Manx Court Throws Out 'Fishing Expedition' Seeking Bank Details

by Jason Gorringe, Tax-News.com, London

29 May 2001

The Isle of Man Chancery Court last week dismissed an application by Irish court-appointed inspectors to inspect the books of the Douglas branch of National Irish Bank, calling it 'a fishing expedition'.

The inspectors, Mr Justice John Blayney and Tom Grace, were appointed by the Irish High Court several years ago with terms of reference which included the investigation of suspected ‘improper charging of interest to account of customers, improper charging of fees to accounts of customers and improper removal of funds from accounts of customers’.

The application to the Manx court sought access to a list of deposit accounts at the branch, the names and addresses of the account holders together with all account balances.

The 11-page judgment delivered by Deemster Cain discussed whether precedents existed to give the Court the power to make such an order in Manx law, and the propriety of giving details of the accounts of innocent third parties to the proceedings.

One such precedent was in the Chancery Court in 1979 when officers of the Inland Revenue came to the Island looking for permission to inspect and take copies of books in the Manx branch of Barclays Bank. Deemster Roy Eason had at that time refused the order saying the application was in respect of legal proceedings in Wales and could not, therefore, be make under Manx law, which only covered proceedings within the Island.

Deemster Cain observed that no notice of the application had been given to accounts holders in the NIB. ‘I am bound to say that I think the practice of making orders ex parte in respect of accounts of persons who are genuinely third parties, unconnected with the proceedings is a most undesirable one,’ he added.

The Deemster quoted other precedents ruling that such orders should be strictly limited and not be allowed if they could be regarded as ‘fishing licences’ into the affairs of third parties; he said that in the present case, the details sought by the inspectors were an intrusion into those affairs and were ‘in the nature of a fishing expedition’.

His judgment concluded: ‘For these reasons I consider that even if this court had power to make an order ... in relation to the investigation into the affairs of the bank, it would not have been appropriate to have made an order in the terms requested by the petitioners.’

Some reassurance for those who fear that the FATF and the OECD between them have stripped away legal protections enjoyed offshore!

Recommended