Report prepared by Mark James Morgan
Privy Council Appeal 78 of 2002.
Gulf Insurance Ltd v The Central Bank of Trinidad and Tobago.
Before: Lords Hoffman, Hope of Craighead, Scott of Foscote,
Walker of Gestingthorpe and Baroness Hale of Richmond.
Judgment delivered March 9.
Alvin Fitzpatrick SC and Joan Byrne for Gulf and Michael Brindle
QC and Veronique Buehrlen (both of the English bar) for the
Gulf was a shareholder of the Trinidad Co-operative Bank Ltd
(TCB). In 1986, the Central Bank under its emergency powers
assumed control of TCB.
In 1989 the Central Bank also under its emergency powers assumed
control of the Workers Bank. In 1993 a merger was proposed
between TCB, Workers Bank and the National Commercial
Bank (NCB) into a new bankFirst Citizens Bank (FCB).
In its September 10, 1992 edition, the Bomb newspaper reported
that NCBs bad debt portfolio was such that FCB was likely
to start life insolvent.
The Central Bank took the view that the effect of this article
would be a run on NCB the following Monday and decided to
implement the merger immediately. They did by causing the
assets of TCB to be transferred to FCB over the weekend in
consideration of FCB paying and discharging all of TCBs
debts and liabilities other than its liabilities to its personnel
The agreement under which the assets were to be transferred
did not provide for an independent valuation.
The Privy Council held that the power under which the Central
Bank purported to transfer TCBs assets was that conferred
by section 44D(vi) of the Central Bank Act. But, under that
section the Central Bank could only exercise its power to
transfer TCBs assets at a price to be determined by
an independent valuator. Since the agreement under which the
assets were to be transferred did not provide for an independent
valuation, the transfer was contrary to section 44D(vi) and
Accordingly TCB was entitled to damages from the Central Bank
for the unlawful disposal of its assets and undertaking which
it could hold for the benefit of its shareholders including
The Privy Council also held that where, as in this case, the
Central Bank had acted outside of its powers under the act,
it could not rely on the provisions of section 44H. This provided
that the bank was not liable for any action done in good faith
and without negligence in the performance of its duty, since
such a limitation of liability clause was to be construed
restrictively and not treated as a licence for unlawful expropriation