BETWEEN RBC ROYAL BANK (TRINIDAD AND TOBAGO) LIMITED (FORMERLY RBTT BANK LIMITED) And KEITH MEDINA LYDIA MEDINA CHRISTIAN MEDINA

THE REPUBLIC OF TRINIDAD AND TOBAGO IN THE HIGH COURT OF JUSTICE Claim No. CV2013-00803 In the matter of the property comprised in a Deed of Mortgage dated 27 th day of July, 1998 made between FITZROY PHILLIP MEDINA and ELISE MEDINA of the First Part, MEDINA PLUMBING LIMITED of the Second Part and THE ROYAL BANK OF TRINIDAD AND TOBAGO of the Third part And In the matter of Conveyancing and Law of Property Ordinance Chap. 27 No. 12 BETWEEN RBC ROYAL BANK (TRINIDAD AND TOBAGO) LIMITED (FORMERLY RBTT BANK LIMITED) And Claimant KEITH MEDINA LYDIA MEDINA CHRISTIAN MEDINA First Defendant Second Defendant Third Defendant Before the Honourable Mr. Justice R. Rahim Appearances: Mr. C. Sieuchand Instructed by Ms. A. Donawa for the Claimant Mr. R. Montano Instructed by Ms. S. Gopeesingh for the First and Second Defendants Mr. B. Hallpike for the Third Defendant

Judgment 1. This claim was instituted pursuant to Part 69 of the Civil Proceedings Rules 1998 ( the CPR ). The claimant, as Mortgagee, seeks an order for possession of the property situate at No. 3 Clarence Street, St. James, Port of Spain ( the property ). The property is not registered property under the provisions of the Real Property Act. The trial in this case was a trial by way of affidavits with cross-examination of the deponents. Background 2. On the 28 th February, 2013, the Claimant filed a Fixed Date Claim Form seeking inter alia the following relief: Delivery up to the Claimant with vacant possession of: ALL AND SINGULAR that certain piece or parcel of land situate at St. James in the City of Port of Spain in the Ward of Port of Spain in the Island of Trinidad formerly known as No. 3B Clarence Street but now known as No. 3 Clarence Street comprising ONE HUNDRED AND NINETY-THREE POINT FOUR (193.4) SQUARE METERS delineated and coloured pink and numbered 3 on the plan annexed and marked A to the deed registered as No. 5666 of 1989 3. By Deed of Mortgage dated the 27 th July, 1998 and registered as number 16361/98 ( the 1998 mortgage/loan ), Fitzroy Phillip Medina ( Fitzroy ) and Elise Medina ( Elise ) conveyed the property to the Claimant as security for a loan of Three Hundred Thousand Dollars ($300,000.00) to Medina Plumbing Limited ( the Company ). Fitzroy and Elise were the guarantors/sureties of the 1998 mortgage and the Company Keith and Lydia Medina, the First and Second Defendants herein executed the 1998 mortgage on behalf of the Company as directors. The Mortgage is therefore a legal mortgage in which title is vested in the Claimant with the Mortgagors having an equity of redemption. 2

4. Christian Medina, the Third Defendant, who is the sibling of the First Defendant herein was made a party to these proceedings on 17 th March, 2015 on his own application since he claims to be in possession of the property and also claims to be a beneficiary of the house standing upon the property under the provisions of a Will. The Third Defendant s application to join came rather late in these proceedings in that the court had already adjourned for the purpose of delivering judgment when the Third Defendant made his application which was argued and subsequently granted. As a consequence, the trial was re-opened with further cross-examination of the witness on behalf of the Third Defendant being permitted and evidence on his part. 5. Fitzroy and Elise, the parents of the First Defendant died on the 28 th June, 2010 and 26 th October, 2011 respectively. Elise was the step mother of the Third Defendant. 6. The Claimant is a limited liability Company registered under the laws of Trinidad and Tobago. Issues 7. The following issues fall for determination: i. When does a Mortgagee become entitled to possession of mortgaged premises pursuant to a legal mortgage. ii. Are the Guarantee documents and the 1998 Deed of Mortgage unenforceable due to lack of independent advice to the Guarantors, Fitzroy and Elise. iii. Was the consent of the sureties, Fitzroy and Elise and the Third Defendant necessary for the Second Demand loan to be secured under the 1998 Deed of Mortgage. iv. Was the 1998 Deed of Mortgage discharged by the repayment of the First Demand loan. v. Can an order of possession be made against each Defendant. 3

The Case for the Claimant 8. The Claimant relied on the affidavit of Ms. Sandra John-Virgil, a Retails Collection Officer, in support of the fixed date claim form. It is the case for the Claimant that under and by virtue of the 1998 mortgage, the Claimant extended to the Company the following facilities: i. Demand Loan under Account Number 3010016024-14010599, ii. Overdraft in the Current Account Number 941-101-263-7, and iii. Demand Loan under Account Number 3010016024-14015457. 9. As a result of the said accounts falling into arrears by way of default in payment of the Mortgage instalments, the Claimant pursuant to its power of sale under the 1998 mortgage sought to offer the property for sale with vacant possession. 10. Prior to these proceedings, the Claimant filed a Fixed Date Claim Form dated the 21 st July, 2010 against Fitzroy and Elise, for vacant possession of the property and payment of the sums due and owing by virtue of the 1998 mortgage. However, both Fitzroy and Elise died before the matter could be determined, after which the claim was stayed. The Claimant then issued Notices to Quit to the First and Second Defendants on the 10 th of August 2012, after being informed that they were in unlawful possession of the property. 11. According to the affidavit of Mrs. John-Virgil, sometime in or around March, 2013, she instructed one of the Claimant s Process Servers, Mr. Rondon Brown to effect Service of the Fixed Date Claim Form and her principal affidavit dated 28 th February, 2013 on the First and Second Defendants at the property. 12. It is Mrs. John-Virgil s testimony that Mr. Brown informed her that in attempting to effect service on the First and Second Defendants he was informed by a neighbour that the First and Second Defendants did not currently reside at the property and that 4

the Third Defendant occupied the property with the permission of the First and Second Defendants. That the Third Defendant frequently visited the property on behalf of the First and Second Defendants to check the same and would spend the night and leave the following morning. The Case for the First and Second Defendants 13. Having regard to the manner in which this case developed, the court will adopt a different approach to the review of the case. What began as an unremarkable standard action for recovery of possession by a Mortgagee soon turned into a highly contentious matter. The gravamen of the Claimant s case lies in large measure with the response by the Claimant after allegations of impropriety were made. In examining the respective cases therefore, it makes good sense to treat with the allegations before moving on to the response to those allegations. 14. The case for the First and Second Defendants was set out by way of affidavit of the 29 th May, 2014 sworn to and filed by the First Defendant. It is their case that in 1998 they applied to the Claimant for a loan of $300,000.00. The loan having been granted, the First Defendant s parents, Fitzroy and Elise provided security for the loan in the form of their property situate at No. 3 Clarence Street, St. James, Port of Spain ( the property ). The First Defendant testified that one of the conditions of the loan was that it would not exceed $300,000.00 and that the Second Defendant and he were present when his parents laid down this condition. Save and except for this evidence there is no supporting evidence of such a condition either by way of the loan documents or in any other form. In fact the evidence appears to be to the contrary, in that facilities were granted whereby overdrafts would be extended using the very security. 15. According to the affidavit of the First Defendant, in order for their loan request to be facilitated, they were told to assign contracts that Medina Plumbing Limited, ( the Company ) had at that time with third parties to the Claimant. Therefore, the Claimant controlled and managed the Company s income and expenditure. At that 5

time the company had three contracts with NIPDEC (in relation to Fraud Squad, Magistrate s Court and T&TEC Head Office buildings) totalling 1.9 million dollars. 16. It is the First Defendant s testimony that no-one from the Company requested any overdraft facility on Account Number 941-100068-1, which was the Company s main account. That the only loan the First and Second Defendants requested or authorised was that under Account Number 3010016024-14010599 for the sum of $300,000.00. 17. The First Defendant averred that he and the Second Defendant were the only two persons who were authorised to sign on behalf of the Company, and to request the facilities of the Claimant on the Company s behalf. That the First and Second Defendants were unaware of their account being credited with money from overdraft facilities which were subsequently consolidated in the sum of $815,000.00. See paragraph 23. 18. The First Defendant testified that it was only in December, 1999 that he and the Second Defendant realized that the loan payments were not being deducted from their account. That at that time they owed $160,327.93 towards the 1998 loan, were consistently paying the monthly sum of $27,936.00 on account thereof and had sufficient funds in their bank account to continue payments in this manner. 19. According to the affidavit of the First Defendant, six equal monthly instalments had been paid between the 25 th September, 1998 and the 25 th February, 1999. That the loan was paid via a standing order and was deducted from their Account Number 941-100068-1. The First Defendant testified that they did not require any further loan since at that time they had sufficient funds to continue paying off the 1998 loan and did not know why the Claimant stopped deducting the loan payments. 20. It is the testimony of the First Defendant that he went to the Bank to get a loan to purchase a vehicle and was told by Mrs. Melville, an employee of the Bank, that his accounts were in disarray and that he should get to the bottom of it. That Mrs. Melville told him that the 1998 mortgage was not being serviced and as a result he 6

had problems with his credit rating. Further, Mrs. Melville indicated that unusual amounts of money were coming out of the account but yet the 1998 mortgage was not being serviced. 21. Mrs. Melville told the First Defendant that the Bank had stopped a certain Bank Teller from dealing with their account because of some irregularities the Bank was seeing on their end. That Mrs. Melville made a connection between this Bank Teller and one of the Company s employees, Ms. Hazel Ann Murray as they had gone to a Bank s event together. Ms. Murray was the Company s Administrative Assistant. 22. The First Defendant testified that Mrs. Melville promised to investigate the matter but she was re-assigned by the Bank and as such was no longer their attendant officer. Ms. Mercedes was thereafter assigned to the Company s account. 23. According to the affidavit of the First Defendant, in March, 2000, the Second Defendant found falsified pay roll sheets in the Company s office bins. These sheets which included names of employees who were not employed with the Company. That as a result of what Mrs. Melville told the First Defendant, he now had proof to fire Ms. Murray and so he did. Subsequently, the First Defendant sought answers from Ms. Mercedes in relation to the suspicious transactions in the account but none were forthcoming. 24. It is the First Defendant s testimony that they never received any notifications of the purported loan and overdraft facility. That on the 3 rd August, 2000, the First Defendant was called into the Bank and presented with a letter dated the 2 nd August, 2000 and a promissory note dated the 3 rd August, 2000. 25. Ms. Tang Yuk, the manager of the Bank telephoned the First Defendant and told him to bring the Company s stamp. Ms. Tang Yuk and he were the only persons at the meeting on the 3 rd August, 2000 and she instructed him to sign the promissory note in the sum of $815,000.00. The First Defendant testified that he explained to Ms. Tang Yuk that they did not take this money and she responded by saying that if he did not 7

sign it, the Claimant would take his parents house (the property). That he, the First Defendant was then handed the letter dated the 2 nd August, 2000 which advised him that they were making available to the Company a facility of $815,000.00. The letter requested that the First and Second Defendants sign and confirm acceptance of the terms and conditions but made no mention of any overdraft facility. Thus, the First and Second Defendant were still unaware of the overdraft facility. 26. According to the affidavit of the First Defendant, at the above mentioned meeting Ms. Tang Yuk did not give him an opportunity to read the letter dated 2 nd August, 2000. Ms. Tang Yuk kept telling him that his parents home would be repossessed. That she also instructed him to take any further existing contracts of the Company and assign it to the Bank. The First Defendant testified that they assigned their contracts with NH International, Moosai Development and Carillion. These contracts according to the First Defendant were about to start in September, 2000 and October, 2000 and their contract values were $411,000.00, $300,000.00 and $410,000.00 respectively. The contractors then dealt with the Bank as all contract payments went to the Bank. 27. The First Defendant testified that between the periods 2000 to 2002 all the Company s contracts were assigned to the Claimant and the Claimant would release to the First and Second Defendants limited funds in order to pay their workers and to buy material. That the Second Defendant was at the time employed as a teacher at St. Francois Girl s College and the First Defendant and his family lived on her income alone. 28. It is the First Defendant s testimony that in 2004, he and the Second Defendant received correspondence and were invited to a meeting where they were instructed that the Remedial Unit of the Bank would now be dealing with their account. The First and Second Defendants met with Mr. Michael Bhimsingh and Mr. Raymond Bachoo. The First Defendant testified that he and the Second Defendant wrote to their contractors informing them that all payments were to be forwarded to the Claimant. In 2003, the Company got contracts with Raghunathsingh Limited, National Gas Company and Triple Bique Limited for the amounts of $299,000.00, $108,000.00 and 8

$150,000.00 respectively. These contracts were subsequently assigned to the Claimant. 29. According to the First Defendant s affidavit, he broke his leg in December, 2004 and requested funds in order to have a surgery, however, his request was denied. The First Defendant testified that it was now clear that things were extremely wrong and he and the Second Defendant started writing to the Claimant and documenting the same. That the Claimant never informatively responded. The First and Second Defendants requested their Bank statements from the Claimant since the First and Second Defendants were not receiving them in the mail. The Claimant did not provide the statements on this occasion. 30. The First Defendant testified that on the 19 th January, 2006 it appeared that the 1998 mortgage had been up-stamped. That the Claimant neither sought the consent of the First Defendant s parents, Fitzroy and Elise nor his consent for this. 31. The First Defendant attested that he was advised that the Claimant released the Guarantee by their actions of changing and allegedly consolidating the 1998 mortgage. That the Deed for the property should have been given back to the First Defendant s parents. Further, if the Claimant wanted to extend the guarantee, it should have followed proper procedure and extended the agreement with fresh signatures from the First Defendant s parents. 32. It is the First Defendant s testimony that the Claimant initiated legal proceedings against his parents for possession of the property and that his parents received several Notices to vacate the same. 33. According to the First Defendant s affidavit, MG Daly & Partners on the Claimant s behalf began communicating with his parents, his attorney Mr. Montano, the Second Defendant and he via letters in 2005. That it was only by correspondence dated the 8 th February, 2006, they we formally informed of the overdraft and that it amounted to 9

$606,000.00. That the Company s current account number 941-101263-7 without the First and/or Second Defendant s authorisation became an overdraft facility. 34. It is the First Defendant s testimony that in 2006, the Claimant provided a summary sheet of the history of the 1998 mortgage for the periods 1998 to 2003. That the summary sheet showed a gap from March, 1999 to July, 2000. That this statement could not reflect what they, the First and Second Defendants were actually paying toward the 1998 mortgage since they knew their contract values. Over the periods 1998 to 2004, the First and Second Defendants assigned over approximately $5,088,000.00 in contracts to the Claimant. In the year 1999 between March to August, a total of $963,753.70 was deposited into their current account. That they did not understand why the Claimant did not continue the standing order on the 1998 mortgage. Further, that there was little reflection of loan payments in that account over the years. 35. According to the First Defendant s affidavit in 2010 through his attorney, Mr. Montano, he, the First Defendant finally got access to some of the Bank Account Statements for the periods 1998 to 2004. 36. Consequently, the First and Second Defendant finally had access to the information concerning the steady climb of the overdraft facility which they never authorised. It was only then that they understood that there was an overdraft facility existing simultaneously with the 1998 loan account. The First Defendant testified that the statements received did not match the loan history summary sheet that was provided. That the First and Second Defendants tried to get answers from the Governor of the Central Bank and Mr. Pennycock, the Minister of Tobago Development and Bankers Association. 37. It is the First Defendant s testimony that by letter dated the 6 th April, 2009, the Claimant suggested that he orally requested the extensive overdraft facility. That the First Defendant requested this overdraft from time to time to assist the Company to 10

fund various projects in which it was involved. Further, the First Defendant testified that he never requested the new account number 941-101263-7. 38. According to the First Defendant s affidavit, the Second Defendant, Mr. Ved Seereram, their financial advisor and he met with Ms. John-Virgil on the 29 th May, 2013 at RBC Independence Square. At this meeting, they continued to make requests that certain documents allegedly within the Claimant s possession with regard to the authorisation of the overdraft facility be provided. That they specifically asked for withdrawal slips to prove that they, the First and Second Defendants were taking funds from the overdraft facility. That they have been denying this fact and have been asking the Claimant for years for the production of these documents and the Claimant has been unable to provide the same. That the Claimant allowed an excessive overdraft facility on Company s account, without a limit and without the First and Second Defendants consent. 39. Thus, it is the case of the First and Second Defendants that the overdraft facility was extended continuously over the years without their consent, the Claimant forced the First Defendant to sign a promissory note in the sum of $815,000.00 and acceptance of the terms of such. Further, that the Claimant refinanced the 1998 mortgage by almost 200% without any documentation and that the Claimant never provided details of deposits collected from the First and Second Defendants loan amounts. Cross-examination of the First Defendant 40. In cross-examination, the First Defendant was shown the bank statements marked KM11 attached as exhibits to the affidavit of the First Defendant. These bank statements cover various months during the years 1998 to 2004. When asked what the letters OD marked next to particular figures on those statements stood for, the First Defendant agreed that they stood for overdraft. The First Defendant testified that as at the 24 th February, 1999 the Company s account was overdrawn. That the monies to pay for the overdrawn balance came from cheques that were brought into the account. 11

41. According to the evidence of the First Defendant, the current account was the Company s operational account and monies were being withdrawn from it to meet the Company s expenses which included salaries and material costs. 42. The First Defendant testified during cross-examination that every transaction or every cheque that he collected he would take to Mrs. Melville. That when he met with her, they would discuss the sum that he would be able to receive from that cheque. Also they would discuss that the First Defendant had to pay salaries and material costs. That she would release the balance from the cheque into the Company s account. 43. According to the evidence of the First Defendant, since the establishing of the Company s account he had to request permission to withdraw funds from the Bank. That he could not withdraw money or issue cheques on the account without prior consultation with the Bank. That before he wrote a cheque he would have to consult the Bank to ensure that it did not bounce. Further, that Mrs. Melville would sometimes bounce the cheques. 44. The First Defendant testified that he was not earning a salary from the Company and it was only when he left the Bank he started earning a salary from the Company but could not say at what date he left the Bank. 45. Further, the First Defendant testified that he saw the demand letter dated the 9 th February, 2000 which was issued by the Claimant to the Company. This letter demanded full settlement of the Company s indebted to the Bank. The Case for the Third Defendant 46. The Third Defendant swore to and filed an affidavit on the 31 st March, 2015. According to his affidavit, he has been living at the property since in or around July, 1976. That in or around July, 1999, after completing his studies and obtaining gainful full time employment at Insync Software Limited as an Analyst/Programmer, he 12

started contributing financially to the upkeep of the property which was owned by his parents, Fitzroy and Elise. 47. The Third Defendant testified that in 2002, he married and brought his wife into the property to live with he and his parents. During this time he was a temporary caretaker for a house in Freeport owned by one of his sisters. That he and his wife would overnight at that house two or three times a week but still contributed financially to the property since that was where they stayed most of the time. 48. He testified that in or around 2005, he obtained a bridging loan from RBC to construct a home on a property situate at Corner Lawrence Wong Road and Maraj Lane, Longdenville, Chaguanas ( the matrimonial property ). This property was owned by both he and his wife. That in or around 2006, the loan was converted to a mortgage. 49. His marriage subsequently failed and as part of the divorce settlement he continued to pay the mortgage as payment towards the maintenance of his son and relinquished all of his rights to the matrimonial property. In or around March, 2010 he obtained new employment with John Dickson & Co. (WI) Ltd as an I.T. Administrator. That due to an increase in salary and the advanced ages of his parents, he started contributing more to the upkeep and maintenance of the property. 50. It is the Third Defendant s testimony that on the 26 th October, 2011, his step mother, Elise, passed away. He testified that he lived with Elise since he was five years old, she considered him to be her son and he considered her as the only mother that he knew. That by Elise s last Will and testament executed on the 25 th July, 2011, she bequeathed the property to him absolutely. In or around November, 2011 after the death of Elise, he took all responsibility for the running of the property which included but was not limited to paying for all the utilities, the maintenance and upkeep of the same. 13

51. A Grant of Probate in respect of Elise s estate was issued to him on the 11 th May, 2012. He gave evidence that upon receiving the grant of probate, he was advised that in order to have the property conveyed to him he would have to do a Deed of Assent. However, having expended $30,000.00 for the grant of probate, the Third Defendant informed his attorney that he was unable financially to undertake the task of the Deed of Assent and has not done so to date. 52. The Third Defendant testified that the First Defendant has not lived on the property since in or around 1995 and the Second Defendant has never lived on the property. That the First and Second Defendants have never been in possession of the property. Fitzroy and Elise were seized and possessed of the property before their death and subsequently, the Third Defendant became seized and possessed of the property by Elise s Will. 53. According to the affidavit of the Third Defendant, at no time before Elise s death he was made aware that the property was mortgaged to the Claimant. That he was never made aware by the First and Second Defendants that there was a High Court case for possession of the property. The Third Defendant testified that he never received any documents from the Court and/or from the Claimant involving this matter and he has never seen anyone from the Court and/or Claimant at the property. That the First time he saw any documents involving this matter was during Christmas in 2014 when he showed the same to the First Defendant. The First Defendant subsequently informed him for the first time that the property was the subject matter of a High Court case in which the Claimant was seeking possession of the same. Cross-examination of the Third Defendant 54. The Third Defendant testified that the First Defendant would have been working with the Company in 1995. That when the First Defendant left the property situate at No. 3 Clarence Street St. James ( the property ) in 1995, he took up residence in Diego Martin. That he did not know when the Third Defendant took up residence in Tobago, but he found out that he was so living five years ago. 14

55. The Third Defendant testified that when correspondence addressed to the First Defendant was mailed to the property he would leave it there and would not call to inform the First Defendant of the same. That the First Defendant did receive correspondence at the property but there was no indication on the outside of the envelope to specify who the mail was sent from and he, the Third Defendant did not open the letters. 56. It is the evidence of the Third Defendant that he did not know whether the Company was still in operation or whether it was closed down at any point in time. 57. The Third Defendant testified that he did not know if the First Defendant knew of the Will and that there were no gifts to the First Defendant in the Will. That he and the First Defendant did not share a close relationship. The Claimant s Response to the Case of the First and Second Defendants 58. The Claimant responded to the First and Second Defendants claims by way of affidavits of Mrs. Sandra John-Virgil and Mrs. Marlene Melville both sworn to and filed on the 21 st October, 2014. Mrs. John-Virgil 59. According to the affidavit of Mrs. John-Virgil, Ms. Tang Yuk was also present at the meeting held on the 29 th May, 2013. That at the said meeting the First and Second Defendants indicated that they were not aware of how the current account escalated. Mrs. John-Virgil testified that they indicated that all information with respect to the account of Medina Plumbing Limited ( the Company ) was previously supplied to the First and Second Defendants through the Claimant s attorney. 15

60. It is the testimony of Mrs. John-Virgil that the 1998 loan for the sum of $300,000.00 was secured by the following: a) Two contracts and Guarantee and Postponement of Claim Forms, one signed by Fitzroy and Elise and the other signed by the First and Second Defendants respectively. See paragraph 4 of the affidavit of Mrs. John-Virgil of the October 21 st 2014. Both Guarantees secured the repayment of the debts of the Company to the limit of $300,000.00. b) Deed of Mortgage dated the 27 th July, 1998, executed by Fitzroy and Elise. This Deed was initially stamped for the sum of $300,000.00 but was also security for any further advances. 61. The Claimant agreed that the Company assigned to the bank, sums payable under its contracts with third parties. Additionally, the Claimant instructed those third parties to make the contractual payments directly to it. 62. Mrs. John-Virgil testified that the monies that were in fact paid by those debtors to the Company were reflected in the account statements. That since contracts were assigned to the Bank, the Claimant was controlling the inflow and outflow of the funds and would allow the Company access to funds in its account so that the First and Second Defendants business would continue and it would be provided with the opportunity to meet their commitments. 63. Further, Mrs. John-Virgil testified that the Company s account was eventually transferred to the Remedial Unit in the year 2002. 64. On the 19 th January, 2006, the 1998 Mortgage was up-stamped to cover additional borrowings of the Company. That paragraph 11 of the 1998 mortgage provides that the Claimant shall be at liberty to up-stamp the mortgage to cover any monies and liabilities thereby secured in excess of $300,000.00. 65. Mrs. John-Virgil testified that it is not true to say that the Claimant released the Guarantee by the consolidating loan. That the 1998 mortgage was a continuing 16

security to the Claimant to cover all debts and liabilities, present and/or future of the Company. 66. It is Mrs. John-Virgil s testimony that it is not true that the First and Second Defendants were only formally informed of the existence of the overdraft facility and that the balance stood at $606,000.00 by letter dated the 8 th February, 2006. That due to the Company s indebtedness to the Bank, the Claimant issued a Demand letter to the Company dated the 9 th February, 2000, requesting full settlement of the debts under the overdrawn current account and demand loan amount. 67. The First Defendant writing on behalf of the Company, by letter dated the 21 st February, 2000, acknowledged the indebtedness of the Company and requested that the Company be given until the 13 th March, 2000 to settle the said accounts. 68. Further, Mrs. John-Virgil testified that at all material times the First Defendant was aware of the fact that the Claimant allowed the Company to access this overdraft facility on the current account since statements for the account were mailed to the Company every two months and set out in detail all credits and debits on the account. 69. According to Mrs. John-Virgil s affidavit, subsequent to the consolidation of the debts of the Company, by virtue of the letter of offer and promissory note dated the 2 nd and 3 rd August, 2000 respectively and by letter dated the 26 th March, 2001, the Company was provided with a breakdown of its indebtedness as at the 3 rd August, 2000. The letter dated 26 th March, 2001 indicated that as at the 3 rd August, 2000 the overdraft balance stood at $606,041.91. 70. Further, Mrs. John-Virgil testified that since the year 1998, the First and Second Defendants would have been aware that there was an overdraft facility existing simultaneously with the loan account. 71. By letter dated the 27 th July, 2011, the Claimant wrote to the Governor General of the Central Bank in response to the letter sent by the First and Second Defendants dated the 18 th April, 2011. 17

72. It is the testimony of Mrs. John-Virgil that it is not true to say that the Claimant refinanced the 1998 loan by almost 200%. That the Claimant with the consent of the First Defendant consolidated the two outstanding facilities in the name of the Company and offered the Company a new loan for the sum of $815,000.00 which was to be repaid in accordance with the terms of the letter of offer dated the 2 nd August, 2000. That the First Defendant s signature on the letter of offer and promissory note dated the 2 nd and 3 rd August, 2000 respectively indicated his acceptance of the terms of the consolidated loan for the sum of $815,000.00. Cross-examination of Ms. John-Virgil 73. Mrs. John-Virgil testified in cross-examination that she was familiar with the affairs, books, documents and papers of the Bank which related to the Company s account since she had been the officer for the Company s account for the periods July, 2009 to October, 2013. That she has no personal knowledge of the events preceding July, 2009. It is her evidence that she is aware that the First and Second Defendants reside in Tobago. 74. According to her evidence in cross-examination, under normal practices, clients are supposed to sign documents requesting an overdraft facility but sometimes a client could make a request to the Bank s officers to extend certain courtesies to them because of urgent circumstances. That the failure to have the documents endorsed with other requests made by the First Defendant may have been an oversight. Further, that a request may be accommodated because of the nature of security been held and the relationship between the client and the Bank. 75. Mrs. John-Virgil further testified in cross that if a guarantor is involved with an overdraft facility and involved in the letter of offer for the overdraft, he should sign off on the letter. She admitted that the proper practise requires the Bank to call in the guarantors and explain to them the implications of the guarantee. Further, she testified that there was no letter of offer on the Company s file for the sums over the approved 18

temporary overdraft facility of $60,000.00. That the only letter of offer for the Company was the letter pertaining to the promissory note of $815,000.00 which consolidated the facilities. 76. It is the testimony of Mrs. John-Virgil that if a contractor of the Company was not paying its debts under the terms of the contract, it was the Company s responsibility to obtain the money owing. However, she testified that it would have been the Bank s responsibility to notify the Company that the money was not being received and that there was no evidence to show that the Bank did notify the Company of such. Further, that at the meeting on the 29 th May, 2014 the question of assigned contracts did not come up. 77. Mrs. John-Virgil testified that when a loan is consolidated, a new loan is created with new terms and conditions. That the borrowers and guarantors have to agree to these new terms and conditions. Further, that based on the records the guarantors were not made aware of the new loan and its new terms and conditions. 78. When asked if the Bank treats all of their clients the way the Company was treated, that is, that the bank allows an overdraft facility to escalate in the manner that the Company s overdraft did, Mrs. John-Virgil replied that she could not say. She testified that she knew that the Bank had tried to be accommodating to some clients in the past and even at present day because that this was the nature of the business in terms of how the Bank tries to help clients. 79. It was the evidence of Mrs. John-Virgil in cross-examination that the manager of the Bank must have approved the increased overdraft facility but that there were no documents to establish this. That she did not see any documents of approval of the increased overdraft facility. Further, that she could not say whether this was a verbal approval but it was reasonable to assume that this overdrawn balance was allowed to increase by a verbal request. She further testified that this was not a common practice or a practice of a professional Bank. That the Company s account was not handled according to procedure. 19

Ms. Marlene Melville 80. According to the affidavit of Mrs. Melville, during the period 22 nd April, 1999 to the 5 th October, 2001, she was employed with the Claimant as a Credit Officer and was attached to the Claimant s St. James branch. As a Credit Officer, she was required to manage accounts in the portfolio assigned to her. She also worked directly with her then manager, Ms. Tang Yuk in managing problematic and/or delinquent accounts within her portfolio. That when she assumed the position of Credit Officer, the account in the name of Medina Plumbing Limited ( the Company ) was one of the accounts in the portfolio assigned to her. 81. It is the testimony of Mrs. Melville that during the period 22 nd April, 1999 to 5 th October, 2001 while she was in charge of the Company s account, the Company had a current account number 941-10068-1 with the Bank. That this was completely separate and apart from the loan facility which was granted to the Company. The current account was poorly serviced by the Company and on several occasions was in a state of being overdrawn, that is, there were insufficient funds in the account to cover the debits being charged to the account. 82. The First Defendant would request from time to time that the Bank honour the cheques in the account on the expectation that monies would be coming into the account shortly. Mrs. Melville testified that the status of this account deteriorated rapidly since expected deposits were not made in a timely manner. Therefore, the excess drawings on the account attracted interest and this exacerbated the deterioration of the account. 83. According to the affidavit of Mrs. Melville, the First and Second Defendants failed to pay the sums due under the current account over the period, which resulted in the account being overdrawn in the sum of $571,491.86 as at February, 2000. In addition to which, as at February, 2000, the 1998 demand loan had an outstanding principal balance of $160,327.93. 20

84. The Company had anticipated payment of the sum of $500,000.00 from a contract that it held with NIPDEC, however this never materialised which contributed to the Company s inability to repay outstanding sums. 85. It is the testimony of Mrs. Melville that the account became so overdrawn that the Bank could no longer indulge the conveniences requested by the First Defendant. Therefore, the Bank took a decision to only honour payroll cheques drawn on the account when sufficient deposits had been made to the account to cover those payroll expenses. This occurred sometime prior to 2000. 86. Due to the indebtedness of the Company, Mrs. Melville issued a demand letter dated the 9 th February, 2000 to the Company on behalf of the Bank demanding full settlement of the above mentioned debts within seven (7) days of the date of the letter. By letter dated the 21 st February, 2000, the First Defendant, writing on behalf of the Company acknowledged the indebtedness of the Company in the sums referred to above and requested that the Company be given until the 13 th March, 2000 to settle the accounts. 87. According to the affidavit of Mrs. Melville, when the Company s facilities with the Bank came up for annual review in the year 2000, the current account had been overdrawn to a value of approximately $600,000.00. Ms. Tank Yuk and Mrs. Melville came up with strategies that they could share with the First Defendant in order to improve the operation of the account. Mrs. Melville would have spoken to the First Defendant many times prior to August, 2000. 88. Mrs. Melville and the First Defendant would have discussed the best way for the account to be placed in a better footing. During their conversation, the First Defendant informed her that he expected to receive a total of $491,655.75 as a result of contract payments which were to fall due from Carillon Limited, Moosai Development Company Limited and NIPDEC. Mrs. Melville testified that but for the 21

First Defendant s representations to her on these matters, she would not have known about these monies which he expected to be paid to the Company. 89. It is the testimony of Mrs. Melville that she formalized the strategies developed for the servicing of the facilities into an offer letter dated the 2 nd August, 2000 which was issued to the First Defendant. She as well as Ms. Tang Tuk signed this letter. The First Defendant signed the letter on behalf of the Company and attached the Company s stamp thereby confirming his acceptance of the terms and conditions offered. Pursuant to the offer letter the Claimant issued to the Company a promissory note for the sum of $815,000.00. 90. Mrs. Melville testified that as far as she is aware no officer from the Bank forced the First Defendant to sign any promissory note or any letter. That the promissory note and the letter of offer which the Bank issued to the Company was a concession made by the Bank in order to try and realize some positive movement on the current account. The concession was made by the Bank in order to save the Company money by avoiding the incurrence of interest fees and penalties on their delinquent accounts. 91. According to Mrs. Melville s affidavit, the Company did not have sufficient money in its current account to continue paying the loan via the standing order. That the account was so overdrawn, the Bank stopped authorising further deductions there from and as such the standing order was also stopped. The standing order arrangement only resumed in August, 2000 after the consolidation. 92. Mrs. Melville denies paragraph 20 and 21 of the First and Second Defendants case. She averred that she never met with the First Defendant and made those statements. 93. Mrs. Melville further denies that the First Defendant was unaware of the overdraft facility. That on the request of the First Defendant and by letter dated the 22 nd February, 2001, she informed the First Defendant of the total interest compounded on the overdraft facility for the period February, 1998 to January, 2001. 22

94. According to the affidavit of Mrs. Melville, she was not aware of any other contracts of the Company being assigned to the Bank other than the contracts mentioned above. That as the facilities were not being serviced in a timely manner, the Bank would only release limited funds to the Company to pay its workers once there was a deposit in the account to cover same. 95. Mrs. Melville testified that the First Defendant at all times knew of the indebtedness of the Company. The Claimant with the consent of the First Defendant consolidated the two outstanding facilities of the Company. That by letter dated the 26 th March, 2001, Ms. Melville informed the First Defendant that on the 3 rd August, 2000 the two facilities in the name of the Company were consolidated to one loan of $815,000.00. This letter indicated that the sum of $815,000.00 comprised of the outstanding 1998 loan balance of $160,327.93, outstanding loan interest in the sum of $48,530.16 and the overdraft balance of $606,041.91. 96. By letter dated the 16 th January, 2001, Ms. Melville made a formal demand on behalf of the Claimant to the Company for the payment of the sum then due and owing under the consolidated account. Cross-examination of Mrs. Melville 97. During cross-examination, Mrs. Melville testified that she has been a Banker for thirty (30) years. She began as a junior clerk in the Bank and is currently employed as a Credit Administrative Officer. Between the periods of the 22 nd April, 1999 to October, 2001, she held the position of a Credit Officer and her duties included managing a portfolio of accounts which generally consisted of business accounts. She was also involved in granting loans. 98. It is the testimony of Mrs. Melville that an account would incur an overdraft if cheques written on the account were honoured by the Bank and there were insufficient funds to cover those cheques. The Bank s decision to honour those cheques would be based on the level of confidence the Bank has in the Client to cover 23

the overdraft and the contracts identified and/or the identified source of funds to cover the account. That a bad Client s account would not be allowed to go into an overdraft. That when she took over the Company s account, she was told that this was a good account. 99. Mrs. Melville testified that the policy with regards to the granting of overdrafts was based on the client s request. That the Bank would then obtain information on the type of business, the account operations, the contracts that are involved, and the level of deposits entering into the account. This information would give the Bank an idea of how much overdraft facility it can extend. When the decision is made the client would sign a letter of offer. The letter of offer would set out the terms and conditions of the overdraft, the amount of the overdraft and the interest rate applicable to the overdraft facility. 100. According to the evidence of Mrs. Melville, when she took control of the Company s account in 1999, there was a temporary, approved overdraft limit of sixty thousand dollars attached to its account. Also there was an overdraft balance in the region of over three hundred thousand dollars. That there was some internal documentation to back up this facility, namely, a credit hour documentation of credit facilities and the internal approval for the facility. The witness was not asked to explain what she meant by a credit hour documentation of credit facilities but the court can take judicial notice of the fact that this is a well-known method of recording revolving credit. When asked if there was a letter of offer for the overdraft facility for the sixty thousand dollars, Ms. Melville testified that she did not know and did not recall seeing one. 101. When asked if she saw any documentation allowing the overdraft to go from sixty thousand dollars to some three hundred thousand dollars plus, Mrs. Melville testified that what she saw from the Bank s statements was that payroll cheques were being processed to the account and while deposits were being made, these deposits were not sufficient to cover the cheques. 24

102. She stated that depending on the relationship the Bank had with the client, the Bank would bounce the cheques if there was an unsatisfactory state of affairs or the Bank would contact the client and ask him when he would be expecting funds to cover the overdrawn status of the accounts. That the overdrawn balance would not have been allowed if the First Defendant did not advise the Bank that he was expecting a deposit to cover the cheques. 103. Mrs. Melville testified that the Company s account came up for review around August, 2000 and by this time more than three hundred thousand dollars had been added to the overdraft facility. That the only documentation that existed in allowing this overdraft to escalate to six hundred thousand dollars and more was memos to the Company s file. 104. Further, Mrs. Melville testified that even though during the three year period the Company s overdraft was increasing and interest was being charged close to a quarter of a million dollars on the facility, the First Defendant s cheques were still being honoured because he requested them to. That it was her manager, Mrs. Tang Yuk and her decision to continue honouring the cheques of the First Defendant. 105. According to the evidence of Mrs. Melville she would have had several meetings with the First Defendant in person and on the phone and it was very likely that she would have advised him that his accounts were in disarray. Mrs. Melville testified that she could have told the First Defendant that he should get to the bottom of why his accounts were in disarray and that his loan was not being serviced and as a result the First Defendant had problems with his credit rating. 106. Mrs. Melville testified that she may have visited the Company s offices once in 2000 and remembered speaking to the First Defendant. Further, that as a Credit officer it was a part of her job to visit the premises of the customers. The Company s office was at the street to the back of the Bank. 25

107. Further, Mrs. Melville testified that her control of the Company s account was reassigned in October, 2001. 108. It is the testimony of Mrs. Melville that a guarantor would be held liable for existing specifics that he would have signed. That he is advised that he is taking on the responsibilities of a guarantor. Mrs. Melville testified that the Bank now has a strict policy of independent legal advice, however, this was not the case in the past. Further, it is the policy of the Bank to keep the guarantor informed at all times as to what was going on with the facility that they stood as a guarantor for. She testified that a copy of the letter of offer and promissory note of $815,000.00 as well as the letter dated 22 nd February, 2001 which informed the First Defendant of the compound interest on the overdraft facility was not sent to the guarantors for the 1998 mortgage (Fitzroy and Elise). That she did not know if a copy of those documents should have been sent to the guarantors but that they should have been at least advised of the facility. Further, that she did not have any evidence that the guarantors, Fitzroy and Elise were so advised and that this was an unprofessional action on her part. 109. Mrs. Melville testified that Fitzroy and Elise were continuing sureties for the new loan of $815,000.00 to the First and Second Defendants. Further, she testified that Fitzroy and Elise would only be liable up to $300,000.00, this sum being the original amount which they guaranteed. 110. According to the evidence of Mrs. Melville, she does not know where the First Defendant resides. Further, she testified that she does not know who is currently in occupation and/or possession of the property situate at No. 3 Clarence Street, St. James. The First Issue 26