Barbara Gayle, Staff Reporter

Supreme Court Justice Roy Anderson threw out the 2002 negligence suit by George Lue and his companies against Island Victoria Bank and Finsac in September 2006. - Rudolph Brown/Chief Photographer

Businessman George Lue has failed in his four-year bid to convince the Supreme Court that his companies suffered financial losses because of breaches by Island Victoria Bank (IVB), a failed bank taken over by Finsac Limited.

Lue, the majority shareholder of Lue's Property Limited (LPL), Lue's Stone Quarrying Limited and A&H Buildings (Ja) Limited, sued the bank, its chief executive officer Ronald Sasso, Finsac and its subsidiary agency Refin Trust Limited, claiming negligence and breach of trust on the part of the bank and its CEO.

The businessman had taken out separate loans with the bank at rates ranging up to 68 per cent, according to court records, but his substantive complaint was that IVB had allowed him to run up an overdraft on which he was charged interest of 120 per cent per annum.

Lue also claimed that the bank's actions caused him to make a loss on his investments.

In June 2004, when the matter first came up for hearing, the case against Sasso was struck out by the court after arguments made by his attorney Emil George, Q.C., that the loan transactions were between the claimants and the bank.

Supreme Court Justice Roy Anderson ruled that there was no evidence that Sasso overstepped his authority or was guilty of any fraudulent misconduct.

The negligence suit proceeded against the bank, Refin Trust and Finsac, which were represented by attorney-at-law Sandra Minott-Phillips of Myers, Fletcher and Gordon. But, Justice Anderson would also rule in his final judgement that Finsac should not have been sued.

Lue claimed that in 1994, he borrowed $10 million from IVB at the bank's lending rate of 65 per cent to develop 45 housing units at Midland Glades, Clarendon. He would later borrow another $5 million to complete the development which had gone into overrun.

$20-million loan

There was also reference to a $20-million loan to LPL at 68 per cent interest, and other loans ranging between $2.8 million-$25 million to Lue's companies, which were secured by promissory notes and debentures.

The businessman claimed that the bank did not calculate the loan payments on the reducing balance, but instead compounded the interest due, and that the sums borrowed were not credited to the right LPL account, resulting in an overdraft as he drew cheques.

Interest of 120 per cent was applied against the overdraft, which Lue claimed in his evidence to the court-led to $10.36 million more in interest than he ought to have paid.

Lue and his companies, who were represented by attorneys-at-law Jacqueline Cummings, Sylvester Hemmings and Debra Reid-Archer of the law firm Archer, Cummings & Company, alleged that the defendants were negligent in allowing them to finance the project on an overdraft facility with such high penalty interest.

By not setting limits on the current account, Lue's lawyers argued, IVB had contravened Bank of Jamaica rules.

But Justice Anderson rejected their arguments, citing in his judgement, Lue's own proposal to IVB in May 1996 that he would settle his debt to the bank for $95 million, as stated in a letter to the bank written by Fraser & Aitcheson, who were then his attorneys.

The bank agreed to the proposal by letter on July 4, 1996, but Lue failed to follow through on the agreement.

IVB blamed

According to Justice Anderson's written judgement, the businessman blamed IVB, saying the bank had failed to finance another of his projects, Savannah Villas, earnings from which he had planned to tap to pay off the $95 million debt.

In fact, he alleged that IVB caused him losses of almost $1 billion from developments not done, including $133 million from Savannah and $800 million in projected income from a project called Garel Pen.

But Justice Anderson found there was "nothing in evidence" to connect the defendants to those allegations and suggested that it was 'trite' to have made a claim for economic loss.

The judge, in his ruling handed down two years after the case was heard, also said he found no evidence supporting a claim that the claimants were "wrongly and illegally" charged a 0.5 per cent commitment fee on the "so-called redistribution" of a $34-million debt into two smaller debts.

"According to Lue's witness statement," the judge wrote, "the commitment fees were respectively $202,000 and $180,000, which do not represent 0.5 per cent even when GCT of 15 per cent is (applied) to the fee."

Justice Anderson also threw out the arguments against the compounding of the interest on the loan as being without merit and ruled that the defendants were entitled to enforce the debt.

He, however, pointed out an error made and acknowledged by the bank that "if there had been an arranged line of credit, the interest would have been $7.42 million less" on the overdraft over the seven-month period February 24-September 15, 1994.

"... The bank might wish to take that into account when it seeks to enforce its rights consequent upon this judgement," said the judge.

However, he made no stipulation on whether restitution should be made, saying he was "far from satisfied" by the evidence placed before him for the demand loan.

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