MEMBER of Parliament for St Catherine Southern Fitz Jackson, who lost his lawsuit against Bank of Nova Scotia Jamaica (BNSJ) over a cheque-cashing fee, criticised the ruling as “ludicrous” and said he plans to appeal the decision.

Jackson made the vow on Friday, during a press briefing to give an update on the case he brought against BNS in July 2022, after he was charged a $385 fee in May 2019 to change a cheque in his name with a value of $2,500. He had contended that the fee was illegal under the Bills of Exchange Act. The cheque in question was drawn on BNS’s Half-Way-Tree branch in St Andrew and was changed at the said bank’s Portmore Pines branch in Portmore, St Catherine.

But Justice Crescentia Brown Beckford, the Supreme Court judge who oversaw the case, ruled that the bank’s practice of charging a fee was consistent with provisions set out in the code of conduct under the Banking Services Act.

However, Jackson said he will challenge that ruling on the basis that it should have been made on the interpretation of the law as set out in the Bills of Exchange Act, and not the Banking Services Act.

“Our suit was never premised on the Banking Services Act because the Banking Services Act doesn’t speak to cheques, it speaks about banking practices,” Jackson told the
Jamaica Observer in an interview on the matter.

“And when the code of conduct, for example, refers to the charging of miscellaneous fees with the requirement that banks give proper notice… what the judge failed to acknowledge is that, in respect of negotiable instruments, it is a special case provided for in the Bills of Exchange,” he argued.

The negotiable instrument Jackson referred to is the cheque he changed at BNS in 2019 when he was charged the fee. He argued that provisions under the Bills of Exchange place an unconditional obligation on a bank to at least change the cheques it issues, and that charging the fee constitutes a failure of the bank to honour a negotiable instrument as set out in law.

“The Bill of Exchange establishes that a cheque, once it qualifies for what they call in legal terms, presentment — where the name is written on the cheque, the date is there, it has a signature and all of the other things that usually make up a properly written cheque — if that is not fulfilled, the bank wouldn’t have an obligation to honour the cheque. But once those are fulfilled, then they have that unconditional obligation to honour the cheque — unconditional. And that is the operative word, unconditional,” Jackson insisted.

He pointed out that, unlike in the US where non-banking entities provide cheque encashment services and charge a fee for the risk they are taking and to provide a service, the bank on which the cheque is drawn has an obligation to change that same cheque without a fee, by virtue of the provisions in the Bills of Exchange Act.

“However, if you have an account at BNS, for example, and you draw a cheque from them and you go to NCB, NCB doesn’t have any obligation to cash that cheque, enuh. They have no obligation to do it, and when they do it they can charge a fee because it is a service they are giving you… so while the ruling talked about encashment fee in its generality, what the judge ignored is the specific obligation by the issuing bank,” he continued.

And he said he disagrees with the part of the ruling which outlined it being the practice of the banks to charge fees.

“Practice and convention and code of conduct can’t trump the legislation because in the Banking Services Act, where the code of conduct provisions are, there is no consequential amendment in that Act relating to the Bills of Exchange Act. Usually when you are coming in with something new and it runs counter to what an existing provision is, you can do one of two things: You can go back and amend that original Bill, the parent Bill, or you can put it inside that Bill and you put a clause in it that says, ‘This amends sections that, that and that of that Bill,’ ” he explained, citing his experience as a legislator.

He also questioned why the judgment made no reference to the Bills of Exchange Act, which is the Bill under which the suit was brought.

“Yes, the ruling is not one that we expected or desired. And having had an initial perusal of the arguments put forward in the ruling and deliberations with the legal team, I am convinced that there are very, very strong grounds of mounting a successful appeal and as such, that will be done,” he said.

He added that he has since learnt that BNS has stopped charging the encashment fee for cheques, calling it “some margin of success in this matter”. But wary that the bank could reimpose the charge, he called on the Government to take greater steps to protect consumers, starting with a Bill he has tabled himself.

“As you are already aware, there is currently a Bill before Parliament in my name, since 2018, that we are begging the Government to act on which would explicitly prohibit the charging of encashment fees, among a plethora of other fees being charged by the bank such as fees for deposits, fees for withdrawal, fees for enquiries — and a whole lot of charges which we believe are unreasonable, unfair, and unjust. But in this instant case of the encashment fee, it is a breach of the Bills of Exchange Act,” Jackson told the
Sunday Observer.

He said he is convinced, as he was when the issue was dormancy fees, that encashment fees are illegal. Banks have stopped charging dormancy fees since the matter came up for public debate.