CCJ Orders Bank To Repay Customer Money Transferred From Account Without Authorisation Or Consent

CCJ Upholds The Validity Of Gift In Belize Estate Dispute

In a judgment released today, the Caribbean Court of Justice (CCJ) dismissed the appeal in Caye International Bank Ltd v Rosemore International Corp. [2023] CCJ 4 (AJ) BZ and ordered Caye International Bank Ltd to pay costs.

Rosemore, a customer of Caye Bank, successfully sued the bank in the High Court of Belize to recover money deducted from its account without its authorisation or consent.

Caye Bank, is an international bank, operating in Belize and providing online funds transfer services to its customers. Rosemore, is a company registered in Panama, and was one of Caye Bank’s online banking customers in accordance with a Depository Agreement and an Indemnity Agreement between the two.

Caye Bank offered Rosemore, as it did for all its customers, the use of its secure online banking portal to conduct online transactions and gave it two sets of unique credentials to access the online banking portal known only to Rosemore.

The present dispute arose over the sum of USD175,000.00 which Caye Bank transferred on 23 April 2015 from Rosemore’s account into an account located in Canada. At the time when the funds were transferred, Caye Bank believed that the transfer was on the instruction of Rosemore.

In fact, the instruction was sent via a compromised email account, to which the fraudster had gained access and he sent a message that appeared to be a legitimate request from Rosemore.

When Rosemore discovered the fraud, it notified Caye Bank, but the bank refused liability for the transaction, claiming it had properly processed the transaction.

On 30 March 2016, Rosemore sued Caye Bank and the fraudster claiming damages for breach by Caye Bank of the express and implied terms of the Depository Agreement and in the alternative, damages for negligence by Caye Bank, its agents and/or servants.

The fraudster took no steps in the proceeding and a default judgment was entered against him.

The claim continued against Caye Bank and the High Court gave judgment for Rosemore, holding that Caye Bank had breached its express and implied duties to Rosemore to exercise reasonable skill and care.

Caye Bank appealed to the Court of Appeal, which upheld the judgment of the High Court.

On 15 February 2022, Caye Bank appealed the decision of the Court of Appeal to the CCJ.

The CCJ reviewed the verification clause of the Depository Agreement and found that there was no evidence that Caye Bank did not properly follow the verification and identification process contemplated by that clause.

Nevertheless, the Court decided that Caye Bank was subject to ‘the Quincecare duty’, an implied term which imposed a negative duty to refrain from executing a customer’s order if the bank was ‘put on inquiry’ that its customer may be subject to a fraud; and a positive duty to do something more than simply not comply with a payment instruction

The Court found that Caye Bank was put on inquiry as there were several red flags namely:

(i) the substantial amount requested to be transferred was suspicious given that the history of the account showed that there had been only one insubstantial withdrawal in the amount of USD1,915.76 in 2012;

(ii) the request came from an address which was not the domain address on record for Rosemore; and

(iii) there were observable differences between the signature on the wire transfer request form and the authorised signature. Given the red flags a senior official from Caye Bank ought to have contacted Rosemore to verify the transaction, which was not done. The Court, therefore, held that Caye Bank breached its Quincecare duty to Rosemore.

The Honourable Mr Justice Wit, Mr Justice Anderson, Mme. Justice Rajnauth-Lee, Mr Justice Barrow, and Mr Justice Burgess formed the panel with the judgment being delivered by the Honourable Mr Justice Burgess.

Mr Simon Christopher Peter Knox KC and Ms Sheena S Pitts appeared for the Appellant and Ms Priscilla J Banner appeared for the Respondent.


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