Tournier v National Provincial and Union Bank of England

The case of "Tournier v National Provincial and Union Bank of England" [1924] 1KB 461 (CA), clarified English law on the banker's duty of confidentiality. [McClean, David [http://books.google.com/books?id=9WPLwaQ7YjUC&printsec=frontcover#PPA266,M1 "International Co-operation in Civil and Criminal Matters"] (p.266) Oxford University Press, 2002] There is an implied contractual term between banks and their customers that the bank will not divulge information to any third party without express or implied consent to do so. The duty is not absolute for the bank may disclose information where the disclosure is under compulsion of law, where there is a duty to the public to disclose and where the interests of the bank require disclosure. It is arguable that a similar duty is implied in the relationship between an individual and his accountant, financial adviser and trustee.

Tournier had an overdraft facility with the National Provincial and Union Bank of England. He had made arrangements to make payments toward the reduction of the overdraft, but after only three instalments had ceased to make further payments. Tournier was the payee of a cheque drawn by Woldingham Traders Ltd. Rather than deposit the cheque in his account with the defendant bank, he endorsed the cheque to a customer of the London City and Midland Bank. The defendant bank came to know about the cheque by virtue of the fact that Woldingham was a customer. Upon seeing the cheque presented for payment the manager rang the appropriate branch of the London City and Midland Bank to enquire as to the identity of their customer. It was learned that the endorsee was a bookmaker, a person who accepts and pays off bets. The manager then rang the employers of Tournier and had conversations with two of the directors. The actual contents of that conversation are not clear, but it was alleged that the manager informed them that Tournier was having dealings with a bookmaker. As a consequence of that communication the employer refused to renew Tournier's contract of employment.

Tournier sued both for defamation and for breach of contract. He lost at first instance and appealed on the grounds that the judge had instructed the jury erroneously. The Court of Appeal held that a banker owes his 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. This duty arises between a banker and customer upon the opening of an account and continues beyond the time when the account is closed (termination of the contract). It covers all transactions concerning the account and information obtained by virtue of the relationship between the banker and its customer, including information attained from other sources, such as a credit reference agency. [ [http://www.bankingcode.org.uk/pdfdocs/Banking%20Code%20Guidance%20March%202005%20FINAL.pdf The Banking Code: Guidance for Subscribers] (p.38) British Bankers' Association, March 2005] The duty is qualified by a few exceptions however, laid down in the Tournier case and more recently confirmed in "Elli Christofi v Barclays Bank Plc" [2000] 1 WLR 937, although this case related to information already available to the public ie. a caution at HM Land Registry.

The case held that the duty of confidentiality confers privilege (the right to refuse to divulge information obtained in a confidential relationship) on bankers from disclosure when supported by statute. However, this obligation of confidence is subject to qualification at both common law and by way of statute. [ [http://www.financial-ombudsman.org.uk/publications/ombudsman-news/45/45_bankers_duty.htm The banker's duty of confidentiality to the customer] Ombudsman News (issue 45) Financial Ombudsman Service, April 2005] The Tournier case sets out these qualifications and also gives circumstances when disclosure must occur, if required by:—

*Compulsion of law, for example a court order under Section 29 of the Data Protection Act 1998 (1998 cap.29)
*Public interest (see "Pharaon and Others v Bank of Credit and Commerce International SA (in liquidation)" [1998] )
*Interests of the bank. This would occur, for instance, in proceedings by the bank against a customer claiming repayment of an overdraft, where the bank must state details of the amount of the overdraft on the face of a summons which is, of course, a public document
*Express or implied consent of the customer. Express consent should be in writing stating specifically the purpose for which the consent to make disclosure has been given. An example of implied consent is a reference a banker might be requested to provide to a third party on behalf of the customer

There is also no breach of confidence if the disclosure occurs whilst under obligation in the course of proceedings (see "El Jawhary v Bank of Credit and Commerce" [1995] ). Therefore any order of the court will override the general duty of confidentiality. Indeed, "Christofi v Barclays Bank" [1998] 2 All ER 484 held that material disclosed pursuant to statute is not covered by confidentiality even if it is was originally received in confidence. While the duty of confidentiality can be overridden by order of the courts, the right of the police and other public bodies to order disclosure is limited. Disclosure without a court order can only be obtained if the disclosure is for (a) the purpose of prevention or detection of crime, (b) the apprehension or prosecution of offenders, or (c) the assessment or collection of any tax or duty or of any imposition of a similar nature. [ [http://www.opsi.gov.uk/acts/acts1998/ukpga_19980029_en_5#pt4-l1g29 Data Protection Act 1998] (1998 cap.29) s.29(1)] The usual method of obtaining information under this legislation is by way of a standard letter to the Controller of Information at the bank but, if the Controller of Information is not content that the grounds are satisfied they do not have to disclose.

A banker's duty of confidentiality is overridden by potential danger to the national interest however. In times of war, for example, a bank would have a public duty to disclose information relating to a particular customer to the authorities, if it had knowledge of that customer trading with the enemy.

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