The duty that the bank owes to the customer under Kenya law is the duty of secrecy.
There are situations when the banks could be in their right to disclose.
A
banker is under an obligation of secrecy under the Banking Contract
regarding his customers’ affairs. This obligation is a legal obligation
arising out of the contract. A breach of that duty on the part of the
banker will expose the banker to liability. In other words a banker is
not generally permitted to disclose the affairs of his customers to 3rd
parties. The duty is not an absolute duty because there are exceptions
when a bank is at liberty to disclose the affairs of the customer.
The leading authority on this subject is the case of
Tournier v. National Provincial and Union Bank of England. (1924) 1 KB 461
It
was held in that case that it is an implied term of the contract
between a banker and its customer that the banker will not divulge to 3rd
persons without the consent of the customer express or implied either
the state of the customer’s account or any of his transactions with the
bank or any information relating to the customer, acquired through the
keeping of the customer’s account unless the banker is compelled to do
so by order of a court, or the circumstances give rise to a public duty
of disclosure or the protection of the banker’s own interests require
disclosure.
The facts briefly
The
Plaintiff was a customer of the Defendant bank. A cheque was drawn by
another customer of the Defendant’s in favour of the Plaintiff who
instead of paying it into his own account endorsed it in favour of
another person who had an account at another bank. On return of the
cheque to the Defendant the manager enquired from the other bank to whom
this cheque had been paid and the information given was that it was
paid to a bookmaker. That information was disclosed by the Defendant to
3rd persons and the Plaintiff brought an action against the
bank and the holding was that the disclosure constituted a breach of the
Defendant’s duty to the Plaintiff and that although the information was
acquired not through the Plaintiff’s account but through the drawer of
the cheque, the information was none the less acquired by the defendants
during the currency of the Plaintiff’s account and in their character
as bankers.
The classic statement is by Bankes L.J at page 472
“In
my opinion it is necessary in a case like the present to direct the
jury what are the limits and what the qualifications of the contractual
duty of secrecy implied in the relation of banker and customer. There
appears to be no authority on the point. On principle I think that the
qualifications can be classified under four heads:
(a) Where disclosure is under compulsion by law;
(a) Where there is a duty to the public to disclose;
(b) Where the interests of the Bank require disclosure;
(c) Where the disclosure is made by the express or implied consent of the customer.
He goes on to say “the
duty of secrecy does not cease the moment a customer closes his
account. Information gained during the currency of the account remains
confidential unless released under circumstances bringing the case
within one of the classes of qualifications I have already referred to.
Again the confidence is not confined to the actual state of the
customer’s account it extends to information derived from the account
itself.”
Tournier v. National Provincial and Union Bank of England (1924) 1 KB 461
Judgment of Scrutton J.
“I
have no doubt that it is an implied term of bankers contract with this
customer that the bank shall not disclose his account or the transaction
relating thereto except in certain circumstances. The circumstances
in which disclosure is allowed are sometimes difficult to state. I think
it is clear that the bank may disclose the customer’s account and
affairs to an extent reasonable and proper for its own protection (as
when a bank is collecting or suing for an overdraft. Or to the extent
reasonable and proper for carrying on the business of the account as in
giving a reason for declining to honour cheques when there are
insufficient assets or when ordered to answer questions in the law
courts or to prevent frauds or crimes.
I
think also that the implied legal duty towards the customer to keep
secret his affairs does not apply to knowledge which the bank acquires
before the relation of banker and customer was in contemplation or after
it ceased or to knowledge derived from other sources during the
continuance of the relation. The banks can by express agreement provide
for circumstances when the bank may be at liberty to disclose.
Judgment of Lord Atkins
Intercom Services Limited & Other v. Standard Chartered Bank Limited Civil Case No. 761 of 1988 E.A. L. R 2002 Vol. 2 391
Judgment of Visram J.
The
facts in this case are that a Mr. James Kanyita Nderitu was a director
of 4 companies Intercom Services Ltd, Inter State, Swiftair, and Kenya
Continental Ltd. In 1985 Mr. Nderitu received a cheque for 17 Million
shillings drawn by Customs & Excise in favour of his company
Intercom Services Ltd. And he banked it on the persuasion of the Branch
Manager of Standard Bank Westlands and it was common ground or it was
conceded that, that cheque represented a substantial amount of money in
those days. One Saturday Mr. Nderitu went to Westlands Branch of
Standard Chartered Bank and deposited that cheque there. The account
was relatively new having been opened some 8 days prior to the
depositing of the cheque. The bank accepted the cheque without raising
any questions as it appeared to be proper on the face of it. The cheque
was specially cleared and on the following Monday the Bank manager
telephoned Mr. Nderitu and informed him that his superiors thought the
deposit was somewhat unusual and he was requested to provide some
documentary proof of payment.