After four and half years, six reported decisions, three trips to the Court of Appeal and 27 days of trial, the High Court of Justice has today dismissed in its entirety Mr Shah and his wife’s claim for over US$300m against HSBC Private Bank (UK) Limited. This is a landmark decision that confirms a bank’s right to delay execution of a customer’s payment instructions and refuse to provide information in circumstances where the bank has a suspicion of money laundering that has been notified to the Serious Organised Crime Agency (“SOCA”).
Berwin Leighton Paisner LLP reporting on the case state that Mr and Mrs Shah (the “Claimants”) were customers of the Bank. Between 20 September 2006 and 28 February 2007, the Bank delayed the execution of four separate payment instructions given by the Claimants, including an instruction to transfer approximately US$28 million. The reason for the delay was that the Bank held a suspicion that the funds in the Claimants’ account were criminal property and it had therefore made an authorised disclosure to SOCA seeking consent to make the payments. In each case, whilst the Bank was waiting for a response from SOCA (SOCA has 7 working days to respond), the Bank told the Claimants that it was complying with its statutory obligations but declined to provide any further information to the Claimants or their solicitors. Once consent had been given, the Bank complied with the payment instructions except for one instruction which the Claimants had previously cancelled.
The Claimants lodged a claim against the Bank for breach of contract contending that the Bank’s failure promptly to carry out the payment instructions and to explain the reasons for not doing so had caused them substantial losses (over US$300m) in Zimbabwe. It was alleged that, upon hearing rumours that Mr Shah was suspected of money laundering in the UK, the Zimbabwean authorities became suspicious, froze and then seized Mr Shah’s assets.
At trial the court was required to consider the following key questions:
Did the Bank suspect money laundering? and
Did the Bank have a duty to provide information about the delay?
Mr Justice Supperstone of the Queen’s Bench Division rejected the Claimants’ claim in its entirety.