Bank ordered to pay damages to customers

The content originally appeared on: Trinidad and Tobago Newsday

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A local bank has been ordered to pay nominal damages of $25,000 for breaching its duty towards a business client.

The order was made by Justice Devindra Rampersad in a lawsuit the bank filed against a caterer and its two directors for defaulting on loans and other credit facilities.

Although the bank ordered Grannies Enterprises and its directors Harvey Don Kissun and Stephne Kissun to repay a total of $318, 383.30 as the balance owing to Royal Bank of Canada (RBC) on the loan, he also ordered the bank to pay damages for negligence and breach of contract.

In his ruling, the judge said there was “uncontroverted evidence” that the bank incorrectly deducted funds from Grannies Enterprises account and secured by a demand loan with the agreement that it would be transferred under the mortgage for property owned by the directors of the company.

“Having wrongly taken the monies from the first defendant’s account and then secured it with the second loan, the claimant ought to have done everything in its power to correct this anomaly,” the judge said.

“As it relates to the mismanagement of accounts, it was stated that the onus was on the claimant to properly manage the defendant’s accounts so to prevent them from falling into arrears in the first instance and presenting the incurrence of the interest sums claimed,” he added.

The court’s ruling in the lawsuit is likely to have a significant impact on the local banking landscape as it relates to going into customers’ accounts to pay outstanding loans or credit facilities.

The caterer and its directors were represented by attorneys Keith Scotland and Jacqueline Chang while RBC was represented by attorney Sashi Indarsingh.

The bank took legal action against the three to recover monies owed by the company which were guaranteed by its directors. The three did not contest the principal sum owed to the bank on the loan and credit facilities, but denied the interest sums which accrued by the bank’s alleged actions. They asserted there was a breach of duty of care between banker and client.

In his ruling, Rampersad said although the effect of the actions of the bank were not specifically proven by the three, the court had “no doubt that the claimant breached its duty of care. and the court will make an order for the award of nominal damages in this regard.”

“There is no doubt that the claimant had a duty of care towards its customer to, amongst other things, provide timely responses and accounts.

“ Further, the claimant, as a bank, is under a duty of care to keep proper accounts of the first defendant’s loans, and funds held with the claimant, and keep the first defendant informed in a timely manner of the manner in which those funds are being utilised,” he said.

He also said while there was no doubt that the bank was entitled to judgment on the principal sum owed on the loan but adjusted the interest due because of his findings.

Over the years, since 2008, the company and its directors had qualified for a number of loans from the bank because of the success of their business.

Among the security held were three vehicles and a certificate of deposit on a Roytrin mutual fund account. After defaulting on its credit facilities in 2015, the bank notified the three of its intention to call in the securities.

The funds from the mutual fund account was applied towards liquidating the balances due on four of the loans in the company’s name and they were only told six months later how the money was disbursed.

Two years later, the bank demanded payment on the balances owed on the credit facilities.

The judge pointed out that it appeared from the evidence money was “erroneously taken out from the first defendant’s account to pay interest and the outstanding balance on the bridging loan.

“Regrettably, this aspect of the case is not very clear to all except to say that this money was not related to anything incurred by the first defendant on the documents before this court.”