Mcgregor

Recently, the media has been consumed with the politically charged issues surrounding the alleged donation of $31M by the multinational corporation, Trafigura Beheer, to the People's National Party (PNP). In the face of accusations of impropriety and potential economic fall-outs arising from questions of transparency, corruption and lack of accountability, very little has been said about the legal issue which surfaced during the debate.

While the Government is busy attempting to do damage-control, the Opposition has insulated itself regarding the source of the information which precipitated the debate by saying that the information was divulged in the national interest. The fact is that confidential banking information was disclosed to a third party. How does the law treat this issue?

Obliged confidentiality

It is generally accepted that medical doctors, attorneys-at-law and bankers are obliged to keep information related to their patients and clients confidential. Anyone who has an account at a bank has a legally binding contract; and an implied term of that contract is that the banker will not divulge to third persons, without the express or implied consent of the customer, either the state of the customer's account or any of its transactions with the bank or any information relating to the customer which was acquired through the keeping of the account.

There are exceptions. The bank may be compelled to disclose the information by order of the court, pursuant to relevant banking regulations (e.g. in relation to money laundering), the circumstances may give rise to a public duty of disclosure or the bank may be obliged to make the disclosure in order to protect its own interests. However, the improper disclosure of confidential information can have dire consequences for a bank.

One example arose in the case of Jackson and another v Royal Bank of Scotland plc. The customer imported goods from Thailand and sold them to X in Lancashire. The bank facilitated the transaction by extending a line of credit to the customer. In handling one of the letters of credit, the bank mistakenly forwarded one of the Thai company's original invoices to X.

Mark-up

With this information, X was able to determine the level of mark-up which the customer applied to the goods before selling them to it. In this way, it learnt that the customer was earning more profits from the trading relationship than it was. X then terminated its arrangement with the customer and ordered the goods directly from the Thai supplier.

The customer's claim against the bank to recover damages for breach of contract and loss of the opportunity to make further profits from the trading relationship with X was successful. The judge held that the bank was in breach of a duty of confidence under its contract with the customer not to disclose to X any of the documents relating to the customer's purchase of goods from the Thai supplier. The House of Lords agreed with that finding and held that, the fact that X might have been able to obtain the information by requesting a direct quote from the Thai supplier, did not absolve the bank of liability for mistakenly disclosing confidential information to the customer. The customer was awarded four years' lost profits.

Sherry-Ann McGregor is a partner and mediator with the firm Nunes, Scholefield, DeLeon & Co. Send feedback and questions to lawsofeve@yahoo.com.