Dextra Bank and Trust Company Ltd v Bank of Jamaica
| Jurisdiction | Jamaica |
| Judge | FORTE J.A. , BINGHAM, J.A.: |
| Judgment Date | 30 November 1999 |
| Neutral Citation | JM 1999 CA 47 |
| Judgment citation (vLex) | [1999] 7 JJC 3005 |
| Court | Court of Appeal (Jamaica) |
| Date | 30 November 1999 |
TORT - Conversion - Moneys had and received - Whether the appellant wrongfully converted cheque toits own use
The plaintiff sued the defendant in conversion and in the alternative for moneys had and received to the use of the plaintiff, in the sum of Three Million US dollars (US$3,000,000). In its further amended Statement of Claim, the plaintiff alleged the following:
"(1) The plaintiff has suffered damage by the defendant wrongfully depriving the plaintiff of its cheque No. 4949 for US $2,999 ,000 drawn on the plaintiff's account with the Royal Bank of Canada in New York, payable to the Defendant, and the Defendant converting the same to its own use."
Then the following particulars were pleaded:
"(a) The aforesaid cheque was drawn by the Plaintiff in favour of the Defendant with the intention of making a loan to the defendant in exchange for and in consideration of the issue of a Promissory Note by the defendant for Three Million United States Dollars (US$3,000,000. The plaintiff received such note dated the 20 th January, 1993 bearing the name of the defendant,
(b) The defendant lodged the cheque, the property of the plaintiff, to its account with Citibank for its own use and benefit.
c) The cheque remained the property of the Plaintiff and the Defendant had no right to lodge the cheque to its account with Citibank since the defendant has denied the existence and/or validity of the loan transaction,
(d) The Defendant lodged the cheque to its account with Citibank in violation of the Plaintiff's proprietary legal rights and wrongly claiming to have acquired the property in the cheque from O. Dunn."
The appellant then alleged that the respondent wrongfully converted the said cheque to its own use and wrongly deprived the appellant thereof, whereby the appellant has suffered damage in the amount of the said cheque. In the alternative, the plaintiff/appellant claimed for money received by the defendant/ respondent for the use of the appellant, the money being the proceeds of the cheque which was cashed and converted into money by the defendant/respondent. It should be noted that the allegations made in para 1 (a) in respect of a promissory note, was subsequently discontinued by the appellant and the claim did not proceed on that basis. After a trial lasting eighty one (81) days and spanning a period from the 6 th June, 1994 to the 4 th November, 1996, judgment having been reserved, was entered on the th October, 1997 for the defendant. It is from this order that the plaintiff/appellant now appeals.
Before outlining the issues which are for resolution, a brief summary of the facts is necessary. I should note, that at the trial, a great deal of evidence concerning matters, which in my view are of no relevance to the issues, occupied a great deal of time, and to some extent, a rehearsal of that evidence was allowed before us. In giving my opinion on the issues, I intend to refer only to such aspects of the facts which I consider relevant to the determination of those issues.
The plaintiff/appellant is a Bank registered in the Cayman Islands and carrying on business there. It holds an unrestricted bank licence which allows it to conduct the following business:
-
(i) lending money outside of Cayman;
-
(ii) all other normal functions of banking business except retail banking and dealing with residents in Cayman.
The respondent is the Central Bank of Jamaica. At the time when the occurrencies which led to this action were taking place, Jamaica was having difficulty accessing foreign currency. As a result the respondent took the decision to become more aggressive in the market to bring in foreign currency into the Central Bank... (the "Bank" /"BOJ") In order to accomplish this, certain agents were appointed to pursue the foreign dollars and to purchase them on behalf of the Bank, and of course to rum them over to the Bank. These agents were facilitated with advance cash to enable them to purchase the dollars. This was done by opening accounts with the Bank in their names to the extent of J$5M which was later reduced to $4M. The agents would use the amounts in the accounts to purchase the dollars, and after the dollars were deposited with the respondent, the accounts would be replenished by payment to the agents of an amount equivalent to what they had paid for the dollars. In purchasing the dollars the agents would of course pay by cheque drawn in favour of the vendor of the dollars, or in the name requested by the vendor.
There were two agents appointed at this time, who were involved in dealing with the cheque, the subject of this action. They are Richard Jones, and Wycliffe Mitchell. These persons quite unauthorised, dealt with others, who would seek out dollars for sale to the agents. Two of these with whom they dealt were John Wildish and Michael Phillips.
It is the deeds of these two gentlemen that planted the seed out of which this case grew. In short, they went to Cayman, and spoke with Darryl Myers of the legal firm of Myers and Alberga, indicating to him that the BOJ was in need of a loan of U$3M, and that they were asked to make representations to the appellant Bank "Dextra" for such a loan. Mr. Myers, being a director of Dextra, approached the Board as a result of which a resolution was passed by the Board as follows:
"It is resolved that the bank provide a loan to the Bank of Jamaica for three (3) months on a Promissory Note and that the Chairman be and is hereby authorised to negotiate and approve the terms of the loan and Promissory Note in consultation with the Bank's Attorney".
In keeping with the resolution, Mr. Myers drafted a promissory note, describing the BOJ as the borrower and Dextra, the lender of the sum of $3M with interest at 16% per annum. The rest of the note is of no relevance here, as the note could only have been admitted to support the appellant's contention that the appellant had always intended the cheque to pass only as a loan to the respondent and not for any other purpose. However, the manner in which Wildish and Phillips dealt with it, and the plaintiff/appellants' conduct in a transaction which they considered to be a loan are matters which will be of great significance when the issues in the appeal are to be examined and resolved.
After the Promissory Note was drafted, it was given to Wildish who in due course returned it to Myers with amendments allegedly made by the respondent. Then the following correspondence is of importance. On the 15 th January, 1993, Myers sent to Wildish a telefax which reads as follows:
"As lawyers for Dextra Bank, we comment as follows on the amendments to the promissory note proposed by the Bank of Jamaica:-
(1) "Clause 1 — I see you were successful with the interest rate.
(2) Clause 3 (d) — The reference is to the Companies Law of the Cayman Islands ... clause 9 says that the note is to be construed in accordance with the law of the Cayman Islands
(3) Clause 3(e) — the deletion of this sub-clause is not acceptable and this point is non-negotiable.
(4) Clause 4 — We believe that the person who vetted this document on behalf of the Bank of Jamaica has misunderstood the purpose of clause 4 ....
(6) Clause 6 — The remaining amendments to this clause are not acceptable as Dextra requires receipt of its interest net of all taxes in Jamaica... Dextra must get the agreed rate of interest in its hands.
(7) Clause 9 — These amendments are inappropriate. A document cannot be construed in accordance with the laws of two countries..."
The above correspondence demonstrates that the appellant Bank treated with Wildish and Phillips as its agents. If this was not enough to confirm this, then the following testimony of Jack Ashenheim, the Chairman of the appellant Bank leaves no doubt:
r instructed Dextra to draw a cheque payable to BOJ for US$3,000,000 less $1,000 legal fees and send immediately to the offices of Myers and Alberga. When the cheque arrived I gave it to Myers who handed it and two copies of the note to Phillips. Myers instructed Phillips to take the two copies of the note and cheque to BOJ and see personally that the note was signed by the Governor or Deputy Governor and other authorised officers and on receipt of the said note to hand the cheque to BOJ and take note and have it stamped by the Stamp Commissioner 'exempt stamp duty -' and sent note to Myers and Alberga".
Phillips did no such thing. Instead he brought the cheque to Jamaica, and together with Orville Beckford and John Wildish offered the cheque to Jones and Mitchell for sale to the BOJ, using the procedures put in place by the BOJ for buying dollars on the open market. Beckford is a former employee of the BOJ who at the time though still employed to the BOJ had no authority from it to engage in the purchase of foreign currency. It was Beckford, in keeping with his usual practice to obtain US dollars on the market for Jones, who offered the subject cheque of $2,999,000 to Jones to purchase US$2M, and Mitchell to purchase the balance. The offer was accepted by the Bank of Jamaica agents, who by virture of the advance provided by the BOJ, purchased the cheque on behalf of the Bank, paying therefor several cheques written in the names of various persons for the Jamaica equivalent value of the Dextra cheque. No mention of the promissory note was ever made to the respondent, who through its agents Jones and Mitchell purchased the cheque and gave...
To continue reading
Request your trial