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Bankers Trust Orders

Author: Nicola Sharp  25 April 2023
2 min read

Nicola Sharp of Rahman Ravelli details a case that considered the criteria for granting Bankers Trust relief outside of the jurisdiction.

The case of Scenna & Anor v Persons Unknown Using the Identity "Nancy Chen" & Ors [2023] EWHC 799 (Ch) involved a group of unidentified individuals who used the false identity of "Nancy Chen" to perpetrate a fraudulent scheme.

The scheme was one that is an all-too-familiar story. It involved the creation of a fake investment company that promised high returns to its investors but was, in fact, a front for a Ponzi scheme. The individuals behind the scheme disappeared with the investors' money, leaving them with significant financial losses of approximately $2.9 million.

The claimants, Scenna and Anor, were Canada-based investors who had put a substantial amount of money into the fake investment company. When they discovered that the company was a fraud they brought proceedings against the unknown individuals behind the scheme, along with various banks with whom the money was being held in various accounts.

The claimants argued that the unknown individuals had committed a number of legal wrongs, including fraud, deceit, and conspiracy to defraud. They sought a range of remedies, including damages, injunctive relief, and an order to freeze the assets of the individuals behind the scheme.

Criteria

The judgment traverses well-trodden ground in respect of granting disclosure orders outside of the jurisdiction of England and Wales. Whilst Judge Pickering KC had originally granted a disclosure order in October 2022, following an urgent ex parte application made by the claimants, this was challenged by the defendant banks.

The five criteria for granting Bankers Trust relief are set out in Kyriakou v Christie Manson and Woods Ltd [2017] EWHC 487 (QB) as follows: 

  1. there must be good grounds for concluding that the property in respect of which disclosure is sought belongs to the applicant;
  2. there must be a real prospect that the information sought will lead to the location or preservation of the relevant property;
  3. the order should not be wider than necessary;
  4. the interests of the applicant in getting the disclosure must be balanced against the detriment to the respondent; and
  5. appropriate undertakings must be given in respect of the use of the disclosed information and/or documents.

For the purposes of this matter, points one to three and point five were not disputed and were deemed to be met. However, as is often the case with such orders, it was point four that was disputed. The defendant banks argued that if such a disclosure order were made, there would be a breach of their confidentiality requirements under Australian law (this being where they are based) and, as a result, they would face severe financial and reputational damage. They did, however, advise that if the claimant made a similar application within the Australian jurisdiction, such an application would not be opposed and would be complied with.

This point was addressed by way of expert evidence for both sides. Having considered the evidence, Judge Pickering KC sided with the banks’ position.

Furthermore, consideration in this case was given to PD6B and the powers it grants the court to make the disclosure orders in question. It was established, for various reasons, that there was not a serious issue to be tried and that England was not clearly and distinctly the best forum. As such, the disclosure order previously made was discharged and/or set aside.

Conclusion

This matter serves as a reminder that despite the courts of England and Wales having their finger on the pulse when it comes to providing appropriate avenues for relief for those who have found themselves the victims of fraud, the new gateway under PD6B is not something that can be used indiscriminately. One must be mindful as to the different jurisdictional pressures and responsibilities placed on those entities out of the jurisdiction who find themselves party to these types of proceedings through no fault of their own.

Nicola Sharp C 09983

Nicola Sharp

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nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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