Henderson J
IN THE GRAND COURT OF THE CAYMAN ISLANDS HOLDEN AT GEORGE TOWN, GRAND CAYMAN Cause No. G70 of 2012 BETWEEN: EDNA BROWN SEYMOUR PLAINTIFF AND: FIRSTCARIBBEAN INTERNATIONAL BANK (CAYMAN) LIMITED 1ST DEFENDANT AND: ANDRE ALEXANDER 2nd DEFENDANT Appearances: Mr. Nick Dunne of Walkers for the Applicant Mr. Clyde Allen of Chambers for the Defendant Before: Hon. Justice Henderson Heard: July 11, 2013 RULING
On November 23rd, 2012 I heard an application by the first defendant, FirstCaribbean International Bank (Cayman) Limited to strike out the statement of claim because it disclosed no reasonable cause of action. During that hearing I indicated to Mr. Allen, of counsel to the plaintiff, that I considered his pleading to be deficient. Rather than strike it out I adjourned the hearing generally and suggested that he file an amended statement of claim. That was done at 11:00 a.m. on July 9, 2013, over seven months after the initial hearing and less than 24 hours before the resumption of this application.
Notwithstanding the considerable amount of time which has been taken in the re-drafting of this document, the result is a confusing amalgam of disjointed but repetitious allegations of fact combined with an improbable array of legal characterisations to be placed on those facts.
The background is this. The plaintiff, Edna Brown Seymour, owns a property in Savannah. After Hurricane Ivan the property was in need of repairs and the plaintiff needed a loan to complete those. She applied for that to the bank. The second defendant, Andre Alexander, is alleged to have been the small business officer at the bank. According to the pleading, virtually all of Ms. Brown Seymour’s dealings were with Mr. Alexander. Ms. Brown Seymour provided two estimates for the necessary work to the bank. These were in the amount of $171,000 and $139,000. It is alleged that the bank offered to lend $169,000 to Ms. Brown Seymour on the strength of a mortgage on the property and that she accepted the offer on November 28th 2005.
The plaintiff says that subsequent to the parties entering into the mortgage contract, Mr. Alexander said to Ms. Brown Seymour that her receipt of the loan proceeds would be conditional upon her selecting a contractor to be recommended by Mr. Alexander himself. Mr. Alexander recommended Mr. Owen Powiss, who was then in the construction business in Grand Cayman. Mr. Alexander is said to have told Ms. Brown Seymour that if she used Mr. Powiss this would save her $30,000.
The pleading, which is repetitious in the extreme, alleges that the plaintiff could not read or write and that a relationship of trust and confidence arose between Mr. Alexander and Ms. Brown Seymour. It is alleged that Mr. Alexander assumed fiduciary obligations to Ms. Brown Seymour, notwithstanding that they were arms-length parties negotiating a mortgage loan. It is said also that Mr. Alexander exercised undue influence over Ms Brown Seymour. For good measure, it is alleged that he defrauded her by making false representations which she was induced to act upon to her detriment and that he was negligent in making those representations. It is alleged that he made “representations and warranties", presumably in relation to the contract between Mr. Powiss and Ms. Brown Seymour.
Accepting the advice of Mr. Alexander, Ms. Brown Seymour obtained an estimate from Mr. Powiss in the amount of $106,500. One of the more confusing sentences in the statement of claim says that "the plaintiff will rely on the contents of that document for its full terms and conditions from which the representations and warranties can be inferred".
Ms. Brown Seymour accepted the offer of Mr. Powiss and retained him to do the work. It is alleged that Mr. Powiss sent his invoices directly to Mr. Alexander who then approved the release of funds to the contractor. It would also appear (although the pleading is unclear) that Ms. Brown Seymour and the bank set aside their first agreement and entered into a fresh agreement for a loan of $106,500.
Mr. Powiss failed to complete the work. He has now disappeared.
Apparently (although this, like many other allegations, is unclear) Ms. Brown Seymour had a separate loan at an institution referred to as the Credit Union Bank. It is said that the bank - that's the FirstCaribbean International Bank - made an additional loan to her in or about November, 2005 for the purpose of taking over this indebtedness from the Credit Union Bank. A variety of figures are contained in the pleading which are difficult to reconcile; there is an allegation that the two loans together amounted to $169,080 in paragraph 16. Elsewhere the amount is said to be $155,277 (paragraph 21). This sort of contradiction is symptomatic of the pleading as a whole. It is now estimated that a further $88,735 is needed to complete the repair work.
After characterising these facts as amounting to fraud, fraudulent and innocent misrepresentation, undue influence, breach of fiduciary duty and negligence on the part of the bank, the pleading says that the result in law is that the mortgage should be set aside. Confusingly, the prayer also asks for "rectification of the register to reflect the correct amount of money loaned for the purpose of registering a legal charge against the property".
The heart of the case pleaded seems to amount to this. It is said that Mr. Alexander established a sort of paternal relationship with Ms. Brown Seymour in which she placed her trust in him to act in her best interests. He steered her toward Mr. Powiss, who promised to do the work at a lower cost than the two estimates she had received but failed to do so. Mr. Alexander, who was alleged to have been a servant or agent of the bank throughout, is said to have lied to Ms. Brown Seymour and to have exercised undue influence over her to persuade her to hire Mr. Powiss.
On this application I must approach my task on the footing that everything alleged in the pleading can be proved. On this basis, it would appear that Ms. Brown Seymour has a viable action against Mr. Alexander and would have one also (had the limitation period not passed some time ago) against Mr. Powiss. The question, however, is whether she has a reasonable cause of action against the bank.
The plaintiff entered into her initial contract with the bank on November 28, 2005 before the various acts by Mr. Alexander of which she now complains. Thus, she showed herself willing to borrow the sum of $169,000 from the bank in exchange for a mortgage on her residence. Subsequently, the loan agreement was re-written for the lower amount of $106,475. When it became necessary to complete the work which Mr. Powiss left unfinished, she appears to have borrowed a further sum which raised the indebtedness to $169,000. Assuming Mr. Alexander has been guilty of everything alleged against him, it does not seem to me that there can be any causal link between the plaintiff's willingness to enter into her contract with the bank and any fraud, undue influence, et cetera brought to bear upon her by Mr. Alexander. His purpose was to induce her to hire Mr. Powiss. She had already decided to borrow money from the bank and nothing needed to be said or done to induce her to do that. All the allegations of fact in the pleading are directed to the proposition that Mr. Alexander should not have induced the plaintiff to hire Mr. Powiss.
There are other deficiencies are well. As the bank has argued, on the most charitable of interpretations Ms. Brown Seymour must have been aware of her complaint against Mr. Alexander and the bank by September, 2006 when she borrowed additional money to fund remedial works. Therefore, the limitation period has now passed and she should not be permitted to advance a new cause of action. The allegation of undue influence is entirely new.
The pleading of undue influence should allege that the plaintiff placed her trust and confidence in the defendant and that the transaction into which she was induced to enter is one "that calls for explanation" or "is not readily explicable by the relationship between the parties". See RBS v Etridge (2) [2001] UKHL 44. Ms. Brown Seymour's pleading says nothing at all about whether the contract she entered into with Mr. Powiss calls for an explanation. It is said that he breached the contract and failed to complete the work; that in itself says nothing about why the initial decision to hire him calls for an explanation. Moreover, there is no suggestion about why the mortgage contract with the bank, which is the real target of the claim, "calls for an explanation".
Of fundamental difficulty with this misconceived action against the bank is the equating of Mr. Alexander's statement to Ms. Brown Seymour that hiring Mr. Powiss would save her $30,000 with a representation of fact. The statement is essentially an assertion of opinion and a prediction of a future outcome. It is not a representation of past or present fact. The pleading assumes throughout that this statement can be treated as a misrepresentation of an existing fact and as a "warranty". There is no merit in that view. For essentially the same reason, the statement by Mr. Alexander about Mr. Powiss cannot form the basis of a claim in fraud. As for negligence, the pleading says (in paragraph 18a) that Mr. Alexander "failed to select someone who would provide an estimate that covered the actual materials and services to be performed" but an estimate is just that: an opinion as to how much a certain job will cost. There is no air of reality to the suggestion that a business advisor commits an act of negligence by failing to select a contractor who "would" provide an estimate that covers the "actual" costs of materials and services which have not yet been rendered.
Overall I am satisfied that the pleading is not in such a form as to disclose any reasonable cause of action against the bank. The application is allowed and the statement of claim is set aside as against the first defendant. Dated this 11th day of July, 2013 Henderson, J. Judge of the Grand Court