Barbara Gayle, Staff ReporterUnion Bank of Jamaica (now controlled by Royal Bank of Trinidad and Tobago) and Eagle Merchant Bank will not have to pay the hefty $2.6 billion Supreme Court award which it was ordered to pay in 1999 to Nunes Rent A Car.
The Court of Appeal yesterday upheld the appeal brought by the banks against the Supreme Court ruling that it should pay damages for loss of property and profits to Nunes.
Nunes had sued Jamaica Citizens Bank and Eagle Merchant Bank, now part of Union Bank, claiming damages for loss of property and profits.
The award to Nunes stemmed from the sale in 1987 of its premises at 27 Lady Musgrave Road under powers of sale which JCB had in a mortgage over the premises. The award had included damages for loss of profits.
Nunes claimed that in 1985 it had owed JCB $345,000. Nunes entered into an agreement with Quality Car Rentals, controlled by Daryl Vaz, to sell the company ten cars, five of which were delivered. The others were to arrive at a later date.
Vaz borrowed $445,000 from Eagle to pay for the cars. The Eagle cheque was credited to Nunes' current account at JCB. Following Quality Car Rental's refusal of the remaining five cars and delivery to JCB of copy of a letter of confirmation from Nunes to Vaz that 50 per cent of the Eagle cheque should have been put on deposit by JCB pending the completion of the sale of the cars, JCB reversed the transaction.
The purchase of the cars was financed by Eagle and a cheque from Eagle for the full amount of the purchase price of the cars was delivered by Nunes and Quality Car Rentals to JCB which was Nunes' bankers, with certain instructions. The instruction given to the bank was to credit a portion of the funds to Nunes' account at JCB and hold the remainder of $220,000 on deposit pending delivery of the remaining five cars. JCB indicated that it could not be done and the entire amount would have to be credited to Nunes' account with the bank. The parties agreed to that. JCB then applied the funds to Nunes's account, thereby closing the loan account and returned the difference to Nunes.
On receiving full payment for the cars, Nunes allegedly failed to complete the agreement and Quality Car Rentals and Eagle demanded a return of the $220,000 from JCB. JCB subsequently reversed the credit of $220,000 and demanded repayment from Nunes which failed to pay the money. JCB exercised its power of sale in a mortgage held on Nunes' property to recover the loan.
Nunes sued the banks, claiming damages for loss of the property and loss of profits of $500 million. Nunes claimed that the banks and Quality Car Rentals conspired to injure its business by having JCB sell its premises and repaid Eagle its $220,000. On July 28, 1999, the Supreme Court awarded Nunes $2.6 billion.
Union Bank and Eagle Merchant Bank, which was represented by Michael Hylton, Q.C. (now Solicitor General), Hilary Phillips, Q.C., attorneys Dmitri Singh and Nesia Warner, instructed by Myers Fletcher and Gordon, appealed the Supreme Court ruling on the ground that JCB acted properly in selling the property. Quality Car Rentals Ltd. which was a defendant to the suit did not appeal.
The Court of Appeal comprising the Hon. Ian Forte, President of the Court of Appeal, Justice Donald Bingham and Justice Ransford Langrin heard the appeal and reversed the judgement of Justice Courtenay Orr (now deceased.) The court held last week Friday that there was no conspiracy between the parties because having written the two letters, Nunes was estopped from denying the contents of the letter which formed the basis of the reversal of the entry by JCB. It was the court's ruling that it would be unconscionable for Nunes to retain the benefit of the $220,000 received since Nunes was fully aware of the circumstances in which the money was credited to its account.
The judges held that in the circumstances , JCB was bound to reverse the credit of $220,000 to Nunes' account and to retain in place the securities it held over Nunes' property and to exercise its power of sale under those securities if the debt was not repaid.
