A recent application flowing from Irish High Court proceedings recently came before the Chancery Division of the High Court of the Isle of Man. The court considered an application under Section 7 of the Bankers Books Evidence Act 1935 on behalf of two individuals, in their capacities as inspectors, who were appointed to investigate and report on the affairs of the National Irish Bank Limited, a banking entity incorporated within the Republic of Ireland and carrying on business in the Isle of Man. The inspectors were appointed by order of the High Court of Ireland, upon application of the Irish minister for enterprise, trade and employment.
Essentially, the inspectors sought a wide-ranging order requiring the bank in the Isle of Man to disclose a range of financial matters that are ordinarily covered by the banker/customer duty of confidentiality.
The respondent bank sought directions from the Manx High Court as to whether the proceedings in Ireland pursuant to which the inspectors were appointed were sufficient 'legal proceedings' for the purposes of Section 7 of the 1935 act, as they were taking place outside the Isle of Man. It further asked whether release to the inspectors of the information sought was sufficiently in the public interest to outweigh the duty of confidentiality between the bank and its customer.
The court first analyzed the position in England, as the 1935 act is based on the Bankers Books Evidence Act 1879 of the English Parliament, and considered Pollock v Garle (1898) 1 CH 1. It then reviewed the English decision in Re: Pergamon Press Limited [1970] 3 ALL ER 535 and the authorities cited within that decision by Lord Denning, together with the Australian decision of McCormack v Campbell (1930) SR QD 228.
Having further reviewed the local decision of R v Grossman (1981 - 83) MLR 20, Deemster Cain held that for the purposes of the 1935 act the term 'legal proceedings' referred to legal proceedings within the Isle of Man only, and not to those taking place in other jurisdictions. In addition, he ruled that on the facts of the particular case the order sought was too wide, in terms of the disclosure sought.
This decision brings to an end the practice that has prevailed in the Isle of Man for the past four years, whereby the High Court has regularly granted discovery relief - usually ancillary to a mareva/freezing order - where there were no substantive proceedings taking place in the Isle of Man but substantive proceedings were underway or pending elsewhere.
Subsequent comments by Cain in an unrelated and unreported decision appeared to summarize the current Isle of Man position as follows:
- So-called 'stand alone' discovery relief will no longer be granted in the Isle of Man in aid of substantive proceedings elsewhere under the Norwich Pharmacal principle or the 1935 act.
- In the absence of proceedings in the Isle of Man, the court may still contemplate injunctive relief on a 'stand alone' basis where there are substantive proceedings elsewhere if the discovery aspects of any injunctive relief will be limited to the defendant, rather than an unrelated third party.
- Where orders under the 1935 act or under the inherent jurisdiction of the court are sought from third parties, substantive proceedings against them must also be commenced in the Isle of Man.
The approach of the court is in part reflective of the provisions of the Civil Jurisdiction Bill 2001 which, when enacted, will provide that the court shall have power to grant interim relief where proceedings have been or are to be commenced outside the Isle of Man. However, under the bill relief may be refused if the court believes that the fact that it has no jurisdiction - other than that stemming from this provision - in relation to the subject matter of the proceedings makes it inexpedient for the court to grant the relief. Further, the definition of 'interim relief' does not include provisions for obtaining evidence.
There is nothing in the case at hand to suggest that the High Court of the Isle of Man will not continue to grant other types of injunctive relief in support of foreign proceedings in anticipation of the bill's passage into law. Equally, these is nothing to prevent an application to the Isle of Man court for the production of information or documentation under the provisions governing the taking of evidence from a potential witness for use in foreign proceedings. Indeed, this may now have to be the usual approach in cases where hitherto there had been thought to be a quicker and sometimes wider-ranging remedy under the 1935 act.
For further information please contact Christopher Arrowsmith at Simcocks by telephone (+44 1624 620 821) or by fax (+44 1624 620 994) or by e-mail ([email protected] ).
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