“This is indeed worrying” – Judges, as Scotiabank “negligently misdirected” $28M

Core Investments Incorporated paid $28 million to Scotiabank (Guyana), intending to repay a mortgage early, but that payment was “negligently misdirected” by the financial institution, according to a judgment by the Full Court of Demerara, dated December 1, 2023.
The ruling, delivered by Justices Priya Sewnarine-Beharry and Navindra Singh, essentially reverses the February 15, 2023 ruling delivered by Justice Damone Younge.
At the centre of the court case is a property owned by Justin Teixeira, who – according to reports – died by suicide in April 2022, after ingesting a poisonous compound: sodium cyanide.
This publication has access to court documents that show that on March 28, 2022, Core Investments (the Appellant), located at Lot 241 Baramita Street, South Ruimveldt Gardens, Georgetown, entered into an agreement with Teixeira to purchase his property. That property, located along the East Bank of Demerara, was priced at $58M, and at time of the signing of the agreement, $47M was to be paid upfront.
At the time of signing of the agreement, the Bank of Nova Scotia (the Respondent) held a mortgage over the property. As a result, the agreement stipulated that the $47M must be paid in the following ways: $28M to Scotiabank by way of a Republic Bank (Guyana) Limited manager’s cheque to liquidate the mortgage; and $19M to the vendor, Teixeira.
The court file states that Core Investments properly acquired the manager’s cheque for $28M from Republic Bank, made payable to the “Bank of Nova Scotia”, and delivered it to Teixeira at the time of the signing of the agreement.
The documents further state that, after the agreement was signed, Teixeira put the cheque into Scotia Bank’s “Express Deposit Box” the very next day, but the bank later deposited the check into Teixeira’s account.
According to the judgment, on April 8, 2022, Teixeira purchased a manager’s cheque for the sum of $50M, payable to a relative, and made other withdrawals, leaving $169,133 in his account. The $28M contained in the cheque was never applied to the mortgage, and as a result, the property remained encumbered to the bank.
On November 28, 2022, Core Investments filed an application with the High Court, requesting, among other things, that Scotiabank return the $28M to it in restitution. The company contended that the bank could not have legitimately placed the $28M into Teixeira’s account, because the cheque was not payable to him.
However, Scotiabank claimed Teixeira had given orders to pay the manager’s cheque because of wording written on the reverse of the cheque, specifically “payee account number 312983.” Additionally, the bank argued that it was not privy to the agreement, and, as a result, was not bound by its provisions, because it was not a party to the deal.

Absurd
In its ruling, the Full Court said it does not believe the words “payee account number 312983” that were allegedly on the back of the cheque were written by Teixeira.
The Judges said a detailed inspection of the cheque revealed that the words were precisely lined up with the bank’s twisted stamp that appears right below those words. They emphasized how unlikely it was that those words, which were allegedly penned before the stamp was positioned there, would have coincidentally aligned with the stamp, or that the words and the stamp would have been aligned.
The bank’s argument that the wording on the back of the cheque was Teixeira’s instructions was dismissed by the court as absurd.
The Judges went on to point out that, in addition to the language being in no way directive, it is a matter of fact and law that Teixeira was unable to give instructions regarding the manager’s cheque, because he was not the payee listed on it. The court ruled that the bank, whether Bank of Nova Scotia or Scotiabank, should have known that the money was meant to be credited to them.
The Full Court held that “the only logical and judicious action” that the Respondent should have taken was to reject the cheque and return it to the drawer, Republic Bank, because it was extremely evident that it maintained no account in the name of the Bank of Nova Scotia.

Negligently misdirected
“If this is indeed the manner in which this financial institution conducts its business, this is indeed worrying, and ought to be inquired into by the Bank of Guyana. The Respondent has failed to establish any legal or factual basis that justifies it depositing the manager’s cheque into (Teixeira’s) account,” said the Judges.
In the circumstances, it concluded that the bank “negligently misdirected the payment of the manager’s cheque, thereby causing loss to the Appellant.”
Consequently, the Full Court ordered that the monies due under the loan held by Scotiabank be calculated up to March 29, 2022, and that the sum of $28M be credited toward such sum.
Further, it was ordered that should this sum be in excess of the sum owing on the mortgage, then such excess monies shall be paid to the company.
Should the sum owed under the mortgage be in excess of $28M, the Court has ordered, Core Investments would have to pay such excess to Scotiabank.
Additionally, the Full Court declared, “The mortgage is deemed to have been settled and repaid as per the forgoing orders. It is further ordered that when the mortgage is repaid as aforementioned, the Respondent shall forthwith cancel the said mortgage.”
The Appellant was awarded damages in the sum of $1M for negligence, and court costs in the sum of $1M against the financial institution. These sums have had to be paid by the bank to Core Investment on or before January 3, 2024. (G1)