Phillips, left, and Joslin
Barbara Gayle, Staff Reporter
A ST. ELIZABETH businessman is faced with a huge debt of $243 million based on loan transactions with a bank between 1992 to 1994.
Gifford Morrell, of Lacovia, St. Elizabeth, is taking the case to the United Kingdom Privy Council in an effort to have the debt set aside or significantly reduced.
This month the Court of Appeal by a majority decision dismissed Morrell's appeal and upheld a Supreme Court ruling that he must pay $243 million to the Workers Savings and Loan Bank which has changed names several times.
The transaction between Morrell and Workers Bank has now been taken over by Dennis Joslin Jamaica Inc.
Morrell, up to May 1994, had a Jamaican dollar current account and three foreign exchange accounts at the branch in Savanna-la-Mar, Westmoreland. In May 1994 Morrell who was engaged in the buying and selling of foreign exchange, complained that his Jamaican dollar current account was showing an ever increasing overdraft error. Morrell's cheques were dishonoured by the bank. The bank threatened to exercise its powers of sale over Morrell's 60-acre property in Lacovia which was mortgaged to the bank. The property was for eco-tourism development.
There was a dispute as to how much money Morrell owed the bank based on the overdraft facilities. Morrell claimed that the debits were unauthorised. Discussions between the parties led to K.P.M.G. Peat Marwick and Mitchell, a firm of auditors, being engaged to conduct an audit of the bank's records to determine the true state of Morrell's accounts.
WRITTEN MANDATES
Morrell subsequently took the issue to the Supreme Court contending that withdrawals from his accounts were always by way of written mandates. Mr. Justice Howard Cooke ruled that there should be judgment for the bank on the counterclaim for $243,201,568.87. Mr. Justice Cooke ruled that the mortgage on the property was valid and enforceable.
Morrell appealed against the Supreme Court ruling. Attorneys-at-law Hilary Phillips, Q.C., Dr. Lloyd Barnett and Harold Brady argued that the bank had acted outside of Morrell's mandate requiring written approval of withdrawals from his account. The lawyers said in so doing the bank committed a fundamental breach of contract.
Attorneys-at-law Dennis Goffe, Q.C., Sandra Minott-Phillips and Odia Reid who represented the bank had relied on the verification clause which gave exemption for errors and omissions if there was a failure to report such errors to them after 30 days. The bank also relied on the audited report that Morrell owed money to the bank.
Mr. Justice Henderson Downer, (now retired) Mr. Justice Donald Bingham and Mr. Justice Clarence Walker heard the appeal and criticised the bank for the manner in which it conducted its affairs in relation to Morrell's accounts.
In his dissenting judgment, Mr. Justice Downer said that the account was debited without a written authority from Mr. Morrell and Fiona Morrell who operated the accounts. The judge said a written mandate from the Morrells was essential to debit the accounts. The judge said they were deliberate debit entries which were made in breach of contract.
Mr. Justice Bingham said that Mr. Justice Cooke's finding that Morrell was indebted to the bank in the amount of $243 million was justified by the evidence.
In his judgment Mr. Justice Walker said that it was a fact that Mr. Morrell accepted the report which was furnished by KPMG which showed that he was indebted to the bank.
DEBIT MEMOS
"If Mr. Morrell were now to be allowed to retain money he has in fact already received from the bank, and in addition be adjudged entitled to receive further payment from the bank on the basis of debit memos for debits for which the bank cannot produce his written authorisation but which in truth were authorised by him, Mr. Morrell would be unjustly enriched at the expense of the bank, its depositors and shareholders, " Mr. Justice Walker said.
Mr. Justice Downer said further in his dissenting judgment that Mr. Justice Cooke's finding that oral instructions were capable of debiting the current account of Mr. Morrell, cannot be supported. The judge said there were oral instructions by Mr. Morrell to the bank but the system required that they should be recorded on telephone transfer forms and covered by Mr. Morrell's cheque and withdrawal slip at the end of the day or within a reasonable time thereafter. Since it was not done, the bank was in breach of contract and the authorised debits as found by Peat Marwick must be accepted by 'this court' as correct.
