Yvonne Powell v RBTT Securities Jamaica Ltd
| Jurisdiction | Jamaica |
| Judge | Coram: Morrison, J |
| Judgment Date | 25 July 2011 |
| Judgment citation (vLex) | [2011] 7 JJC 2502 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. 2008HCV 5488 |
| Date | 25 July 2011 |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN CIVIL DIVISION
CLAIM NO. 2008HCV 5488
Lord Anthony Gifford, O.C. instructed by Gifford Thompson and Bright for the Claimant Mrs. Sandra Minott-Phillips and Ms Ky-Ann Taylor Instructed by Myers, Fletcher and Gordon for the Defendant
Investment Company/Client relationship – Whether advice, if given, negligently given by employee/representative of defendant – Negligent misstatement – Whether defendant vicariously responsible
The English poet and artist, William Morris, penned these immortal lines:
‘If your lips would keep from slips, Five things observe with care: To whom you speak; of whom you speak; And how and when, and where.’
Its relevance is not the least diminished despite its then targeted audience. It is of apposite application today. The focus of attention in the case at bar is:
Did Ms. Alvarene Smalling, Investment Representative of the Defendant, in that capacity, and while in the employment of the Defendant, by way of negligent mis-statement, give advice to the Claimant on which the latter relied to her detriment and loss? In other words, did Ms. Smalling's lips ‘slip’?
The Claim
The Claimant's action against the Defendant is for damages for breach of contract and/or negligence advice given to her by the Defendant's servants or agents. Thus, says the Claim Form that was filed on 19th November, 2005. In particularizing her claim, the Claimant relates that, the Defendant is a company duly incorporated according to the law of Jamaica and carries on the business of a securities dealer and investment adviser. In this regard she asserts that she was a customer of the Defendant.
The essence of her claim is that one Alvarine Smalling, the Defendant's employee, an Investment and Securities Broker, with whom she had a discussion, gave her advice that eventuated in an investment by her of US $70,000.00 in Government of Jamaica Bonds ‘Bonds’ and Jamaican $3,362,500.00 in a fixed deposit. Months later, at the suggestion of an employee of Royal Bank of Trinidad and Tobago (Jamaica Limited) ‘RBTT’, the Claimant invested the proceeds of the fixed deposit investment with the financial unregulated entity named the Cash Plus Limited, ‘CP’. The gravity of the offence she then asserts, is that, Ms. Smalling suggested to her that she should invest the remainder of her funds with ‘CP’. She expressed to Ms. Smalling that she was risk adverse in view of medical bills she had to meet concerning her son's medical condition, that of, Velo-Cardial-facial syndrome.
Notwithstanding, Ms. Smalling's previous suggestions had burgeoned into ‘strong advice’ to the effect that, ‘Carlos Hill of Cash Plus had been in business for five years, that he was solid; that she (Smalling) had invested her personal money in Cash Plus, that she (Claimant) should put the money into Cash Plus for three months and then put it into a repo instrument; that it (Cash Plus) will not go down in three months.’ Having received strong advice and robust encouragement from Ms. Smalling and in reliance thereon the Claimant ‘encashed the remainder of her funds amounting to US $70,000.00 and invested the proceeds amounting to $4,886,000.00 in Cash Plus.’
To superadd to the substance of the impeachment, ‘in giving advice Ms. Smalling was acting in the course of her employment with the Defendant and the Defendant is vicariously liable for any loss occasioned thereby,’ because in so doing, ‘the Defendant and its servants owed a duty of care to the Claimant arising from contract and/or tort to exercise such skill and care as would reasonably be expected of a securities adviser in giving advice to the Claimant.’
From the pleaded assertions the Claimant posits that the advice as given was negligent in that the Defendant, its servants and agents:
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a) know or ought to have known that the Cash Plus scheme was paying interest to investors at rates in excess of 10% per month and was a speculative and high risk scheme;
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b) knew or ought to have known that the Cash Plus Scheme was not licenced by the Financial Services Commission;
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c) knew or ought to have known that Carlos Hill, the Director of Cash Plus had been convicted in the United States on two counts of conspiracy to commit wire fraud;
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d) failed to advise the Claimant of the above matters so that she could make an informed decision;
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e) failed to advise the Claimant that it would be prudent to spread her investment and not put all her money into one instrument;
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f) advised the Claimant to invest the entirety of her funds into speculative investment.
Save for some formal admissions confirming a contractual relationship between the Defendant and the Claimant, that the Defendant employed Ms. Alverene Smalling; that the Claimant used the Defendant's services to acquire an interest in certain securities which the Claimant subsequently encashed; that the Defendant does not know whether or not it is true that the Claimant invested the proceeds of the encashed funds with Cash Plus, the Defendant denies that Ms. Smalling gave the Claimant advice as alleged or, if she did, she did not do so in the course of her employment with the Defendant.
The Issues
The central issue to be determined is whether Ms. Smalling, in the course of her employment with the Defendant, gave to the Claimant unqualified advice, on which the Claimant relied and acted to her detriment.
In this case was there a special relationship between the parties as would fix the Defendant with liability in tort for a negligent misstatement. Further, was Ms. Smalling negligent in giving the advice?
Is the Defendant, should the above issues be determined in favour of the Claimant, vicariously liable?
What damage has ensued to the Claimant by her acting on the advice?
The Facts
Some facts are incontestable, others are not.
The Defendant is a duly incorporated company in Jamaica and at the relevant time was involved in the business of a securities dealer and investment adviser.
The Claimant had a contractual relationship with the Defendant at the relevant time of September 2007. At that time Ms. Smalling was an employee of the Defendant in the capacity of an Investment Representative. It is readily clear that the Claimant interfaced with Ms. Smalling while the latter was in the employ of the Defendant.
It is peremptorily clear that prior to and at the relevant time there existed an unregulated, illegal entity named Cash Plus Limited that held out itself as an investment alternative scheme. Prior to the impugned transaction with ‘CP’ the Claimant had invested funds with that unlicensed entity, not once but twice.
It may be assumed that having had two previous successful investment experiences with the impugned entity, those experiences would have served to be the lodestone of the Claimant's intention that the balance of her investment through the Defendant should go the way of her earlier investments with ‘CP’.
Nevertheless, I am persuaded that by the very nature of the exhibited public notices issued by the Financial Services Commission Exhibits 5,6, and 7, that the Claimant and Ms. Smalling, moreso, must be deemed to have been aware of the risk that the Claimant was taking by investing her money with ‘CP’.
I now endeavour to illustrate.
I turn attention to the transcript of the audio recorded telephone conversation between the Claimant and Ms. Smalling. Before I do so it is well that I sketch the background.
The Claimant having sold property which she owned and being put in receipt of the proceeds of sale she opened an account with Royal Bank of Trinidad and Tobago (RBTT) on 5th December 2006 into which she deposited US $128,382.83. She then spoke to one Richard Price, an employee of RBTT who advised her to place some of the said money on a certificate of deposit. As to the remainder of her money, Mr. Price, says the Claimant, referred her to Ms. Smalling, who advised her to place it in Government of Jamaica Global Bonds.
Thus advised, on 29th December 2006, the Claimant purchased Bonds worth US $58,000.00 at 8.5% maturing in 2036. According to Ms Karen Mitchell, Trading Manager of the Defendant, between July 2005 to May 2009 and Senior Manager up until May 2010, the total settlement amount for the above transaction was US $62,770.50 comprised of US $58,000.00 representing its nominal value; US $3,045.00 representing its premium on bond and US $1,725.50 representing the accrued interest purchased.
Later on 5th January 2009 the Claimant invested US $50,000.00 on a US Dollar Repurchase Agreement (Repo) through the Defendant. This investment was for (90) days at an interest rate of 4.5% per annum.
Mindful of the paltry rate of interest on her investments the Claimant, according to her witness statement, went to RBTT in about February 2007 and spoke to two of their employees Ms. Sabrina Anderson and one Mr. Corey Mossington. The latter told her that ‘she needs to go over to ‘Cash Plus’ as ‘that was the only way she will get a decent rate of interest.’ This she confirmed with another of RBTT's employees, whereupon, she invested US $20,000.00 with Cash Plus on 19th February 2007. She had withdrawn this sum of money from the Bonds investment. Approximately, one month later, on 22nd March 2007, she ‘invested the rest of the C.D. in Cash Plus,’ and decided to keep ‘the rest of my money in Government Bonds’, in keeping with advice she had received from the RBTT employee.
So far no complaints.
At paragraph 12 of her witness statement the Claimant exults: ‘Between March and September 2007 I received interest from Cash Plus …I received $338,539.47 per month on the investment … about 10% per month.
I pause here to say that one must read...
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