RBTT Bank Jamaica Ltd v YP Seaton and Others

• Jurisdiction: Jamaica
• Judge: Sykes J
• Judgment Date: 17 March 2014
• Neutral Citation: [2014] JMSC Civ 34
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. CL 1993/E 083 CONSOLIDATED WITH CLAIM NO CL 1993/S 252
• Date: 17 March 2014

[2014] JMSC Civ 34

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CIVIL DIVISION

CLAIM NO. CL 1993/E 083

CONSOLIDATED WITH CLAIM NO CL 1993/S 252

Between

RBTT Bank Jamaica Limited

Claimant

and

YP Seaton

First Defendant

and

Earthcrane Haulage Limited

Second Defendant

and

YP Seaton & Associates Company Limited

Third Defendant

Between

YP Seaton

Claimant

and

RBTT Bank Jamaica Limited

Defendant

Denise Kitson QC , Trudy — Ann Dixon Firth instructed by Grant Stewart Phillips for RBTT Bank Jamaica Limited

Pamela Benka Coker QC , Anna Gracie , David Parchment instructed by Rattray Patterson Rattray for YP Seaton, EarthCrane Haulage Limited and YP Seaton & Associates Company Limited

CONTRACT — WHETHER BANK ENTITLED TO TAKE MONEY FROM ACCOUNT OF CUSTOMER — ALLEGATION OF OVER-PAYMENT — QUISTCLOSE TRUST — MISTAKEN PAYMENTS — MONEY HAD AND RECEIVED —ABUSE OF PROCESS

IN OPEN COURT

Sykes J

A quick overview

1 It was the year 1990. Jamaica was in the throes of an extreme shortage of foreign exchange. The Bank of Jamaica (“BoJ”) had little or no foreign exchange. Those who needed foreign exchange in large quantities had to find those who had it and work out an exchange rate. Not even government companies could rely on the BoJ to provide them with needed foreign exchange to pay for goods and services from overseas. The Jamaica Commodity Trading Company (“JCTC”) was one such company. So short was foreign exchange that JCTC entered into agreements to purchase milk powder with an overseas company which accepted Jamaican dollars thus relieving JCTC of the obligation to find foreign exchange to pay under the sale contract. Throughout, this case, no one has remotely suggested that BoJ had any foreign exchange to sell to anyone or to make available to government companies. Therefore even in this opening paragraph it can be stated with absolute certainty that the contracts that have precipitated this dispute did not require JCTC or BoJ to provide foreign exchange to the seller. Any sentient reader would immediately ask, how then was the seller to be paid? This case is a story about paying the seller; the arrangements that were made to do so; the payment mechanism established for payment; how it was effected and the consequences of giving effect to the payment mechanism.

2 JCTC was responsible for importing a number of goods. It had a recurring problem: lack of foreign exchange. The company now wanted to purchase milk powder but had no foreign exchange. It invited tenders from suppliers. Prolacto SA (“Prolacto”), a Belgian company responded and placed bids with JCTC. One of the attractive features of this company was that it was prepared to accept payment in Jamaican dollars. JCTC was delighted.

3 Two contracts were concluded – the first in August/September 1990 and the second in December 1990. Under the first contract, Prolacto offered a cash price. This was available if JCTC paid, in full, the Jamaican dollar equivalent of the full purchase price. Prolacto offered an alternative: 180 days payment by an irrevocable letter of credit and the price went up by US$65.00 per metric tonne. It appears that even on these exceptionally favourable terms for an international sale JCTC was unable to take advantage of the offer. JCTC simply did not or could not pay the full cash price in Jamaican dollars.

4 The second contract also offered a cash price per metric tonne provided that the full purchase price was paid in Jamaican dollars.

5 Prolacto appointed EarthCrane Haulage Limited (“EarthCrane”) as its agent. Mr Seaton is the major shareholder of EarthCrane. He is also the major shareholder in YP Seaton and Associates Company Limited (“YPSACL”). He is the major human persona in this case who was the alter ego of both companies.

6 The relationship between JCTC and Prolacto deteriorated and both contracts were terminated. JCTC then demanded that Eagle Commercial Bank (“ECB”), now RBTT Bank Jamaica Limited (“RBTT”), return the sums outstanding from the deposits made under both contracts and such sums, according to JCTC, should include interest on the deposit. ECB baulked and JCTC filed two claims against the bank. The first claim was filed in August 1991 against ECB and Prolacto ( JCTC v Prolacto and ECB, Suit No CL 1991/J244). This was in relation to the first contract. The second claim was against ECB alone ( JCTC v ECB Suit No. 1991/J314). This was in relation to the second contract. By January 1992, ECB decided to settle both claims. In the settlement of both claims, ECB paid over approximately JA$32.5m.

7 The bank then brought a claim against Mr Seaton, EarthCrane and YPSACL to recover the money it claims was overpaid, that is to say improperly withdrawn by EarthCrane, from the deposit in respect of the first contract. This is Claim No. 1993/E083. According to the bank, the terms of the first contract were that Prolacto would supply 3,000 metric tonnes at US$1,260.00.00 to JCTC. This would be a total of US$3,780,000.00.00. It is said that only 1,879.85 metric tonnes were delivered which means that on the contract terms and at the exchange rate contended for by JCTC, only US$2,368,611.00 should have been paid. RBTT's case is that, eventually, an additional US$65.00 per metric tonne was charged by Prolacto on the milk powder delivered which meant that an additional US$122,190.25 were paid in excess of the contracted price. The bank seeks to recover this sum from the defendants.

8 RBTT further alleges that Prolacto charged an additional US$4.75 per metric tonne on the transportation and this meant that there was further overpayment of US$8,929.29 to Prolacto which ought not to have been paid. The bank is seeking to recover this as well. This figure when added to the US$122,190.25 allegedly overpaid on the price per metric tonne gives a total of US$131,119.54 and it is this combined figure that RBTT wishes to recover on the basis of it being an overpayment.

9 RBTT also pleads that there was overpayment on interest (JA$3,771,615.17) and overpayment on the cost of foreign exchange exposure (JA$5,133,792.93) totalling JA$8,905,408.10. The bank is seeking to recover this sum from the defendants.

10 The essence of the bank's case is that these sums were paid out of the deposits in error to Prolacto or its agents contrary to the instructions of the account holder, JCTC. It also pleads that these sums were not handed over by the defendants when the sums were demanded and therefore a claim had to be filed in order to enforce the demand.

11 There was a second contract in December 1990 for 3000 metric tonnes of milk powder at US$1,450.00 per metric tonne. The total value of this contract was US$4,350,000.00. Under the second contract 494 metric tonnes were delivered. The invoice was US$716,300.00. According to RBTT, the Jamaican dollar equivalent was JA$9,131,034.25. In respect of this second contract, JCTC deposited JA$39,717.675.00. Of that amount it is alleged that JA$24,385,617.94 were paid to Prolacto or the defendants. Since no further shipments were made, only JA$9,131,034.25 should have been taken out. This meant that the defendants would have had JA$15,254,583.69 too much. This sum was taken from Mr Seaton's personal accounts at the bank.

12 In summary the bank's claim in CL 1993/E083 is about (a) recovering the overpayments; (b) recovering interest it claims to be entitled to and (c) a declaration that the taking of the JA$15,254,583.69 from Mr. Seaton was lawful.

13 Before launching its claim, the bank had frozen several of Mr Seaton's personal accounts. There is no evidence that EarthCrane or YPSACL had any accounts at ECB.

14 Mr Seaton is having none of this. He is saying that there should be an accounting between himself and the bank on the basis that the bank froze his accounts and although he has received some of the money from the frozen accounts he is not sure that he has received all that he should including interest. He also wants to recover the JA$15,254,583.69 taken from his accounts and further that interest should be paid on that amount. This is what CL 1993/S252 is about.

15 The bank has abandoned its claim to JA$1,514,646.00 which represented mobilisation fees, opening and closing commissions on the first contract.

16 Mrs. Benka Coker QC submitted that the court ought not to engage in trying to determine the terms of the contract between Prolacto and JCTC because none of the original contracting parties is involved in this present claim. The court does not agree with this submission. The court cannot control how a litigant chooses to present his or her case. The primary question is whether the litigant can establish by relevant and admissible evidence the case pleaded.

17 Mrs. Benka Coker submitted that the entire claim should be dismissed as an abuse of process. This was her primary submission. If that failed then it was submitted that the evidence presented does not support the claim. This aspect of the response to the bank's claim will be addressed later.

18 The court will examine, in detail, the evidence relating to each transaction with a view to deciding whether the basic terms of the contract can be identified. Before examining the evidence, the court will set out, at this early stage, three critical aspects of this case which will help to understand why the transaction was structured in the way it was. They are part of the matrix of fact against which the evidence is to be understood.

Background against which to interpret the contracts and understand the conduct of the parties

19 The court will say that not all the documents are before the court and to that extent the court is hampered but not prevented from deciding what were the basic terms of the contract between the JCTC and Prolacto. It is important to come to some conclusion about the contract between Prolacto and...