Sagicor Bank gets a break on $4b claim • Judge nixes compound interest calculations on award to Seaton parties
The Court of Appeal has effectively put aside a near $4-billion claim against Sagicor Bank Jamaica Limited in favour of contractor York P. Seaton, Y.P. Seaton and Associates and associated company, Earthcrane Haulage Limited which was computed on the basis of compound interest.
Justice Marva McDonald-Bishop, who wrote the decision on behalf of the three-member Court of Appeal panel, ordered that a new accounting exercise be undertaken by an expert agreed between the parties, calculated on simple interest, at an agreed rate.
The case emanated from a lawsuit filed by Eagle Commercial Bank in the Supreme Court in 1993 against the Seaton parties, seeking to recover money the bank said it had erroneously overpaid to their accounts.
Eagle claimed recovery of the overpayments with interest and a declaration that it was lawfully entitled to debit $15.25 million from accounts in the name of Y.P. Seaton. Eagle had also frozen several of Seaton's personal accounts.
Seaton sued Eagle, claiming that the bank had wrongly frozen five foreign currency accounts in his name. Although Eagle had repaid some of the money it had frozen, Seaton contended he was not sure he had received all of the funds, inclusive of interest.
As the case progressed through the courts, Union Bank was formed from the merger of several failed banks, including Eagle Commercial, that were taken over by the government in the 1990s. Union Bank was subsequently acquired by RBTT and renamed RBC Royal Bank in June 2011. RBC Jamaica was acquired and merged with Sagicor Bank in June 2014.
In a judgment handed down by Justice Bryan Sykes three months earlier in March 2014, the court refused to grant declarations sought by RBTT and instead ordered the bank to repay Seaton with interest.
Justice Sykes also ordered the bank to pay Seaton any sum found due and owing to him with interest.
Justice Sykes, at a hearing to consider the basis on which interest should be calculated, ordered in a second judgment on September 24, 2014, that the bank pay monthly compound interest on the sum owed at 27.3 per cent.
The accounting exercise started in the Supreme Court, with the Seaton parties submitting a summary of calculation of their claim for principal and interest of about $4 billion. This was arrived at after a computation done on the basis of compound interest at the rate stipulated by Justice Sykes.
RBTT filed an appeal challenging the orders contained in the two judgments, and Sagicor later filed its application for a stay of execution pending the hearing of the appeal.
The Court of Appeal has adjusted Syke's ruling for the repayment of $15.25 million to Seaton to $9.2 million. "It is apparent that the court below fell into error in making an award of $15,254,583.69 when there was supporting evidence only in respect of $9,200,000," Justice McDonald-Bishop noted.
The appellate court also held that there was no legal basis for the award of compound interest, saying nothing in the case proved it was required.
The new accounting exercise is to be conducted within 60 days of the judgment. The court also affirmed the order for the bank to pay indemnity costs to the Seaton parties.
Patrick Foster, QC, who along with attorney Carlene Larmond represented the Seaton parties, said the attorneys are reviewing the matter with their clients, but a decision has not yet been made whether to appeal.
Michael Hylton, QC, Kevin Powell, Sundiata Gibbs and Melissa McLeod represented Sagicor Bank.