Walsh v National Irish Bank Ltd

JurisdictionIreland
CourtSupreme Court
JudgeMr. Justice Clarke
Judgment Date25 Jan 2013
Neutral Citation[2013] IESC 2
Docket Number[S.C. No. 267 of 2007]

[2013] IESC 2

THE SUPREME COURT

Murray J.

Hardiman J.

Fennelly J.

Clarke J.

MacMenamin J.

[Appeal No: 267/2007]
Walsh v National Irish Bank Ltd
In the Matter of s. 908 of the Taxes Consolidation Act, 1997 as substituted by s. 207(i) of the Finance Act, 1999
Between/
Paul Walsh
Applicant/Appellant

and

National Irish Bank Limited
Respondent

TAXES CONSOLIDATION ACT 1997 S908

FINANCE ACT 1999 S207(I)

WALSH v NATIONAL IRISH BANK LTD 2008 2 ILRM 56

TAXES CONSOLIDATION ACT 1997 S906(A)(1)

FINANCE ACT 2000 S68(C)

CENTRAL BANK OF IRELAND 1971 S9

R v GROSSMAN 1981 73 CR APP REP 302

TAXES CONSOLIDATION ACT 1997 S906(A)

BANKERS BOOK EVIDENCE ACT 1935 (ISLE OF MAN) S7

BLAYNEY & GRACE, IN RE 2001-03 MLR 13

COMPANIES ACT 1990 S8

BANKERS BOOK EVIDENCE ACT 1935 (ISLE OF MAN) S2

BANKERS BOOK EVIDENCE ACT 1935 (ISLE OF MAN) S6

TOURNIER v NATIONAL PROVINCIAL & UNION BANK OF ENGLAND 1924 1 KB 461

GLADSTONE v BRUNNING CP 2004/146 7.3.2006

BRITTAIN v IMPEX SERVICES WORLDWIDE LTD CP 2003/96 26.1.2004

WINE v WINE CP 2007/10 29.5.2007

PHAROAN v BANK OF CREDIT & COMMERCE INTERNATIONAL SA 1998 4 AER 455

REVENUE LAW

Taxation

Disclosure - Statutory powers of Revenue - Financial institutions - Right to apply to court for disclosure of bank account documents and information - Right to inspect and take copies as evidence - Customer accounts in foreign jurisdiction - Whether financial institution - Whether legislation applies to bank branches outside jurisdiction - Whether legislation has extra-territorial effect - Whether order to furnish information and documentation to be made - Whether clear that disclosure order would breach law of foreign jurisdiction - Whether order can be fashioned to obtain view of courts of foreign jurisdiction - Courts - Jurisdiction - Extra-territorial effect - Comity of courts - Whether order sought would have extra-territorial effect - Jurisdiction of court to make an order with extra-territorial effect - Rules of international law - Presumption legislature limited to its jurisdiction - Intention of legislature - Interpretation of statute - Conflict of laws - Contract - Proper law - Whether proper law of contract relevant to order sought - Whether proper law of banking contract Ireland or the Isle of Man - Test for displacing proper law - Whether banking contract governed by law of place where that account was held - Solid grounds required to displace proper law of jurisdiction where account held - Whether infringement of sovereignty of Isle of Man - Banking - Banker and customer - Duty of confidentiality - Tax evasion - Whether duty of confidentiality absolute - Public interest requirements - Whether duty of confidentiality ceased upon account being closed - A-G v Guardian Newspapers (No 2) [1990] 1 AC 109; Barclays Bank Plc v Taylor [1989] 1 WLR 1066; Chemical Bank v McCormack [1983] ILRM 350; Cooper Flynn v Radio Telefís Éireann [2000] 3 IR 344; [2001] 1 ILRM 208; Cripps Warburg v Cologne Investment [1980] IR 321; FDC Co Ltd v Chase Manhattan Bank (Unrep, Hong Kong Court of Appeal, Huggins VP, 17/10/1984, No 65); Gladstone v Brunning (CP 2004/146) (Unrep, Isle of Man High Court, Deemster Doyle, 7/3/2006); In re Impex Services Worldwide Ltd [2004] BPIR 564; Joachimson v Swiss Bank Corporation [1921] 3 KB 110; Libyan Arab Bank v Bankers Trust Co [1989] 1 QB 728; Libyan Arab Foreign Bank v Manufacturers Hanover Trust Co [1988] 2 Lloyd's Rep 494; Libyan Arab Foreign Bank v Manufacturers Hanover Trust Co (No 2) [1989] 1 Lloyd's Rep 608; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548; Mackinnon v Donaldson, Lufkin and Jenrette Corpn [1986] 1 Ch 482; McCormack v Campbell [1930] St R Qd 228; National Irish Bank Ltd v Radio Telifís Éireann [1998] 2 IR 465; Northern Bank Limited v Edwards [1985] IR 284; In re Norway's Application (Nos 1 & 2) [1990] 1 AC 723; Petition of Blayney and Grace (2001-2003) MLR 13; Pharaon v BCCI [1998] 4 All ER 455; R v Grossman (1981) 73 Cr App R 302; Reg v West Yorks. Coroner, Ex p Smith [1983] 1 QB 335; Sierratel v Barclays Bank [1998] 2 All ER 821; Tournier v National Prudential and Union Bank of England [1924] 1 KB 461; Wine v Wine (CP 2007/10) (Unrep, Isle of Man High Court, Deemster Doyle, 29/5/2007) and X AG v A bank [1983] 2 All ER 464 considered - Contractual Obligations (Applicable Law) Act 1991 (No. 8) - Convention on the Law Applicable to Contractual Obligations 1980, articles 3 and 4.Taxes Consolidation Act 1997 (No. 39), ss. 906A and 908 - Application refused by High Court; Appeal allowed by Supreme Court but order deferred to allow application to court in Isle of Man (2006/13MCA - McKechnie J - 4/5/2007 and 267/2007 - SC - 25/1/2013) [2007] IEHC 325 and [2013] IESC 2

Walsh v National Irish Bank Ltd

Facts: The appellant was an authorised officer of the Revenue Commissioners who sought disclosure of certain information from the respondent bank. The appellant had applied for disclosure of three categories of information pursuant to s. 908 of the Taxes Consolidation Act 1997, the first two of which were approved in the High Court. The third category concerned the personal and financial information of all customers of the respondent"s Isle of Man branch who had received or paid a figure above €6,350 from or to a Northern Bank Ltd account. This was rejected in the High account and the subject of this appeal.

The respondent accepted that the appellant had fulfilled the requirements of the Taxes Consolidation Act 1997 in bringing the application, but averred that the Isle of Man branch was not governed by the Irish regulatory regime and outside the court"s jurisdiction. It was further argued that if jurisdiction was accepted, then the court would have to weigh up its obligation to disclose against the Isle of Man"s obligation of privacy. The appellant argued that in that instance, an order for disclosure should be made which included measures to alert the Isle of Man"s courts so they make consider applications of any affected parties. It was accepted that the court"s decision whether to make a disclosure order was discretionary and could be subject to conditions.

Held by Clarke J that the initial consideration should be whether the Isle of Man branch was governed by the Irish Central Bank, because if not, the proceedings could go no further. There was no doubt that the respondent was a financial institution as defined in the Taxes Consolidation Act 1997. However, the issue here was whether the Isle of Man branch could be considered a separate entity. In the instant case, the respondent conducted business through the Isle of Man whilst retaining its ordinary network of branches in Ireland and so the correct approach was held to be that the branch was subject to the laws of both jurisdictions.

In relation to the argument advanced by the respondent that an order should be refused due to the laws of privacy of the Isle of Man, it was noted that there was a distinct lack of evidence before the courts to come to a conclusion as to whether there would be a conflict between the jurisdictions. It was determined that in the absence of clarity, the best course of action was first to consider whether an order could ordinarily be made if the extra-territorial issue was absent, and then decide what the best course of action was in consideration of comity between the courts. It was determined that by making an order but not initially enforcing it, interested parties could invoke their rights before the Isle of Man courts which would determine whether a conflict arose. There would be no breach of the principles of comity between the courts as the Isle of Man would be given full recognition and have an opportunity to make their own rulings. These rulings would then help govern whether to enforce the court order or not.

As a result, an order of disclosure pursuant to Taxes Consolidation Act 1997 was made subject to the condition that it would be deferred for 12 weeks which the appellant could apply to extend during that period if it was shown a relevant application was pending before the Isle of Man courts. It was further a condition that the parties were at liberty to apply to the court not to make the order on the basis of a ruling of the Isle of Man"s courts that such an order would be a breach of their laws.

Order made subject to conditions

1

Judgment of Mr. Justice Clarke delivered the 25th January, 2013.

2

Judgment delivered by Clarke J [Nem diss]

1. Introduction
3

2 1.1 There have been many developments in the law relating to both disclosure obligations and confidentiality in recent years. It is fair to say that the law has developed in different ways in different jurisdictions. Given the cross border nature of many of the issues with which courts in various jurisdictions are concerned, it is hardly surprising that conflicts may arise between disclosure obligations owed in one jurisdiction and potential duties of confidence or obligations to respect privacy owed in other jurisdictions. What are the courts to do when a clear disclosure obligation in one jurisdiction potentially or arguably conflicts with a possible duty to retain confidentiality or to respect privacy in another jurisdiction? There are, often, no easy answers to such questions.

4

3 1.2 The backdrop to these proceedings involves a possible obligation on the part of the respondent ("the Bank") to make disclosure of what would ordinarily be considered confidential information concerning customer accounts held at its branch in the Isle of Man. The disclosure is sought by the applicant/appellant in his capacity as an authorised officer of the Revenue Commissioners. In that context, I will refer to the applicant/appellant as "the Revenue" save where the context requires personal reference. I...

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