... Privy Council rules verbal directive can override written instructions
January 21, 2007
A St. Elizabeth businessman, his last hope of reprieve dashed by the United Kingdom Privy Council, is now faced with a huge debt of $462 million to October 17, with interest accruing at a daily rate of $40,000, arising from loan transactions with a bank between 1992 to 1994.
Gifford Morrell's debt is now eight fold the $57 million he owed at the start of the case in 1998.
But it is not the size of liabilities but the precedent set by the ruling that will spark interest in banking, financial and business circles, based on the conclusion drawn by law lords that notwithstanding specific mandate in writing, a bank can act on oral instructions from its clients.
Essentially, the Privy Council has endorsed arguments that verbal directives from a bank client can override earlier written instructions.
overdraft facility
Morrell, who had an overdraft facility with the failed Workers Savings and Loan Bank, which was taken over by Finsac in the 1990s and is in the process of being wound up, had sued the bank - his daughter was also party to the suit - claiming that Workers wrongly debited their accounts and was unable to supply documentary proof or authorisation for such debits.
The bank counter-claimed for an overdraft, which in September 1994 amounted to $56.8 million, on the basis that it acted on verbal instructions.
Justice Howard Cooke who heard the Morrell's suit in the Supreme Court, dismissed it in October 1998 and ruled that there should be judgement in the sum of $243 million for the bank on its counter-claim.
Morrell appealed the ruling. After a 44-day hearing that began October 1999, the local Court of Appeal comprising Justices Henderson Downer, Donald Bingham and Clarence Walker, handed down a majority decision in January 2003 applauding Cooke's ruling. Justice Downer dissented.
The Morrells, for the first time, had raised the issue of illegality in the Court of Appeal and contended that the bank aided and abetted Morrell in an illegal activity, namely the selling of foreign exchange for which Morrell had no licence at the time. The Morrells said that because of the illegal transaction, the bank had no power to sell his 60-acre property in Lacovia, which was earmarked for eco-tourism development.
But the Court of Appeal dismissed the claim. Justices Downer and Walker held that the defence of illegality should not be allowed because it involved issues of fact which would have required trial to determine....
Author: Barbara Gayle
Source: Jamaica Gleaner
