Crawford (Donovan), Regardless Ltd, Alma Crawford and Balmain Brown v Financial Institutions Services Ltd

• Jurisdiction: Jamaica
• Judge: CORAM: WOLFE C.J.
• Judgment Date: 28 September 1999
• Judgment citation (vLex): [1999] 5 JJC 2501
• Court: Supreme Court (Jamaica)
• Date: 28 September 1999

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN COMMON LAW

BETWEEN

FINANCIAL INSTITUTIONS SERVICES LTD.

PLAINTIFF

AND

CNB HOLDINGS LIMITED

1ST DEFENDANT

AND

CENTURY NATIONAL DEVELOPMENT LIMITED

2ND DEFENDANT

AND

DONOVAN CRAWFORD

3RD DEFENDANT

AND

VALTON CAPLE WILLIAMS

4TH DEFENDANT

AND

BALMAIN BROWN

5TH DEFENDANT

AND

REGARDLESS LIMITED

6TH DEFENDANT

AND

FORDIX LIMITED

7TH DEFENDANT

AND

SPRING PARK FARMS

8TH DEFENDANT

AND

ALMA CRAWFORD

9TH DEFENDANT

BETWEEN

FINANCIAL INSTITUTIONS SERVICES LTD.

PLAINTIFF

AND

CNB HOLDINGS LIMITED

1ST DEFENDANT

AND

DONOVAN CRAWFORD

2ND DEFENDANT

AND

BALMAIN BROWN

3RD DEFENDANT

AND

VALTON CAPLE WILLIAMS

4TH DEFENDANT

AND

REGARDLESS LIMITED

5TH DEFENDANT

AND

DEBROC LIMITED

6TH DEFENDANT

BANKING LAW - Breach of fiduciary duty - Breach of contract - Whether plaintiff entitled to recover debt, damages or other compensation on behalf of Century National Bank - Whether grant of overdraft facilities done without proper and sufficient security

CORAM: WOLFE C.J

1 On the 28th day of April, 1998, it was ordered that the action in Suit CL 1997/C050 be consolidated with the action in suit CL 1996/C330.

2 Both actions were commenced in the names of Century National Bank Ltd. and Century National Building Society. On January 21, 1998, by Order of Miss Justice Beckford, Financial Institutions Services Limited was substituted as Plaintiff in both actions. Leave was granted to both the Plaintiff and the Defendants to make such consequential amendments to their pleadings as might be necessary.

3 CLAIM - Suit CL1996/C330

4 The Statement of Claim dated October 2, 1996, was amended, pursuant to an Order of the Master in Chambers dated December 19, 1996 and was further amended, pursuant to an Order of Miss Justice Beckford dated the 21st day of January, 1998.

5 The amended Statement of Claim contains sixty seven paragraphs. Laborious as it is, I am constrained to set them out as they explain in detail the relationship of each defendant to the plaintiff and the circumstances in which the liability of each defendant arises.

• " 1A. The Plaintiff is a company in which, pursuant to an Order of this Honourable court made on the 21st day of October, 1997, in Suit No. M-121 of 1997, the assets of Century National Bank Limited and all claims and rights to recover debt, damages or other compensation from persons liable to Century National Bank Limited are vested.

• 1B. Century National Bank Limited (hereinafter referred to as 'CNB") is and was at all material times a bank licensed under the Banking Act, 1992 and at all material times carried on business as bankers through various branch offices in the island of Jamaica. On July 10, 1996, the Minister of Finance assumed the temporary management of the Plaintiff pursuant to section 25 of the Banking Act.

• 2. The 1st Defendant is a company incorporated under the Companies Act and was at all material times the majority shareholder of CNB.

• 3. The 2nd Defendant is a company incorporated under the Companies act. The 3rd defendant owns 99.99% of the shares in the 2nd Defendant.

• 4. The 3rd Defendant was at all material times a director and the chairman of CNB , the 1st and the 2nd Defendants and a director of the 6th, 7th and 8th Defendants. The 9th Defendant is the 3rd Defendant's mother.

• 5. At all material times the 3rd Defendant, his wife Claudine, and his children Donovan and Sian, owned all the shares in the 6th Defendant.

• 6. At all material times the 3rd, 6th and 9th Defendants owned a majority of the shares in the 1st Defendant.

• 7. The 7th and 8th Defendants are companies incorporated under the Companies Act and were at all material times wholly owned subsidiaries of the 1st Defendant.

• 8. At all material times the 3rd Defendant was also the chief executive officer and an employee of CNB and was responsible for overseeing the day to day operations of CNB and he received a salary for these services.

• 9. At all material times, the 4th and 5th Defendants were directors and employees of CNB and received a salary for their services and the 5th defendant was the President of CNB.

• 10. At all material times the 4th Defendant was a director of the 1st Defendant, the 2nd Defendant and the 7th Defendant.

• 11. The 1st Defendant is indebted to the Plaintiff in the sum of $235,887,984.90 being the debit balance outstanding as at September 15, 1996 in respect of the 1st Defendant's current account with CNB.

• 12. Interest continues to accrue on the said sum of $235,887,984.90 at the rate of 65% per annum from September 16, 1996 until judgment or sooner payment.

• 13. By an instrument in writing made in or about the year 1991, the 2nd Defendant guaranteed to CNB payment of all sums due to CNB from the 1st Defendant. Despite demand, the 2nd Defendant has not paid the sums due to the Plaintiff from the 1st defendant or any part thereof.

• 14. The 2nd Defendant is indebted to the Plaintiff in the sum of $251,608,398.43 being the debit balance outstanding as at September 15, 1996, in respect of the 2nd Defendant's current account with CNB.

• 15. Interest continues to accrue on the said sum of $251,608,398.43 at the rate of 65% per annum from September 16, 1996 until judgment or sooner payment.

• 16. In order to induce CNB to grant the overdraft facilities referred to in paragraphs 11 and 14 hereof, and as security for its indebtedness to CNB , the 2nd Defendant created equitable mortgages by deposit of title deeds in favour of CNB over the lands comprised in the following certificates of title:-

  • a. Volume 1207 Folio 345 - property known as Barry & Lloyd

  • b. Volume 957 Folio 291 - property known as land part of Negril;

  • c. Volume 1237 Folio 151 - property known as Lot 4 Sterling Castle;

  • d. Volume 1237 Folio 578 - property known as Apartment 54 Fisherman's Point;

  • e. Volume 1209 Folio 914 - property know as Devon Penn, St. Andrew

  • f. Volume 914 Folio 93 - a farm in St. Elizabeth.

• 17. The 5th Defendant is indebted to the Plaintiff in the sum of $1,310,428.80 being the debit balance outstanding as at September 15, 1996 in respect of the 5th Defendant's current account with CNB .

• 18. Interest continues to accrue on the said sum of $1,310,428.80 at the rate of 65% per annum from September 16, 1996 until judgment or sooner payment.

• 19. The 6th Defendant is indebted to the Plaintiff in the sum of $5,180,590.63 being the debit balances outstanding as at September 15, 1996, in respect of the 6th Defendant's current accounts with CNB.

• 20. Interest continues to accrue on the said sum of $5,180,590.63 at the rate of 65% per annum from September 16, 1996 until judgment or sooner payment.

• 21. By an instrument in writing made in or about the year 1992, the 3rd Defendant and the 9th Defendant guaranteed to CNB payment of all sums due to CNB from the 2nd Defendant. Despite demand, the 3rd and 9th Defendants have not paid the sums due to the Plaintiff from the 2nd Defendant or any part thereof. This instrument of guarantee is a printed document which was executed in blank by the said 3rd and 9th Defendants on the understanding that the 2nd Defendant was the principal debtor whose total indebtedness was being guaranteed. By executing the document in blank the 3rd and 9th Defendants impliedly authorized CNB to complete it by inserting the 2nd Defendant's name, the approximate date on which it was executed, and the word "unlimited".

• 22. In order to induce CNB to grant the overdraft facilities referred to in paragraphs 11 and 14 hereof, and as security for their indebtedness to CNB:

  • a. The 3rd Defendant created equitable mortgages by deposit of title deeds in favour of CNB over the lands comprised in the following Certificates of Title:

    • i. Volume 1129 Folio 802 - 2A Sterling Castle, Red Hills

    • ii. Volume 1127 Folio 720 - Lot 5 Sterling Castle

  • b. The 3rd defendant and the 9th Defendant created equitable mortgages by deposit of title deeds in favour of CNB over the lands comprised in the following Certificates of Title:

    • i. Volume 1185 Folio 828 - Lot 1 Strata 298, Sterling Castle

    • ii. Volume 1185 Folio 829 - Lot 2 Strata 298 Sterling Castle, Red Hills.

    • iii. Volume 1185 Folio 832 - Lot 5 Strata 298, Sterling Castle

    • iv. Volume 1185 Folio 833 - Lot 6 Strata 298, Sterling Castle

    • v. Volume 1185 Folio 834 - Lot 7 Strata 298, Sterling Castle

• 23. The 7th Defendant is indebted to the Plaintiff in the sum of $2,469.80 and US$484,584.33 being the balances outstanding as at September 15, 1996, in respect of the 7th Defendant's current account with CNB, and a US dollar demand loan, respectively.

• 24. Interest continues to accrue on the said sums of J$2,469.80 and US$484,584.33 at the rate of 65% and 16% per annum, respectively, from September 16, 1996, until judgment or sooner payment.

• 25. The 8th Defendant is indebted to the Plaintiff in the sum of $35,615,443.31 being the debit balance outstanding as at September 15, 1996, in respect of the 8th Defendant's current account with CNB.

• 26. Interest continues to accrue on the said sum of $35,615,443.31 at the rate of 65% per annum from September 16, 1996 until judgment or sooner payment.

• 27. By an instrument in writing made in or about the year 1991, the 2nd Defendant guaranteed to CNB payment of ail sums due to CNB from the 8th defendant. Despite demand, the 2nd Defendant has not paid the sums due to the Plaintiff from the 8th Defendant or any part thereof.

• 28. The 3rd, 4th and 5th Defendants owed a duty of care and skill to CNB.

• 29. In breach of their said duty of care and skill the 3rd, 4th and 5th Defendants and each...