The Court of Appeal (Civil Division) handed down judgment in the case of Shah and Another v HSBC [2010] EWCA Civ 31 on 4th February 2010. The case concerned an appeal against an order of the High Court granting summary judgment in favour of HSBC (‘the bank’), in respect of a claim for damages brought by Mr. Shah and his.

In July 2006 Mr. Shah transferred $28 million to the bank from an account held by Credit Agricole, explaining upon doing so that this was for a short time only, due to the fact that there was a risk that he was being impersonated by an unidentified person. The claim arose out of the bank’s failure to execute four separate money transactions on behalf of Mr. Shah during the time in which the money was being held.

In compliance with statutory reporting obligations under the Proceeds of Crime Act 2002 c. 29 (POCA), HSBC contend that upon becoming suspicious that Mr. Shah was involved in money laundering the bank made an authorised disclosure (see section 338 POCA) to the Serious Organised Crime Agency, with a view to obtaining the ‘appropriate consent’ (see section 335 POCA) to action Mr. Shah’s requests. Upon becoming aware of the ongoing investigations into Mr. Shah’s financial affairs, and having been refused access to information as the concerns over Mr. Shah’s financial affairs, Zimbabwean authorities transferred assets held by the Reserve Bank of Zimbabwe on his behalf from high-yield to low-yielding treasury bonds. Mr. Shah claims that as a result of the bank’s delay, he suffered losses of up to $331 million in accrued interest which he now seeks to recover in damaged from HSBC.

Allowing the appeal on limited grounds, the court held that although judges should utilise their powers under Part 24 of the Civil Procedure Rules (SI 1998/3132) in appropriate cases, it is in the interests of justice that a case not be summarily dealt with unless all relevant facts have already been satisfactorily investigated (see Equitable Life Assurance v Ernst and Young [2003] EWCA Civ 1114). Following the case of R v Da Silva [2007] 1 WLR 303, the court held that although the bank did not have to prove that the suspicion was held on ‘reasonable grounds’, the appellants were entitled to proceed with their claim in order to put the bank to proof on the suspicion which it alleged it had.

On the issue of whether Mr. Shah was entitled to information as to the state of his affairs given the constraints placed on the bank by the ‘tipping-off’ provisions contained in section 333 of POCA, the court held that there was at least an arguable case that the bank as agent to Mr. Shah was obliged to provide him with information. In this respect the appeal was also allowed to succeed.