Dextra Bank & Trust Company v Bank of Jamaica
C.L. D46 of 1993
Richard Mahfood, Q.C., Dennis Goffe, Q.C. & Mrs. Susan McGhie-Sang instructed by of Myers, Fletcher & Gordon for plaintiff.
Dr. Kenneth Rattray Q.C., David Muirhead, Q.C. & Douglas Leys instructed by Mrs. Pamela Wright for defendant.
Tort - Conversion — Plaintiff by writ of summons claimed damages for conversion by the defendant of its cheque drawn by the plaintiff on its account in the name of the defendant acting under a mistake of fact and intending to make a loan to the defendant in exchange for a promissory note by the defendant — Defendant alleged that it changed its position in circumstances in which it would be inequitable to ask it to make any repayment to the plaintiff — Finding that the defence of change of position was available to the defendant and accordingly succeeded — Plaintiff's claim failed.
By writ of summons the plaintiff claims damages for conversion by the defendant of its cheque no.4949 for US$2,999,999.00 drawn by the plaintiff on its account with the Royal Bank of Canada in New York, in the name of the defendant, acting under a mistake of fact and intending to make a loan to the defendant and in exchange for a promissory note by to the defendant for $3,000,000; the property in the cheque remained with the plaintiff, the defendant having denied the existence of a loan and contending that it purchased the cheque and gave full value for it. Alternatively, the plaintiff claims damages in the sum of US$2,999,000 for money had and received, the proceeds of the said cheque received being the proceeds of the said cheque received, by the defendant for the use of the plaintiff. The plaintiff claims that the defendant's allegation that it purchased the cheque is false, the alleged purchase knowingly fictitious, foreign currency transactions, the returns of its agents fictitious and that was the proximate cause of the defendant's act of payments in its alleged purchase, which could not confer title in the cheque on the defendant.
The defendant denies that it converted the plaintiff's cheque and contends that the plaintiff by making the cheque payable to the defendant intended that the property pass to the defendant and such property did pass when the cheque was delivered to the defendant, for which cheque the defendant gave valuable consideration in the course of a foreign currency purchase by foreign exchange agents; that there was no loan transaction; that the plaintiff owed a duty to the defendant and was negligent and in the circumstances the plaintiff's negligence is the proximate cause of its loss; that the plaintiff by its conduct is estopped from denying that it gave the defendant title to the said cheque, and it did not receive the said sum to the plaintiff's use to cause it to be obliged to repay it to the plaintiff, and it changed its position in circumstances in which it would be inequitable to ask it to make any repayment to the plaintiff.
The facts, inter alia, are as hereunder.
The plaintiff company (Dextra) which holds a bank licence under the laws of the Cayman Islands, at a meeting of its board of directors on the 13th day of January 1993, passed the following resolution, exhibit 1,
“It is resolved that the bank provide a loan to the Bank of Jamaica for 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 Attorneys”
The resolution resulted from a pronouncement to the said board, by Peter Blackman, its director/secretary that he had been,
“… approached on an urgent basis by Myers & Alberga …..to provide a loan of US$3 million for 3 months to the Bank of Jamaica on a Promissory Note,”
Messrs. Myers & Alberga, were attorneys-at-law, for Dextra, whose chairman Mr. Jack D. Ashenheim, the plaintiff's witness, was employed to Myers & Alberga as “… financial consultant and accountant.”
Darryl Myers, attorney at law and partner in Messrs. Myers & Alberga and also director of the plaintiff, had spoken to Blackman by telephone on the 11th day of January 1993, and on the same date wrote to the plaintiff, referring to the telephone conversation.
“…I confirm that this firm has been contacted by Mr. John Wildish, on behalf of the Bank of Jamaica, requesting a short term loan of US$3 million for three months at 16% per annum free of withholding tax …. evidenced by a promissory note signed by the Bank.
There appears to be some urgency ….”
Blackman, on the 13th day of January 1993, advised Darryl Myers of the plaintiff's resolution.
On the instructions of Jack Ashenheim, Darryl Myers drafted a promissory note, (exhibit 4) which contained, inter alia, the names of the parties,
“Bank of Jamaica the Borrower” and ‘Dextra …. the Lender,’ the amount of the loan, ‘..Three Million United States Dollars (US$3,000,000.00..,’ the duration of the said loan, and the rate of interest ‘…16%…,’ payable ‘…every thirty days.’”
Clause 3(c) exhibit 4, provided that the outstanding balance of the loan is repayable,
“(c) on the calling of a general election in, Jamaica”
The said exhibit also provided that the interest should be net of taxes and that the law of the contract is the law of the Cayman Islands.
Exhibit 4 was given to one John Wildish who subsequently returned it to Myers with amendments. Exhibit 6, displays the amendments. Written onto the typed copy of the said document, are amendments to, the rate of interest, “24” which previously was “16%;” clause (e) was deleted; the law of the contract was stated as “Cayman Islands Jamaica” and the jurisdiction of the courts originally stated as “Cayman Islands,” had the added words “and Jamaica.”
Darryl Myers, on the 15th day of January 1993, sent to John Wildish, an telefax, exhibit 8, dated the said date, which read inter alia,
“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 laws of the Cayman Islands.
(3) Clause 3(e) - the deletion of this subclause 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 and meaning 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 in appropriate. A document cannot be construed in accordance with the laws of two countries …..
I request you show this letter to the Bank of Jamaica and if they have, any further problems with current let them call us direct to discuss them as going through you as intermediary is a waste of your time.”
Myers on the said 15th day of January, 1993, sent a further telefax message exhibit 9 to “Mr. John Wildish/Mr. Michael Phillips,” which reads,
“We have checked with Myers, Fletcher & Gordon so you need not trouble Noel Levy.
We have checked the Bank of Jamaica Act, and it seems to us that the Bank must sign:-
a. by the Governor or Deputy Governor and another director so authorised, affixing the seal, or
b. If the seal is not used (and it is not necessary to affix the seal to a promissory note) by the Governor or any other director or officer authorised to do so, pursuant to a Board decision.
In either case, a resolution of the Board will be required to take the loan and to execute the promissory note. You must therefore get from the Bank a certified copy of the resolution unless Mr. Beckford, whom I assume has the authority, tells you that this is notary. There may be a general resolution already in effect. If not, this is going to cause a delay, but we have no choice. If we are to lend US$3 Million, we must be sure that the note is properly authorised and signed.”
Another telefax, exhibit 16, dated the 18th day of January, 1993, was sent by Darryl Myers to John Wildish, it read,
“Please see attached promissory note.”
Exhibit 5, is headed “Promissory Note,” and contains, inter alia, the names of the parties, the amount of the loan, the rate of interest “24% payable every thirty days”, and “…free and clear and net of all taxes”, the mode of repayment, events which would require immediate repayment, the law of the contract, and the jurisdiction of the court to be Caymanian and dated “20th day of January 1993.” This document bears a signature “R E Straw” above the designation “Governor/Deputy...
To continue readingREQUEST YOUR TRIAL