The National Commercial Ba nk (NCB) Staff Association on Friday won another major victory after the bank lost its appeal against the 2017 judgements of then presiding judge, Justice Bryan Sykes.

The now chief justice had ruled in favour of the association after the bank failed to pay staff a share of the profits, worth several millions, declared at the end of the 2002 fiscal year.

At the heart of the protracted legal battle was a 1980 Profit Sharing Scheme (PSS) decided upon by the bank with staff members with agreed terms to include the distribution of a percentage of the consolidated profits before tax “as soon as practicable after 30th September each year after consultation”.

The dispute had its genesis in December 2002 when NCB in a letter delivered disappointing news to the association informing members that there was a shortfall of $50.5 million from the required return of 25 per cent of relevant shareholders’ fund and as such “no profit sharing is payable…”

After years of discussions failed to resolve the issue, the association took the matter to court seeking declarations that, among other things, the deduction of the sum attributable to the minority interests was incorrect and that NCB could not unilaterally deduct minority interest profit, and that the profit-sharing payment was due for the financial year ending September 2002.

The association also argued that the profit-sharing scheme had been incorporated into the contract of employment between the appellant and its staff members.

Justice Sykes, who heard the matter over a number of days in July, September, and November 2016 as well as in May 2017 in July of 2017, granted a number of the declarations sought by the association. He also ruled that NCB had acted in breach of the principle of good faith. At Sykes’ request, both the association and NCB made submissions on what interest rate should be awarded and whether it should be compound interest or simple interest. He then ruled that compound interest was not applicable and in October 2017 awarded simple interest at the commercial rate of 20.05 per cent on the agreed sum of $142,821,646.39 from 1 October 2002 to the date of payment to the association.

NCB, however, challenged Sykes’ ruling in that same year on several grounds, charging that he erred in fact and law when he failed to consider or failed to adequately consider what the term ‘consolidated profits before tax’ meant in general accounting terms and what would be the correct method of calculating such a figure whether in relation to the PSS, or for the purposes of declaring to shareholders and the public in general. They further challenged that he erred when he failed to give any or any sufficient regard to the role of the auditors in light of the evidence that there needed to be adjustments to the figures to take into consideration any losses sustained by a minority as well as any provisions already made which may affect the consolidated profits before tax.

Last Friday, the panel of three Appeal Court judges comprising Justice Hilary Phillips, Justice Nicole Foster-Pusey and Justice David Fraser dismissed NCB’s appeal and affirmed the judgements of Justice Sykes dated July 20, 2017 and October 25, 2017 and also ruled that the costs of the appeal to the respondent should be taxed, if not agreed.

Justice Foster-Pusey, in her analysis said, among other things, “in all the circumstances the appellant has not demonstrated that the decision of the judge is unsound or that the conclusions to which he arrived are unsatisfactory. The evidence as a whole clearly supports the decisions to which the judge arrived on the PSS and the interpretation of the circular. These grounds of appeal therefore fail”.

She, however, said “this was not an appropriate case in which the good faith principle in the performance of contracts could have, or needed to have been utilised to determine the matter between the parties”.

“Consequently, the findings made by the judge that (NCB) acted in bad faith, in light of the particular circumstances in this case cannot stand. However, although I agree that (NCB’s) ground of appeal that good faith did not arise on the pleadings is correct, this would not affect the outcome of the appeal insofar as the declarations granted by the judge are concerned. In my view, none of the declarations which were granted required, or related to any breach of terms implied into the contract between the parties, as a result of the application of the good faith principle in the performance of contracts,” Justice Foster-Pusey noted.

“In light of all of the above, in my respectful view, this was not a case in which it was necessary for the judge to have entered into uncharted waters in respect of the good faith principle in the circumstances of this case,” she said further.

In noting that the association claimed interest as at the date of judgement, she pointed out that its members had been deprived of the monies from 2002.

“The dispute concerning the profit share payment arose in or around December 2002 in respect of the appellant’s audited financial statements as at 30 September 2002. The claim was filed in 2006 and was amended in 2014. Judgement was handed down in July and October 2017. While the appellant has submitted that there was no explanation for the delay between when the claim was filed in 2006 and May 2015, no positive assertion was made that the respondent deliberately caused this delay. It would not be appropriate to accede to the somewhat faint submissions made by the appellant, and deprive the respondent of interest for the period before judgement, when no evidence was led before the judge that the respondent had, for example, unjustifiably delayed trial of the claim,” the Appeal Court judge stated.

She further pointed out that NCB has not established that the judge misunderstood the law or evidence before him in the exercise of his discretion.

“In accordance with section 48(g) of the Judicature (Supreme Court) Act as well as the provisions of the Law Reform (Miscellaneous Provisions) Act, the judge was entitled to exercise his discretion to grant interest for the period over which the respondent’s members had been deprived of the relevant sum. This ground of appeal therefore fails. For the reasons outlined above, I therefore propose that the appeal be dismissed with costs to the respondent to be agreed or taxed,” she ended.