Guyana Airways Corporation v Chase Manhattan Bank N.A.
| Jurisdiction | Guyana |
| Judge | Massiah, J. |
| Judgment Date | 25 February 1974 |
| Neutral Citation | GY 1974 HC 8 |
| Docket Number | No. 1878 of 1971 |
| Court | High Court (Guyana) |
| Date | 25 February 1974 |
Supreme Court. High Court
Massiah, J.
No. 1878 of 1971
Mr. J.T. Clarke, S.C. with Mr. M.C. Young for the plaintiff
Mr. J. King for the defendant
Commercial Law - Letter of credit — Terms
Massiah, J.; This matter is concerned generally with certain aspects of commercial law also specifically with the question as to whether or not there should be strict compliance with the terms of a commercial letter of credit. The main point for determination was whether or not a certain document described as a ‘List of flying hours” could he considered an invoice, and if not, what consequences ensued. I held that the document was not an invoice and that liability attached to the defendants for so treating it and for paying against it under a letter of credit.
By a contract — in writing the plaintiffs, a public corporation established under the Public Corporations Ordinance, 1962, agreed to hire an aircraft from Amphibious Airways, a corporation established under the laws of the united States of America. The plaintiffs agreed to pay $100.00 (U.S.) per flying hour for the use of the aircraft, but it was also a term of agreement that the plaintiffs would pay certain expenses and make advances to the pilot who accompanied the aircraft and deduct those sums from the charter cost.
The plaintiffs and Amphibious Airways had also agreed that payment would be made by letter. (Exhibit ‘A’) was duly opened; by it the defendants authorised Amphibious Airways to draw on the Chase Manhattan Bank, 1, Chase Manhattan Plaza, New York, United States of America, to an amount of $15,000.00 (U.S.).
unIn their letter (Exhibit ‘A’ 1) of 3 rd April 1967, the plaintiffs made it clear that the money was to be made available to Amphibious Airways on the presentation of drafts drawn by them “accompanied by the following documents: invoice certified correct by representatives of Amphibious Airways and Guyana Airways Corporation covering charter cost, less deductions, if any, for fuel, insurance and pilot expenses”. The defendants made a similar stipulation in the letter of credit (Exhibit ‘A’ 2) which was sent to Amphibious Airways through the Chase Manhattan Bank in New York.
In pursuance of these arrangements the plaintiffs and amphibious Airways each presented a separate invoice to the defendants sometime about May, 1967, in respect of the use the aircraft for the period 4th April to 7th May, 1967. The Amphibious Airways' invoice (Exhibit ‘B’ 1) is dated 21st May, 1967, and bears the heading “Invoice to cover charter of Grumman aircraft $100.00 per flying hour”. The plaintiffs' invoice (Exhibit ‘B’ 2) is dated 11th May 1967, and bears the heading “Invoice — Ref. AC — 34/3530. Irrevocable letter of credit No.658884 Statement of Account”. It is prepared on what purports to be the plaintiffs' official stationery.
Both invoices, (Exhibits ‘B’ 1 and ‘B’ 2) show that the sum of $1, 080, 46 (U.S.) was to be deducted for fuel, oil and other expenses, and the net sum due to be paid was $8, 077.87 (U.S.). Both invoices agree with each other in detail. Exhibit ‘B’ 1 was certified as correct by Dean H. Franklin as President of Amphibious Airways and Exhibit ‘B’ 2 was certified by R.L. Abrams as General Manager of the plaintiff Corporation.
The invoices were accepted by the defendants, and Amphibious Airways were duly paid the sum of $8,077.87 (U.S.). There has been no complaint from any quarter about the payment of that amount. It seems that all the parties were quite satisfied with that transaction.
Problems arose, however, when the defendants made their second payment to Amphibious Airways. This appears to relate to the use of the aircraft for the period 7th May, 1967, to 30th May, 1967. In relation to this transaction Amphibious Airways presented to the defendants an invoice (Exhibit ‘C’ 1) dated 13th May, 1967. That invoice is headed: “Invoice to cover charter of Grumman aircraft $100.00 per flying hour. Guaranteed one hundred fifty hours”. The invoice states that the total flying time is 53 hours, 35 minutes and the amount due is $5, 358.35 (U.S.). The invoice also shows that no deductions were due; it was certified correct by Dean H. Franklin as President of Amphibious Airways. The invoice did not state, however, for what period the money was due. There was also submitted to the defendants a document (Exhibit ‘C’ 2) “N 702 A Flying Hours. Ramp to Ramp. From 7th May, 1967 – 30th May, 1967”. This list of flying hours is a record of the hours during which the plaintiffs used the aircraft for the period 7th (?) May — 3oth May, 1967, and shows total flying time to be 53 hours, 35 minutes. This corresponds with the flying time shown on Amphibious Airways, invoice, Exhibit ‘C’ 1.
The list of flying hours, Exhibit ‘C’ 2 purports to have been checked by one Joseph Austin and to have been approved for payment by one V. Edwards. Austin was a clerk employed by the plaintiffs and Edwards was their acting Traffic Officer. A stamp: Guyana Airways Corporation — Traffic Officer” appears at the foot of the list of flying hours just where Edwards Signed.
However, the list of flying hours does not state what amount was due to Amphibious Airways whose name does not appear on it nor is there any mention on it of deductions. It has already been mentioned that the Court had to determine whether or pnot this list of flying hours is an invoice.
No one seems to know when or how an invoice (Exhibit ‘C’ 1) and the list of flying hours (Exhibit ‘C’ 2) reached the defendants, but whether they arrived together or separately, the defendants and their Head office in New York treated them as relating to each other and in due course the Head Office (the intermediary banker) paid the Amphibious Airways the sum of $5,358.35 (U.S.) claimed on Exhibit ‘C’ 1 (See Exhibit (‘F’). That sum was then debited to the plaintiffs' account by the defendants.
Although the sum of $5,358.35 (U.S.) was paid in June, 1967, it appears that the plaintiffs knew nothing about this until the defendants wrote them on 6th October, 1967, pointing out that there was a balance of only $1,562.08. under the letter-of-credit. (See Exhibit ‘D’). By letter dated 10 th October 1967, (Exhibit ‘E’), the plaintiffs repudiated this, pointing out that they had never certified the second payment and that they had written Amphibious Airways on 4th September, 1967, winding up their arrangements. The plaintiffs stated in their letter of 4th September they had enclosed a statement of the final position with supporting invoices for $2,464.90 (U.S.) which was to be the second and final drawing on the letter of credit, and they explained that Amphibious Airways had not answered their letter.
Finally, the plaintiffs told the defendants in their letter of 10th October, 1967, (Exhibit ‘E’), that the second withdrawal “was subject to various expenses and therefore the second payment of U.S. $5, 360.05 is overdrawn by U.S. $2, 895.15”. Indeed, the amount paid was $5,358.35 (U.S.).
Thereafter, correspondence passed between the plaintiffs and the defendants in which the plaintiffs insisted that the list of flying hours could not be considered an invoice, whereas the defendants appeared to think that it was-See Exhibit ‘F’-‘M’. The defendants, meanwhile, were in touch with their Head Office in New York where payment had been made. Subsequently, the defendants denied any liability in the matter and trail action was launched on 18th June, 1971.
The plaintiffs sought a declaration that the sum of $10,716.70 ($5,358.35 U.S.) had been wrongfully debited against their account and asked that it be paid as money due and owing to them.
The plaintiffs also sought relief under another head. It will be remembered that in their letter to the plaintiffs of 6th October, 1967, (Exhibit ‘D’) the defendants stated that the balance remaining under the letter of credit was $1,562.08 (U.S.). The plaintiffs complained that the balance paid to them was $2,653.87 (Guyana) whereas it should have peen $3,124.16 (Guyana). They allege that this came about because when they were paid the balance the defendants converted the sum of $1,562.08 (U.S.) at the exchange rate of $1.70 (Guyana) for $1.00 (U.S.) instead of at the then prevailing rate of $2.00 (Guyana) for $1.00 (U.S.). The plaintiffs therefore claimed that the sum of $470.29 was due to them.
I found for the plaintiffs under the first head but against them under the second head, but for reasons which I shall state later I gave judgment only for the sum of $4,976.73, with costs $1,000.00.
The main part of the plaintiff's claim is for the sum of $10,716.70 ($5,358.35 U.S.) which the plaintiffs allege was wrongfully paid by the defendants to Amphibious Airways.
The plaintiff's contention was first that the list of flying hours (Exhibit ‘C’ 2) is not an invoice and should not therefore have been accepted by the defendants as such, and in any case that document whatever its character was not certified by authorised representatives of the plaintiff corporation in compliance with the terms of the letter of credit.
Counsel for the defendants met those arguments by contending that only one invoice was required under the terms of the letter of credit, Exhibit ‘A’ 2. He argued that Exhibits ‘C’ 1 and ‘C’ 2 must be read and considered together as one invoice. Exhibit ‘C’ 2 he emphasised, was certified by employees of the plaintiffs, and there was nothing in the letter of credit, he stressed, to show that the invoice had to be certified by an “authorised representative”, for the letter of credit speaks merely of a “representative”. Counsel for the defendants urged that an invoice is a mere bill and seemed to suggest that the list of flying hours Exhibit ‘C’ 2, could be considered an...
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