Tournier unbound
Alan L Tyree

Every banking law student knows that Tournier v National Provincial & Union Bank of England [1924] 1 KB 461 established the bank's duty of confidentiality to its customer. Like many famous cases, Tournier is often quoted and seldom read. It is worth recalling the details.

Tournier was a customer of the defendant bank. His account was in overdraft and he agreed to make regular payments to reduce it. He paid only three instalments.

A cheque was drawn on the defendant bank in favour of Tournier. Instead of depositing the cheque into his account, he indorsed it to a third party who had an account at the London City and Midland bank. When the cheque was presented for payment, the manager noticed it and rang the deposit bank. He learned that the depositor was a bookmaker.

The bank manager than rang Tournier's employer asking for Tournier's private address. In the course of the conversation, he told the employer that Tournier was indebted to the bank and that he appeared to be paying a bookmaker. The employer refused to renew Tournier's employment.

Tournier sued in defamation and for breach of contract. As is well known, the Court of Appeal held that the bank was liable for breach of an implied term of the banker/customer contract. The judgment quoted most often is that of Bankes LJ who held that there was a duty of confidentiality, but that it is not absolute. He identified four situations in which the bank might disclose information. They are where:

• the disclosure is under compulsion of law;
• there is a public duty to disclose;
• the interests of the bank require disclosure; and
• the disclosure is made with the express or implied consent of the customer.

There have, of course, been many subsequent cases which have clarified the scope and content of the duty and of the exceptions. The reader should refer to [[BROKEN LINK: cite:@weaver03:_austr], paragraph 2.3400ff] for a full discussion of the Tournier duty of confidentiality.

In the 1980s and 1990s, building societies and credit unions adopted the view that Tournier applied only to banks. After all, the defendant in Tournier was a bank. It is hard to know if this attitude was merely a disingenuous self-serving one or if their advisors simply had not read Tournier.

The arguments in the Tournier judgment certainly provide no basis for excluding non-bank financial institutions. The judgments clearly support extension at least to any financial institution that provides its customers with more than the most elementary of services.

In Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97, the Federal Court indicated that the duty of confidentiality should extend to a merchant bank. In [[BROKEN LINK: cite:@Tyree95b]] it was argued that Tournier obviously applied to building societies and credit unions. Reciting the same arguments, the Supreme Court of Tasmania confirmed that the duty applies to credit unions: see Bodnar v Townsend [2003] TASSC 148. The fact that the court did not cite the aforementioned article is simply a reflection of the obviousness of the arguments.

AVB v TDD [2014] EWHC 1442 (QB) was a request for an injunction to restrain the use of private and confidential information. The claimant also asked for damages. The information was, in part, about the relationship between the claimant and the defendant and information that she had learned about AVB's family and acquaintances.

The relationship between the claimant and the defendant was that of client and sex worker. AVB was a solicitor in his 60s, TDD a woman in her twenties. TDD was attending "a prestigious college in London" studying law. Because her parents disapproved of some of her actions, they withdrew financial support and she turned to prostitution to make a living.

The parties met in March 2012 when AVB responded to one of TDD's advertisements published through an escort agency. The relationship was stormy at times, but continued for at least a year during which time AVB assisted TDD financially and in making employment contacts in legal firms.

The request for an injunction arose, in part, because TDD emailed AVB's family and the partners of his law firm, and because she threatened to expose more details of their relationship. In part, these threats were an attempt to get AVB to pay money which she claimed that he owed for for sexual services.

The court found that AVB had not upheld his end of the bargain, observing (at para 198):

…TDD gave her consent induced by his agreement to make payments and confer other benefits on her, to which AVB did not adhere, or intend to adhere. AVB manipulated and deceived TDD into giving consent by other promises and assurance of payment or of help in her career, and in her disputes with others. He also induced her submission by threatening TDD with litigation when she sought to press her claims. … I accept her evidence that he was a manipulator and a bully. I accept that TDD's claims to be entitled to the payments she demanded were sincere and were warranted, notwithstanding that they were not legally enforceable.

For present purposes, the importance of AVB v TDD is that the court turned to Tournier to settle the disclosure issue. In particular, the court said (at para 66):

In Tournier the court was considering the duty of confidentiality owed to a customer by a bank, and in particular the qualifications to that duty, but there seems no reason why the following passage should not also apply in a confidential business relationship where some service other than banking is what is provided (so the passages should read substituting the words "service provider" for the word "Bank)".

The passage referred to is from the judgment of Scrutton LJ at p 486:

…the obligation not to disclose information such as I have mentioned is subject to the qualification that the bank have the right to disclose such information when, and to the extent to which it is reasonably necessary for the protection of the bank's interests, … as against their customer…

Tugendhat J then stated plainly the application of Tournier to the case before him:

Can a man who refuses to pay a prostitute who has consented to sex in exchange for money or money's worth, but who the prostitute claims to be in breach of that promise, seek to prevent the prostitute from making any complaint at all to any third parties, either by a Confidentiality Agreement, or by the general law of confidentiality or privacy? Not in my judgment. The principle in Tournier cited in para 66 above applies in this case.

In summary, the court in AVB v TDD considered that Tournier applied at least to all confidential business contracts, even those which, like the contract between a prostitute and client, are unenforceable. The limits of disclosure may, of course, be different for different types of contracts, but the principles remain the same.

In Brighton v Australia and New Zealand Banking Group Ltd [2011] NSWCA 152, the issue was whether the bank owed guarantors a duty of confidentiality. The guarantees all included the Code of Banking Practice. Clause 22 of the Code acknowledges that it has obligations under the Privacy Act 1988 as well as a general duty of confidentiality. It goes on to limit the duty of confidentiality in four circumstances which are identical to those set out in Tournier.

The Campbell JA, with whom Giles and Hodgson JJA agreed, performed a detailed analysis of the Code, concluding that its provisions worked only in favour of a customer of the bank. It so happened that two of the guarantors were customers of the defendant bank and two were not. The absurd result was that two guarantors were owed a duty of confidentiality by the bank and two were not.

The guarantors also argued that there was an implied term imposing a duty of confidentiality. Campbell JA referred to Tournier at para 54, taking a very narrow view of its application:

… while [the Tournier] obligation of confidentiality is implied into the contract between a banker and customer, a guarantor of a debt of a bank customer is not, simply by virtue of being a guarantor, a customer of the bank. Thus, that recognised legal incident of banker/customer contracts does not apply to the contracts of guarantee between ANZ on the one hand and [the two non-customers] respectively on the other.

Campbell JA then went on to consider if the duty could be an implied term under the well known test in BP Refinery (Westernport) Pty Ltd v Hastings [1977] HCA 40. He found that the contract of guarantee would be effective and workable without any such implied term. It is hard to escape the conclusion that Tournier might have had a different conclusion if decided by the modern NSW Court of Appeal.

If Tugendhat J's interpretation of Tournier is correct, then it would apply to the contract of guarantee. It would then be a matter of determining the type of information to which the duty applied.

Common sense would indicate that a guarantor may not wish the details of the arrangement to be disclosed. The expectations are entirely in line with those considered by the Tournier court.