Guernsey Law Reports 2007–08 GLR 297
SHAHAM v. LLOYDS TSB OFFSHORE TREASURY LIMITED and FOOKS (as Administratrix of the Estate of RON)
ROYAL COURT (Collas, Deputy Bailiff): March 2nd, 2008
Banking—accounts—joint accounts—creation—bank’s standard documentation may create joint account by assignment of funds in existing account but must (a) explicitly create joint ownership of those funds and (b) provide that, on death of joint owner, survivor shall (not “may”) become owner of balance remaining—not sufficient merely to add further authorized signatory to account if that signatory not also successfully made joint owner
The plaintiff brought an action in the Royal Court to establish that funds held in an account at the defendant bank’s Guernsey branch, in the name of the deceased and his mother were in fact her (the plaintiff’s) property by survivorship.
The account was originally opened by the deceased (Dr. Ron) and his mother, both of whom lived overseas. His mother died in 2002 and later that year Dr. Ron and the plaintiff (who was his housekeeper and friend) came to Guernsey for the purpose of adding the plaintiff’s name to the account, so that it would become a joint account with Dr. Ron. At the bank, they completed a “Joint Account Authority” and provided the “Personal Details for Additional Signatory” but it was disputed whether they provided the bank with all the requested documentation relating to proof of the mother’s death.
The joint account authority instructed the bank to add the named person
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(the plaintiff) to his account and treat it as a joint account in accordance with the authority given. The authority gave an instruction to the bank to act on any request to withdraw or deal with property or securities held for the joint account holders and advised that, on the death of one of the account holders, it “may pay any existing or future credit balance in any account in our joint names to, or the order of, the survivor(s) of us . . .”
Dr. Ron then died suddenly, leaving the account still in the joint names of himself and his mother. The plaintiff brought the present proceedings to establish her ownership of the funds in the account.
She submitted that (a) the account had been or should have been transferred into the joint names of herself and Dr. Ron during his lifetime and the funds in it therefore passed to her by survivorship on his death; alternatively, (b) the joint account authority she and Dr. Ron had signed constituted a legal assignment of the funds to them jointly, even though the formalities to enable her to become a customer of the bank may not have been completed; and (c) in the further alternative, if the legal assignment to her and Dr. Ron were defective, it took effect as an equitable assignment of the funds to them jointly, the Island’s customary law having evolved (following the statutory recognition of legal assignment by the Law of Property (Miscellaneous Provisions) (Guernsey) Law 1979, s.2(2)) to allow the recognition of equitable assignments as well.
The intervenor (the administratrix of Dr. Ron’s estate) submitted in reply that (a) since it was uncertain whether the documentation relating to the death of Dr. Ron’s mother had been produced to the bank as requested, the account remained in the sole name of Dr. Ron (by survivorship) and became part of his estate on his death; (b) the joint account authority could not act as a legal assignment since it neither gave the bank specific information about who was to be the owner of the funds but merely gave an instruction as to who was to be a signatory and, on the death of one of the account holders, did not positively require payment to be made to the survivor but authorized that the bank “may” pay the balance of the funds to the survivor; and (c) it could not take effect as an equitable assignment, since Guernsey customary law had not evolved to recognize the concept; the States has specifically legislated in 1979 to recognize the legal assignment of a chose in action and since they had stated that this was “for the removal of doubt” and had not referred to equitable assignment, it must be presumed that they had not envisaged the recognition of equitable assignment as well.
Held, dismissing the action:
(1) The funds in the account passed to the estate of Dr. Ron, since the plaintiff had not become a joint holder of the account and did not therefore acquire them by survivorship. The credit balance in the account was a chose in action which could be legally assigned by the account holder to another person (or to himself and another person jointly) by following the procedures laid down in the Law of Property (Miscellaneous Provisions) (Guernsey) Law 1979, s.2(2). Completing and implementing the joint
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account authority would only satisfy the requirements of s.2(2) as a matter of law, however, if the account-opening formalities in respect of the joint account were properly completed. This had not happened here, because (a) who was to own the funds in the account was not expressly stated in the joint account authority but merely who was to be authorized to give instructions to deal with the account; and (b) there was no specific instruction that, on the death of one of the two joint account holders, the survivor was to become the owner of the remaining funds but merely that the bank “may” pay the balance to the survivor (paras. 11–16).
(2) Nor could the attempt to open a joint account take effect as an equitable assignment to Dr. Ron and the plaintiff jointly, as Guernsey law did not recognize the concept of equitable assignment. Although the customary law could evolve to meet new circumstances, when, as here, the States had already legislated to recognize legal assignment but failed in that legislation to make any provision for equitable assignment, it was not an omission that the Royal Court could remedy by judicial decision (paras. 18–20).
Cases cited:
(1) C (A Minor) v. D.P.P., [1996] A.C. 1; [1995] 2 W.L.R. 383; [1995] 2 All E.R. 43; [1995] 2 Cr. App. R. 166, dicta of Lord Lowry applied.
(2) Morton v. Paint (1996), 21 GLJ 61, observations of Southwell, J.A. followed.
(3) R. v. Kearley, [1992] 2 A.C. 228; [1992] 2 W.L.R. 656; [1992] 2 All E.R. 345; (1992), 95 Cr. App. R. 88, referred to.
Legislation construed:
Law of Property (Miscellaneous Provisions) (Guernsey) Law 1979, s.2(2): The relevant terms of this sub-section are set out at para. 11.
R.I.C.E. Harris for the plaintiff;
N.J. Barnes for the intervenor.
1 COLLAS, DEPUTY BAILIFF:
Introduction
These proceedings before the Royal Court concern a bank account held with the defendant in Guernsey. The account was originally opened by two Israeli citizens and residents, Mrs. Mira Ron and her son Dr. Dan Ron. Mrs. Mira Ron died on August 3rd, 2002. The parties are agreed that Dr. Ron then became the sole owner of the balance standing to the credit of the account when his mother died. On November 4th, 2002, Dr. Dan Ron travelled to Guernsey with his housekeeper and friend, the plaintiff, who understood that the purpose of the visit was to add her name to the account, so it would thereafter be in the joint names of the plaintiff and Dr. Ron.
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2 On November 4th, 2002, Dr. Ron and the plaintiff met with Paul Samman, a personal accounts manager of the defendant and completed forms produced by him on behalf of the bank; the first was entitled “Joint Account Authority”; and the second was entitled “Personal Details for Additional Signatory.” There is a dispute as to what was said at that meeting and, in particular, whether Mr. Samman, on behalf of the bank, made it a condition of the transfer that certain documentation be produced, namely a copy death certificate for Mrs. Mira Ron or her original death certificate or a certified copy of her death certificate (in order to remove her name from the account) and whether or not he also asked for a utility bill (to verify the plaintiff’s address). Those questions, among others, are to be decided by the Jurats having heard evidence in these proceedings.
3 The dispute arose because, when Dr. Ron died suddenly and unexpectedly in May 2003, the defendant still held the account in the names of Dr. Ron and his late mother. The plaintiff argues that the account had, or should have, been transferred into the joint names of herself and Dr. Ron during his lifetime and hence that it passed to her on Dr. Ron’s death, by way of survivorship.
4 On the other hand, the intervenor argues that the account passed to his estate because the conditions that, she says, were laid down by the bank at the meeting on November 4th, 2002, requiring the production of documents, had not been satisfied. That dispute will be resolved when the Jurats have made their determinations of fact.
5 Advocate Harris, on behalf of the plaintiff, also pursued a second or alternative line of argument, namely that the joint account authority, signed on November 4th, 2002, was sufficient to assign the ownership of the funds in the account to the joint names of Dr. Ron and the plaintiff, notwithstanding that the bank never accepted the plaintiff as its customer (if that is the finding of the court).
6 When giving legal directions to the Jurats in my summing-up to them, I directed that the joint account authority did not operate as an assignment of the ownership of the funds in the account and I announced that I would give reasons for that ruling after the Jurats had retired. These are my reasons.
7 The joint account authority was completed by Dr. Ron in his own handwriting on November 4th, 2002 and signed by him and the plaintiff where appropriate. The form was left with Mr. Samman at the bank at the conclusion of their meeting.
8 When filling in the account details, Dr. Ron completed the account title as “Dr. D. Ron,” although the account was still designated as being in the joint names of himself and his late mother. Nothing turns on that discrepancy, if it is a discrepancy, for the purposes of this decision. The
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material part of the document on which Advocate Harris relies is section 3.2 headed: “Signature of all parties to the account(s).” It states: “Please add the person named in section 3.1 to my sole/joint account(s) and treat these account(s) as joint accounts in accordance with the authority set out overleaf.”
9 The authority set out overleaf, at section 2 of the form, includes an instruction to act on any request signed by “any one of us” to “withdraw or deal with any property or securities which you may hold for us from time to time.” It also states, in para. 4: “You may pay any existing or future credit balance in any account in our joint names to, or the order of, the survivor(s) of us, or to the executors or administrators of the survivor(s).”
10 Advocate Harris argues that the instruction in section 3.2 was twofold. First, the bank was instructed to add the plaintiff to the account. Secondly, it was to treat the account as a joint account. That second instruction, he argued, acted separately, independently and additionally to the first instruction.
11 I accept that a credit balance in a bank account represents a debt due from the bank to its customer. It is a chose in action, capable of being assigned in accordance with s.2 of the Law of Property (Miscellaneous Provisions) (Guernsey) Law 1979, sub-s. (2) of which imposes two requirements:
“(a) the assignment is by writing under the hand of the assignor or any person authorised in writing by the assignor to act on his behalf; and
“(b) express notice in writing of the assignment has been served on the debtor, trustee or other person from whom the assignor would have been entitled to claim the debt or other thing in action.”
12 I accept that the second of those conditions was satisfied. If the joint account authority is an assignment, notice was given to the bank when the form was completed in the presence of Mr. Samman and thereafter left with the bank. I had to decide whether, as a matter of law, the instruction in the second part of the sentence in section 3.2 (quoted above) was an assignment. I agreed with Advocate Barnes’s submission that it was not capable of acting as a conveyance or transfer of ownership of the moneys in the account into the joint names of the plaintiff and Dr. Ron if the account-opening formalities were not completed.
13 I noted first of all that the joint account authority does not expressly mention the ownership of the funds in the account. I also took into account what I consider to be the object or purpose of the joint account authority. The form was prepared by the bank and, in my view, serves two principal purposes. First of all, it introduces to the bank someone who wishes to
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become its customer. Or, to put it another way, as the banking relationship is contractual in nature, it introduces someone who wishes to enter into a contract with the bank jointly with its existing customer in order to set up a new relationship which, Advocate Harris acknowledged, would be a new contract between, in this case, Mrs. Shaham and Dr. Ron on the one hand and the bank on the other hand.
14 Secondly, the form advises the bank who has authority to give instructions to withdraw money or deal with the account. Depending on which of the two boxes is ticked, in para. 2 of section 2 of the form, requests may be signed by any one of the joint account holders, or by all of them. Paragraph 4 also instructs the bank to whom moneys may be paid after the death of any one of the account holders. It says: “[Y]ou may pay any existing or future credit balance . . . to . . . the survivor of us.”
15 As I have said, in my view, the form does not purport to advise the bank as to who is the owner of the funds, let alone to transfer ownership from Dr. Ron to the two of them jointly. If ownership were being transferred, I would expect a clear statement in terms that, for example, the survivor of the two joint account holders shall be the owner of the account. An instruction that the bank may pay the balance to the survivor falls short of what I would consider is required.
16 I therefore conclude that the joint account authority is not sufficient, by itself, to transfer ownership of the funds into their joint names.
17 Advocate Harris also sought to argue that the assignment could take effect by way of equitable assignment. The plaintiff’s case was originally pleaded, in para. 7.1 of the cause, as an “absolute legal assignment.” During the hearing, and without objection from Advocate Barnes, the word “legal” was deleted.
18 Both counsel agreed that a Guernsey court has not previously been asked to consider whether equitable assignment exists under Guernsey law. Advocate Harris argued that the Island’s customary law had now evolved so as to incorporate equitable assignment. I asked Advocate Harris when he would submit that equitable assignment became part of Guernsey law and he suggested it did so in 1979 upon the enactment of the Law of Property (Miscellaneous Provisions) (Guernsey) Law 1979, which introduced legal assignment, or at least removed any doubt as to the existence of legal assignment.
19 Customary law can, and does, evolve and, throughout history, the courts of this Island have continually developed the law to meet new circumstances. Situations in which it is proper for the courts to do so were considered by the Guernsey Court of Appeal in Morton v. Paint (2). Southwell, J.A. there quoted from the speech of Lord Lowry in C (A Minor) v. D.P.P. (1). He applied R. v. Kearley (3) and the second of five
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“aids to navigation across an uncertainly chartered sea” put forward by Lord Lowry in C (A Minor) v. D.P.P. ([1996] A.C. at 28): “[C]aution should prevail if Parliament has rejected opportunities of clearing up a known difficulty or has legislated, while leaving the difficulty untouched.”
20 Section 2 of the 1979 Law is expressed to have been made “for the removal of doubt” and so it is clear that the States were legislating for a known difficulty and they did so by copying provisions, similar, or very similar, to English statutory law. Even though equitable assignment was well known to English law, the States made no provision for it. I therefore do not consider that it is open to me to hold that this was an omission by the States which the Royal Court may now remedy.
21 Having given that ruling to the Jurats, there is no need for them to find as a fact whether there had been an effective equitable assignment. Advocate Barnes argued that, for example, Dr. Ron had not done all he could to perfect the assignment if he did not provide the documentation requested by the bank (if it was requested) and that it is not the role of equity to complete what Dr. Ron did not complete in his lifetime. The Jurats were directed by me that they do not need to consider whether that is so.
Order accordingly.
2009
Law Report
None
Guernsey Law Reports 2007–08 GLR 297