Thursday 28th April 2005


Privy Council Appeal 21 of 2004

ADB has power over loans

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Law Report by Mark James Morgan

O’Meara Food Products Ltd, Marie Kavanagh and Sharif Mohammed –v- Agricultural Development Bank of Trinidad and Tobago.

Before: Lords Hoffman, Hope of Craighead, Scott of Foscote, Walker of Gestingthorpe and Baroness Hale of Richmond.

Judgment delivered February 28, 2005.

Fenton Ramsahoye SC and Anand Ramlogan for the Appellants and Michael Cristal QC (of the English bar), Fyard Hosein SC and Hannah Thornley (of the English bar) for the Respondent.


The Agricultural Development Bank made a loan to O’Meara repayable in one year. Kavanagh and Mohammed were joined as sureties.

Under Sections 35 and 42 of its incorporating act, the ADB was given wide general powers to make loans on conditions prescribed by its board. Sandwiched between these sections were provisions which provided for three classes of loans: short-term loans (not exceeding 18 months), medium-term loans (between 18 months and 10 years) and long-term loans (between 10 and 30 years).

The section dealing with medium-term loans (s. 37) provided that such loans could have sureties, but the section dealing with short-term loans (s. 36) had no such provision.

The act also made provision for the forms to be used; for short-term loans, it prescribed Form 18 which was a simple form without sureties and for the longer term loans, it prescribed Form 19 which was in a more elaborate form and made provision for sureties.

Though the loan to O’Meara was a short-term loan, the ADB processed the loan using Form 19 and took sureties for it.

In an action by the ADB to recover the loan, O’Meara and the sureties argued that in using the wrong form, the bank went outside of its powers and that the loan was therefore ineffective.


The Privy Council disagreed. Lord Walker, giving the judgment of the board, stated that while a statute must be read as a whole, where a statutory body has several powers which overlap, there was no principle of construction which restricted its powers to the limited area common to all the powers.

He acknowledged that sections 36 to 41 of the act, and the prescribed forms, contained a fairly detailed code.

Lord Walker stated that though this was no doubt of great practical utility in enabling the officers of the bank and their customers to arrange a considerable volume of relatively small loans without incurring unduly large legal costs, these detailed provisions could not cut down the width of the general powers granted by sections 35 and 42.

He held therefore it was within the ADB’s powers under the act to decide that a 12-month period was appropriate for its loan and that it was also appropriate to require sureties and to use the relatively elaborate form of charge (Form 19).

On that basis the Privy Council dismissed the Appeal.

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