Dextra Bank V. Bank Of Jamaica Notes

Dextra Bank v. Bank of Jamaica

Facts

On 19 January 1993 Dextra Bank & Trust Co Ltd (“Dextra”) drew a cheque dated 20 January 1993 on its bankers Royal Bank of Canada (New York) in favour of the Bank of Jamaica (“the BOJ”) for US$2,999,000. The BOJ received that cheque on 20 January 1993. On 25 January 1993 the BOJ negotiated the cheque by indorsement and delivery to Citibank International Ltd which duly collected payment from the Royal Bank of Canada. Dextra drew its cheque intending to lend the sum specified to the BOJ against the security of a promissory note executed by the BOJ. The BOJ for its part intended to buy the specified sum of United States dollars in exchange for the equivalent in Jamaican dollars, which it paid to individuals understood to be nominated on behalf of Dextra. Each party was deceived as to the intention of the other and the Jamaican dollar sums paid by the BOJ were received not by Dextra but by others who included those responsible for the deception.

Dextra sued the BOJ to recover the sum paid under its cheque, contending that the BOJ had converted the cheque or alternatively that it (Dextra) was entitled to recover the proceeds of the cheque as money paid under a mistake of fact.

Holding

Change of position

BOJ’s claim on change of position: The submission of the BOJ has been that it would have been entitled to do so because the Dextra cheque was purchased by the BOJ's authorised agents on its behalf in good faith and the BOJ reimbursed their accounts in full, and that this rendered it inequitable for Dextra thereafter to recover the money so received by the BOJ as having been paid under a mistake of fact.

Dextra’s argument: Dextra has responded that the actions so relied on by the BOJ as constituting a change of position were performed by the BOJ before it received the benefit in question, and so amounted to what has been called “anticipatory reliance” and as such could not amount to a change of position by the BOJ for the purposes of the law of restitution.

Anticipatory reliance

For those who support the distinction, however, their reply appears to be that, whereas change of position on the faith of an actual receipt should be protected because of the importance of upholding the security of receipts, the same is not true of a change of position in reliance on an expected payment, which does not merit protection beyond that conferred by the law of contract (including promissory estoppel).

Their Lordships confess that they find that reply unconvincing. Here what is in issue is the justice or injustice of enforcing a restitutionary claim in respect of a benefit conferred. In that context, it is difficult to see what relevant distinction can be drawn between (1) a case in which the defendant expends on some extraordinary expenditure all or part of a sum of money which he has received from the plaintiff, and (2) one in which the defendant incurs such expenditure in the expectation that he will receive the sum of money from the plaintiff, which he does in fact receive. Since ex hypothesi the defendant will in fact have received the expected payment, there is no question of the defendant using the defence of change of position to enforce, directly or indirectly, a claim to that money. It is surely no abuse of language to say, in the second case as in the first, that the defendant has incurred the...

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