Harre CJ
```html 1 IN THE GRAND COURT OF THE CAYMAN ISLANDS HOLDEN AT GEORGE TOWN, GRAND CAYMAN CAUSE NO. 10 OF 1992 BETWEEN: ALI IBRAHIM PLAINTIFF AND： BRITISH AMERICAN BANK LTD DEFENDANT For the plaintiff： Ian Croxford Q.C. with him Mr. George Giglioli For the defendant： Pierre Lamontagne Q.C. with him Mr. Phillip Boni HARRE CJ. JUDGMENT The plaintiff is a customer of the defendant bank which at the time these proceedings were issued in 1992 was called First Home Banking Ltd and is now called British American Bank Ltd. He was introduced by a lady called hono. berleigh Brougher ("Brougher"), who was already a customer of the Bank, and opened individual accounts on 16th February 1990. The plaintiff spoke to the bank by facsimile evidence when he gave instructions to the bank by facsimile ("fax") to a bank officer also and he did not give withdrawal instructions in that way. With the exception of one unconsummated ```
```html 2 transaction that is consistent with the contemporary documentation. On 28th June 1990 the plaintiff sent a message to the Bank for the attention of Ms. Marisa Boyd giving an instruction to buy a six month CD (term deposit) for all the funds in his savings account No. 10795052 (sic). In fact the correct account number was 1079052 but nothing turns on that. The fax was sent on the printed paper of a company called Quantum Consulting Network Inc. ("Quantum") and the telephonerind fax numbers in the body of the message are the same as those in the instructed heading. On 20th December 1990 Mr. Ibrahim issued a further instruction on a similar style of transmission form giving an instruction or the completion of another CD, with the result that the total $100,000 deposited at the bank by way of certificates of deposit was some $200. All figures in this judgment are expressed in United States dollars. struct The two instructions by fax purporting to be signed by Mr. Ibrahim which have given rise to the present proceedings were dated respectively 27th May and 28th May 1991. The first purported to direct the bank to sign a further 6 months CD with the balance. Account 1 was a joint account of the plaintiff and Brougher which had an opening on 2nd April 1991 and on which either had authority The second purported instruction was to break CD No. 50016 credit savings account 1079052 and then transfer $400,000 to account of Quantum Consulting Network Inc. in Atlanta. ```
The plaintiff was the sole witness on his own behalf and no evidence was offered by the defence. He says that he discovered the two transactions on his return from India in June 1991 and that these faxed instructions were forged by Brougher. He had given no authority to any third party to give the instructions which purported to have been given, and no instructions or authority to the bank to disclose any information to Brougher. His evidence of admissions by the bank official Ms. Boyd that the bank sought unsuccessfully to verify the bogus instructions by telephone and was fobbed off by Brougher, and that infallibly had been given to Brougher which enabled her to make up a shortfall of $14,000 on the plaintiff's account so that the second transaction could be completed went unchallenged. It is convenient to observe that the sum of $14,000 which was thus deposited became in accordance with established principles of banking variable owed by the bank to the plaintiff and does not fall to be separated and treated in any way. Any matter in issue between the plaintiff and the depositor is of no concern of or assistance to the bank. As innumerable broken promises by Brougher to repay, the plaintiff's mainly a we lawyers - Kilpatrick & Cody - and a criminal complaint instituted through other lawyers, Garland and Samuel. On 18th and his Escrow Agreement was entered into under which Brougher agreed to $871,448.61 with Bank South NA as Escrow Agent pending distribution of the respective interests of Brougher, the plaintiff's brother (who had been initially a plaintiff in the present action). In fact a settlement was reached, and is embodied in the Judgment.
4 a document dated 26th September 1991 which recites the payment of $871,448.61 under the Escrow Agreement; that Brougher has maintained a right to possession of portions of the escrow fund based on various theories, including, without limitation settlement of an assault and battery claim against Ali Ibrahim and settlement of certain claims against Quantum for unpaid commissions and consulting fees; that the parties had agreed to settle their disputes; and that it is understood that the agreement is a compromise of doubtful and disputed claims and is not an admission of liability by either of the parties. The agreement also provides that the present plaintiff and Brougher will instruct the escrow agent to distribute $121,448.61 to Brougher and the remainder of the escrow fund with interest to Kilpatrick & Cody, attorney for ease Ibrahims. There then follow, among other things, mutual releases and undertakings to discontinue the action commenced in George suing that Brougher had converted over $900,000 of the plaintiff's funds. No evidence has been given on behalf of the defendant, but among the matters outstanding is the assertion that the instructions were issued by the plaintiff under his authority on the stationary of a company controlled him and from that company's offices; and that the bank has the plaintiff's signature which was verified by it against its record. A banker has a duty to use reasonable care and to honour the instructions of his customer given in accordance with that customer's instructions. There is also a duty of confidentiality. The plaintiff's
5 mandate in force required that withdrawal instructions should be signed by the plaintiff. The plaintiff gave evidence which was not challenged with regard to his practice when sending instructions by fax. It was that he spoke to the bank when sending such instructions and had not given instructions as to withdrawals in that way. The enquiries which the bank made were insufficient and it paid out monies on the basis of inadequate and insufficient instructions. With present technology the ease with which a bogus facsimile escribe can be appended to a document is obvious. In any event to y sigpe an instruction bearing a facsimile signature as being silius the person whose signature it purports to be seems to me to be e. ease of language. doubt I have no doubt that the bank was in breach of its duty of care in this instance. Indeed, in not admitting liability Mr. Lamontagne for the bank in that he was not going to say anything about it and as I have said, the matters were neither challenged in cross-examination nor was a future about them brought by the defence. Moreover, information that funds where not available to cover the second withdrawal in full was given to Brougher and this enabled her to top up funds from an account over which she had control in the sum of $ f legal and so enable the transaction to proceed. That too was a breach of duty. A number of issues arise from that finding which I will deal with in: so gne. They are these - p tid 14itev oean
Is there an equity in favour of the defendant? It was argued that such an equity arose from the principle expressed in B. Liggett (Liverpool) Ltd. v. Barclays Bank Ltd. (1928) I K.B. 483 and considered thereafter in cases to which I shall refer. Wright J. in Liggett took the statement of the equitable doctrine under which a person who has in fact paid the debt of another without authority is allowed to take advantage of his payment from the language of Scrutton LJ in the case of A.L. Underwood Ltd v. Bank of Liverpool and Martins (1921) 2 cheq. 775. and concluded that it should apply to a case where a cheque was paid by a banker without authority so that the payee will be entitled to the benefit of that payment if he was entitled to discharge a legal liability of the custodian in it. ALL, considered by the Court of Appeal in Re Cleadon Trust (1933) 116 and E.R. 518 and subsequently in the Supreme Court of Ontario 95. Royal Bank of Canada v. LVG Auctions Ltd. (1985) LRC (Com be I take the following succinct statement of the doctrine in its consequence in the Canadian case, which is allowed in accordance with the earlier statements in the English case how the judgment of Cromarty J - he cannot be equitable doctrines under which a person's the debt of another without authority may be allowed to take advantage of the payment. This equity is extended, if the circumstances justify, to a person who pays a cheque without authority if it is for the payment discharged a legal liability of the customer. The reasoning which supports the equity of the case by Wright J in B. Liggett (Liverpool) Ltd. v. Barclays Bank Ltd. (1928) I K.B. 48 at p 64".
```html 7 "The customer in such a case is really no worse off because the legal liability which has to be discharged is discharged, though it is discharged under circumstances which at common law would not entitle the bank to debit the customer." On the facts of the case before him Cromarty J concluded that extension of the equity to the defendant was fully justified in that payment of the cheque concerned discharged a clear legal liability of the plaintiff and to allow the plaintiff's claim would be in substance to make the defendant pay the plaintiff's debt. Although the London Trust is the leading authority from the English court of last resort I do not propose to refer to it at any greater length, so far, in the judgment, are all the cases on the equitable doctrine from the same origin. If the present matter. There is no authority or principle extract of all a principle of equity which applies where a fraudster withdraws its money from a bank and subsequently succeeds in retaining it as part of a settlement of a disputed claim with the account holder who has been defrauded. It is of course true that the settlement as arrived at with the knowledge and consent of the plaintiff's loss client was arrived at without any acknowledgment of liability or otherwise, and falls in my judgment far outside the equitable principle. What the plaintiff was doing was seeking to mitigate his position by reason of the bank's remedial measures. He was placed in a difficult position and acted reasonably in the adoption of his
What, if any, sum is the defendant now liable to pay? The disputed payments fall into the following categories: (a) Legal expenses The plaintiff claims reimbursement of legal expenses. Very detailed accounts are in the agreed bundle. They are from the two firms of lawyers to whom I have referred. The plaintiff challenges these bills on two grounds. Firstly because the actual payment was made by Quantum, p.c. cause only, rather than by the plaintiff himself; and secondly, because it is said that the bills do not only relate to the civil dispute with Kilween the plaintiff and Brougher. I have been through the bill with tatrack & Cody in some detail and conclude that the intense ar 1991 which the lawyers undertook in the period from June to September relates substantially to the settlement negotiations with Brougher which their consummation. There is a reference to "divorce" in relation to one of the meetings which the plaintiff explained, in relation to "the complaint" which I take to be a reference among many others to the complaint relating to Brougher. There is also a reference to a jury trial and to transfer of funds which the plaintiff says was a matter ancillary to the prospect of settlement. I see no reason to doubt that. The fees are categorically of course the categories do not prove themselves and I see no reason under the circumstances of this case to work on anything in the nature of a taxation exercise and disallow of them. Indeed to do so without evidence would be quite wrong, be it tort or of other sorts.
```html In relation to the objection that payments were made by Quantum and not by the plaintiff himself, my attention was drawn to several cases. Esso Petroleum Company Ltd. and Mardon (1976) 1 Q.B. 801 was a case in which money was lost through an unfavourable deal with the petroleum company. An argument put before the Court of Appeal in relation to damages was that it was not Mardon's money that had been brought into the venture and lost but the money of a company in which he and his wife were the only shareholders. They could at any time have wound up and taken the money standing to its credit as their the the instead Mardon drew cheques from the company's accounts ween wif court found that it was to all intents and purposes his and momenta's money. In view of the conclusion which I shall reach in etwee I do not need to consider whether that is the situation (76) 3 t the plaintiff and Quantum. I think it is unnecessary abrima Food Distributors Ltd and London Borough of Tower Hamlets (whic as TALL. E.R. 462. It is in my view much simpler than that. It ent est: plaintiff who instructed the lawyers to recover his money and s acie he is responsible for the fees. The arrangement he made for payment are not relevant to the question of establishing the defendant's liability towards him. ```
The plaintiff claims an account of the penalty interest charged by the defendant on the purported surrender of the certificates of deposit before their maturity and of the interest that would otherwise have accrued to the certificates at the defendant's rate of interest in force from time to time had they not been broken. Pre-judgment interest pursuant to Section 62 (2) of the Judicature Law is separately pleaded, but I shall make no award under that head. There seems to me to be no difference in principle between the case where the plaintiff loses contractual interest because money has been wrongfully taken away and a case such as *Wadsworth v. Lydall* (1981) 2 ALL ER 491, in which interest charges are incurred on a borrowing as a consequence on payment of money under a contract. For these reasons the plaintiff is in my judgment entitled to recover the following amount: | US$ | | --- | | Monies paid by Broby the defendant and taken by the creditor, less credit from the plaintiff recovered from her. | | Legal fee of Broby Kilpatrick of the plaintiff | | Legal fee of Broby Garland & Agnew | | Fee paid to the Advocate Agent | | 150,000.00 | | 82,768.73 | | 4,469.00 | | 2,000.00 | An account of the penalty interest on the purported surrender of the Certificate of Deposit before maturity and of the interest which would otherwise have accrued to the said Certificate of Deposit had they not been broken. Costs to be taxed or allowed. 31st May 1995 G.E. Ilarre Chief Justice