Sinclair wins appeal; court orders FIS to refund him $70m
JOHN Sinclair, the hotelier who sued his creditors in 1997 for charging too much interest on monies borrowed by his companies, Negril Holdings and Negril Investments Limited, won the second round of his legal battle Friday when two of three local appellate judges ordered the government’s Financial Institutions Services Limited (FIS) to refund him approximately $70 million with interest at 52 per cent per annum.
According to the majority ruling by appellate court judges Paul Harrison and Ransford Langrin, the interest rate is to be applied from September 30, 1992 when the suit was filed to July 18, 1997 when Supreme Court Judge Lloyd Ellis ruled that Century National Bank (CNB) had no right to charge compound interest on monies that Sinclair borrowed through three overdraft accounts to finance various hotel-building projects.
Sinclair’s lawyers, led by Hugh Small QC, had contended before Justice Ellis that the Donovon Crawford-run CNB, which was subsequently taken over by the FIS, had illegally and oppressively compounded interest rates on monies that Sinclair borrowed. They contended that Crawford took advantage of his non-fiduciary relationship with Sinclair before making a formal demand on him to repay the monies borrowed or forfeit his hotels.
Their calculations at the time concluded that the bank had overcharged Sinclair by about $70 million.
However, Justice Henderson Downer, who also heard the appeal that FIS filed against Justice Ellis’ ruling, disagreed.
“Mr Sinclair pursued a reckless policy of borrowing by way of overdraft …. the accounts were constantly overdrawn,” he said in his contribution to the judgement. Justice Downer also pointed out that the interest rates charged by CNB were in keeping with the usual rates justified by settled authorities on the subject and that Sinclair’s lawyers had not proved that the interest charged amounted to penalties.
“The contracts (that governed the overdrafts) enabled the bank to charge compound interest at the usual rate as decided by settled authority. The bank was also entitled to vary the interest rates…,” he said.
However, the other two judges ordered FIS is to render a proper account of the current accounts that Sinclair had opened with CNB on November 15, 1984; December 4, 1986 and July 13, 1987.
Those records are to form the basis of the refund to Sinclair.
