February 26, 2021
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The UK Bankers’ Books Evidence Act (“BBEA”) has been on the statute books for well over a century. It provides for certain procedural rules that are specifically applicable to banks, including for the inspection of banking records. In the recent judgment of Wangzhou Meng v HSBC Bank Plc [2021] EWHC 342 (QB), handed down in connection with high profile foreign extradition proceedings, the English High Court took a narrow approach to the types of material that may be obtained, and the parties who may obtain them, under the BBEA.
The Claimant (a CFO of a telecommunications equipment company) sought disclosure under Section 7 of the BBEA of certain documents by the Defendant (HSBC) said to be relevant in Canadian proceedings for her extradition to the U.S. Under the BBEA, the court has a discretion to permit inspection of entries in “ledgers, day books, cash books, account books and other records used in the ordinary business of a bank” by “any party to a legal proceeding.”
The Claimant’s employer was subject to criminal proceedings in the U.S. for allegedly conducting business with Iran in breach of U.S. Sanctions. The Claimant was accused of making misrepresentations to HSBC to induce it into clearing U.S. dollar transactions relating to such business on behalf of her employer. The U.S. authorities sought to extradite her from Canada so that she could be prosecuted as a co-defendant. The Claimant’s application for disclosure under the BBEA focused on documents said to be relevant to the alleged misrepresentations, which were not otherwise disclosable in the extradition proceedings.
The Court considered whether:
On all three issues, the Court found in favour of the Defendant, and the Court refused the Claimant’s application for inspection of the relevant materials.
The court noted that the term “legal proceeding” was used throughout the BBEA and, in most instances, necessarily referred to U.K. proceedings specifically. Although the reference to “legal proceeding” in Section 7 was not necessarily so limited, it was appropriate to assume that Parliament intended that the term be interpreted consistently throughout the BBEA.
Further, were the section to extend to foreign proceedings, it would fly in the face of existing statutory frameworks for obtaining evidence in aid of foreign proceedings. Under those frameworks, requests for documents invariably have to come from the foreign Court, not the parties to the foreign proceeding. The section was therefore limited to applications by parties to U.K. legal proceedings.
Considering the authorities, the Court found that Section 7 of the BBEA was concerned with transactional records—it did not cover everything recorded by a bank in the course of its business, only materials which evidence “concrete banking actions.”
The scope of materials which could be sought was therefore narrow, and did not extend, for example, to records kept by the bank for regulatory purposes. Extending the scope of the BBEA in that way would also be difficult to apply in practice and would likely give rise to further disputes as to the reason why specific records were retained. Where appropriate, materials falling outside the scope of the BBEA could be sought by way of third-party disclosure.
As none of the materials sought by the Claimant could be considered transactional records, they were not disclosable under the BBEA.
The Court would not have exercised its discretion to require disclosure in any event—the Claimant was seeking to circumvent provisions preventing disclosure of such materials in the foreign extradition proceeding, and it was not necessary for the English Court (as opposed to the Canadian Court) to consider whether granting the application was necessary to ensure the extradition proceedings were fair.
Meng v HSBC should be of some comfort to banks. It provides reassurance that the BBEA cannot be used by anyone involved in court proceedings anywhere in the world as a backdoor for obtaining disclosure in the English Court of broad categories of documents from banks. Nonetheless, the case serves as a useful reminder that it still remains possible for parties to U.K. proceedings to use the BBEA to access transactional records held by banks in appropriate circumstances.
