledgers, day books, cash books, account books and all other books used in the ordinary business of the bank”
The High Court also stated that (at [21] – [23]):
“21 … The discovery sought in this case would be of entries in “all other books used in the ordinary business of the bank”, if at all.
22 For completeness, I should add that the duty of confidentiality between banker and customer is exclusively governed by s 47 of the BA, and thus the exceptions to banking secrecy listed in the Third Schedule are comprehensive. This means that there is no room for common law exceptions to banking secrecy to operate: per the Court of Appeal in Susilawati v American Express Bank Ltd [2009] 2 SLR(R) 737 at [67].
23 Importantly, the same category of entries in a banker’s book not only defines an exception to banking secrecy but also delineates what may be received as prima facie evidence “of the matters, transactions and accounts therein recorded” under s 171 EA. …”
Therefore, to sum up, banking secrecy is governed exclusively by statute: it is not governed by common law, and the scope of banking secrecy (including exceptions to banking secrecy and what documents fall within the ambit of a “banker’s book”) depends on the interpretation of the relevant legislative provisions. Hence, not all documents held by a bank for its customers are protected by banking secrecy, and the court is empowered to order disclosure of entries in a banker’s book for purposes of a court proceeding.
What is a “banker’s book”. The High Court considered the leading case Wee Soon Kim Anthony v UBS AG [2003] 2 SLR(R) 91 (“Anthony Wee”), a decision of the Court of Appeal which considered how “other books” in s 170 EA should be interpreted in relation to modern banking practice (at [24]). In Anthony Wee, the Court of Appeal had held that “… [a]ny form of permanent record maintained by a bank in relation to the transactions of a customer should be viewed as falling within the scope of that expression.” (at [24]; emphasis by the Court of Appeal)
The High Court considered this limitation critical because there are other documents kept by a bank which do not fall within the class of documents establishing a customer’s position in a bank, and specifically, the extent to which the customer is in credit or debit. See [25] as set out below:
“25 … The bank’s record of transactions establishes the customer’s position with the bank, and in particular the extent to which he is in credit or debit. It is this position between banker and customer recorded by the bank that is amenable to proof on a prima facie basis by copies of documents without the attendance of a bank officer. There will be many other documents kept by a bank which record information concerning its customers that are of much less certain evidential value and thus not apt to fall within a class of documents defined for the dual purpose of discovery and prima facie proof by production of copies.”
The High Court also noted the Court of Appeal’s explanation that “on a purposive interpretation of s 170 EA, the permanent record of the bank could take the form of any method made available by modern technology.” (at [26]).
Conclusion. The High Court further considered recent decisions of other jurisdictions (at [28] – [32]) and the parties’ submissions (at [33] – [36]) before concluding that banker’s books are limited to transactional records concerning a customer. This would include the bank’s record of the identity of the beneficial owner of a bank account and correspondence to the bank effecting a transaction (if filed as part of the bank’s permanent record), though it would not include other matters such as, e.g., documents generated by the bank itself to check on the creditworthiness of a customer or documents generated by the bank for regulatory purposes such as identification documents or incorporation documents (at [37] – [40]).
The High Court was careful to state (at [41]) that:
While, in the past, the identity of the customer did not go beyond the name of the account holder, that is no longer the position now as the information includes the identity of the beneficial owner; and
While account opening forms do not (of themselves) come within the category of banker’s books, it is the “declaration of beneficial ownership that such a form may contain that, upon entry into the bank’s permanent transactional record, stands as an entry in a banker’s book.”
Therefore, the High Court dismissed SETL’s appeal but varied the order made below to order discovery of “Any form, declaration or written communication sorted and filed by CS or DB in relation to the respective bank account that records the identity of the ultimate beneficial owner of that account or of the monies in it.” (at [42])
Significance. This decision makes clear that banking secrecy, in Singapore, is a creature of statute. Hence, when taking up a discovery application against a bank, or when resisting a discovery application against a bank, it is important to bear in mind that you need to consider which legislative provision applies before asserting banking secrecy.
It is also important to remember that as modern banking practice now requires the record of the beneficial owner of an account, information pertaining to the beneficial owner of a bank account can be subject to a discovery order, though, as illustrated by the Court’s decision, the scope of discovery can still be restricted as the Courts will be careful to ensure that the discovery request is not too broadly worded, leading to the disclosure of documents that are protected by banking secrecy.
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