By Barbara Gayle, Staff ReporterTHE UNITED Kingdom Privy Council has ruled that the Jamaican courts were correct when they disallowed the excessive interest rates charged by the defunct Century financial institutions for overdraft accounts involving hotelier John Sinclair and his companies Negril Negril Holdings Ltd., and Negril Investments Company Ltd.
The ruling was made yesterday when the Privy Council allowed, in part, an appeal brought by the Government-owned Financial Institutions Services Ltd., (FIS) against a 2002 Court of Appeal ruling.
THE OUTCOME
Sinclair's case was one in which the banking community was watching the outcome of the case as he had challenged the excessive interest rates on his overdraft facilities at the bank. Sinclair and his companies sued the Century financial entities to recover damages for the excessive interest rates and in 1997 the Supreme Court awarded him $70 million.
"The bank, having entered into a special relationship, could not conscientiously allow the Companies' overdrafts to get bigger and bigger while treating them as unauthorised overdrafts in order to charge very high rates of interest. For these reasons their Lordships consider that it was right for the courts below to disallow the rates charged by the Bank, but that they went too far in disallowing any compounding effect," the Privy Council held. The Privy Council held also that the bank was entitled to interest at a reasonable commercial rate which the Supreme Court judge fixed at 26 per cent.
