Two business owners, who claimed that they went ahead and constructed a supermarket with their own cash based on an oral assurance by the then Chief Executive of GBTI that the financial institution would have granted them a loan, have lost a High Court case and now have to repay the bank more than $56 million plus interest and costs.
Justice Rishi Persaud this month granted the $56M judgment to the Guyana Bank for Trade and Industry (GBTI) against two customers of the bank, Chatterpaul Deo and Bibi Faneeza Deo, who challenged the foreclosure on their mortgage on the grounds that the bank’s then Chief Executive Officer, John Tracey gave them signals that their loan application would have been granted.
Filed since August 2015 in the High Court, the bank, in the case of Guyana Bank for Trade and Industry Limited V. Chatterpaul Deo and Bibi Faneeza Deo (Civil Action No. 2015-HC-DEM-CIV-CD-860), sought to recover $56,469,544 for two loans that the defendants defaulted on.
The two defendants were business persons who had overdraft facilities with the Bank and decided to start a supermarket on the Railway Embankment Road on the lower East Coast of Demerara.
They approached the Bank for a loan to finance this business investment and the Bank requested that they submit a loan application for its credit committee to consider and this was done.
However, the defendants commenced construction with their own funds believing that they would be approved but the Bank’s credit committee eventually did not approve their loan application.
They began defaulting on their overdraft facilities until it reached a stage where the Bank began proceedings to recover the monies outstanding to it. These amounts were secured by a mortgage and promissory notes by the defendants.
When the bank began proceedings for the recovery of the monies owed, the defendants sought leave of the Court to defend the matter, claiming in their defence that the then Chief Executive Officer of the Bank had promised them faithfully to have the loan granted. They claimed they would not have begun the project and risked their own funds without such promises.
The Bank’s Attorney submitted to the Court that promissory notes are very simple financial documents and as such, are construed by the Courts very strictly.
The Bank cited several cases in support of its contentions that there are only a few limited defences to a promissory note and pointed out that none of those were alleged.
Further, the Bank submitted that under Guyana’s Roman-Dutch law of mortgages, a mortgage was equivalent to a judgment of the High Court and therefore the Defendants would have to have it set aside before they could seek to be relieved of sanctions under it.
The Defendants countered that they had been led astray by false assurances from the Bank’s CEO and that the Bank was bound by this as it had full knowledge of their supermarket project even submitting that GBTI’s CEO could see the construction clearly while driving along the East Coast. They argued that the Bank was therefore liable to a counter-claim in compensatory damages for the losses they had suffered.
On the 9th February 2018, Justice Rishi Persaud, sitting in the High Court, dismissed their contentions and ruled in the Bank’s favour.
Justice Persaud ruled that if the Defendants wished to advance those allegations, they must do so in a separate lawsuit and observed that were he to hold otherwise, it would wreak chaos in the financial community.
It was then that he issued judgment for $56M together with all interest accrued, and costs, against the Defendants.
The Bank was represented by Andrew Pollard, SC of Hughes, Fields & Stoby while the Defendants were represented by Rabi Sukul and Jaya Singh-Backreedy.