NCB’s big court showdown
THE Judicial Committee of the United Kingdom Privy Council, Jamaica’s final appellate court, will on Tuesday, December 12, hear the matter between National Commercial Bank, Jamaica’s largest of its kind and its staff association, which has dragged on for over two decades.
The bone of contention centres on the non-payment of an incentive to staff in 2002, with the bank’s management saying that it did not make enough profit that year for it to trigger the payment. However, the staff association is insisting that, based on its calculation from its many years of experience, the bank had generated enough profit to have made the payment. The matter therefore, ended up in court.
The dispute is based on what both parties had agreed to in a contractual arrangement in 1980.
The staff association leads two to nil in the drawn-out legal series, following earlier rulings by the Supreme Court and the Court of Appeal in its favour.
In July 2017 then judge of the Supreme Court, Justice Brian Sykes, ruled in favour of the staff association that its members should get a percentage of the bank’s consolidated profits before tax, coming out of an original agreement under the 1980 Profit Sharing Scheme that members should benefit after September 30 each year.
In December 2002 the staff association balked at a letter from NCB’s management which told members that there was a shortfall of $50.5 million from the return of 25 per cent of shareholders’ fund, which would not allow for profit sharing to be paid out.
Following the breakdown of dialogue the staff association proceeded to court on the basis that the bank was in no position to deduct minority interest profit, and that the bank must proceed to settle the 2002 amount which it said it could not pay, due to its declared shortfall.
Sykes ruled later in October 2017 that NCB had breached the principle of good faith and decided that the staff association ought to be appropriately compensated. Sykes ordered that a commercial simple interest rate of 20.05 per cent be added to the almost $143-million sum from October 1, 2002, to the date of decision in October 2017.
That sum, based on calculations done by financial analysts, has ballooned to more than $700 million.
Soon after that ruling NCB filed an appeal, highlighting elements of the case where it said Sykes had erred in arriving at certain conclusions.
The Court of Appeal, three years later in early July 2020, upheld Justice Sykes’s ruling. The appeal was heard by justices Nicole Foster Pusey, Hilary Phillips, and David Fraser.
Justice Sykes is now chief justice of Jamaica.
When the Privy Council hears the matter, arguments on behalf of the staff association will be led by veteran Jamaican attorney-at-law M Georgia Henlin Gibson, King’s Counsel, instructed by Crafton Miller and Company; while attorneys from the law firm Myers Fletcher and Gordon will represent NCB.
Head of NCB Staff Association Paul Stewart is hoping that the Privy Council will rule in favour of the workers, thus ending a chapter that had resulted in frustration of many of its members.
“From the beginning we figured that the formula had triggered, and we have not changed our position,” Stewart, a retired banker, told the Jamaica Observer after he had arrived in London as part of the team. “So we are going step by step and hope that, at the end of the day, when the Privy Council hears it they will take the same position as we saw fit from day one in 2002.
“There is a formula which states whether profit sharing is due, and the bank said that it never triggered so we never got the money at all. We say it triggered based on the formula, and we ended up in the courts. At every step of the way the ruling was in our favour, and we thought at that time the bank would have said, ‘Let us make the payment and move on.’ Instead, they have taken their staff to the Privy Council,” Stewart said.
Based upon the average time frame in which it settles such matters, it is expected that the Privy Council will make its decision public before the end of the first half of 2024.
NCB Staff Association has more than 2,000 members who would qualify to benefit, should the ruling go in its favour.
Many have died, and their beneficiaries or their estates would have to claim for anything that may be handed down.
There was no official comment from the bank’s Executive Chairman Michael Lee-Chin, as efforts to contact him by telephone failed.
NCB has been in the spotlight in recent months with the departure of its two senior executives, Patrick Hylton, then managing director, and Dennis Cohen, Hylton’s deputy. Both men parted ways with the bank in July, and except for a dispute with Lee-Chin about the non-payment of dividends to its shareholders in three years, the reasons for their departure are still unclear.
The bank announced weeks ago that a dividend would be paid this year.
In November the the bank said it had reached a separation agreement with Hylton and Cohen with an overall compensation payout of about $6 billion between them.