Olint Corporation Ltd v National Commercial Bank Jamaica Ltd and Michael Hylton
| Jurisdiction | Jamaica |
| Judge | JONES, J. |
| Judgment Date | 18 April 2008 |
| Judgment citation (vLex) | [2008] 4 JJC 1801 |
| Court | Supreme Court (Jamaica) |
| Date | 18 April 2008 |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE CIVIL DIVISION
INJUNCTIONS - Interim - Threat to close claimant's account - Failure to satisfy Anti-Money Laundering policy - Whether there is a serious issue to be tried - Whether damages are an adequate remedy - Banking Act - Fair Competition Act
In January 1720 in the United Kingdom, the South Sea Company offered shares to the public at the modest price of £128.00. The directors of the company in an effort to whip up interest in the company's shares, published claims of great success and far-fetched tales of South Sea riches to entice investors. One such claim was that it was a "company for carrying out an undertaking of great advantage, but nobody to know what it is". By the end of June 1720, the share price rose to £1080.00. As the events unfolded, it led to what is euphemistically called the "South Sea Bubble".
Unlike the South Sea Company, Olint Corp. Limited (hereinafter called the Claimant) provides customer services to its members as a private club. It is widely reported in the public media to be involved in what is said to be the lucrative business of foreign currency trading, but no one knows for sure. It is also widely reported to be one of a group of "alternative investment schemes" currently engaged in a legal fight (at the Jamaican Court of Appeal) with the Financial Services Commission over whether or not it offered "securities" as a "prescribed financial institution" and therefore should be regulated. It is also widely reported in the public media to be competing successfully with the local banking industry (inclusive of the Defendant) for US$ investment funds. It is concerned about its ability to provide service for its customers if National Commercial Bank Jamaica Limited goes ahead with its threat to close its accounts.
National Commercial Bank Jamaica Limited (hereinafter called the Defendant), despite a willingness to maintain a banking relationship with the Claimant, is increasingly anxious of the Claimant's continued tardiness in providing requested information in order to comply with its obligations under the "Know your Customer Guidelines" (KYC) and "Due Diligence" (DD) provisions under the "Bank of Jamaica Guidance Notes on the Detection and Prevention of Money Laundering and Terrorist Financing Activities".
Despite numerous attempts to ease the anxiety each side remains apprehensive; one grumbling that the other has failed to comply with request for information to satisfy (KYC) and (DD) provisions of the Bank of Jamaica and the other that there is a breach of the Banking, and the Fair Competition Acts. On November 14, 2007, the music stopped, and the dancing ceased. The Defendant decided that the courtship must come to an end as all it received from the Claimant in answer to its request for specific information was high hopes, fine words, but no results In a short tersely worded letter, the Defendant gave as its reason the Claimant's repeated failures to provide audited financial statements and on what it says is a reassessment of its risk in doing business with them.
The Claimant complains that the maximalist stance adopted by the Defendant in deciding to summarily close its accounts will wreak havoc with its business and the consequential damage caused cannot be adequately compensated by way of damages. It obtained an interim injunction to prevent the closing of its accounts and now ask that this be extended pending the trial of this matter. For the Defendant, however, the Claimant's defiance is a critical test of what it says is its resolve to comply with the Bank of Jamaica's Guidance Notes. It has strenuously objected to the application for the extension.
BACKGROUND FACTS
The Claimant was incorporated on October 14, 2005, under the laws of Jamaica with its registered office at 30 Dominica Drive in the parish of St Andrew, with the principal object being to provide customer service. The Defendant is a licensed and regulated commercial bank with offices at 32 Trafalgar Road in the parish of St. Andrew.
The Claimant began its banking relationship with the Defendant in November 2005 by opening a local currency chequing account and a US$ savings account. The US$ savings account was for the purpose of its customer service business to facilitate club member encashments Between 2005 and June 2007 the Claimant had an average monthly throughput ranging from US$5,000,000.00 to US$20,000,000.00. This information was provided to the Defendant in the Customer Information Form presented at the time of opening of the account In addition, the Claimant indicated that; its principal line of business was "club member" care, its principal source of funds was from "club members; and that the purpose of the account is "to facilitate payment to and receive funds from 'club members' and meet Operational Expenses".
The Defendant wrote to the Claimant on August 8, 2007, requesting certain documents The Defendant says that this was not the first request and followed oral requests that had been made before which had not been complied with. By letter dated November 14, 2007, the Defendant wrote to the Claimant and advised it that "the Bank has decided that it does not wish to continue to operate the accounts of the Claimant "and its affiliates The reason stated by the Defendant is the "the combined effect of the Claimants failure to provide the documents requested and NCB's assessment of the risks and challenges involved with maintaining a banking relationship with the Claimant led to the decision to close the accounts". The Defendant went on to indicate that it would be closing accounts bearing numbers 171-017-866, 171-011-647, 174-079-587 and 171-017-866 on December 17, 2007 (unless the Claimant does so before) It also indicated that it would stop accepting deposits on the account as at November 21, 2007.
By letter dated November 21, 2007, the Claimant responded to the Defendant saying that it had complied with all the Defendant's requests in order to satisfy the Defendant's Anti-Money Laundering Policy, Know Your Customer and other local and internationally acceptable control measures designed to protect the integrity of the banking system. It said that the short notice to close the banking accounts and establish new banking relationships would cause disruptions and major inconvenience to its "club members". It indicated that it would use its best efforts to establish alternative banking relationships in the shortest possible time, however, additional time will be required to effect a smooth transition that being the case. It requested an additional three months ending March 14, 2008, to be allowed to operate the accounts.
The Defendant responded to this letter through its Regional Manager, Retail Banking Christopher Denny in letter dated November 22, 2007 He advised that, the Claimant was wrong to suggest that it had complied entirely with the Defendant's request In the letter Christopher Denny said:
"in any event, you are no doubt aware that the decision to terminate the banker-customer relationship may be made by either the bank or the customer, without the requirement for the terminating party to have to or articulate specific reasons Provision of all the information to NCB does not, therefore, place us under any duty to provide banking services or remain otherwise obligated to you (or any other customer) indefinitely. Instead we are entitled (as you are) to make our own assessment of the liabilities, risks and benefits of continuing the relationship and to make a decision accordingly...
The Defendant by virtue of that letter extended the time to close the accounts to January 14, 2008 The Claimant thereafter in letter dated November 23, 2007, requested an extension of time to March 14, 2008, a meeting with the Defendant, and indicated that it had a difference of opinion on the bank's right to terminate its account without cause. The Claimant offered to provide management accounts in lieu of audited accounts until the )latter were ready.
The Defendant responded in letter of November 29, 2007, and indicated that it had requested various items in its letter of August 8, 2007, which were not provided. The documents requested were.
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(1) The Audited Financial Statements
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(2) Letter of Good Standing from the Registrar of Companies
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(3) Current Tax Compliance Certificate
The Defendant further indicated in that letter that it was not prepared to accept management accounts given the increased level of activity in the Claimant's accounts. It further advised the Claimant that it wished to be fair and reasonable regarding the Claimant's request for an extension of time but that the Claimant's letter did not provide sufficient reason to justify an extension beyond the time initially provided. In dealing with the Claimant's allegation of loss if the account was closed without the extension requested the letter continued:
"we are unable to appreciate what delays would result from alternative banking arrangements and how these would result in a loss to you of US$1,000,000.00 per month. You would need to provide us with an explanation of all these statements and sufficient documentary support for them so that we can consider your request."
The Defendant then refused to extend the time beyond January 14, 2008
The Claimant responded in letter dated December 19, 2007, providing (the Defendant with a current Tax Compliance Certificate, the letter of Good Standing from the Registrar of Companies and a computation of loss if the account is closed at the time fixed by the Defendant, The Defendant's response is dated December 24, 2007, advising that it was not prepared to reconsider its...
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