Mayberry wins at arbitration over Jackson’s Bridgeton
Mayberry Investments Ltd has scored a major victory at arbitration over bridgeton Management Services Ltd, which claimed that the former had wrongly handled two main accounts maintained with it.
Arbitrator, retired Justice Roy Anderson, handed down his written 64-page ruling earlier in December, that Mayberry did not breach the Margin Agreements entered into with Bridgeton, and therefore the company was not entitled to pay Bridgeton the just over $1.3 billion that it had sought to recover in damages.
Bridgeton had sought to claim damages, interest and costs from Mayberry, which the respondent denied, saying that it was in no way indebted to Bridgeton. Mayberry also argued that the claim made was statute barred.
Bridgeton, whose core business is investment and management of securities, is headed by veteran accountant John Jackson, who was among those who gave evidence.
Joan Brown, a chartered accountant, also gave evidence, and prepared a financial report on Jackson’s behalf.
Jackson claimed, among other things, that Mayberry wrongly computed its indebtedness, because of the use of wrong interest rates. He also complained of the wrongful margin calls and sale of shares. Bridgeton had stated in the matter that Mayberry’s failure to properly apply interest rates as agreed has resulted in a gross miscalculation of accounts which has been exasperated by compound interest and wrongful sales of the claimant’s stock portfolio. According to that proposition, the claimant has suffered loss and damage and has been put into a worse position than it would have been had these breaches not occurred, which resulted in the claimant seeking compensation.
Justice Anderson also said that a sum of $7.3 million, which was posted and reversed by Mayberry, ought to be paid to Bridgeton at an annual interest rate of six per cent from the date of reversal; and 90 per cent of Mayberry’s costs of the arbitration should be paid by Bridgeton.
Justice Anderson wrote: “At the conclusion of the hearing of this arbitration and after hearing written and oral submissions from Ransford Braham QC and Carissa Mears instructed by Braham Legal, attorneys-at-law for the claimant, and Michael Hylton QC, Jerome Spencer, Dane Patterson and Kerri-anne Mayne, instructed by Patterson Mair Hamilton, attorneys-at-law for the respondents [it is] ordered that:
(1) The respondent was not in breach of the Margin Agreements as the claimant failed on a balance of probabilities to prove its stated case including allegations that:
(i) The respondent applied the wrong interest rates in the computation of the claimant’s margin accounts
(ii) The respondent overcharged interest which understated the real value of the claimant’s margin accounts
(iii) The respondent made inappropriate margin calls and wrongly sold the claimant’s shares
(iv) The respondent’s alleged breaches caused losses in excess of J$1 billion, and
(2) The respondent pay to the claimant the sum of J$7,337.307.08, with six per cent simple interest from May 22, 2012 to the day of payment.
(3) The claimant pays 90 per cent of the respondent’s legal costs to be agreed or taxed.”
The hearings began in midmarch at the Liguanea Club in St Andrew, and by Zoom on December 7.
Mayberry’s witnesses were company CEO Gary Peart, Zack Nadur of Ernst and Young in Trinidad & Tobago, and veteran lawyer and senior partner in Patterson Mair Hamilton, Trevor Patterson.
Bridgeton maintained that it entered into the two Margin Agreements, one on September
12, 2004, the other on June 16, 2005. It alleged that both accounts were merged shortly after.
According to the written ruling, Justice Anderson stated that “It is common ground that the rate of interest charged on the loans made by the respondent under the agreements (the margin rate)” was stated to be “based on the current 30-day Bank of Jamaica Treasury Rate plus five per cent” in respect of the first margin agreement, while In respect of the second Margin Agreement, the margin rate was changed to “current 365-day Bank of Jamaica Treasury Rate plus five per cent.
“For these proceedings, it is worth noting at the outset, that it is further common ground that the Bank of Jamaica did not have rates which were in terms, as characterised in the margin agreements.
“During the currency of the operation of the said agreements, the claimant avers that disputes or ‘differences’ arose between the parties in respect of certain matters, particularised by the claimant in its Points of Claim as follows:
(a) The proper construction of the provisions of the Margin Agreements particularly as it relates to the applicable margin rate and the proper circumstance in which the defendant was entitled to make margin calls
(b) The rate of interest applicable to the claimant’s accounts
(c) Whether the rate of interest applied was properly applied to the accounts
(d) Whether having regard to the correct rate of interest the defendant was properly applying compound interest
(e) Whether in the account the defendant applied or properly applied compound interest to sums due to or accruable to the claimant
(f) Whether the defendant wrongly applied or failed to apply transactions to the claimant’s accounts
(g) Upon the defendant’s purported attempt to increase interest rates, whether such increase was properly or lawfully done
(h) Whether the defendant’s maintenance calls were proper or lawful
(i) Whether the defendant’s statements of accounts were accurate
(j) Whether when the accounts were properly or lawfully calculated/adjusted there are sums or further sums due to the claimant.
“The claimant in its Points of Claim avers that or about July 1, 2010, a meeting was held between the representatives of the claimant and defendant with a view to resolving the differences. It is the claimant’s contention that there was an agreement to settle or compromise the dispute so as to allow the claimant’s accounts to be accurately and properly calculated and set out. Further claimant claimed that it was agreed that the respondent would recalculate the claimant’s accounts, applying what it claimed was the newly agreed interest rate and ‘where appropriate make adjustments to interest rates, transactions and where necessary reversing maintenance calls which may have been improper’.
“In another part of his evidence, Mr Jackson conceded that while the first margin agreement in paragraph 7 provided for a margin rate (also referred to as the margin interest rate) based on the ‘30-day BOJ Treasury
Rate’, no such rate existed. It was pointed out to him that while this fact was specifically noted in the claimant’s Points of Claim, no mention was made of this fact in his own witness statement. It is my understanding of his evidence that he sought to suggest that while there was no formal rate characterised as the ‘30-day BOJ Treasury Rate’ it was possible to argue that ‘It doesn’t necessarily mean there is not a treasury rate, because the BOJ Repo rate is in fact the rate that the Bank of Jamaica uses for open market operations which is their treasury operation’. It is worth noting that this proposition flies in the face of the assertion advanced in the August 19, 2010 letter, that there was no such rate and upon which is founded the argument of a new agreement upon which much of this claim is premised,” Justice Anderson wrote.
The retired jurist was also blunt in his description of Jackson’s and Jones’ handling of the evidence.
“I do, however, want to make some other comments in relation to these proceedings. As far as the evidence was concerned, the witnesses for the respondent seemed far more knowledgeable about these financial matters than the witnesses for the claimant.
“Although Mr Jackson is clearly an investor with some experience, and the evidence is that he sometimes appeared as a speaker at seminars put on by the respondent, the command of the niceties of the financial market did not appear to be as firm as that of Mr Peart, Mr Nadur or Mr Patterson.
“Similarly, Ms Jones [sic], an accountant by profession, did not have the grasp of these matters exhibited by Mr Nadur or Mr Peart. In addition, her report suffered from the fact that it arose out of and was premised upon assumptions which she was asked to make in her instructions,” Justice Anderson stated.