Republic Bank Ltd v Tri-Star Caribbean Inc.
| Jurisdiction | Trinidad & Tobago |
| Judge | A. Mendonça, J.A. |
| Judgment Date | 09 September 2020 |
| Neutral Citation | TT 2020 CA 50 |
| Date | 09 September 2020 |
| Docket Number | Civil Appeal No. P266 of 2018 |
| Court | Court of Appeal (Trinidad and Tobago) |
IN THE COURT OF APPEAL
A. Mendonça, J.A.
G. Smith, J.A.
J. Jones, J.A.
Civil Appeal No. P266 of 2018
Claim No. CV 2015-04245
Mr. I. Benjamin SC and Mr. P. Rudder instructed by Ms. M. Ferdinand appeared on behalf of the Appellant
Mr. E. Prescott SC and Mr. A. Singh instructed by Ms. N. Persad appeared on behalf of the Respondent
I have read the judgment of Mendonça, J.A. I agree with it and have nothing to add.
/s/ G. Smith, J.A.
I have read the judgment of Mendonça, J.A. I agree with it and have nothing to add.
/s/ J. Jones, J.A.
Delivered by A. Mendonça, J.A.
There is before this Court an appeal by the Appellant, Republic Bank Limited (the Bank), and a counter-notice of appeal by the Respondent, Tri-Star Caribbean Inc (Tri-Star). The appeals concern the awards of interest and exemplary damages made by the Trial Judge. In short, the Bank's position with respect to the issue of interest is that the Trial Judge imposed a disproportionate and a punitive rate of interest on an erroneous legal basis and without any evidential foundation. In relation to the award of exemplary damages, the Bank contends that such an award ought not to have been made or alternatively, it is disproportionate. Tri-Star in its counter-notice of appeal contends that the interest awarded by the Trial Judge ought to have commenced from a date earlier than was ordered.
With that short introduction I will set out briefly the factual background to these appeals. Before I begin however, I wish to note that references hereafter to the Bank should properly be at times references to its predecessor, the liabilities of which have been assumed by the Bank. However, for the purposes of these appeals it is not necessary to distinguish between the two and for convenience I will refer simply to the Bank appreciating that the references may at times be to its predecessor.
The Bank at all material times carried on the business of banking in this jurisdiction. In April 2002, the Central Bank of Cuba (CBC) granted to the Bank a Representation Licence to operate in Cuba. The licence, however, prohibited the Bank from conducting directly any banking or financial asset or liability operation in Cuba.
Tri-Star is a company incorporated under the laws of Ontario, Canada. It was licenced by the Cuban Ministry of International Trade to carry on in Cuba the business of the importation and sale of vehicles and ancillary automotive and industrial parts.
In 2004, Mr. Sarkis Yacoubian (Mr. Yacoubian), a Canadian national and a director of Tri-Star, visited the Bank's office in Cuba and arranged a discounting facility with that office. Tri-Star also opened a bank account which was held at the Bank's branch at Independence Square, Port of Spain, in this jurisdiction for the sole purpose of facilitating Tri-Star's business in Cuba.
Under the discounting facility the Bank would primarily discount bills of exchange presented by Tri-Star. In brief, the discounting facility operated in this way: Tri-Star's customers would purchase vehicles and other goods on payment due in the future in accordance with various instruments, primarily bills of exchange. Tri-Star would assign these instruments to the Bank which would advance 78% of the face value of the instrument assigned to it. The Bank would hold 18% as interest and a further 4% as retention in case of late payment to the Bank by Tri-Star's customers. Payment made by Tri-Star's customers and not due to the Bank would be credited to Tri-Star's account at Independence Square, Port of Spain.
The discounting facility seemingly operated well until July 2011 when Mr. Yacoubian was arrested and imprisoned in Cuba. According to Mr. Yacoubian, he was charged with “trumped up charges” of bribery, tax evasion and activities damaging to the Cuban economy. He was convicted and sentenced to a term of imprisonment and fined. The Canadian government secured his release in February 2014 and he was immediately flown to Canada. On Mr. Yacoubian's arrest, Tri-Star's office in Cuba closed. Indeed Tri-Star's Cuban business, which was Tri-Star's only business, was brought to an end following Mr. Yacoubian's arrest.
In February 2013 the CBC wrote to the Bank's representative in Cuba stating that by “Resolution No. 15 dated April 30, 2012” the Bank was instructed to transfer to an account in judicial deposit the funds in Tri-Star's account with the bank relating to the discounting of bills of exchange and a BMW purchase agreement in respect of two of Tri-Star's customers. The Bank replied to the CBC by letter dated February 25, 2013 indicating its preparedness to comply but requested from the CBC the “resolution of the proper entity” which to the Bank's knowledge was the Ministry of Foreign Trade. The Bank added:
“We have obtained references that the mentioned Resolution exists but it is not currently in our hands. Please remit copy of the same with a written instruction from your Office indicating that this Resolution is to be mandatorily fulfilled by our office, a fact that may help us complete transfer of the Letters of Exchange and funds of ‘TriStar Caribbean Inc.’ under custody of our Bank indicated in your communication as soon as possible.”
The Bank was not provided with the Resolution and by letters dated April 28 and June 10, 2014 the Bank wrote to the CBC requesting an update on the matter and an indication as to the manner in which it should proceed. The Bank also pointed out that Mr. Yacoubian had requested return of the funds in Tri-Star's account with the Bank.
By letter dated July 16, 2014 the Bank again wrote to the CBC confirming that it would transfer the funds to the judicial deposit account and required confirmation of the account into which the monies were to be paid since the investigations of the Bank had indicated that the account previously referred to by the CBC was closed. The Bank indicated that after deductions for its commissions the amount to be transferred was US$1,078,256.37. The Bank also sought the CBC's direction in relation to a sum of US$33,727.32 “corresponding to credit for retention for previous operations”.
Despite the Bank's letter of July 16, 2014, by May 22, 2015, the Bank had received no response from the CBC and the funds were not yet transferred to Cuba. The Bank on May 22, 2015 again wrote to the CBC requesting an update on instructions to transfer the funds because Mr. Yacoubian had contacted the Bank's headquarters and the account to which the Bank was directed by the CBC to transfer the funds was closed.
By email dated May 26, 2015 Mr. Yacoubian was informed by the Bank that the funds could not be released to him due to a freeze order in place by the CBC. The bank further indicated that it will seek an update and will get back to Mr. Yacoubian.
Mr. Yacoubian in May 2015 was provided by the Bank with a statement of Tri-Star's monies held by it. That statement reflected a balance of US$1,111,983.69 being the total of the sums of $1,078,256.37 and $33,727.32. Mr. Yacoubian however observed that a sum of US$146,535.13, which in his view was owed to Tri-Star by the Bank, was not shown in the statement.
Tri-Star, through its attorneys-at-law, sent a pre-action protocol letter dated October 27, 2015 to the Bank. In the letter, payment was demanded on Tri-Star's behalf of the sums of US$1,111,983.69 and the additional sum of US$146,535.13. The Bank responded through its attorneys-at-law by letter dated November 18, 2015 stating, inter alia:
“We are instructed that a Regulatory Order from the Central Bank of Cuba as well as a Ministerial Resolution was issued and served on Republic Bank Limited's Representative Office in Cuba in Havana directing that funds held in your client's account were to be paid into a judicial deposit account. Our client had no alternative but to comply, pending its review of the Regulatory Order and Ministerial Resolution so as not to have its licence revoked.”
Contrary to the impression given in that paragraph, the Bank had not as yet paid the funds to the judicial deposit account.
These proceedings were commenced on December 11, 2015.
The Bank was subsequently instructed by the CBC by letter dated February 12, 2016 to transfer to the deposit account in Cuba the sum of US$1,078,256.37. By another letter also dated February 12, 2016 the Bank was informed that the funds in the sum of US$33,727.32 were not affected by “the court-order freezing” of Tri-Star's account and was not the target “of any judicial seizure or confiscation order” and that these funds were at the Bank's disposal.
On February 19, 2016 the Bank remitted the sum of US$1,078,256.37 to Cuba and on July 21, 2016, after the commencement of these proceedings, the sum of US$33,727.32 was wired by the Bank to Tri-Star. Tri-Star however, actually received the sum of US$32,854.00 leaving a balance of US$873.32.
In these proceedings, Tri-Star sought (a) damages arising out of the Bank's wrongful detention and conversion of the sums of US$1,078,245.37, US$146,553.67 and US$33,727.32; (b) alternatively, damages for breach of contract; (c) interest on the sums claimed at the rate of 26% per annum or alternatively, at a rate equal to the Bank's percentage profit for the year ended 2015 or alternatively, at such rate as the court considers reasonable compounded annually from November 5, 2012 or alternatively, over such period or periods as the court considers reasonable; (d) an inquiry as to the profits the Bank made from its Cuban business after June 5, 2014; and (e) exemplary damages.
At the trial, Mr. Yacoubian gave evidence on behalf of Tri-Star and Ms. Davi Samaroo-Singh, who held the position of Country Manager of the Bank's office in Cuba from January 1, 2014 to...
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