Forbes (Robert) v National Commercial Bank Jamaica Ltd and NCB Trust & Merchant Bank
| Jurisdiction | Jamaica |
| Judge | Beswick J. |
| Judgment Date | 15 November 2007 |
| Judgment citation (vLex) | [2007] 11 JJC 1502 |
| Date | 15 November 2007 |
| Court | Supreme Court (Jamaica) |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
BANKING LAW - Loan indebtedness - Whether loan repaid
BANKING LAW - Securities for loan - Right to retain - Nominal damages
Mr. Robert Forbes, the claimant, has been a good customer of National Commercial Bank for many years. His uncontradicted evidence is that he has limited reading and writing skills having left school when he was 12 years old in order to sell in the market with his parents. He is now a businessman and he says that he relies on his banker to advise him about banking matters.
The manager of National Commercial Bank (JA.) Ltd (NCB), Cross Roads Branch, Mr. Kimel Allen, was Mr. Forbes' good friend and handled Mr. Forbes' account. Mr. Forbes says that Mr. Allen was aware of his "literacy challenges" and that Mr. Allen would simply present him with documents and tell him that they were in respect of his account, with no detailed explanation of the documentation. Mr. Forbes would sign the documents because he trusted Mr. Allen and relied on him for much of the decision-making concerning his accounts.
Mr. Forbes had bought the Olympia Crown Hotel and wished to purchase furniture and fittings to make it habitable. His evidence is that he applied for a loan of $10 million from NCB for that purpose but was told that he was not qualified for such a loan. NCB said that his income could only support a loan of $7 million. He applied for that amount in June 1993 and in September 1994 he "secured the loan" and was able to draw down on it by issuing cheques on his chequing account though no funds were directly given to him.
At the request of Mr. Allen, in June 1993, Mr. Forbes had signed a "commitment letter" which he believed pertained to that $7 million loan.
Still later, in March 1995, Mr. Forbes signed another "Commitment Letter" which he believed concerned the $7 million loan. He has signed documents in blank but as far as he knew they all pertained to his $7 million loan.
In early 1994 Mr. Allen had asked him for two blank signed cheques. He noticed in his January 1994 bank statement that there was a credit to his account for $5.6 million followed by a withdrawal of the same amount on the same day. His March 1994 statement reflected another $5.6 million credit with withdrawal the same day of the same amount. He had not written these cheques nor was he aware of having received these monies. He was therefore puzzled and asked Mr. Allen and other bank officers for an explanation. He received none.
On one occasion, Mr. Forbes went to make a payment towards the $7 million loan and was informed that his loan payment had been increased. It appeared to be nearly twice the amount that he had expected to pay.
The bankers told him that NCB Trust & Merchant Bank (NCB Trust) had earlier issued him a loan of $4.5 million that he had not paid and therefore a second loan for $6.5 million had been issued to him to enable him to repay that $4.5 million loan. That, they explained, resulted in the increased monthly payment, which had then become due. Mr. Forbes, for his part, said that he had made no application for such a loan and was unaware of receiving such funds or of such funds being put to his use.
Evidence from the defendants is that before the proceeds of the loan were disbursed to him, Mr. Forbes was in fact utilizing an overdraft facility that the bank converted to a commercial paper loan to help Mr. Forbes' indebtedness. After Mr. Forbes had secured the $7 million loan, Mr. Allen, the Manager, told him that he could not service the debt and should therefore subdivide the hotel and sell half the rooms.
Fearing that he would otherwise lose his property, Mr. Forbes engaged lawyers to start that process. Mr. Allen assisted by engaging the services of a realtor but no lots were sold. Mr. Forbes thereafter noticed a change in Mr. Allen's attitude towards him.
Mr. Forbes continued to repay the $7 million loan while requesting that NCB investigate the $6.5 million loan about which he alleged that he knew nothing.
Meanwhile NCB had in its custody three Duplicate Certificates of Title for land that Mr. Forbes had given to them to provide security for the $7 million loan that he was repaying.
In December 1997, Mrs. Claudette Stephens of NCB Trust asked Mr. Forbes to sign a mortgage deed for a mortgage registered on his 3 titles for $27 million. She informed him that that was the amount that he owed the Trust. This was almost three (3) years after the letter of commitment for the $7 million loan had been issued.
His evidence is that he had already contested the $6.5 million loan and his records showed that he would have already repaid the $7 million loan with interest. However, he signed under protest and told her that he was signing so as not to have any quarrel with them and risk losing his property. His evidence is that he told Mrs. Stephens that when the bank investigated they would see their error and would cancel the $27 million loan. NCB Trust registered the $27 million mortgage, some four years after Mrs. Stephen's request.
After sometime Mr. Forbes wished to have his Duplicate Certificates of Title returned. Entreaties to NCB to return his Duplicate Certificates of Title fell on deaf ears.
Consequently, Mr. Forbes filed suit and now seeks relief against NCB and NCB Trust and claims:
Return to the plaintiff of all securities held by the defendants as security for the said loan especially the Duplicate Certificates of Title registered at Volume 1205 Folio 388 and Volume 1200 Folios 657 and 658.
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1. A Declaration that the Mortgage or loan of $7 million has been fully repaid together with the interest thereon.
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2. A Declaration that the alleged Mortgages or loans of $6.5 million and $27 million are null and void.
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3. That the defendants account to the Plaintiff for all sums paid to the Defendants to liquidate the loan of $7 million.
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4. A Refund of any sum overpaid by the plaintiff to the defendants or any sum wrongfully deducted from the plaintiff's account with the defendants.
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5. Interest at the Commercial Bank rate.
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6. Damages for breach of the Duty of Care.
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7. Costs.
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8. Such further and other relief as this Honourable Court deems fit.
NCB & NCB Trust deny any wrongdoing and allege that Mr. Forbes was well aware of all loans granted to him, had signed for all of them and had failed to repay them. They claim that the Duplicate Certificates of Title should remain in their possession as securities for the outstanding monies owed to them by Mr. Forbes. The bank claims that Mr. Forbes received $27 million as a mortgage, incorporating the original $7 million and $6.5 million loans, interest and penalty charges.
NCB and NCB Trust allege that Mr. Forbes has continued to default on payments on his debts and now owes them $ 42,673,442.00, with interest and costs. They counterclaim for that sum alleging it to be the mortgage amount with interest.
The main issues therefore are:
A. Was any loan made by NCB and by NCB Trust to Mr. Forbes?
B. Was he aware of any such loan?
I. Loan of $7 million
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a. Was any loan made by NCB and by NCB Trust to Mr. Forbes?
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b. Was Mr. Forbes aware of any such loan(s)?
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c. If there were any such loan(s), have they been repaid?
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d. Do NCB and NCB Trust have the right to retain Mr. Forbes' Duplicate Certificates of Title?
It is agreed that Mr. Forbes received a loan for $7 million from NCB Trust in September 1994. The Duplicate Certificates of Title, which the NCB Trust held, were in the possession of the Trust as security for the $7 million loan.
II. Loan of $6.5 million
NCB Trust alleges that Mr. Forbes did not properly service the $7 million loan. According to Mr. Justin Seaton, Manager's Assistant of NCB, Mr. Forbes consulted with NCB and thereafter obtained a second mortgage loan of $6.5 million from NCB Trust to clear the interest arrears on the $7 million loan and also on an outstanding commercial paper debt of $4.6 million.
NCB and NCB Trust seek to rely on three promissory notes, two dated August 17, 1993, for $4 million and November 3, 1993 for $1.6 million respectively and one for May 3, 1994 for $5.6 million representing a...
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