Ephraim B.E. Morley v Teachers and Salaried Workers Cooperative Credit Union Ltd

• Jurisdiction: Bahamas
• Judge: Jonathan Z.N. Deal
• Judgment Date: 01 November 2024
• Docket Number: 2021/CLE/gen/1022
• Court: Supreme Court (Bahamas)

Between

Ephraim B.E. Morley

Claimant

and

Teachers and Salaried Workers Cooperative Credit Union Limited

Defendant

Before:

Assistant Registrar Jonathan Z.N. Deal

2021/CLE/gen/1022

IN THE SUPREME COURT

Common Law and Equity Division

Appearances:

Roshar Brown for the Claimant

Candice Ferguson for the Defendant

RULING

ASSISTANT REGISTRAR DEAL

1 This is a ruling on an application made by Notice of Application filed on 30 September 2024 to set aside an Order for Judgment in Default of Appearance filed on 20 October 2023 (the “Order for Judgment in Default”) which has been heard on the papers. The application is supported by the Affidavit of Jamison Davis filed on 30 September 2024 and written submissions dated 4 October 2024 and 18 October 2024. The Claimant opposes the application by written submissions dated 11 October 2024.

The Application

2 The Defendant's Notice of Application provides inter alia:

“1. The Defendant… makes application for the Order for Judgment in Default of Appearance be set aside on the ground that the Defendant has a good and arguable defence and a real prospect of successfully defending this claim and that the Defendant be at liberty to defend this action pursuant to Order 13.3(1) of the Supreme Court Civil Procedure Rules, 2022. The Defendant further believes the Claimant is statute barred pursuant to Sections 5 and 9 of the Limitation Act, 1995, failing to bring an action on 15 February 2007 or prior to the expiration of the limitation period for negligence and/or breach of fiduciary duty.

2. The grounds of the application are:

i. In accordance with Part 13 of the Supreme Court Civil Procedure Rules 2022 (“CPR”) the Court may set aside/vary a Judgment in Default (Rules 13.2, 13.3 and 13.4 of the CPR).

ii. Rule 12.4 of the CPR, a Defence was filed on 12 September, 2023, prior to the filing of the Order on October 20, 2023 and therefore the set aside Application may be granted.

iii. The application was made as reasonably as practicable after finding out the judgment has been entered,

iv. The Claimant's claim is statute barred pursuant to Sections 5 and 9 of the Limitation Act, 1995, v. the Defendant has a good and arguable defence, and

vi. The Defendant has a real prospect of successfully defending this claim.

3. The following written evidence will be used at the hearing of the application:

The Affidavit of Jamison Davis attached hereto which sets out the following:

i. The Statement of Claim does not identify what term(s) (expressed or implied) which the Defendant is alleged to have breached to ground a claim in breach of fiduciary duty or negligence,

ii. Judgment was filed one month after the Defence was filed and served on the Claimant. The Claimant therefore knew the Defendant's intention to defend this claim. The Claimant should have set the matter down for case management for a trial.

iii. Set aside of the Judgment in Default of Appearance is sought for the following reasons:

• (i) the Defendant has a good and arguable Defence,

• (ii) the Claims of the Claimant are statute barred by virtue of Sections 5 and 9 of the Limitation Act, 1995, failing to bring an action on 15 February 2007 or prior to the expiration of the limitation period for negligence and/or breach of fiduciary duty,

• (iii) a Defence was filed

• (iv) the Claimant was aware from a letter as early as November 18, 2021 that the Defendant intended to defend this claim,

• (v) the Statement of Claim does not identify what term(s) (expressed or implied) which the Defendant is alleged to have breached. The material terms of the share account and the fixed deposit account which are relied in this matter should have been set out in the Statement of Claim,

• (vi) the Claimant did not bring the withdrawals to the attention of the Defendant within a reasonable time (or at all), and

• (vii) the Claimant was not reasonably diligent in failing to monitor his account(s) and failing to alert the Credit Union from 2007 to 2018/2019 (a period of 11/12 years).”

The background

3 The Claimant, a member and customer of the Defendant, commenced these proceedings by a specially endorsed Writ of Summons filed on 9 September 2021 alleging breach of fiduciary duty and negligence on the part of the Defendant. The Claimant alleges that, between 15 February 2007 and 19 August 2015, the Defendant facilitated several unauthorised withdrawals from his fixed account maintained with the Defendant totalling some $14,000, which he only noticed in or around late 2018.

4 The Claimant's Statement of Claim, so far as it is material, is in the following terms:

“3. On or about the end of 2018 or the beginning of 2019 the Plaintiff went into the Defendant's main office to enquire about his fixed account.

4 The Plaintiff did not become aware of the Defendant's actions on his account until sometime around the end of 2018 or the beginning of 2019.

5 Sometime in or around the 15 ^th February 2007, the Defendant facilitated a withdrawal from the Plaintiffs account in the amount of $5,000.00 to an unknown person or entity. The Plaintiff did not request and/or authorize this transaction.

6 Sometime in or around the 23 ^rd November 2011, the Defendant facilitated a withdrawal from the Plaintiffs account in the amount of $700.00 to an unknown person or entity. The Plaintiff did not request and/or authorize this transaction.

7 Sometime in or around the 31 ^st January 2021 [sic], the Defendant facilitated a withdrawal from the Plaintiffs account in the amount of $5,000.00 to Providence Advisors Ltd. The Plaintiff did not request and/or authorize this transaction.

8 Sometime in or around the 22 ^nd January 2015, the Defendant facilitated a withdrawal from the Plaintiff's account in the amount of $3,000.00 to an unknown person or entity. The Plaintiff did not request and/or authorize this transaction.

9 Sometime in or around the 19 ^th August 2015, the Defendant facilitated a withdrawal from the Plaintiff's account in the amount of $300.00 to an unknown person or entity. The Plaintiff did not request or authorize this transaction.

10 In the premises the Defendants had no authority to pay the said amounts to any individual or company on the Plaintiff's behalf.

11 Alternatively, the said sum of $14,000.00 is payable to the Plaintiff by the Defendant as money wrongly debited to the Plaintiff's account by the Defendant without the authority of the Plaintiff.

Breach of Fiduciary Duty

12 At all material times the Plaintiff was a customer of the Defendant and operated a share account and a fixed deposit account facility held at the Defendant's main branch since approximately 1977.

13 In wrongly debiting the Plaintiff's account the Defendant was in breach of its duty of care to the Plaintiff.

14 Particulars of Breach of Fiduciary Duty

a. Employees, agents and/or servants of the Defendant failed to identify and detect that the signature on withdrawal requests was not the signature of the Plaintiff;

b. Employees, agents and/or servants of the Defendant failed to inform and notify the Plaintiff about the fraudulent signature;

c. Employees, agents and/or servants of the Defendants failed to address the Plaintiff's written concerns in a missive delivered to the Defendant's corporate office sometime in or around February 2019;

d. Employees, agents and/or servants of the Defendant failed to reimburse the Plaintiff for the Defendant's breach;

e. The Defendant failed to have security processes in place and/or sufficient security processes in place to detect the above-mentioned withdrawals were not made by the Plaintiff; and

f. The Defendant failed to inform the Plaintiff about the withdrawals mentioned above.

Negligence

…

17 In facilitating the numerous and various withdrawals the Defendant was negligent toward the Plaintiff.

18 Particulars of Negligence

a. Employees, agents and/or servants of the Defendant failed to identify and detect that the signature on withdrawal requests was not the signature of the Plaintiff;

b. Employees, agents and/or servants of the Defendant failed to inform and notify the Plaintiff about the various unauthorized withdrawals;

c. Employees, agents and/or servants of the Defendants failed to address the Plaintiff's written concerns in a missive delivered to the Defendant's corporate office sometime in or around 2019;

d. Employees, agents and/or servants of the Defendant failed to reimburse the Plaintiff for the Defendant's breach;

e. The Defendant failed to have security processes in place and/or sufficient security processes in place to detect the above-mentioned withdrawals were not made by the Plaintiff; and

f. The Defendant failed to inform the Plaintiff about the withdrawals.

AND the Plaintiff claims:

i. A declaration that the Defendants are not entitled to debit the Plaintiff's account with the amount of the said cheque;

ii. Special damages of $14,000.00;

iii. General Damages

iv. Interest on the sum of $14,000.00 at such other rate as the Court shall think just;

v. Costs; and

vi. Any further remedy the Court deems fit and just.”

5 The Claimant's Writ of Summons was served on the Defendant on or about 27 October 2021. In a letter dated 18 November 2021, the Defendant's attorneys informed the Claimant's attorneys that they intended to “file the necessary documents in response” to the claim. However, nothing was filed by the Defendant in acknowledgment of the proceedings by the end of November 2021. Consequently, by a Summons filed on 7 December 2021, the Claimant applied for Judgment in Default of Appearance and Defence under Order 19, Rule 3 of the Rules of the Supreme Court, 1978 (“RSC”).

6 By a Summons filed on 15 December 2021, the Defendant applied ex parte for leave to enter a conditional appearance under Order 12, Rule 6 of the RSC on the ground that the Claimant's claim is statute barred. For reasons that are not in evidence, the application was not heard until May 2023. On 1 May...