World Wise Partners Ltd v RBTT Bank Ltd
|13 June 2008
|Judgment citation (vLex)
| 6 JJC 1301
|Supreme Court (Jamaica)
|13 June 2008
BANKER/CUSTOMER - NATURE OF CONTRACT - INTERLOCUTORY INJUNCTION - APPLICABILITY OF AMERICAN CYANAMID PRINCIPLES - SECTION 4 (3) OF THE BANKING ACT - SECTIONS 20 AND 34 OF THE FAIR COMPETITION ACT
INJUNCTIONS - Interlocutory - Bank/Customer - Nature of contract - Applicability of American Cyanamid principles - Banking Act S. 4(3) - Fair Competition Act, S. 20 and 34
On May 15, 2008, Daye J. granted an ex parte injunction in favour of World Wise Partners Limited (WWPL) restraining RBTT Bank Jamaica Limited (RBTT) from closing four accounts in the name of WWPL.
This is now the inter partes hearing to determine whether the injunction should continue until trial. There is also an application for a search order. At the end of the hearing the injunction was discharged and the application for extending the injunction until trial as well as the application for a search or order was dismissed with costs to RBTT to be agreed or taxed. These are my reasons.
RBTT is a bank licensed under the Banking Act to provide retail banking services. WWPL is a company incorporated under the Companies Law of Jamaica. It was incorporated on July 17, 2007.
According to the articles of incorporation the core business of WWPL would be business services, all legal investments, inland and offshore investments. The first directors were Mr. Noel Strachan and Miss Judy Strachan. Miss Judy Strachan is also listed as the company secretary.
This was not the first time that RBTT had occasion to deal with Mr. Strachan and Miss Judy Strachan. The bank had occasion to deal with them in their capacity as officers of Jade Property Development and Construction Limited (Jade) which opened an account at RBTT on March 30, 2004. This company was incorporated on September 8, 2003. According to the memorandum of association, the company was established to engage in purchasing and developing land. Article 3 (a) of the memorandum of association states that the company would supply consumers with all types of property, construction services and products of that nature. The article also states that the company would also deal in service contracts and any other product and/or service that may be related to the sale or service of land and/or buildings. The article has the usual subclauses spelling out in greater detail what the company could do in connection with its business of buying and developing land.
In April 2007, Mr. Noel Strachan and Miss Judy Strachan as well as Jade were registered and trading under the business name World Wise. According to the certificate of registration of the business name, World Wise would be involved in service products, servicing contracts, loan agreements and collections. In other words the, officers of Jade in their personal capacity and Jade as a corporate entity would be engaging in these services. It is to be observed that before WWPL was incorporated on July 17, 2007, the name "World Wise" was the business name of Mr. Strachan, Miss Strachan and Jade which was registered in April 2007.
The bank formed the view, rightly or wrongly, and I make no pronouncement on this, that it was uncomfortable with the developments that occurred in 2007 in respect of Mr. Strachan, Miss Strachan, Jade and WWPL. In the eyes of the bank there did not seem to be a clear delineation between WWPL, World Wise and Jade as far as their commercial activities were concerned. The bank felt (again without agreeing one way or the other) that it wanted more information concerning the commercial activities of the various entities. The bank seems to be saying that the current regulatory environment with its emphasis on knowing ones customer and establishing effective anti-money laundering measure it needed more and better particulars from WWPL, World Wise, Jade, Mr. Strachan and Miss Strachan.
In August of 2007 the bank initiated dialogue. It spoke to Mr. Strachan who told the bank "that the nature of his business was to facilitate the creation of corporate partnerships by bringing people and money together" (see para. 14 of affidavit of Mrs. Jacqueline Cowan for the bank). The bank alleges that between August and October 2007, it was becoming increasingly concerned by the activities of the WWPL. The anxiety of the bank reached fever pitch when it saw an article in the Daily Gleaner of October 24, 2007, which referred to an entity known as World Wise Investment which had an escrow account at RBTT and that account held 80% of the "funds under management" (see para. 20 of Mrs. Cowan's affidavit). Mrs. Cowan adds that at no time did RBTT have an escrow account for WWPL or World Wise or World Wise Investments. From the evidence presented, the word "Escrow" was written on the contract relating to this account but no one knows how it got there or even who wrote it. In any event, the bank is denying that there was an escrow account in the normally understood sense of that word. It appears also from the evidence that WWPL does not dispute this.
It appears that there were further meetings between Mr. Strachan and RBTT since a letter dated November 1, 2007, was written over the signature of Mr. Strachan to the bank referring to the article in the Daily Gleaner. I should point out that Mr. Strachan did not identify the article but it is fair to say that when one reads the article and examines Mr. Strachan's letter of November 1, 2007, it is a fair conclusion that he was referring to the article of October 24, 2007.
The letter was typed on a paper headed 'World Wise' and Mr. Strachan signed as Chairman of World Wise. It is not clear whether this was World Wise the business name or a shortened form of WWPL, the corporate entity. Significantly, the letter makes reference to the banking relationship of over three years. I make this observation. If Mr. Strachan was saying that WWPL and the bank had a relationship for over three years then that would not be quite accurate because WWPL was not incorporated until July 2007. Also he could not have been referring to those persons trading as World Wise because World Wise was not registered as a business name until April 2007 and there is no evidence that Jade or Mr. Strachan or Miss Strachan was trading as World Wise, whether individually or collectively at any time before 2007. From the evidence, the only banking relationship that was over three years old was that between RBTT and Jade. There is no evidence that for over three years Jade traded as anything but Jade.
Indeed the article in the Daily Gleaner made the express assertion that the writer spoke to Mr. Noel Strachan. The article alleged that the company, WWPL, claimed to have been around since September 2003. Again, there is no evidence that WWPL was incorporated in September 2003. The company that was incorporated in September 2003 was Jade and Mr. Strachan was an officer of that company. If it is that the writer of the article spoke to Mr. Strachan based on the evidence the only company he could have possibly been referring to was Jade. Was Jade the company being referred to by the article but it was called WWPL? Was Jade in fact doing, from 2003, the things attributed to WWPL? These are legitimate questions that any reasonable banker would ask. By asking these questions the bank is not condemning anyone it simply wishes to understand clearly the nature of the business being operated by its customers. It is not hard to see why the bank was more than anxious.
It is obvious that Mr. Strachan knew of the article because he referred to it in his letter and pointed out only one error, namely, the escrow account. Mr. Strachan's letter of November 1, 2007, states in part, "as it relates to our last conversation, you noted your concern about an article in the Gleaner where the Journalist (sic) stated that RBTT Bank of Jamaica Limited operates an Escrow account for World Wise. That is true, however, the purpose of the escrow account was false".
The reason for Mr. Strachan saying this in the letter was because of the following paragraph from the article:
It [World Wise] claims that 80 percent of funds under management are held in escrow at RBTT Bank Limited. Strachan also did not comment on how he was able to generate sufficient returns from 20 percent of funds under his management to pay investors their monthly 12 percent, nor how the funds were invested or traded.
The normal understanding of an escrow account is that the funds are held for specific purposes and only paid out on instruction or on the occurrence of a particular event. The journalist clearly understood escrow in this sense and this explains why he was curious about how 20% could generate enough revenue to pay 144% annual returns if 80% of the fund were held in escrow. If this was true then it would truly be an example of extraordinary business acumen.
The point is that Mr. Strachan did not deny the rest of the allegations attributed by the journalist to an interview with him. After this article and Mr. Strachan's letter can any reasonable person, with knowledge of the history of the time when banking relationships with the various parties were established as described above, be surprised at the concerns of the bank?
On November 5, 2007, Miss Strachan on a document headed 'World Wise' wrote to RBTT asking it to close the account and transfer the funds to one of the accounts to one of WWPL's account which was opened on July 20, 2007. This request from Mrs. Strachan to close the...
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