Barbados Supreme Court

BARBADOS.

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL

Civil Appeal No.10 of 2008

BETWEEN:

GRACE BEVERLEY SEALY Appellant

AND

FIRST CARIBBEAN INTERNATIONAL BANK

(BARBADOS) LIMITED Respondent

Before: The Hon. Sir David Simmons K.A., B.C.H., Chief Justice, the Hon. Peter Williams, Justice of Appeal, and the Hon. Sandra Mason, Justice of Appeal

2009: 6 and 7 January; 18 September

Mr. V.O. Smith Q.C. and Ms. Lisa Greaves of Smith & Smith, attorneys-at-law, for the appellant

Mrs. S. Mohammed Cumberbatch of Carrington & Sealy, attorneys-at-law, for the respondent

JUDGMENT

Introduction

SIMMONS CJ: This appeal raises important issues concerning the consequences of wrongful dishonour of cheques by the respondent (the bank), as well as important issues concerning pleadings in civil litigation. In the court below, Kentish J dismissed the action brought by the appellant (Mrs. Sealy) in which she claimed damages for breach of contract and libel. The trial judge found that "there was much dissonance between the case sought to be advanced at the trial on behalf of the plaintiff and that pleaded on the statement of claim".

[2] Mrs. Sealy is the office manager and accountant of the firm of attorneys-at-law known as Smith & Smith. She has been a customer of the bank since the 1970s. In June 2004 she held two accounts at the bank's Broad Street branch. These accounts were: (a) current account No.2622503 and (b) savings account No.6261394. Mrs. Sealy's son was the other signatory to the savings account.

[3] On 16 June 2004, Mrs. Sealy wished to renew her annual membership and that of her husband to the Barbados Cancer Society (the Cancer Society). She drew a cheque on the bank in the sum of $150 in favour of the Cancer Society. This cheque was presented to the Bank of Butterfield Ltd. for payment on 22 June 2004. It was dishonoured and returned to the Cancer Society with the notation "Refer to Drawer". Then, on 20 June 2004, Mrs. Sealy drew another cheque. This was made payable to the company of her dentist, Cavident Ltd, in the amount of $105. It, too, was dishonoured when presented on 22 June 2004 to the Bank of Butterfield (Barbados) Limited with the notation "Refer to Drawer".

[4] As a result of the dishonour of the cheques, Mrs. Sealy filed an action claiming, (i) damages for breach of contract, (ii) damages for mental distress, humiliation, embarrassment and, (iii) damages (including exemplary damages) for libel.

Appellant's Evidence

[5] Mrs. Sealy gave evidence that on 15 June 2004 her savings account contained $114,889.02. She went to the bank to withdraw $800.00 from her savings account. She wanted $200 in cash and she told the teller to transfer $600 from her savings account to her current account. She received $200 in cash together with a slip marked 'current account withdrawal' showing $600 "withdrawn amount" from her current account. The withdrawal slip was signed by Mrs. Sealy. She insisted that this slip was evidence of the transfer of the funds which she asked for from her savings account to her current account but, in terms, the slip did not so state. It showed a withdrawal amount and cash received of $600. However, she did not receive $600 shown on the withdrawal slip because this sum was posted by the Bank to Mrs. Sealy's savings account. Mrs. Sealy then gave evidence concerning the two cheques which she had drawn but which had been dishonoured. She spoke of her embarrassment when she learnt of their dishonour.

[6] On 24 June she received a statement of her current account from the Bank and saw that it was overdrawn by $134.26 and that $600 had been debited from that account. She went to the bank the next day, 25 June 2004, and spoke with Mrs. Colleen Webster, a supervisor. She asked Mrs. Webster how was it that her account was in overdraft when, on 15 June 2004, she had asked that it be credited with $600 being a transfer from the savings account to the credit account. According to Mrs. Sealy, Mrs. Webster said that she saw where the error was. The account had been debited rather than credited. She said that Mrs. Webster got a computer print-out of her savings account and asked her to transfer $1200 from the savings account to the current account in order to regularise it. This was done.

[7] Mrs. Sealy then said that she asked Mrs. Webster whether any of her cheques had 'bounced' and she was told No. However, Mrs. Webster told her that, if any cheques were returned, she should bring them to the bank and the bank would write and apologise. Mrs. Sealy said she was reluctant to do as advised because that was the second time that the bank had "messed up" her chequing account. About 3 days after seeing Mrs. Webster, Mrs. Sealy received a letter from the Bank dated 23 June 2004 and signed by Mr. Gregory Carter, senior credit counsellor. The letter informed her that her current account was overdrawn as at 22 June 2004 in an amount of $334.26 and, since she had no overdraft facility with the bank, it reserved the right to dishonour her cheques. She was advised to deposit "a sum sufficient to regularise the position by 30 June 2004".

[8] After receiving Mr. Carter's letter on 27 June 2004, Mrs. Sealy telephoned the bank the next day and spoke to him. She said she told him that the letter mentioned that her account was overdrawn but she had gone into the bank on 25 June 2004 to point out that the bank had made an error. When she told Mr. Carter that she also had a savings account with money on it and he should not 'bounce' her cheques for such a small amount, Mr. Carter's response was that there could be more than one Grace Sealy. In fact, Mrs. Sealy's evidence was that she told Mr. Carter that there was only one Grace Sealy at "Anderson" East Point, St. Philip. Mrs. Sealy's cheques bear her home address and telephone number, so Mr. Carter's response was puzzling to say the least. Mrs. Sealy said that she told him that she hoped the bank had not bounced her cheques and he said no.

[9] However, after this conversation, she received a call from Cavident Ltd informing her that the cheque paid to that company for $105 had also "bounced".

[10] Under cross-examination, Mrs. Sealy testified that on 15 June 2004 she went to the bank to carry out 3 transactions: (i) to deposit a cheque in the sum of $276; (ii) to withdraw $200 in cash from her savings account; and (iii) to transfer $600 from her savings account to her current account. She said the teller gave her 4 slips and she recalled signing 2. Mrs. Sealy was examined and cross-examined on 4 transaction slips generated by the bank. Exhibit 1A was a "Current Account Withdrawal" slip, unsigned, but showing a withdrawal of $600. Exhibit 1 was a "Savings Account Deposit" slip, signed by Mrs. Sealy and recorded a "cash amount" of $600 and "total deposit" of $600. Exhibit 2 was a "Savings Account Withdrawal" slip, unsigned, but which showed a withdrawal of $200 and on which was handwritten "$114, 689.82". Exhibit 14 was a "Savings Account Deposit" slip, signed by Mrs. Sealy and recorded a deposit of $276 and the amount of $114, 689.82 in someone's handwriting.

[11] However, Mrs. Sealy said that she did not make a deposit of $600 on 15 June 2004. She said that she expected to see the $600 reflected on her current account. Instead, the current account statement for 15 June 2004 suggested that she owed the bank $134.26. Mrs. Sealy was positive that she never told the teller to transfer $600 from her current account to her savings account.

Evidence for the Respondent

[12] The Bank called Mrs. Webster and Mr. Carter as its witnesses. Mrs. Webster has known Mrs. Sealy since 1999 and has been a client of the firm Smith & Smith. She said that Mrs. Sealy came to see her as she realised that the transfer on 15 June was from current account to savings account and "not the other way round". She said:

"On printing the accounts I realised that $600 was transferred from chequing to savings. That transaction had put the chequing account in an overdraft position and I also realised that two cheques had also been passed through the chequing account to put it further into overdraft."

[13] She said that after printing the accounts, the statement on the chequing account showed a withdrawal of $600 and, on the savings account, a deposit of $600, both done on 15 June 2004. Mrs. Sealy told her that the transactions were incorrectly recorded and Mrs. Webster therefore suggested to her to "double" the transaction by transferring $1 200 from the savings to the chequing account. She said that she considered it strange that the customer would have withdrawn $600 from her chequing account and then issue further cheques to put it further in debit.

[14] Mrs. Webster gave an account of the usual procedure for withdrawal of funds. She said that Mrs. Sealy would have gone to the teller and stated what type of business she wished to transact. The teller enters that information into the computer. A slip is then printed in duplicate and the customer is given the duplicate for verification of the transaction. The customer verifies the information, signs the slip and returns it to the teller who then gives a copy of that slip to the customer. If there is an error, the customer points it out to the teller who then calls the supervisor to delete the transaction and the teller will thereafter enter the correct information. There was, however, no evidence before the Court that that procedure was in fact followed on 15 June 2004. The teller, whose number was on the transaction slips, was not called as a witness because, according to Mrs. Webster, she could not recall the transaction.

[15] We note that on 23 June 2004 when Mr. Carter sent his letter the two cheques had already been dishonoured. Mrs. Sealy gave unchallenged evidence that Mr. Carter had in fact assured her that none of her cheques had been dishonoured. Indeed Mrs. Sealy's evidence that Mrs. Webster had also given a similar assurance was not challenged by the bank.

The Pleadings

[16] Because of their centrality to the decision of Kentish J and this appeal, it is appropriate to reproduce relevant parts of the pleadings as they relate to the dishonour of the cheques beginning with paras.3 to 8 of the statement of claim:

"(3) At all material times the Plaintiff by agreement was a customer of the Defendants and maintained a current account No.2622503 at the said branch.

(4) In the premises it was the duty of the Defendants to honour any cheques drawn on the Defendants by the Plaintiff and duly presented for payment provided they were sufficient funds standing to the credit of the Plaintiff's said account.

(5) On the 16^th day of June 2004 the Plaintiff drew a cheque for $150.00 payable to the Barbados Cancer Society or order in payment of the Plaintiff's and her husband's membership subscription for the year 2004/05. On that date and all material times thereafter the Plaintiff's said account was in credit in excess of the amount of the said cheque.

(6) On or about the 22^nd day of June 2004 the cheque drawn in favour of the Barbados Cancer Society was duly presented through to the Defendants but although there were sufficient funds standing to the credit of the Plaintiff's account out of which to pay the said cheque, the Defendants in breach of contract and their duty to the Plaintiff as her bankers wrongfully did not honour the said cheque and did not pay the amount thereof out of the Plaintiff's account but returned the cheque to the Barbados Cancer Society through The Bank of Butterfield (Barbados) Ltd.

(7) On the 20^th day of June 2004 the Plaintiff drew a cheque on the said account for $105.00 payable to Cavident Ltd. or order in payment of dental services rendered to the Plaintiff by the said Cavident Ltd. On that date and all material times thereafter the Plaintiff's said account was in credit in excess of the cheque.

(8) On or about the 22^nd day of June 2004 the cheque drawn in favour of Cavident Ltd. was duly presented through the Bank of Butterfield (Barbados) Limited to the Defendants for payment but although there were sufficient funds standing to the credit of the Plaintiff's account out of which to pay the said cheque the Defendants in breach of contract and their duty to Plaintiff as her Bankers, the Defendants did not honour the said cheque and did not pay the amount thereof out of the Plaintiff's said account but returned the cheque to Cavident Ltd by way of the Bank of Butterfield (Barbados) Limited."

[17] Paragraphs 4 to 8 of the Defence are relevant:

"4. The Defendant admits paragraph 4 of the Statement of Claim and states that its duty was only exercisable if the Plaintiff's cheques were properly executed and if there were no funds awaiting clearance before being credited to the Plaintiff's account.

5. The Defendant makes no admission in respect of paragraph 5 of the Statement of Claim and states that on the 16^th day of June, 2004 the Plaintiff's account number 2622503 was overdrawn in the amount of $134.26.

6. The Defendant denies paragraph 6 of the Statement of Claim and states that on or about the 22^nd day of June, 2004 the Plaintiff's account was overdrawn in the amount of $334.26.

7. The Defendant denies paragraph 7 of the Statement of Claim and repeats paragraph 6 of its Defence herein.

8. The Defendant denies paragraph 8 of the Statement of Claim."

[18] Mrs. Sealy served a Reply. In para.2, in response to para.5 of the Defence, she denied that her account was overdrawn on 16 June 2004 and, by para.3(a) of the Reply, she denied that the account was overdrawn on 22 June 2004 in the sum of $134.26 or at all. In para.3(b) she averred that the particulars of her account given by the bank were incorrect. The Reply then averred at para.3(c) and (d) as follows:

"(c) The Plaintiff further states that in fact the Plaintiff transferred from her savings account No.6261394….the sum of $600.00 and deposited the said $600.00 to her said Account No.2622503 but the Defendant negligently and erroneously entered the deposit as a debit and not as a credit to the said account.

(d) On the 25^th June, 2004 the Defendant sought to correct its said erroneous debit entry and on the 6^th day of July repaid to the Plaintiff's said account No.2622503 the excess penalty fee and overdraft interest debited to the Plaintiff's said account in error on June 30, 2004 in respect of the said erroneous withdrawal entry on 15^th June 2004."

Approach of Trial Judge

[19] At paras.16 and 23 of her judgment, Kentish J identified the critical issue of fact on the pleadings as whether on 16 and 20 June 2004 Mrs. Sealy had sufficient money in her current account to cover the value of the cheques when presented for payment. The trial judge said that it was clear from the evidence-in-chief of Mrs. Sealy that her case was that the teller had not carried out her instructions causing her current account to go into overdraft. The trial judge said that it was the submission of Mr. Vernon Smith Q.C. for Mrs. Sealy, that at all material times she had sufficient funds standing to the credit of her current account, and the bank had wrongfully, and in breach of her instructions, deducted funds from the chequing account which caused it to go into overdraft. The trial judge then said at para.[32]:

"However, nowhere in the statement of claim filed on behalf of the plaintiff is there any allegation reflecting that submission."

[20] She pointed out that counsel for the bank did not object to that submission. In the result, Kentish J found that Mrs. Sealy had insufficient funds in her current account to cover the cheques made payable to the Cancer Society and Cavident Ltd. In her judgment, the Bank in such circumstances, was under no contractual duty to honour the cheques and Mrs. Sealy's claim failed. The trial judge considered it unnecessary, having regard to her findings, to decide any question of damages for breach of contract or the claim for damages for libel.

The Appeal

[21] Mr. Smith argued on appeal that the trial judge not only ignored the Reply to the Defence but misdirected herself in law and fact. There is merit in the grounds of appeal. The trial judge did not advert to the Reply in her judgment. She appeared to focus only on the statement of claim and the Defence. In our view she erred both in her approach to a resolution of the issues on the evidence and in her approach to the pleadings.

[22] Plainly, the thrust of Mrs. Sealy's case was that on 16 and 20 June respectively, when she drew the cheques, there were sufficient funds in her current account to cover them. This allegation was made and pleaded because she had instructed the bank to transfer $600 to her current account from her savings account and, as she then believed, the bank had carried out her instructions. She therefore averred that "although there were sufficient funds standing to the credit of [her] account", the bank dishonoured the cheques - see para.6 of the statement of claim (supra).

[23] Mr. Smith put before us a submission which was addressed to the court below but not dealt with in the judgment. He submitted, that on the face of the bank's records, even if the value of the two cheques ($255.00) were added to the sum of $334.26 when the cheques were presented for payment on 22 June 2004, the current account still would not have exceeded the sum of $600 debited from the account. If the bank had not erroneously debited $600 from the account, no overdraft would have been created. In counsel's submission, the bank's error created the overdraft.

[24] That was one of the reasons why he pleaded and submitted that at all material times there were sufficient funds to meet the cheques at the time of presentment. This was an issue of fact and was contrary to the bank's Defence that the account was in negative balance. Although the argument of Mr. Smith was not lightly put, we do not think that it is necessary to deal with it for the purposes of our decision.

[25] The trial judge relied on the bank's records which showed that on 16 and 20 June 2004 there were insufficient funds in the current account - see paras.[41] to [47] of the judgment of Kentish J. So that, the trial judge seemed to prefer the documentary evidence of the bank without more and tied Mr. Smith rigidly to the letter of his statement of claim rather than to the effect of the evidence and the way in which the case was presented without objection. On the basis of the bank's records, the trial judge found at para.[48]:

"that neither at the date on which each cheque was drawn or (sic) on the date on which each cheque were presented for payment, was (sic) there sufficient funds standing to the credit of Grace Sealy from which FCIB (the bank) could honour the cheques."

[26] These courts are so familiar with the learning and authorities on the importance of pleadings that it would be supererogatory to traverse ground so well known as Thorp v. Holdsworth (1876) 3 Ch.D.637, andEsso Petroleum Co. Ltd. v. Southport Corporation [1956] A.C. 218 or the writings of the late Sir Jack Jacobs in Bullen & Leake and Jacob's, Precedents of Pleadings; The Fabric of English Civil Justice (Hamlyn Lecture 1984) and The Present Importance of Pleadings (1960 Current Legal Problems). This Court accepts, without the need for embellishment, the basic rules of pleading. In particular, we accept that a party is bound by his/her pleadings.

[27] However, although the function of pleadings in an action is to define the issues between the parties, pleadings often perform that function imperfectly. Invariably, the evidence led in an action goes beyond the strict letter of a pleading. It is a counsel of prudence in such an eventuality to seek an amendment of the pleadings to bring them into harmony with the evidence. That course was not pursued in this case.

[28] We are of opinion that the issue on the pleadings in respect of the dishonour of the cheques was simply this. Mrs. Sealy was alleging that when she drew the cheques, there were sufficient funds in her account to cover the value of those cheques because she had instructed the bank to transfer $600 from her savings to her current account. So far as she was aware, those instructions had been carried out when she was at the bank on 15 June 2004. On the other hand, the bank's case was that, on the dates when the cheques were presented for payment, her current account was in negative balance and the bank's records verified that state of affairs. The case proceeded without objection by counsel for the bank on the basis of Mr. Smith's submission and the contentions of his client in the course of her evidence. The bank was not taken by surprise or put to a disadvantage by the way in which Mrs. Sealy's case was presented.

[29] So, as we construe Mrs. Sealy's pleadings, her evidence and Mr. Smith's submission, her allegation of there being sufficient funds in her current account, was that there ought to have been sufficient funds because she had instructed the bank to make the transfer to her current account and she believed that the bank had carried out those instructions. Since the bank had not carried out those instructions, their records were erroneous. That was the effect of the evidence (much of it unchallenged and not explained away by the bank). That was the way in which the trial proceeded and to which, we repeat, there was no objection from the bank.

[30] In those circumstances, the trial judge was under a duty to assess and evaluate both the evidence and the pleadings, paying due regard to the way in which Mrs. Sealy's case was advanced and presented. In our judgment, the trial judge did not so resolve the issues but relied upon an excessively technical application of the rules of pleading.

[31] Sir Robin Millhouse observed in State Government Insurance Commission v. Sharpe (1996) 126 F.L.R. 341 at 344:

"The day has well passed when decisions are based on the state of the pleadings, irrespective of the facts or justice."

[32] In Domsalla v. Barr [1969] 3 All ER 487, evidence of loss of future prospects by an injured person was led without objection though the loss had not been pleaded. The English Court of Appeal held that since no objection had been taken at the trial, it was the duty of the court to consider the evidence. Edmund Davies LJ said at p.493:

"[T]he plaintiff was going outside his pleading, and objection might properly have been taken to the leading of such evidence. The objection, however, was not made, and accordingly it is not right, in my judgment, for this court to say now it will not have regard to such evidence as was called in support of this new, unpleaded matter; but that in no way relieves the court from the duty of carefully assessing such evidence as was adduced in support of this entirely novel allegation."

[33] At p.495 Widgery LJ emphasised the fact that there had been no objection made to the way in which the case was presented. He said:

"If in this case the plaintiff desired to make one of the planks of his claim the proposition that he had hoped to make money as the owner of a steel-erecting business, it was vital, in my judgment, that that matter should have appeared in the pleading, so that the defendants could be apprised that this important factor would appear at the trial. That was not done. Had there been objection to the evidence relating to the plaintiff's future prospects it might well have been that that objection should have been sustained. I agree with Edmund Davies LJ that, in the circumstances of this case, and having regard to the fact that there was no objection, it is right for us to consider such evidence as there was, but, for reasons which I have already given, that evidence makes a relatively small impression upon the amount recoverable in this case."

Deficiencies in Approach of Trial Judge

[34] We have identified a number of deficiencies in the approach of the trial judge. We enumerate them briefly below for convenience. (i) There was no analysis or finding in respect of Mrs. Webster's evidence mentioned at para.[12] supra. This was an issue requiring a finding. (ii) There was nowhere in the judgment of the court below any account of the evidence of Mrs. Webster or Mr. Carter and, not surprisingly, no evaluation of their evidence. (iii) There was no attempt to determine what were the instructions given by Mrs. Sealy. (iv) The trial judge did not advert to or examine Mrs. Sealy's evidence that on 15 June 2004 she had enough funds in the bank vis-à-vis the bank's allegation on the pleadings that on 16 June 2004 Mrs. Sealy's account was overdrawn. This was an issue on the pleadings on which the trial judge apparently made a finding adverse to Mrs. Sealy without proper examination and analysis of the evidence. (v) What were the inferences to be drawn from Mrs. Webster's evidence that she considered it "strange" that Mrs. Sealy should have withdrawn $600 from her chequing account and then issue cheques to put it in debit. In Mr. Smith's submission, even the sum of $600 did not put the account in debit. (vi) What was the evidential impact of the transaction slip marked "current account withdrawal" but showing that $600 had been withdrawn from Mrs. Sealy's current account? Clearly, there was an error on the face of the bank's own document prepared by its employee. (vii) The trial judge did not ask herself what was the probability that Mrs. Sealy would withdraw $200 from a savings account containing in excess of $114, 000 and then transfer $600 from her current account to the savings account, thereby exposing the current account to a deficit. (viii) The trial judge did not properly examine and evaluate the documentary evidence of the transactions done by Mrs. Sealy on 15 June 2004. For example, all of the transactions generated 'transaction slips' (referred to in para.[10]) which were timed and dated. Thus, (a) at 14:34, a deposit by cheque of $276 was made to the savings account. The slip was signed by Mrs. Sealy; (b) at 14:35, there was a withdrawal of $600 from the current account and a notation was made 'cash received'. The slip relating to this transaction was not signed and Mrs. Sealy did not recall precisely which slip she signed; (c) at 14:36, a cash deposit of $600 was made to the savings account and Mrs. Sealy signed the transaction slip; (d) at 14:38, there was a withdrawal of $200 in cash from the savings account but the transaction slip is unsigned. In her treatment of this evidence, the trial judge made no mention of either the savings account deposit slip (which clearly suggested an error on the part of the bank) or the savings account withdrawal slip (which was evidence supporting Mrs. Sealy's case that she was taking money from her savings account and not her current account). (ix) Finally, the trial judge set out the denials in the Defence but did not consider Mrs. Sealy's Reply in response. In the view of this Court, the judgment of the court below was unbalanced.

[35] The trial judge's pre-occupation with the strict letter of the statement of claim, her omission to analyse the effect of the Reply; her failure to analyse the evidence for both parties and make any proper findings or inferences arising from the primary facts; her failure to approach her decision based on the way in which Mrs. Sealy's case was advanced without objection by the bank's counsel, were all matters which led the trial judge to dismiss Mrs. Sealy's action.

[36] We take a different view of the primary facts from the trial judge and, where necessary, have drawn the appropriate inferences upon a fresh consideration of all the evidence. One of the stark features of Mrs. Sealy's evidence was that much of it, going to the facts in issue, was not challenged. For example, her evidence of conversations and assurances of Mrs. Webster and Mr. Carter that none of her cheques was dishonoured. This was unchallenged evidence raising an issue of credibility which was not addressed by the trial judge. Then, Mrs. Sealy's account of her instructions to the teller and the events of 15 June 2004 at the bank were not contradicted. On the other hand, none of the bank's witnesses was able to give direct evidence of Mrs. Sealy's actual instructions. Mrs. Webster testified only as to what was the normal procedure. It is true that the bank's records appeared to speak contrary to Mrs. Sealy's evidence. But, in our view, that documentary evidence may only have been proof that the bank did not carry out Mrs. Sealy's instructions and erred in transferring the funds from one account to the other. The accounts could only show what information was entered in the system. We are not able to draw an inference favourable to the bank in the absence of clear evidence by it as to what actually occurred on the day.

[37] Accordingly, and for the reasons set out in paras.[21] to [36] supra, we hold on a balance of probabilities, that it was the bank's error which caused Mrs. Sealy's current account to appear to be overdrawn. In the circumstances, the bank is liable for the dishonour of the cheques.

[38] That finding disposes of the issue of liability. However, that is not the end of this appeal. The trial judge made another error which obliged this Court to consider the case afresh. She did not attempt a provisional quantification of damages in the event that her decision on liability was wrong. In Weekes v. Barbados Advocate Company Limited (2002) 66 WIR 26, this Court said at paras.[36] and [37]:

"[36] Tucker L.J. in Harrison v. National Coal Board [1950] 1 All E.R. 171 at p.178 advised that:

"[I]n cases such as this, which involve difficult questions of law and are likely to be taken to appeal it is always desirable that the trial judge, whether or not he is requested by counsel so to do, should assess the damages provisionally, if his decision is adverse to the plaintiff. Failure to do so frequently results in unnecessary further expense to the parties."

[37] We think that such advice should also be heeded in cases where difficult questions of fact are in issue and a judge decides against a plaintiff who seeks damages. In this jurisdiction, Clifford Husbands J followed the advised practice in Sherlon Nurse v. William Edey (No.205 of 1977, unreported). At p.7 of his judgment, the learned judge, having given judgment for the Defendant, continued:

"However that may be, nevertheless I must assess the damages I would have awarded had my finding been otherwise."

Damages

[39] We must examine the issue of quantum of damages (a) in contract and (b) in tort.

(a) Contract

Mr. Vernon Smith's submission is that a bank's primary duty is to honour its customer's cheques, provided the state of the customer's account warrants it. Dishonour of a cheque when there are sufficient funds in a customer's account to honour the value of the cheque is a breach of the bank's contract. We accept the soundness of that submission. It rests upon an implied contract - see the analysis of Mocatta J in Burnett v. Westminster Bank Ltd [1966] 1 Q.B. 742.

[40] What is the appropriate quantum of damages for breach of the current account contract? For a long time, the authorities held that a distinction had to be drawn between the wrongful dishonour of a cheque of an ordinary person and that of a trader. The former recovered only nominal damages whereas the latter was entitled to substantial damages without pleading and proving actual damage: Gibbons v. Westminster Bank Ltd [1939] 2 KB 882; Wilson v. United Counties Bank Ltd [1918-19] All ER Rep.1035. In Wilson, Lord Birkenhead, following Rolin v. Steward [1854] EngR 492; (1854) 14 CB 595, said at p.1037:

"The defendants undertook for consideration to sustain the credit of the trading customer. On principle the case seems to me to belong to that very special class of cases in which a banker, though his customer's account is in funds, nevertheless dishonours his cheque. The ratio decidendi in such cases, is so obviously injurious to the credit of the trader that the latter can recover, without allegation of special damage, reasonable compensation for the injury due to his credit."

[41] Lord Birkenhead's reasoning clearly suggested that it was influenced by considerations resonating in the law of defamation. The rule enunciated by Lord Birkenhead may have been appropriate in times when the banking system was not as highly developed as it is today and the ownership and use of cheques were largely limited to business persons. The common law is dynamic. It must respond to the standards, values and expectations of contemporary society. In today's world, most people (not only traders and business persons) are holders of cheque books, credit or debit cards. Banks routinely assign credit ratings to customers. Thus, we hold with the English Court of Apeal that the distinction in the law is no longer valid.

[42] That Court swept away the distinction in Kpohraror v. Woolwich Building Society [1996] 4 All ER 119. It was held in that case that a person who was not a trader could recover substantial rather than nominal damages in contract for loss of credit or business reputation resulting from the wrongful dishonour of a cheque by a bank.

[43] Whereas Mr. Smith contended for substantial damages, Mrs. Mohammed Cumberbatch for the bank, submitted that, if Mrs. Sealy were successful, she should recover the measure of damages provided for in s.57 of the Bills of Exchange Act, Cap.304 which, so far as material, provides:

"57(1) Where a bill is dishonoured, the measure of damages which shall be deemed to be liquidated damages shall be as provided in this section.

(2) The holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an endorser who has been compelled to pay the bill may recover from the acceptor or from the drawer or from a prior endorser -

(a) the amount of the bill;

(b) interest thereon from the time of presentment for payment if the bill is payable on demand and from the maturity of the bill in any other case;

(c) the expenses of noting or, when protest is necessary and the protest has been extended, the expenses of protest."

[44] The submission is unmeritorious. Mrs. Sealy's statement of claim did not allege a cause of action founded upon the provisions of the Bills of Exchange Act. On the contrary, the cause of action pleaded in the statement of claim rested upon a breach of the bank's contractual duty - see para.[16] supra. Thus, the pleading in para.13 of the Defence, relying as it did on s.57 of the Bills of Exchange Act, is not sustainable. It was a pleading irrelevant to the pleaded cause of action.

Quantum of Damages

[45] In Hill v. National Bank of New Zealand [1995] 1 NZLR 736, Eichelbaum J took into account the position and standing of the plaintiffs and the extent to which the dishonour became known. He found that that last element "was slight, involving a few officers of the bank and of the collecting bank and the payee of the cheque" who, coincidentally, "was the plaintiffs' own firm of accountants" - see p.747. The learned judge was of opinion, however, that, because of his relationship with his accountants, the plaintiffs might have been able to mitigate the damage by a telephone call "explaining that they had had a difference of opinion with their bank…." p.747. He assessed damages at $500.

Non-Pecuniary Damages

[46] Mrs. Sealy claimed damages for mental distress, humiliation and embarrassment. The general principle is that compensation is only awarded for financial loss resulting from the breach of contract. The old case of Addis v. Gramophone Co. Ltd [1909] UKHL 1; [1909] AC 488 placed restrictions upon the availability of damages for non-pecuniary loss. A number of recent cases in the House of Lords has examined the principle enunciated in Addis v. Gramophone Co. Ltd. - see, for example, Malik v. Bank of Credit and Commerce International SA [1997] UKHL 23; [1997] 3 All ER 1; Johnson v. Unisys Ltd [2001] UKHL 13; [2001] 2 WLR 1076; Farley v. Skinner [2001] UKHL 49; [2001] 3 WLR 899. Having regard to our decision on the question of damages for defamation later in this judgment and, since there was not full argument and citation before us, we have not considered it necessary to discuss the claim for non-pecuniary damages. We are content merely to observe that the effect of the trio of House of Lords' cases (supra) suggests that the authority of Addis v. Gramophone is now heavily qualified. It seems to us that contemporary jurisprudence is pointing in the direction of a wider availability of damages for non-pecuniary loss occasioned by a breach of contract. In all the circumstances we make no award of damages for non-pecuniary loss.

[47] In Kpohraror (supra), the defendants had wrongfully refused payment of the plaintiff's cheque for £4, 550. The error was recognised the same day and corrected. The master awarded £5, 550 as general damages. This award was upheld by the court. Taking into account Mrs. Sealy's position at Smith & Smith, the unacknowledged error, and her long patronage of the bank, we assess damages for breach of contract in the sum of $10, 000.

(b) Defamation

[48] We turn now to the claim in tort. As an alternative to the claim for damages for breach of contract, Mrs. Sealy claimed damages for "libel" in the prayer to the statement of claim. She alleged that the words "Refer to Drawer" were libellous in their natural and ordinary meaning as well as in their inferential meanings. The innuendoes on which she relied were: (i) that she did not have sufficient funds standing to the credit of her current account to meet the cheques; (ii) that her financial standing was unsound and no one should have business dealings with her; (iii) that she had no money to pay for the dental services which she had requested; (iv) that she was guilty of the criminal offence of obtaining services by deception contrary to s.12 of the Theft Act, Cap.155.

[49] The Bank's pleaded Defence denied publication of the words but said that, if it did write the words, it was done without malice. In addition, the Bank denied that the words were capable of the meanings ascribed to them. It is of more than passing interest, however, that, although the Defence was that Mrs. Sealy's current account was overdrawn on 16 June 2004 and reflected in the bank's records, there was no pleading whatsoever of the defence of truth. It seems to us that if it were the case that Mrs. Sealy did not have sufficient funds in her account at the material time, the bank should have and could have pleaded that the use of the words "Refer to Drawer" was justified. This observation leads us to a brief examination of the relevant provisions of the Defamation Act, Cap.199.

[50] The Defamation Act came into force on 15 August 1997. It radically transformed the law of defamation in Barbados. One of its fundamental reforms was the abolition of the distinction between libel and slander. From the date of its commencement, the Act proclaimed that "it shall no longer be competent for a plaintiff to bring an action for libel or an action for slander and the action shall be brought for defamation." - s.3(1). Another reform was the abolition of the traditional defence of justification and its replacement by a defence of truth - s.7(1).

[51] As a consequence of the abolition of the distinction between libel and slander, Mrs. Mohammed Cumberbatch repeated to us her submissions in the court below that the prayer for damages for "libel" was bad because it sought "damages for libel" rather than "damages for defamation". She further contended that to allow an amendment of the prayer in the Court of Appeal would be tantamount to creating a cause of action which was by then statute-barred. The Writ of Summons was filed on 16 July 2004 and the limitation period for an action of defamation is 3 years.

[52] We cannot accept those submissions. In the first place, there was no objection in point of law taken in the bank's Defence. Secondly, no point was taken in limine that the statement of claim disclosed no cause of action. The trial proceeded without objection until the point was taken very late in the day in Mrs. Mohammed Cumberbatch's written submissions. The bank's approach savoured very much of trial by ambush. It is a tactic which we deprecate. If the point had been taken at an early stage, it was a small thing for Mr. Smith to have applied for an amendment to delete the word 'libel' and substitute in lieu thereof the word 'defamation'. Finally, although R.S.C. Ord.18, r.15(i) states that "the statement of claim must state specifically the relief or remedy which the plaintiff claims; but costs need not be specifically claimed", this is a reference to the prayer, not to the cause of action. The pleading of a cause of action is to be found in the body of the statement of claim and not in the prayer. In this case, the body of the statement of claim properly pleaded a cause of action in defamation.

[53] The authors of Bullen & Leake and Jacob's, Precedents of Pleadings (12^th Edition) explain at p.54:

"It is necessary for the statement of claim to fulfil its function that the elements or components, which together constitute the substantive right which is being claimed or enforced, must be alleged as the material facts of the pleading. What these elements or components are will depend upon the particular substantive right which is being raised in the pleading."

[54] The amendment which should have been sought to the prayer was purely technical. It was plain in the body of the statement of claim and in parts of the Defence that the cause of action was defamation. In Blackman v. Gibson (1996) 53 WIR 75, the Barbados Court of Appeal, following Pearlman (Veneers) SA Pty Ltd v. Bartels [1954] 3 All ER 659 and Mercer Alloys Corporation v. Rolls Royce Ltd [1972] 1 All ER 211, held that, in exercise of its inherent jurisdiction, it was entitled, of its own motion, to effect an amendment to the name of a party to the proceedings even after judgment was entered in order to do justice between the parties. We see no valid reason to depart from the earlier decision of this Court. We therefore delete the word "libel" appearing in the prayer to the statement of claim and substitute therefor the word "defamation".

[55] As we have indicated earlier, one of the issues on the pleadings was whether the words "Refer to Drawer" were reasonably capable of a defamatory meaning. In our view, they are. In Pyke v. Hibernian Bank Ltd [1950] I.R. 195, one cheque was marked "Refer to Drawer". At first instance, it was held that the words were reasonably capable of a defamatory meaning. However, on appeal, the Court of Appeal was equally divided. Two judges agreed with the court below; the other two disagreed and the judgment of the court below stood. In Jayson v. Midland Bank Ltd [1967] 2 Lloyds Rep 563, a jury found that the words "Refer to Drawer" were in fact defamatory after the trial judge ruled that they were capable of bearing a defamatory meaning. A persuasive authority is Hill v. National Bank of New Zealand (supra) cited by Mr. Smith. There, Eichelbaum J found the words to be reasonably capable of a defamatory meaning.

[56] At p.749 he said:

"The test to be applied is that of the fair and natural meaning which would be given to the words by reasonable persons of ordinary intelligence in the circumstances in which the writing was published."

[57] We are of opinion that the meanings ascribed to the words in the innuendoes pleaded and referred to at para.[44] are reasonably capable of bearing those imputations. As regards the question whether the words were in fact defamatory, we apply the test hallowed in legal usage by Lord Atkin in Sim v. Stretch [1936] 2 All ER 1237 at 1240, namely:

"would the words tend to lower the plaintiff in the estimation of right thinking members of society generally?"

[58] We desire to say that in most societies a bank's dishonour of a cheque is a serious matter. It affects a person's ability to use the banking system. Issuing a cheque knowing that an account has insufficient funds to cover the value of the cheque offends the criminal law; such action also reflects adversely on the creditworthiness of the drawer. In a small society such as Barbados, "bouncing" a cheque, as dishonour is colloquially characterised, exposes the drawer to opprobrium and ridicule. If a person persistently "bounces" cheques, the word soon gets around. We think that the average, ordinary person in Barbados would think less of one who draws cheques knowing that he/she had insufficient funds in a bank account to meet the cheques. We agree with Eichelbaum J in Hill v. National Bank of New Zealand at p.750 that:

"the majority of reasonable people would think that in all probability the bank had done so [i.e. dishonoured a cheque] on good grounds founded on some circumstance discreditable to the drawer of the cheque."

[59] Accordingly, on the weight of authority we hold that the publication was defamatory.

Quantum of Damages

[60] Assessment of the quantum of damages for defamation involves a consideration of factors beyond those to be taken into account in a claim under contract. A court is entitled to have regard to the position and standing of the plaintiff in the nature, mode and extent of the publication; the presence or absence of an apology; the conduct of the defendant before, during and after commencement of the action; and the plaintiff's injured feelings, distress, embarrassment and humiliation - see, generally, Devlin LJ in Dingle v. Associated Newspapers Ltd [1961] 1 All ER 897.

[61] As we indicated at para.[2] supra, Mrs. Sealy is the office manager and accountant of the firm of attorneys-at-law known as Smith & Smith and has been a customer of the bank for over 30 years. In addition, the bank's agent, Mrs. Webster knew her personally and professionally and she had a savings account with the bank in which there were substantial funds. No evidence was led by Mr. Vernon Smith from any of the payees as to their opinion of Mrs. Sealy as a consequence of the dishonour of the cheques.

[62] Dr. Dorothy Cooke-Johnson, on behalf of the Cancer Society, did, however, return the cheque "with a notice from the Bank of Butterfield" to Mrs. Sealy under cover of a letter dated 12 July 2004. So far as the cheque to Cavident Ltd was concerned, Mrs. Sealy's evidence was that she received a call from the dentist's office telling her about the cheque. She said that the caller told her that her cheque was returned and "to bring cash and not a cheque". She said that she was very embarrassed. She sent the cash "and paid to have it delivered to the dentist's office the following day". It was the first time she had gone to that dentist. She had a second appointment and she cancelled it. None of this evidence was challenged.

[63] We accept that Mrs. Sealy was embarrassed and distressed. We find on the evidence that publication was limited to Dr. Cooke-Johnson, the employee of Cavident Ltd who telephoned Mrs. Sealy and the officers of the respondent bank and the Bank of Butterfield who dealt with the cheques. In the absence of evidence, we have estimated that these officers were fewer than ten. However, seeing that the amounts on the cheques were relatively small, the embarrassment of Mrs. Sealy must have been all the more acute. The inferences in this regard are self-evident. Moreover, Mrs. Webster's assurance on 25 June 2004 and that of Mr. Carter on 28 June 2004 that Mrs. Sealy's cheques had not been dishonoured, do not sit comfortably with Mr. Carter's letter of 23 June 2004 in which he drew to Mrs. Sealy's attention that the current account was overdrawn. This conduct was quite unsatisfactory. Finally, we take into account that there was no evidence of an apology from the bank which persisted in its denial of wrongdoing throughout the proceedings.

[64] This Court assessed damages for defamation in 2006: Arnold Phillips et al v. Maria Boyce and P.S.M.T. (Barbados) Inc. (2006) 71 WIR 14. In that case, the appellant was defamed by the first respondent in a staff meeting of the second respondent. The defamatory statement implied that the appellant, among others, was dismissed for stealing. This Court, after a review of several local cases, upheld an award of $10, 000 by the trial judge.

[65] The publication in this case may not have extended to as many persons as in the case of Phillips v. Boyce but we take into account that banks conduct public business and the clearing of cheques affords an opportunity for employees of banks to become aware of the creditworthiness of customers.

[66] Whereas it would not be appropriate to discuss the law relating to a banker's right to conbine a customer's account, we nevertheless feel compelled to express our consternation that the bank should dishonour two small cheques of a customer of over 30 years' standing with the bank when one of customer's accounts contained in excess of $100, 000. Surely a telephone call would have avoided the embarrassment and distress suffered by Mrs. Sealy.

[67] In our judgment and, doing the best we can, having regard to the limited evidence, we think that an award of $15,500 meets the justice of this case.

Exemplary Damages

[67] We have not awarded exemplary damages. It is well established, of course, that such damages cannot be awarded for purely breach of contract - Johnson v. Unisys Ltd. (supra). There was evidence before the trial judge that in 2002 Mrs. Sealy had instructed the bank to transfer $800 from her savings account to her credit account. On receipt of her bank statement, the money was indeed transferred to her current account and then "taken back out". A cheque which she had written to her employer, Smith & Smith, was returned. On that occasion the bank "regretted" the incident and apologised in a letter which was admitted in evidence in this case. Although this incident was pleaded in the statement of claim in support of an award of exemplary damages, we do not think that the basis for an award of such damages exists in this case.

[68] Exemplary damages are damages whose purpose extends beyond the usual compensatory function to punitive functions. The availability of exemplary damages for tort was limited to three categories by Lord Devlin in the landmark case Rookes v. Barnard [1964] UKHL 1; [1964] AC 1129. Those categories were: (a) where government officials act in an oppressive manner; (b) where a defendant's conduct is calculated to make a profit from his wrong; and (c) where a statute expressly so provides. These categories have been rejected as too limited in Canada, Australia, New Zealand and Ireland - see Todd "A New Zealand Perspective on Exemplary Damages' (2004) Common Law World Review 255. And despite the criticisms of the English Law Commission in its Report (No.247-1997) that the limitations in Rookes v. Barnard are "unprincipled and illogical", they nevertheless survive in English law. However, in Kuddus v. Chief Constable of Leicestershire Constabulary [2001] UKHL 29; [2002] 2 AC 122, the House of Lords held that access to exemplary damages was not restricted to the categories of cases recognised by Rookes v. Barnard. Nevertheless, it is our judgment that the facts of the instant appeal are not so outrageous as to warrant an award of exemplary damages with a punitive or deterrent objective.

Disposal

[69] In the result, the appeal is allowed. To the extent that the award for damages for breach of contract has been subsumed by the award for defamation and there can be only one award, we order as follows:

That the respondent pay the appellant the sum of $15,500 together with interest thereon at the rate of 8% with effect from the date of this judgment until payment. The respondent must also pay the costs of the appellant here and in the court below, to be taxed if not agreed and certified fit for two attorneys-at-law.

Chief Justice

Justice of Appeal Justice of Appeal