Principles of Lender Liability
Parker Hood
Published:
2012
Online ISBN:
9780191812040
Print ISBN:
9780198299035
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Principles of Lender Liability
Parker Hood
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Parker Hood
Pages
47–114
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Published:
October 2012
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Hood, Parker, 'Lender Liability for Breach of Confidence', Principles of Lender Liability (2012; online edn, Oxford Academic), https://doi.org/10.1093/law/9780198299035.003.0002, accessed 8 Aug. 2024.
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Introduction
The most important duty on a banker,1 which arises from the general banking contract, is the implied obligation to keep its customers’ financial details confidential.2 This duty is a qualified one, rather than an absolute one.3 Indeed, it has been said that ‘[t]he existence of an efficient banking system based on a confidential relationship between the individual banks and their customers is a central feature of a modern economy’.4 Because the duty is a limited one, ‘common sense’ needs to be used to determine these limits.5
1 No distinction is drawn between different types of lenders in this chapter. In Australia, it has been held that an implicit ‘contractual duty of confidence’ would apply to an investment or ‘merchant’ banker, or ‘financier’: see Winterton Constructions Pty Ltd v Hambros Australia Ltd (1993) 111 Australian Law Reports 649, 667, per Hill J.
2 Tournier v National Provincial and Union Bank of England [1924] 1 KB 461, 472, per Bankes LJ; see, too, Scrutton LJ at 480 and Atkin LJ at 484. The new Lending Code (March 2011) simply states that the lender will treat ‘personal information … as private and confidential, and [lenders] will provide secure and reliable banking and payments systems’: see ‘Section 1: Key Commitments’, para 15, bullet point 6; the detail on this is quite a bit less than the position under the now obsolete Banking Code (2008) and the Business Banking Code (2008). A duty of confidentiality could also be expressly set out in any written contract between the parties, although this is unlikely in a straight lending situation. It is to be noted that in the Tournier case, Tournier’s passbook indicated that the Bank’s ‘officers’ were under an obligation of ‘secrecy’ concerning ‘customer transactions’, see [1924] 1 KB 461, 463 and 484. The Tournier case has been approved by the Privy Council, see Robertson v Canadian Imperial Bank of Commerce [1994] 1 WLR 1493, PC. It has also been approved in other common law jurisdictions, see Smorgan v Federal Commissioner of Taxation (1976) CLR 475 (High Ct of Aust) and Canadian Imperial Bank of Commerce v Sayani (1993) 83 BCLR (2d) 167 (British Columbian Court of Appeal); the Canadian Supreme Court declined to give leave to appeal: [1994] 1 SCR (vi). A duty of confidentiality can also exist: (a) in equity, under English law, or the general law under Scots law; and/or (b) pursuant to the Human Rights Act 1998 (HRA): see paras 2.20–2.25 (‘non-contractual confidence’), and 2.26 and 2.161–2.198 (HRA).
Keywords: Breach of confidentiality, Data protection breaches, Remedies for lenders’ breaches, Criminal liability of lenders, Improper disclosure, Legal proceedings and monetary obligations
Subject
Forms of Crime IT and Communications Law Criminal Law Banking Law Restitution Contract Law Private International Law and Conflict of Laws Macroeconomics and Monetary Economics
Collection: Financial Banking Law
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