Munroe v First Caribbean International Bank (Bahamas) Ltd

• Jurisdiction: Bahamas
• Judge: Fraser, J,DEBORAH FRASER,JUSTICE
• Judgment Date: 01 February 2016
• Court: Supreme Court (Bahamas)
• Docket Number: CLE/gen/01915 2013
• Date: 01 February 2016

COMMONWEALTH OF THE BAHAMAS

IN THE SUPREME COURT

Common Law and Equity Divison

Before:

The Hon. Mrs. Justice Deborah Fraser

CLE/gen/01915 2013

Between

Earnal Munroe

Plaintiff

and

First Caribbean International Bank (Bahamas) Ltd.

Defendant

Appearances:

Mr. Wayne Munroe and Mr. Clinton Clarke for the Plaintiff

Mr. Luther Mcdonald and Ms. Keri Sherman for the Defendant

Negligence - Whether the defendant exercised the required standard of care and diligence expected of a licensed banking institution — Whether the defendant caused the plaintiff to suffer loss and damage by paying against the plaintiff's account.

Fraser, J

Background

1 This is a claim by Writ of Summons filed on November 22 ^nd 2013 by the Plaintiff against the Defendant for breach of contract on the purchase of a Bill of Exchange on July 3 ^rd 2013, and/or that the Defendant were negligent in their duty in not exercising the required standard of care and diligence expected of a licensed commercial banking institution thereby, causing the Plaintiff to suffer loss and damage.

2 The facts of this case are not in dispute and I will adopt them as set out in the submissions of counsel for the Defendants as follows:

• i. On or about the 3 ^rd July 2013, Earnal Munroe, a client of the firm of Anthony Thompson & Company, attended the firm. He was instructed to obtain a Manager's cheque payable to “Kirkland Johnson/Anthony Thompson & Company.”

• ii. On the 3 ^rd July 2013, the Plaintiff attended at the Shirley Street Branch of the Bank and requested that a Manager's cheque be issued in favor of “Kirkland Johnson/Anthony Thompson & Company.”

• iii. On the same day, the Plaintiff paid the cheque at the office of Anthony Thompson & Company, who accepted the same and the Plaintiff received a receipt from Anthony Thompson and Company acknowledging payment of the said sum.

• iv. Again on the same day, Kirkland Johnson (“Mr. Johnson”), an employee of the firm, who was put in possession of the cheque by the firm, presented the cheque at the Shirley Street Branch of the Bank.

• v. The Bank, after confirming the identity of Mr. Johnson, paid the proceeds of the cheque to Mr. Johnson in cash.

• vi. Following complaint to the Police by the said Anthony Thompson & Company, Mr. Johnson was on the 13 ^th July 2013, charged in the Magistrate's Court with stealing the sum of $15,900.00 from Anthony Thompson & Company by reason of his employment with the said law firm.

  (It has also been conceded that for the purposes of this case the procedure for cashing a Manager's cheque and a cheque are one and the same)

3 A Statement of Claim was filed on December 19 ^th 2013, in which the Plaintiff claims loss of:

• (1)$15,900.00;

• (2) special damages of charges and fees paid;

• (3) interest;

• (4) cost;

• (5) such further and other relief the Court deems just.

4 The Defendant filed a Defence on the 14 ^th February 2014, in which they denied the claim and stated that the Defendant is not liable for the refund of the value of the cheque to the Plaintiff as the same had been duly paid out by the bank in accordance with the instructions of the Plaintiff. They also denied that the Plaintiff suffered loss or damage as alleged in the Statement of Claim.

5 The issues are:

• (a) Did the Defendant exercise the required standard of care and diligence expected of a licensed banking institution?

• (b) Did the Defendant cause the Plaintiff to suffer loss and damage by paying against the Plaintiff's account the sum of $15,900.00?

6 Did the bank exercise the required standard of care which would include conduct of the necessary inquiries during the preparation and negotiation of the instrument in this case? At common law, an implied term of contract is that a professional person agrees to render certain services for a reasonable fee and in return he will exercise reasonable skill and care.

7 Counsel for the Plaintiff submits that the bank carries out its customer's instructions under an implied contractual duty to exercise skill and care and the standard of care by which the absence or presence of negligence is to be determined must be ascertained by reference to the practice of reasonable men carrying on a business of bankers ( Lloyds Bank v. Savory and Co. [1933] A.C. 201, 221) and the fact that on inquiry is not likely to disclose that a fraud is involved does not excuse the banker's failure to investigate. ( Underwood (AL) Ltd. v. Bank of Liverpool (1924) 1 K.B. 775,789 and a banker is considered negligent if without making due inquiry, he credits to the private account of an agent a cheque payable to him in his representative capacity. Bute (Marquess) v. Barclays Bank (1955) I/Q.B. 202.

8 Further, counsel for the plaintiff submits that Bankers ought to be held at a high standard and one of their main duties to the customers is to protect them against fraud committed by individuals or third parties. The Defendant therefore owed the Plaintiff a general duty in contract and in tort to take reasonable care in rendering services to him by following his instruction even though the agreements entered into between the parties did not contain any express terms requiring the bank to advise the customer. Go Dante Yap v Bank Austria Creditan Stalt AG (2011) SGCA 39.

9 It is submitted by counsel for the Plaintiff that when the Plaintiff attended the Bank to request a Manager's Cheque the Defendant did not adhere to the universal banking codes and standards set for the good practice with respect to banking transactions which all banking staff should be aware and perform diligently and skillfully and the fact that the draft was for an amount exceeding $15,000.00 certain steps should have been taken in accordance with guidelines set by the Central Bank of the Bahamas. This ground is not contained in the pleadings by the Plaintiff and therefore cannot be relied upon at trial. I can say that having looked at the provision it appears to be discretionary and the witness for the Defendant Ms. Bain in cross-examination did confirm in her evidence that she had knowledge of the legislation relating to Money Laundering and Anti Terrorism.

10 The Plaintiff witness statement reads as follows:

• “1. That on the 3 ^rd day of July A.D. 2013, in the afternoon, I personally attended the main branch of CIBC First Caribbean International Bank (Bahamas) Limited (“FCIB”);

• 2. That while at FCIB I approached the queue for teller transactions, which I knew to be responsible for processing deposits, withdrawals, credit card payments, bank drafts, Manager's Cheques and wire transfers;

  that I had reason to speak with a teller at the counter...