IN THE COURT OF APPEAL BETWEEN AND RBTT BANK LIMITED

Transcription

1 REPUBLIC OF TRINIDAD AND TOBAGO IN THE COURT OF APPEAL Civil Appeal No: 244 of 2009 BETWEEN CLYDE DINDIAL APPELLANT AND RBTT BANK LIMITED RESPONDENT PANEL: A. Mendonça, J.A. N. Bereaux, J.A. M. Rajnauth-Lee, J.A. APPEARANCES: Mr. Dolsingh appeared on behalf of the Appellant Mr. Gilkes, appeared on behalf of the Respondent DATE DELIVERED: January 31 st, 2014 I agree with the judgment of Mendonça J.A. and have nothing to add. N.Bereaux, Justice of Appeal I too agree. M. Rajnauth-Lee, Justice of Appeal Page 1 of 18

2 JUDGMENT Delivered by A. Mendonça, J.A. 1. The Appellant at all material times was an operator of trucks. In 2005 he decided to acquire two dump trucks from a Mr. Rattan (Rattan) at the total cost of $900,000. In or about February 2006, he approached the respondent Bank (the Bank) for a loan of $600,000 to assist in the purchase of the trucks. His application for the loan was approved on March 21 st, As security for the loan the Appellant was required to provide a mortgage over the trucks by way of mortgage bills of sale. 2. On April 12 th, 2006 the Appellant executed a mortgage bill of sale in respect of each of the trucks. The Bank on that date disbursed the loan proceeds and credited Rattan s account with them. Shortly thereafter it was discovered that the trucks did not exist. A fraud was perpetrated by Rattan and as the Judge (Jones, J) noted not unsurprisingly he has since disappeared. On May 12 th 2006 the Appellant subsequently executed a deed of mortgage in favour of the Bank over his property at Malabar, Arima, in essence, to replace the mortgage bills of sale as security for the loan. 3. In 2008 the Appellant commenced these proceedings against the Bank claiming a declaration that the mortgage bills of sale and the Deed of Mortgage were null and void and should be set aside, damages for negligence and breach of contract. There were other consequential relief claimed that I need not set out. 4. The Appellant alleged that the Bank was negligent in its dealings with him and pleaded several particulars of negligence and breach of contract. In summary the particulars related to the alleged failure of the Bank: a) to obtain the originals of certain documents which the Bank required for processing the loan; b) to verify the existence of the trucks; c) to transfer the loan proceeds without obtaining the authorization of the Appellant and without following standard Bank procedures which required the money to be paid by a crossed cheque. It was pleaded as particulars of negligence and breach of contract that the mortgage over the Appellant s property was obtained without his receiving independent legal advice. Page 2 of 18

3 5. The Judge in her judgment stated that the case of the Appellant may be divided into 3 distinct areas namely: 1) the action of the Bank prior to the approval of the loan and the disbursement of the loan proceeds; 2) the unauthorized payment by the Bank of the loan proceeds to Rattan in payment for the trucks; and 3) the execution of the deed of mortgage by the Appellant without his having obtained independent legal advice. 6. With respect to the actions of the Bank prior to the approval of the loan and the disbursement of the loan proceeds, the Judge was of the opinion that there was no duty of care owed by the Bank to the Appellant to ensure that the trucks existed or the Appellant got what he paid for. The arrangement between the Appellant and Rattan was of no importance to the Bank, except insofar as it was concerned with the Bank s security. The Judge opined that: Insofar as the existence or the value of the trucks were relevant to the transaction between the Bank and the Claimant it was relevant only with respect to the ability of the Bank to recover its money in the event of default by the Claimant. 7. With respect to the authorization of the payment of the loan proceeds to Rattan, the Judge found as a fact that the Appellant had authorized the payment to Rattan and consequently could not complain that the Bank disbursed the loan proceeds to Rattan. 8. On the question of independent legal advice, the Judge was of the view that this issue was of no relevance to the Appellant s case. She stated: The difficulty that the Claimant faces is that his case is based on the Bank s negligence and/or breach of duty of care towards him and not undue influence. While independent legal advice was one of the ways by which [an] allegation of undue influence is rebutted it is not an element in negligence, neither is it a cause of action on its own. I have not been referred to any authorities which show that there is a duty of care on the Bank to ensure that independent legal advice be given. What the authorities provided do show is that it may be prudent in certain circumstances for the Bank to require a party to obtain independent legal advice in order that it could avoid claims of undue influence. That is as far as the cases go. In my view they fall short of declaring that there is a duty on a Bank Page 3 of 18

4 to provide or insist on independent legal advice to customers entering into a mortgage or other arrangements for the provision of security for a loan with them. 9. The Judge therefore dismissed the Appellant s claim and the Appellant now appeals contending that the Judge erred in dismissing his claim against the Bank. 10. Before this Court Mr. Dolsingh, Counsel for the Appellant, attempted to argue that the Bank owed duties of a fiduciary nature to the Appellant arising out of the trust and confidence reposed by the Appellant in the Bank and that the mortgage bills of sale and/or the deed of mortgage were obtained by undue influence. The Court did not think that it was open to the appellant to make those submissions. Nothing of the kind was pleaded by the Appellant. Of course an issue may have been a live one before the trial judge even though it does not arise on the pleadings. In that event the parties would have had an opportunity to fully investigate the factual circumstances. That is not the position here. Those were not live issues in the Court below and it would be unfair and prejudicial to the Bank to permit those issues to be raised before this Court. In any event what evidence there was in this case cannot support a claim of undue influence or go to show that the relationship between the Bank and the Appellant acquired a fiduciary character and could give rise to claims of a fiduciary nature. 11. The Appellant s case as noted previously is pleaded both in contract and in tort. Before this Court however, Mr. Dolsingh rested his case on the tort of negligence. He submitted that the Bank owed a common law duty of care to the Appellant to ensure that the documents it received prior to the disbursement of the loan were genuine and that the trucks existed. 12. It is not disputed that when the Bank approved the loan to the Appellant it required valuation reports in respect of the trucks and a slip issued by the Licensing Authority as evidence of registration of the vehicles in the name of the Appellant. It is also not disputed that the Bank received copies of documents purporting to be valuation reports and certified copies of the certificate of registration of the trucks with the Licensing Authority purporting to be issued by the Licensing Authority. These documents were not genuine and were in fact copies of forged documents. They were apparently sent to the Bank by Rattan. Having received these documents the Bank proceeded to process and subsequently disbursed the loan. It is also not in dispute that Page 4 of 18

5 the Bank did not take any steps to verify that the trucks existed prior to the disbursement of the loan. It is Mr. Dolsingh s contention that the Bank owed a duty of care prior to the disbursement of the loan proceeds to the Appellant to ensure that the documents it received were genuine and that the trucks existed. 13. Mr. Dolsingh contended that there was an express representation by the Bank of the assumption of such a duty by it or alternatively that such a duty was owed on general principles pertaining to the tort of negligence. 14. With respect to the submission that the Bank assumed such a duty by express representation, it is sufficient to say that that is simply not borne out by the evidence. Mr. Dolsingh was unable to refer to any evidence that supported such a conclusion and following a careful examination of the evidence there is none that remotely suggests an express assumption of such a duty by the Bank. We must therefore have regard to general principles to determine whether the Bank owed the Appellant the duty of care contended for by him. 15. It is now settled that for any situation to give rise to a duty of care three ingredients must exist and these are; 1) the foreseeability of damage; 2) there should exist between the party said to owe the duty and the party to whom it is claimed to be owed a relationship characterized by the law as one of proximity or neighbourhood and 3) that the situation should be one in which the Court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other (see per Lord Bridge of Harwich in Caparo Industries plc v Dickman and Others [1990] 2 A.C 605, ). 16. In addition to the foreseeability of damage, the law therefore imposes the need for proximity and reasonableness and fairness. In commenting on the latter two concepts Lord Bridge in Caparo noted that they were not susceptible of any precise definition but were labels that might be attached to circumstances from which the Court can conclude that a duty of care exists. He stated (at p. 618): it is implicit in the passages referred to that the concepts of proximity and fairness embodied in these additional ingredients are not susceptible that any precise definition as would be necessary to give them utility as practical tests, but amount in effect to a little Page 5 of 18

6 more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognizes pragmatically as giving rise to a duty of care of a given scope. 17. Similarly Lord Oliver in Caparo said (at p ): The question is, I think, one of some importance when one comes to consider the existence of that essential relationship between the appellants and the respondent to which, in any discussion of the ingredients in the tort of negligence there is accorded the description proximity, for it is now clear from a series of decisions in this House that, at least so far as concerns the law of the United Kingdom, the duty of care in tort depends not solely upon the existence of the essential ingredient of the foreseeability of damage to the plaintiff but upon its coincidence with a further ingredient to which has been attached the label proximity and which was described by Lord Atkin in the course of his speech in Donoghue v Stevenson [1932] A.C 5662, 581 as: such close and direct relations that the act complained of directly affects the person whom the person alleged to be bound to take care would be directly affected by his careless act..thus the postulate of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within the bounds of commonsense and practicality. Those limits have been found by the requirement by what has been called relationship of proximity between plaintiff and defendant and by the imposition of a further requirement that the attachment of liability for harm which has occurred be just and reasonable. But although the cases in which the courts have imposed or withheld liability are capable of an approximate categorization, one looks in vain for some common denominator by which the existence of the essential relationship can be tested. Indeed it is difficult to resist the conclusion that what has been treated as three separate requirements are, at least in most cases, in fact merely facets of the same thing, for in some cases the degree of foreseeability is such that it is from that alone the requisite Page 6 of 18

7 proximity can be deduced, while in others the absence of that essential relationship can most rationally be attributed simply to the court s view that it would not be fair and reasonable to hold the defendant responsible. Proximity is, no doubt, a convenient expression so long as it is realized that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists. 18. It should also be noted that the duty is not a duty to take care in the abstract but a duty to avoid causing to the particular claimant damage of the kind he has suffered. In Caparo Lord Oliver put it this way (at p. 651):. proximity in such cases as this is an expression used not necessarily as indicating literally closeness in a physical or metaphorical sense but merely as a convenient label to describe circumstances from which the law will attribute a duty of care. It has to be borne in mind that the duty of care is inseparable from the damage which the plaintiff claims to have suffered from its breach. It is not a duty to take care in the abstract but a duty to avoid causing to the particular plaintiff damage of the particular kind which he has in fact sustained. 19. How then are the principles of foreseeability, proximity and fairness to be applied in this case? To determine this is necessary to return to the evidence. 20. When the Bank approved the loan, the Appellant was made aware that in order for the Bank to proceed with the loan transaction he was required to provide the Bank with valuation reports in respect of the trucks and evidence of their registration in his name. It is clear on the evidence that the Appellant had to provide the Bank with security for the loan in the form of mortgage bills of sale over the trucks. The documents requested of him by the Bank were a step in perfecting or putting its security in place. As Mrs. Gonzales stated the documents were required by the Bank so that it could perfect its security for the loan. There could, therefore be no dispute, as the Judge noted, that it was for the Bank s protection and benefit, and not that of the Appellant to ensure there was valuable security to support the loan. Page 7 of 18

8 21. The Judge noted that it was open to the Bank to grant the loan to the Appellant with no security. While I agree with the Judge that the Appellant could have no objection to the Bank deciding to waive the requirement of security for the loan, unless it did so, it is equally clear that the obligation to provide the security required by the Bank for the loan rested on the Appellant. As part and parcel of the provision of this security, in addition to providing the documents required of him by the Bank, the Appellant was required to execute the mortgage bills of sale and I would add to these obligations, the obligation to ensure that he acquired a proper title to the vehicles. These could all be treated as terms of the agreement between the Appellant and the Bank with respect to the loan. If the appellant failed to discharge any of these obligations, or in other words was in breach of any of the terms of the contract, the Bank could rely on the breach either to refuse to proceed with the loan transaction or to demand immediate payment if the breach was discovered after the loan was disbursed. It is unreasonable to suggest that although the Appellant owed these obligations to the Bank that somehow the Bank had a corresponding duty of care to ensure that the documents provided by the Appellant in fulfillment of his obligations were genuine and if they were not, then the Bank was liable to pay to the Appellant damages in negligence. Such a contention simply defies logic. The obligations were solely within the responsibility of the Appellant and these were owed to the Bank. It cannot be that the Bank was under a duty to ensure that the Appellant has discharged his obligations to it. 22. In this case it makes no difference that the documents were provided by Rattan. It is clear that the Appellant entrusted Rattan with the task of registering the vehicles in his name and procuring the valuation of the vehicles. He had requested the Bank to let Rattan know what documents were required to progress the loan and it is reasonable to infer on the evidence that he left the task of obtaining the documents to Rattan. It is clear on the evidence that Rattan was constituted by the Appellant as his agent to provide the documents to the Bank. 23. Further as I mentioned one of the necessary ingredients before the law will impose a duty of care is the foreseeability that the breach of duty might cause damage to the claimant. And as noted above the duty is to avoid causing the particular claimant damage of the particular kind which he in fact sustained. The question then is whether failing the exercise of reasonable care was it reasonably foreseeable that the claimant might suffer damage of the kind he in fact suffered. Page 8 of 18

9 24. In this case the loss suffered was a financial or monetary loss. It is necessary therefore to bear in mind that this is the kind of loss suffered. It is relevant also to take into account that it is financial or monetary loss caused by the intentional acts of a third party in defrauding the Appellant. 25. In the Attorney General v Craig Hartwell (Privy Council Appeal No. 70 of 2002) the Privy Council considered the degree of likelihood that was required to satisfy the requirement of reasonable foreseeability of harm. Lord Nicholls speaking for the Privy Council said that bearing in mind the underlining concept is fairness and reasonableness, the degree of likelihood depends on the circumstances of the case. He stated (at para. 21): Reasonable foreseeability does not denote a fixed point on the scale of probability; see Lord Hoffman in Jolley v Sutton Lord London Borough Council [2000] 1 WLR 1082, There must be reasonable foreseeability of a risk which a reasonable person would not ignore. The risk must be real in the sense that a reasonable person would not brush [it] aside as far-fetched. In the circumstances of this matter I do not think that the risk could be considered to be a real one. In my judgment it was simply far-fetched and could readily have been brushed aside by a reasonable person. In coming to that conclusion it is necessary to rehearse the essential facts. 26. The Appellant had contracted with Rattan. He had made inquires of foreign-used vehicle dealers and had decided to deal with Rattan. After that decision and prior to the date on which Rattan was paid for the trucks, the Appellant had dealt with Rattan and had supplied him with building materials. Rattan provided the Appellant with copies of the foreign registration of the vehicles. He had also showed the Appellant two trucks of the type the Appellant had agreed to purchase, which Rattan identified to the Appellant as the trucks that were to be supplied to him. In the circumstances of this case the idea that this was all a ruse to defraud the Appellant could not have been reasonably entertained by the Appellant. Indeed it is clear on the evidence that it was not. There was no reasonable basis for the Appellant to consider such a risk. This applies with even greater force to the Bank. That the fraud would comprise the provision by Rattan of Page 9 of 18

10 false valuation reports and false evidence of registration is also one that the Bank could ignore as too remote particularly as these tasks were entrusted to the Appellant. More so in this jurisdiction where the registration of a used vehicle in the name of a new owner is generally only done when both the vendor and purchaser of the vehicle are present before the Licensing Authority. 27. In the circumstances, in my judgment, the Bank owed no duty of care to the Appellant to ensure that the valuation reports and the evidence of the registration of the vehicles were genuine. This of course does not exclude such a duty if the Bank is put on notice. It, however, should be clear from what I have said above that I do not think that there is any basis to say that the Bank was put on notice. I will return to this later in this judgment. 28. In any event I do not think that it is open to the Appellant to argue that there was such a duty at law owed to him by the Bank. As I noted, the Appellant s case is pleaded in contract and in tort. The general rule is that where parties are in a contractual position a party to the contract may choose to base his claim either in tort or in contract. However that option is not open to the party where the claim in tort is inconsistent with the express or implied terms of the contract (see Henderson v Merrett Syndicates Ltd. [1995] 2 A.C 145). That in my judgment is the position here. As I mentioned the Appellant had agreed to provide to the Bank valuable security for the loan. Part of this obligation required that he produce the documents referred to, which documents must of course be genuine. A claim that the Bank failed to ensure that the documents were genuine seems to me to be inconsistent with the very obligation on the Appellant. The Appellant in those circumstances cannot maintain that claim in tort. 29. Mr. Dolsingh made other submissions to which I will now refer. 30. He submitted that even though the duty of care may not have arisen at the outset of the Bank s relationship with the Appellant, the Bank should be held to have subsequently assumed that duty in the course of the loan transaction because the Bank dealt directly with Rattan. As the Bank dealt directly with Rattan, the result was that the Appellant had no say or input in the matter nor was he given the opportunity to examine the documents supplied by Rattan. The Appellant was therefore excluded from the process. The Bank should have therefore protected his interest and in that way the Bank took on the duty of care contended by the Appellant. Page 10 of 18

11 31. In considering this submission it is necessary again to refer the evidence. It is clear that the Bank communicated with Rattan. There is a letter dated March 22 nd, 2006 addressed to Rattan from the Bank in which he was informed that the Bank had agreed to provide the Appellant with financial assistance to purchase the trucks. The letter outlined some of the conditions on which the Bank had agreed to provide financing. 32. Also on March 22 nd, 2006 according to the evidence of Mrs. Gonzales, she received a call from Rattan and answered a query by him as to what documents were necessary to process the loan application. 33. Further on April 11 th, 2006 Mrs. Gonzales noted that the engine and chassis numbers on the copies of the valuation reports that it had received were the same for both trucks. This of course could not be so and Mrs. Gonzales contacted Rattan and informed him of the error. She later received from Rattan further copies of the reports in which the error was corrected. 34. These were the occasions on which the Bank appeared to communicate directly with Rattan and on their face seem to suggest that the Bank assumed the responsibility of obtaining the documents it required the Appellant to provide. But that conclusion is not merited when the evidence is looked at in its entirety. 35. The letter of March 22 nd, 2006, according to the evidence of Mrs. Gonzales, was delivered to the Appellant and addressed to the vendor. This was done at the request of the Appellant who informed Mrs. Gonzales that Rattan required it in order to have the vehicles transferred to the Appellant. 36. As to the Bank contacting Rattan with respect to the errors in the valuation reports, again this was done, according to Mrs. Gonzales, at the request of the Appellant. 37. The Appellant denied in the course of cross-examination that he made those requests of the Bank. The evidence is therefore in conflict as to whether the requests were made by the Appellant for the Bank to communicate with Rattan. The Judge was however of the view that given the manner and demeanour of both witnesses in the witness box, the evidence of Mrs. Page 11 of 18

12 Gonzales was more credible and was to be preferred to that of Mr. Rattan. The Judge therefore, who had the benefit of seeing and hearing the witnesses made it patently clear that she preferred the evidence of Mrs. Gonzales. On the facts as found, the communication between the Bank and Rattan on these occasions was done at the request of the Appellant. They represent no more than the Bank complying with its customer s instructions. In those circumstances the Bank communicating with Rattan does not constitute a waiver by the Bank of the Appellant s obligation to provide the documents and cannot be interpreted as any assumption by the Bank of that obligation. 38. As to the Bank responding to Rattan s telephonic inquiry as to the documents necessary to progress the loan, that too cannot amount to an assumption of responsibility by the Bank to obtain the documents. The Bank, in essence, communicated to Rattan no more than the it was authorized to convey to him by the letter of March 22 nd, The obligation continued to rest with the Appellant and nothing in that conversation discharged the Appellant from the obligation to provide documents and the proper security which the Bank required. 39. In the circumstances I do not accept the submission that the Bank assumed the responsibility to provide the documents. It is clear on the evidence, that what happened was that the Appellant left it entirely to Rattan to obtain the valuation reports and to register the vehicles. So that according to the Appellant, 1. he made firm arrangements with Rattan for him to deliver the trucks to the valuers for them to inspect the vehicles and prepare the reports and 2. despite the practice of both vendor and purchaser attending on the Licensing Authority to have the vehicle registered in the name of the new owner, he did not bother to go to the Licensing Authority. The Appellant adopted a hands-off approach, which as it unfortunately turned out, was to his peril. 40. It was suggested by Mr. Dolsingh that the Judge s acceptance of Mrs. Gonzales evidence should not be sustained. He made reference to the evidence of Mrs. Gonzales where she said that she had a conversation with the Appellant on April 17 th, 2006 when she was told that the trucks were not yet delivered to the Appellant. April 17 th, 2006 was Easter Monday - a public holiday - when the Bank was closed. It was therefore submitted that the evidence of Mrs. Gonzales as to Page 12 of 18

13 the date of the conversation was clearly wrong and it should colour the whole of her evidence leading to its rejection. I do not agree. 41. The trial judge in assessing the credibility of the witnesses was in a position of advantage over this Court as she had the opportunity to see and hear the witnesses, which is an advantage this Court does not enjoy. In those circumstances this Court should be slow to overturn findings of fact by the trial judge, which turn essentially on the question of credibility, unless it is satisfied that the trial judge misused or wasted her advantage. I cannot conclude that the trial Judge did so. 42. Mrs. Gonzales evidence was that on April 17 th, 2006 the Appellant told her that the trucks were not yet delivered. She also referred to a further conversation with Rattan on the same day when he told her the reason the trucks were not delivered was that he had promised the Appellant to do repairs and/or refurbishments to the trucks and that another delivery date had been agreed. In cross-examination it was put to Mrs. Gonzales that she was told that on April 12 th, 2006 after the bills of sales were received and not April 17 th, 2006 as that was a public holiday when banks would be closed. Mrs. Gonzales response was that the conversations probably did not occur on the April 17 th, 2006 but she was adamant that they occurred after the April 12 th, Although that was put to Mrs. Gonzales the Appellant gave no such evidence. The Court was therefore free to reject the suggestion unsupported as it was by any evidence. But not only did the Appellant not give such evidence but the evidence he gave was inconsistent with the suggestion put to Mrs. Gonzales as to the date of the conversation. According to him, he executed the mortgage bills on April 12 th, 2006 and stated that he understood when he did that, he owned the trucks. He however stated at that time he had no idea when the trucks would be delivered to him and had no conversation with Rattan as to when the trucks would be delivered. If the conversations occurred on April 12 th, 2006 then it was inconsistent with and contradictory of the allegation of the Appellant that on that date he had no idea when the trucks would be delivered. It was also inconsistent with and contradictory of his assertion that after executing the mortgage bills of sale on April 12 th, 2006 he had no conversation with Rattan as to when the vehicles would be delivered to him. Page 13 of 18

14 43. In the circumstances the Judge cannot be faulted for rejecting any suggestion that the conversations on April 17 th, 2006 occurred on April 12 th, 2006 and was entitled to accept the evidence of Mrs. Gonzales. The explanation offered by Mrs. Gonzales that April 17 th, 2006 was probably an error but that the conversation would have occurred after April 12 th, 2006 is far more probable on the state of the evidence. It is therefore patent that the Judge did not misuse her advantage of having seen and heard the witnesses and was well entitled to accept the evidence of Mrs. Gonzales in preference to that of the Appellant. 44. Mr. Dolsingh also took issue with the disbursement of the loan proceeds to Rattan. This was done by a debit authorization signed by the Appellant. The effect of this was to debit the account of the Appellant and credit Rattan s account (which apparently was at a different branch of the Bank) with the loan proceeds. The Judge made a clear finding that this debit authorization was signed by the Appellant on April 12 th, 2006 and that he intended to and did authorize the debiting of his account of the loan proceeds and the crediting of Rattan s account. This is a clear finding of fact which on the evidence the Judge was entitled to make. I have already dealt with Mr. Dolsingh s submission regarding the Judge s acceptance of Mrs. Gonzales evidence over that of the Appellant. 45. The objection to the disbursement of the loan proceeds was however on two further grounds. First that the payment was by way of a debit authorization and not a bank draft and second the security for the loan had not yet been perfected. 46. With respect to the first ground of objection, it was submitted that the Bank was negligent in paying the loan proceeds in the manner it did because it had represented that, on the approval of the loan, a bank draft would be made payable to Rattan. 47. The statement relied on by Mr. Dolsingh that Mr. Rattan will be paid by way of a bank draft is contained in the letter of March 22 nd, 2006 to Mr. Rattan. However the letter does not state, and it does not mean, that the payment can be made only in that manner. The Appellant and the Bank were free to make payment in any manner authorized by the Appellant and this is what happened in this case. In any event there is no evidence that if the loan proceeds were paid by way of a bank draft the loss suffered would have been avoided. Page 14 of 18

15 48. As regards the second ground of objection, Mr. Dolsingh submitted that the loan proceeds were only to be disbursed when the security for the loan was perfected. Counsel submitted that the security was not perfected as the property in the vehicle had not been passed to the Appellant at the time of the disbursement of the loan proceeds. The Bank was therefore negligent to make the proceeds payable to Mr. Rattan at the time that it did. 49. Mr. Dolsingh s submission that the security was not perfected as the property in the trucks had not been passed, rested on section 20(b) of the Sale of Goods Act, Chap. 82:30. This section provides as follows: 20. Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in goods is to pass to the buyer: (b) where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done, and the buyer has notice thereof. It was submitted that as repairs or refurbishments were being done to the vehicles by Rattan that the trucks were not in a deliverable state. Consequently the property in the vehicles had not passed and the security was not perfected. There is no merit in this submission. 50. Whether goods are in a deliverable state depends on the state in which they are to be delivered by the terms of the contract relating to the sale of the goods (see Underwood Ltd. v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343). There is no evidence that under the terms of the contract between the Appellant and Rattan, that Rattan was to do any repairs or refurbishments to the trucks. The evidence in fact suggests the contrary. According to the Appellant he agreed with Rattan to purchase the trucks, was shown two vehicles purporting to be them and they were the vehicles he agreed to buy. Insofar as there is any suggestion that repairs or refurbishments were to be done, it seems to have arisen as an after-thought after the Bank was authorized by the Appellant to pay Rattan and after the Bank in fact did so and did not form part Page 15 of 18

16 of the terms of the contract for the sale of the goods. There is therefore no evidence that the vehicles were not in a deliverable state. 51. In any event according to the evidence, the first time the Bank was told that repairs or refurbishments were being done was after the Appellant authorized payment to Rattan and after payment was in fact made. Until then the Bank had no notice that the trucks were not deliverable. There is nothing on the evidence that would put it on notice that such was the case. 52. There is also nothing that would have suggested to any reasonable and honest banker prior to the disbursement of the loan proceeds that there was a serious or real possibility that the Appellant was being defrauded. This was a transaction in which the Appellant freely contracted with Rattan for the sale of the trucks. The Appellant was provided by Rattan with evidence of the foreign registration of the vehicles and was in fact shown locally two vehicles purporting to be the trucks. He was in communication with Rattan and on April 12 th, 2006, when the loan proceeds were disbursed with the authorization of the Appellant, both he and Rattan were at the Bank. The Appellant would have had no reason to suspect anything amiss and more so the Bank. The Bank in the circumstances of this case cannot be held to be negligent when it acted upon the Appellant s instructions to disburse the loan proceeds. 53. Counsel for the Appellant further submitted that the Bank was negligent in that it did not cause a search of the register of mortgage bills of sale. Had this been done, it was submitted, that the Bank would have discovered the fraud before any moneys were disbursed. 54. It is not disputed that a search of the register of the mortgage of sale of bills was not done by the Bank. This submission however assumes that the Bank has a duty of care to the Appellant to ensure the security was perfected before the loan proceeds were disbursed. As I mentioned earlier I do not think that there is any such duty. The evidence also does not support the imposition of a duty to conduct a search for another reason. The trucks were supposed to be imported foreign used vehicles. These vehicles are imported by the dealer for sale to specific individuals. As the vehicles are imported for sale, it is not expected that there will be any prior dealings locally affecting the vehicles that would be found on a search of the register of mortgage bills of sale. I think that it is probably for that reason that the Bank does not cause a Page 16 of 18

17 search of the register of mortgage bill of sale when a mortgage is being taken by the Bank on a foreign used vehicle as security for a loan to purchase the vehicle from the dealer. There was no evidence led by the Appellant that suggested that the policy not to conduct a search in these circumstances was ill-advised or unsound. It indeed makes good sense as such a search would reveal nothing and the imposition of a duty in those circumstances would be unfair and unreasonable. 55. In any event in this case even if a search had been done there is no evidence that it would have made any difference. According to the evidence the vehicles the Appellants had agreed to purchase carried registration numbers TBZ1877 and TBZ1878. These were the registration numbers of vehicles that were actually registered in the records of the Licensing Authority. They were owned by other individuals and were not dump trucks. It was contended by Mr. Dolsingh that had the mortgage bills of sale register been searched the truth that these vehicles belonged to others would have been discovered and in that way the fraud would have been exposed before the loan proceeds were disbursed. But that would only be so if there were mortgage bills of sale on the register affecting those vehicles. There is however no evidence that that was the position. 56. Lastly I come to the contentious claim that the Bank was negligent in obtaining a mortgage of the Appellant s property without the Appellant receiving independent legal advice. There are however two insurmountable obstacles standing in the way of the success of this submission. 57. First, according to the evidence led on behalf of the Bank, the Appellant was told that he should obtain independent legal advice before entering into the mortgage transaction. The Appellant however indicated that he did not need such advice. Indeed there was a clause in the deed of mortgage which stated that the Appellant was expressly advised, prior to the execution of the deed of mortgage, of the need to obtain independent legal advice and that he had agreed to execute the deed of mortgage fully realizing and apprehending the nature of his obligations and liabilities under the mortgage. The Attorney who prepared the deed of mortgage and who witnessed the Appellant s execution of it, gave evidence that this clause was specifically brought to the Appellant s attention and that she explained the legal effect of the document to him and what would happen in the event of him failing to repay the installments on the loan. Page 17 of 18

18 58. The Appellant denied that he was ever advised of the need to obtain independent legal advice or that the clause was brought to his attention but he did concede that he was told that if he was unable to continue make the loan payments, which were reduced from his initial liability, that his property could be sold under the mortgage. 59. The Judge made no finding as to whether the Appellant was advised to obtain independent legal advice. It is however not reasonable to contend that given the weight of the evidence and the Judge s assessment of the Appellant s credibility she intended to prefer the Appellant s evidence to that led on behalf of the Bank. The Appellant cannot be regarded in this case as having established the fact that he was not advised to seek independent legal advice. The weight of the evidence is against that conclusion. 60. Second, I agree with the Judge that there is no duty of care arising in the tort of negligence for the Bank to advise the Appellant of the need for independent legal advice. It is of no relevance to a claim in negligence. It might have been relevant had the Appellant s claim been based for example, on undue influence but as I have mentioned earlier that forms no part of the Appellant s case. 61. In view of the above this appeal is dismissed. We will hear the parties on costs. Allan Mendonça Justice of Appeal Page 18 of 18