Joint bank account of spouses

"The bank is obliged to act on the instruction terms agreed with its clients when opening the joint account"

The opening of a joint bank account in the name of more than one person is a common banking practice, giving the right to any of the beneficiaries to collect the amount and the bank has the obligation to pay it, regardless of the relationship between the beneficiaries. The bank is required, on request, to act under the instructions and the agreement of the opening of the bank account and to remain impartial and unaffected by any disputes which have arisen between the beneficiaries of the account. The bank’s refusal to pay the money to the beneficiary who requested payment, leaves the bank exposed and accountable to the extent that the beneficiary acquires an actionable right to claim the amount in Court. Usually, such issues arise between spouses who may separate and one of them resorts to the bank to collect the amount from the joint account, assuming that he/she is entitled to it. The source of the money, whether it comes from joint savings or the sale of property of one or both of the spouses or from any other source, should not concern the bank, which has to act on the basis of the account opening agreement. Any dispute between the beneficiaries should be resolved by them personally or in Court or when it comes to spouses, in the context of resolving their property relations.

The Supreme Court in the judgment issued in the Civil Appeals 41 & 76/2011 dated 30.6.2017, dealt with the above matter involving a banking institution, which, while it had paid the money from the joint account of beneficiary spouses to the husband, then after certain allegations of the wife, opened unilaterally a new joint account in the name of both spouses and transferred the said amount to it without having received any instructions from the husband. The latter filed an action against the bank claiming payment of the amount of the deposit plus interest and costs. The Court of first instance accepted the husband’s claim and ordered the bank to pay the amount to him with interest and costs. Consequently, it held that the bank did not commit any mistake when it had paid the money from the joint account to the husband and it did not have to correct it. The joint account could be operated under the instructions of just one of the signatories.

According to the judgment of the Court of first instance, the bank was obliged to act on the instruction terms agreed with its clients when opening the joint account and it was obliged to pay the amount of the previous deposit to the person who deposited it or for the benefit of whom such amount was deposited. It had to accept the husband’s instructions on the basis of the terms of the agreement made upon opening the joint account and ordered the bank to pay him the amount it transferred from his account to the new joint account. Moreover, the Court of first instance stressed that the wife does not have the right to claim that she had contributed to the acquisition of the amount. This matter will be decided by the Family Court, which has sole jurisdiction to decide on the spouses’ property rights. In view of the fact that there is an order issued by the Family Court prohibiting the husband from collecting any amount from the balance of the deposit, any rights of the wife on the amount to be awarded to the husband are not affected.

The Supreme Court held that there was no need to intervene, since the Court of first instance correctly concluded that the agreement between the bank and the spouses regarding the fixed term deposit, was that any beneficiaries could operate the account and withdraw the money. Hence, the Supreme Court added, the husband’s instructions to withdraw money from the previous joint account and its deposit into an account whose sole beneficiary was the husband was legal and in accordance with the agreement; therefore, the bank’s refusal to follow the instructions of only the husband and pay the amount of the new deposit was in breach of their agreement and the Court dismissed the appeals. The dispute between the two spouses correctly remained to be resolved by the Family Court.