DBJ sues to recover $46m from Aubyn Hill’s company
The Development Bank of Jamaica (DBJ) is headed to court in an effort to collect some $46 million that it says it is owed by the Aubyn Hill-led NationGrowth Microfinance Limited.
But Hill is denying that his company owes the money.
In court documents, Hill argues that based on the terms of the agreement, any sums owing are by subborrowers and not his company.
In September 2009, the DBJ and NationGrowth entered into an agreement that provided for the bank to lend money to Hill's company for the purpose of on-lending to third parties.
The DBJ, which is being represented by Michael Hylton, QC, is arguing that it was a term and condition of the agreement that NationGrowth would repay, on dates agreed, the principal sums with interest.
NationGrowth decided to borrow $80 million on December 9, 2009, and the DBJ claims that the company issued promissory notes for the loans.
The DBJ contends that in breach of the terms of the agreement, letter of commitment, and promissory notes, NationGrowth failed to make payments on the due dates. Interest continues to accrue on the total sum of $45.7 million at a rate of 11.5 per cent, or just over $14,999, each day from August 16, 2014, to the date of judgment.
In the company's defence, filed in the Supreme Court on November 12 last year, attorney-at-law Harold Brady, who is representing Hill, argued that NationGrowth did not owe the money for which it is being sued.
Brady stated that the DBJ and NationGrowth embarked upon a venture to finance the micro financial sector as part of a Government of Jamaica initiative to provide loans to small farmers and middle-income businesses.
Terms of agreement
According to NationGrowth, it was always agreed and understood by the parties that it was to be the special-purpose vehicle for the disbursements and administration of the loans to "qualified persons" to finance eligible projects upon the terms and conditions prescribed by the DBJ.
In addition, NationGrowth contends that all the loans were disbursed only after the persons getting the money were approved by the DBJ.
"It was agreed and understood by the parties that the defendant would collect from the sub-borrowers and pay over to the claimant quarterly and monthly from collections from the sub-borrowers and that DBJ would replenish the fund from which further loans would be made to qualified persons," added NationGrowth in the document filed by Brady.
Brady further contends that the company was unable to collect repayments from sub-borrowers, and so it had to pay, from its own resources, in order to facilitate further drawdowns from the funds to disburse to qualified persons who were approved by the DBJ.
According to NationGrowth, in 2010, it started receiving complaints from the sub-borrowers about their inability to service their loans due to factors beyond their control, and it immediately sent a letter to the DBJ. This was followed by a series of meetings between the parties and the Ministry of Agriculture.
The company argued that the failure of the subborrowers to repay the loans was due to factors beyond its control, including, but not limited to, diseases, bad weather, and faulty seeds and crop stocks.
It said the Ministry of Agriculture had confirmed that some of the farmers and borrowers were now bankrupt.
The DBJ has rejected this argument and is adamant that Hill's company remains liable as principal debtor to the DBJ for the repayment of the loans.