Sunsystems Ltd et Al v Grenada Co-operative Bank Ltd et Al

JudgeGlasgow, J.
Judgment Date17 May 2024
Judgment citation (vLex)[2024] ECSC J0517-3
CourtHigh Court (Grenada)
Docket NumberCLAIM NO. GDAHCV2023/0015 (formerly CLAIM NO. GDAHCV2015/0303)
Sunsystems Limited
Phillip David
Sonia David
Grenada Co-Operative Bank Limited
Lewis & Renwick (A Firm)
Trevor St. Bernard (Personal Representative of the Estate of Cosmo St. Bernard, deceased)

The Hon. Justice Raulston L.A Glasgow High Court Judge

CLAIM NO. GDAHCV2023/0015 (formerly CLAIM NO. GDAHCV2015/0303)






Mr. Keith Scotland K.C. and Mrs. Melissa Modeste – Singh for the Claimants

Mr. Sydney Bennett K.C. with Mr. Alban John, Mrs. Hazel Hopkin – La Touche and Ms. Chandelle Denzil – Bartholomew for the 1 st Defendant

Mr. Paul Dennis K.C. with Mr. Ian Sandy and Ms. Ssavanna Seales for the 2 nd and 3 rd Defendants

Glasgow, J.

This claim involves an unfortunate state of events resulting from the breakdown in the relationship of banker and customer.


The 1 st claimant, Sun Systems Limited (“SSL”), is a limited liability company incorporated on the 24 th November, 1997 in the state of Grenada. The 2 nd and 3 rd claimants, Phillip and Sonia David (collectively “the Davids”) are a married couple, and the sole shareholders and directors of SSL. SSL owned and operated a business which traded as ‘Sun Motors’. SSL's principal business was the importation, sale, and rental of luxury branded vehicles such as Volkswagen and Land Rover in Grenada. In or around 2003, SSL approached Grenada Co – operative Bank for the purposes of opening accounts for the operations of the business of SSL.


The 1 st defendant, Grenada Co – operative Bank (“the Bank”) is a licensed banking institution established in 1932 in Grenada, and is Grenada's only indigenous bank. In 2003, the Bank provided SSL with 4 accounts for the operations of its business.


The 2 nd defendant, Lewis & Renwick (“the Law Firm”) is one of the oldest law firms in Grenada, and at one point, the Law Firm was exclusively retained to do all of the Bank's commercial and conveyancing work. The 3 rd defendant, Mr. Cosmos St. Bernard was one of the senior partners of the Law Firm. He passed away on 4 th October, 2021, prior to the commencement of the trial and his son, Mr. Trevor St. Bernard, was substituted as 3 rd defendant 1.


The claimants plead that they first approached the Bank in 2003, and within 30 minutes of meeting and without signing any formal contractual documentation governing the banking relationship, one of the Bank's employees, a Mr. DeFreitas approved the Davids' opening of 4 accounts at the Bank for SSL. These 4 accounts covered SSL's Land Rover sales, Land Rover servicing and parts, Volkswagen sales and Volkswagen servicing and parts. The accounts opened for SSL were credit accounts on overdraft, with no fixed overdraft limits or interest rates provided by the Bank.


The relationship between the Bank and the claimants continued in this manner, and the claimants claim that the Bank applied and capitalized interest

on the overdrafts with no contractual reference point. By 2008, the claimants say that SSL had incurred significant indebtedness to the Bank. Sometime during 2008, the claimants claim that the Bank offered SSL a restructuring proposal. The claimants allege that this restructuring proposal would have the effect of converting the overdraft balance owed by SSL into a loan of $3.8 million and also provide SSL with approximately $1.2 million in working capital. The claimants explain that this proposal by the Bank was conditional on the Bank obtaining some form of security from SSL, as up to 2008, SSL's overdraft facilities were being operated without any form of security

The Claimants claim that many discussions took place between the Davids' and the Bank on the appropriate security to be offered after the proposal was made. The Claimants claim that the Davids wished to offer property situated at Maurice Bishop Highway, St. George's as security, but the Bank indicated that they preferred property owned by the Davids situated at Point Saline, St. George's. There was some back and forth between the parties on this point, culminating with the title deed for the Point Saline property being taken by the Davids to Mr. DeFreitas at the Bank, and lodged with him in April, 2009.


Thereafter, the claimants state that the Bank offered restructured facilities formally to SSL by letter dated 6 th April, 2009. This offer letter proposed a loan of $3.8 million dollars for a term of 15 years, and an ‘overdraft facility/letter of credit’ of $1.2 million dollars, and was conditional on “security being provided in the form of a fixed and floating charge over the assets of SSL of the property at Point Salines, St. George's – recently conveyed” to the Bank. The claimants claim that they understood this offer letter to be on the same terms of the Bank's proposal in 2008 and executed same.


The claimants utilize the definition of restructured facilities in the Eastern Caribbean Central Bank's (ECCB) Prudential Credit Guidelines, and the terms ‘overdraft and/or letters of credit’ as contained in the 2009 offer letter to support this assertion of their understanding of the proposal. The claimants' case is that if working capital was not provided, SSL could not operate, and the restructured facilities would have been doomed to fail from the outset, as all that would have happened is that the Bank would have obtained security, while the Bank's customer was misled.


After execution of the offer letter of 30 th April, 2009, SSL's accounts at the Bank were credited, the claimants' say, which cleared off the overdrafts owing on 3 of the 4 accounts. This left SSL with 1 overdraft account at the Bank with a balance of $1,292, 865.24. Sometime before receiving a letter from the Bank dated 22 nd May, 2009, the claimants say that the Davids came to the realisation of the effect of the Bank's restructuring, as the application of the loan had the effect of denying SSL the $1.2 million working capital as contemplated in the 2008 proposal and contained in the April 2009 offer letter.


By the time the Davids realized the actual operation of the restructurings in May, 2009, the claimants say that SSL's accounts had already been credited, but no security had been put in place by the Davids, outside of the title deed to the Point Saline property being lodged with Mr. DeFreitas at the Bank. The claimants explain that these security arrangements were not formalized until the Davids' executed the mortgage documents on 29 th July, 2009. The claimants allege that in this interim period, the property at Point Salines, which was owned personally by the Davids', was transferred to SSL on 28 th July, 2009, without the Davids' knowledge. The claimants insist that they were completely unaware of this transaction (the Voluntary Conveyance).


On 29 th July, 2009, the Davids' attended the Law Firm and Ms. Deborah St. Bernard, an attorney at the Law Firm provided them with what they refer to as “a lot of documents”. The claimants aver that Ms. St. Bernard said nothing about the documents, other than they were “okay to sign”, so they executed the documents. The claimants further claim that the Davids knew nothing about the Voluntary Conveyance, so they assume that the Davids must have signed the Voluntary Conveyance on that occasion, as the Law Firm never explained to the Davids what they were signing.


The claimants indicate that they felt secure, as while it was widely known in Grenada that the Law Firm acted for the Bank, the Law Firm also acted for the Davids, so they assumed that the Law Firm was looking after their interest. The claimants also state that they knew Mr. Cosmos St. Bernard was a senior partner at the Firm and chairman of the Bank, but they did not know he was also a significant shareholder of the Bank. The claimants assert that had SSL been aware of Mr. St. Bernard's interest in the Bank, the Davids would have acted differently by obtaining separate advice.


The claimants contend that neither Ms. St. Bernard nor anyone else at the Law Firm advised the Davids to seek independent legal advice. Also, they say that the Bank and the Law Firm were aware that the Davids had no independent advice, given that they were relying on the Law Firm. The claimants' case is that what occurred in 2009 was:

  • (1) SSL had passed a resolution approving an arrangement in 2008 which was to procure $1.2 million in working capital;

  • (2) An offer of restructuring was made in April 2009 that appeared to replicate the 2008 proposal;

  • (3) By 2009, there was no intention by the Bank to provide $1.2 million in working capital, but the claimants were unaware of this;

  • (4) The Davids attended the Law Firm to sign for the loan but were merely providing security to the Bank for a set of arrangements that were doomed to fail, and the Bank was aware of all of the above.


The claimants further state that sometime in May, 2009, Mrs. David went to Mr. DeFreitas and informed him that he had effectively tied up SSL. They allege that Mr. DeFreitas said that if additional security was given to the Bank over the Maurice Bishop Highway property, then working capital would be provided, along with additional financing for SSL's operations. The claimants complain that this meeting with Mr. DeFreitas marked a 2-year period where the Bank was slow in making payments on SSL's account, causing the Davids to finance SSL's business from other sources. Mr. DeFreitas passed away in 2010, and SSL's accounts were then managed by Mr. Leon Moses.


The claimants allege that they held several conversations with Mr. Moses about security proposals to be offered to the Bank, given that the Bank continued to offer support to SSL on overdraft. By 2011, SSL's accounts were stressed and fluctuating beyond the limits agreed in 2009, due to the absence of...

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