AN account can help uncover what is owed when one party holds financial records and the other is left in the dark.

Commercial disputes often start with one simple question: Where did the money go?

In commercial arrangements, employment relationships, partnerships, and other business ventures, clear and transparent record keeping matters. Ideally, when individuals or companies are engaged in business relationships, both parties have equal information in the form of financial records, which are clear evidence to show each party what was received, what was paid and what remains outstanding.

However, there are cases where one party has more knowledge of or access to this information than the other, making it difficult to determine the precise amount of indebtedness if a dispute later arises. One party may hold all the invoices, bank records, or other documents needed to calculate that debt. This gap in knowledge must be resolved to ensure that the less informed party is not deceived.

In such a situation, the less informed party can apply for an order for an account, which is a remedy granted by the court to compel financial transparency and accountability in various legal relationships.

What is an account?

A claim for an account requires the accounting party to provide financial documents showing the amount of money received, spent and any outstanding amounts.

The court’s power to make an order for an account is set out in Part 41 of the Civil Procedure Rules, 2002 (“CPR’). Under Part 41 of the CPR, a person may, by Fixed Date Claim Form and Affidavit in Support, seek an account or some other relief which requires the taking of an account, and the court may make directions or orders for the account.

Generally, there are two components of an account: Firstly, the Applicant must establish the right to an account. Once the court is satisfied that the applicant is entitled to an account, the accounting takes place and the court determines how the property should be allocated between the parties. (McLeod v Richards [2015] JMCA Civ. 44)

There is no exhaustive list of relationships/circumstances in which an account can be ordered. However, it often arises where the parties are in a fiduciary or contractual relationship. Examples include partners, directors and companies, agents and principals, employees and employers, or people entrusted with another’s property or money.

Why does it matter?

Accounts are taken in litigation to determine the precise amount which one party owes to another, after considering the debits and credits. An account is an important remedy in ensuring that persons are not forced to prove a debt while the vital records for doing so are in someone else’s possession.

In Capital & Credit Merchant Bank Ltd v Real Estate Board / Real Estate Board v Jennifer Messado & Co [2013] JMCA Civ. 29, the Court of Appeal recognized that an account is particularly valuable where the facts necessary to ascertain the ultimate amount are within the knowledge of one party. This may occur where the financial records of one party are solely within that party’s knowledge and control. In such a case, the other party cannot fairly assess any claim for compensation without a proper account.

The law provides a remedy which enables parties to ascertain more information about sums which they are owed. It can also prevent a party with control of financial records from gaining an unfair advantage. For example, in Jamaica Association of Composers Authors and Publishers Ltd v Combined Communications Ltd, the court granted specific disclosure of audited financial statements because the documents were necessary to calculate sums allegedly owed and were directly relevant to the fair determination of the claim.

Not every debt dispute will require a claim for an account. However, when liability for a debt arising from a contractual or fiduciary duty is clear, but the amount is undetermined, a claim for an account is an important remedy which can be used to level the information playing field.

Andre Taylor is an associate at Myers, Fletcher and Gordon and a member of the firm’s Litigation Department. He may be contacted at andre.taylor@mfg.com.jm or through the firm’s website www.myersfletcher.com.

This article is for general information purposes only and does not constitute legal advice.