Gifford Morrell and Another v Workers Savings & Loan Bank
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance |
| Judgment Date | 18 January 2007 |
| Neutral Citation | [2007] UKPC 3 |
| Date | 18 January 2007 |
| Court | Employment Appeal Tribunal |
| Docket Number | Appeal No 20 of 2006 |
[2007] UKPC 3
Privy Council
Present at the hearing:-
Lord Nicholls of Birkenhead
Lord Hope of Craighead
Lord Millett
Lord Walker of Gestingthorpe
Lord Mance
[Delivered by Lord Mance]
The appellants, Mr Gifford Morrell and Miss Fiona Morrell (father and daughter) were active customers of the respondent bank, Workers Savings & Loan Bank, during a two-year period beginning in February 1992 and ending in May 1994. After that time the bank refused to honour further cheques and the appellants' four accounts (a Jamaican dollar current account No. 8001100 and US dollar, Canadian dollar and pound sterling accounts) became inoperative. In proceedings brought in March 1996 the appellants claimed inter alia an account and declarations to the effect that the bank "has wrongly debited [their] accounts in all instances where the [bank] is unable to supply documentary proof or authorisation for such debits", that an overdraft and overdraft and penalty interest debited by the bank to the Jamaican dollar account were not owed, and that a mortgage dated 9 th December 1993 over property in Lacovia, St Elizabeth did not cover any overdraft (as the bank was contending) but was only given to the bank as security for a loan which was never granted and was thus unenforceable. The bank counter-claims for an overdraft (put, with interest, at 56.86 million Jamaican dollars [or J$56,856,850.54] in September 1994).
The claim and counter-claim were the subject of a trial extending over some 28 days from December 1997 to May 1998. On 2 nd October 1998 the trial judge, Cooke J, gave a detailed judgment, concluding in summary that (a) in respect of the period ending 31 st December 1992 any liability of the appellants on the Jamaican dollar account was limited to that revealed by monthly bank statements which the bank was able to produce - in the event the bank could not produce any complete set of such statements, and the balance on the Jamaican dollar account was taken as nil, rather than at the overdraft level of J$2,348,147.25 suggested by such statements as the bank could produce, (b) the bank had established as accurate and binding the movements shown on all subsequent bank statements and (c) interest was only recoverable on the Jamaican dollar overdraft from time to time at a reasonable rate, which the judge fixed at 45% p.a. with half-yearly rests. In the result, the appellants' claim was dismissed and the counterclaim succeeded in an amount which in October 1998 totalled with interest (and after crediting some small balances on the foreign currency accounts which carried interest at only 4% p.a.) $243,201.568.87.
The Court of Appeal consisting of Downer, Bingham and Walker JJA, heard an appeal by the appellants over 44 days, The hearing started in October 1999, continued in March and April 2000 and then in March and December 2002 and concluded in January 2003. During the second period in March 2000, the appellants sought to raise, for the first time, the entirely new point that the purpose of the accounts which they had opened and operated was, to the bank's knowledge and with its consent, illegal foreign exchange trading on their part. As a result, they argued that the bank's counterclaim and any attempt to enforce the mortgage, if given as security for the overdraft on the accounts, must fail and (presumably therefore) accepted that their own claim must likewise be dismissed. The Court decided that it would hear the substantive submissions on this new point de bene esse, reserving until judgment the decision whether to allow the point to be raised at all. By judgment given on 4 th November 2004 and by a majority (Downer JA dissenting) the Court of Appeal upheld Cooke J's determination of the substantive issues. Downer and Walker JJA held that the defence of illegality should not be allowed to be raised because it involved issues of fact which it would have required trial to determine, while Bingham JA held that any such defence failed on the facts found by Cooke J. Against this judgment, appeal is now brought by leave of the Court of Appeal.
The appellants' accounts were with the bank at its Savanna-la-mar branch in the parish of Westmoreland. The appellants signed account opening forms for the accounts which provided inter alia that
"Each of the undersigned further agrees with you and with each other that …. such moneys and interest or any part thereof may be withdrawn by any one of the undersigned or his or her attorney or agent, and each of the undersigned hereby irrevocably authorises you to accept, from time to time, as a sufficient acquittance for any amount so withdrawn, any receipt, cheque or other document signed by any one of the undersigned, or his or her attorney or agent, without any further signature or consent".
Mr Morrell was described in the documentation as a fish farmer, although, since the description was not in his writing, it is not clear whether it appeared on the documentation when he signed it. The appellants also signed in respect of the Jamaican dollar current account an "agreement re operation of account" dated 16 th April 1992 providing inter alia:
"3. CHARGES TO ACCOUNT:
The Bank may charge against any account of the Customer at any branch of the Bank the amount of any bill of exchange, promissory note, cheque or other instrument, drawn, made, accepted or endorsed by the Customer which is payable at any branch of the Bank, and the amount of any bill of exchange, promissory note, cheque or other instrument cashed or negotiated by the Bank for the Customer or credited to his account for which payment is not received by the Bank, together with any charges and expenses incurred by the Bank in connection therewith and the Customer shall be and remain liable to the bank in respect of each amount so charged.
4. VERIFICATION OF ACCOUNT:
Upon the receipt from the Bank from time to time of a statement of account of the Customer together with cheques and other debit vouchers for amounts charged to the said account appearing therein, the Customer will examine the said cheques and vouchers and check the credit and debit entries in the said statement and, within thirty days of the delivery thereof to the Customer or, if the Customer has instructed the Bank to mail the said statement and cheques and vouchers, within thirty days of the mailing thereof to the Customer, will notify the Bank in writing of any errors or omission therein or therefrom; and at the expiration of the said thirty days, except as to any errors or omissions of which the Bank has been so notified, it shall be conclusively settled as between the Bank and the Customer that the said cheques and vouchers are genuine and properly charged against the Customers and that the Customer was not entitled to be credited with any amount not shown on the said statement."
Although Miss Morrell was or became a joint customer of the bank in respect of all four accounts, the accounts and their operation have been treated, no doubt realistically in the light of Mr Morrell's evidence, as under his complete control and as belonging to him alone.
Whatever the extent of Mr Morrell's involvement in fish farming, it is clear that by early 1992 he was engaged on a very substantial basis in the quite different business of dealing in foreign exchange from his base in Negril some 22 miles from Savanna-la-mar. The judge found that, after a spell as supervisor of Alcan's Jamaican dairy herd, Mr Morrell embarked on this new business in the late 1970s, and that
"By 1992 he was well-established and had cultivated a most desirable clientele. The volume of his transactions staggered the comprehension of the court".
However, the judge also found, as will appear, that Mr Morrell had other business interests, including an Eco-tourism project at the 60 acre property in Lacovia which was the subject of the mortgage and where Mr Morrell lived. Mr Morrell became a customer of the bank after a lunch meeting with the bank's Savanna-la-mar manager, Mr Heron, in early 1992, where "a business relationship …. was fashioned" which gave rise at the trial to issues as described by the judge in the following passage:
"Essentially, Mr. Morrell would transact his [foreign exchange] business through the bank. For the bank, this would result in its customers being better serviced. It would have acquired a most preferred customer and access to considerable foreign currency. There would be consequential benefits to its income. For Mr. Morrell, some of his logistical hurdles would be removed. No longer would his couriers or himself have to be traversing Jamaica carrying cash. His customers would receive foreign exchange through the network of the bank. Mr. Morrell's evidence is that he was to receive special treatment.
Now, Negril is some 22 miles from Sav-la-mar. He was to be allowed into the bank before opening hours and after closing hours to transact business. All his Jamaican dollar requirements to purchase foreign exchange would be provided to him. He would be given same day clearance on instruments. According to Mr. Morrell, a critical aspect of the proposed relationship was that purchasers of foreign exchange must first deposit to his account the equivalent Jamaican currency before there could be any deduction from his foreign currency accounts to be paid to them. Further, there should be no deduction from any of his accounts unless he had so authorised in writing. It is Mr. Morrell's contention that the bank was in breach of contract, and negligent as regards these two terms of the agreement. He also says that the bank did not ensure that the payments in Jamaican dollars in respect of the purchases of foreign exchange were credited to his current account. This...
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