The Bank-Customer relationship usually commences with the account opening processes. This is the stage where the banks on board their customers. The type of account opened for the customer is indicative of the kind of relationship that may exist between the bank and the customer during the period.
There are several forms of accounts: such as Savings accounts, Current accounts, Corporate accounts, Individual Accounts, Joint Accounts etc. Each of these have its own legal ramifications. Joint Account usually is an account held by more than one person as opposed to individual accounts.
Due to the special nature of Joint Accounts, attaching same in a garnishee to satisfy the debt obligation of only one holder must be considered carefully in order not to expose the bank to some unwarranted liability or suit by the other joint holder.
For a detailed discussion on the subject of garnishee, see the previous article by the authors published by the BNFT on; https://thebftonline.com/24/08/2020/frederick-gurah-sampson-roselyne-kaledzis-mrs-thought-understanding-the-law-on-garnishees-2/ and (https://ghanalawhub.com/understanding-the-ghanaian-law-on-garnishees/). An offshoot of that topic is, whether bank accounts that are held by persons jointly (Joint Accounts) can be attached in satisfaction of the debt obligation of one of the account holders.
There are two contrasting positions of the law in this regard. While some jurisdictions think Joint accounts ipso facto cannot be attached once the other party is not obliged to the Judgment Creditor in any way, other jurisdictions take the view that, Joint accounts can be attached regardless, subject however to certain conditions.
In this article, the authors shall explore the subject of Joint Bank Accounts, discuss its legal ramifications, evaluate the two legal positions on the subject whether it can be garnisheed or not, and conclude with a position that is consistent with the laws of Ghana.
What is a Joint Account?
The Blacks’ Law Dictionary defines Joint Account as “A bank or brokerage account opened by two or more people, by which each party has a present right to withdraw all funds in the account and, upon the death of one party, the survivors become the owners of the account, with no right of the deceased heirs or devisees to share in it[1].
It continues thus “Typically the account-holders are designated as “joint tenants with the rights of survivorship” or “joint-and-survivor account-holders”. In some jurisdictions, they must be so designated to establish a right of survivorship.”. A Joint account is referred to as special due to its peculiarities.
The distinction in law between Joint ownership and Ownership in Common is essential as they have different legal implications. In Joint ownership, there is always the doctrine of ‘jus acrescendi’ or the right of survivorship. This means that when persons hold property jointly and one dies, the property becomes the absolute property of the survivor. In Ownership in common, however, upon the death of one person, his or her interest devolves unto his successors.
Legal Ramifications of Joint Bank Accounts
A Bank that opens a joint account owes a duty to the account holders jointly. This is the position of the law as decided in the case of Husband v Davies.[2].
Since the relationship between the bank and the joint account holders is founded on a contract, there is a presumption of joint contract between the bank on one hand and the joint holders on the other hand.
The bank being liable to both joint account holders, it is unable, in the absence of any indication to the contrary, to deal with the account except upon the instruction of the holders jointly or in accordance with the mandate at the time of creation of the account.
Joint ownership has two main distinguishing features, one being the Right of Survivorship or ‘Jus acrescendi’ and the second being what is known as the four unities (Unity of Possession, Unity of Interest, Unity of Title and Unity of Time).
For purposes of this paper, we shall limit ourselves to unity of interest which means that the interest of each joint owner is the same as that of the others as to its extent, nature and duration. As a matter of strict law, each person owns the whole of the property….[3]
With an account of this nature, the legal question that arises relative to garnishee is whether it can be attached in the satisfaction of the debt of only one joint holder in favour of another person who obtains judgment against a joint holder or whether the funds in that account can be used to pay the judgment debt to a third party when the funds in the account are jointly held with all the incidents of a joint account or joint ownership known to law?
The two contrary positions on whether or not Joint Account can be garnisheed.
As mentioned earlier, there are two contrasting positions of law on this all-important question. While some jurisdictions like the Commonwealth countries opine through case law, that Joint Accounts cannot be garnisheed, others like America and Canada take the view that Joint Accounts can be garnisheed.
It is worthy of note that there are decisions from Singapore supporting the two contrasting positions. The authors shall review these two positions and come to a conclusion that the position that Joint Account can be garnisheed is more convincing and in accord with the laws of Ghana.
Position that Joint Accounts cannot be garnisheed.
The judicial decisions that support this line of argument have mainly been from England where Ghana borrowed its laws both judicial (common law) and statute law until around the middle of the 19th Century when Ghana obtained its own local legislature.
Countries such as England[4], Australia[5], Hong Kong[6] Northern Ireland[7] and India[8] have all held that joint accounts are not attachable in garnishee proceedings. Their view popularly referred to as the position in Hirschon, is to the effect that a joint account, cannot be the subject of a garnishee order and therefore it would be unconscionable that an account that is held jointly will be attached by way of garnishee for the satisfaction of the judgment debt of one of the joint holders.
They argue that, this will be detrimental to the interest of the non-judgment debtor account holder. One key duty of a Bank is to ensure that monies belonging to its customers are not withdrawn without lawful justification.
To this school, any such attempt to garnishee a joint account for the satisfaction of the debt of one party is detrimental to the other joint account holder who is not a party to the suit and therefore bears no legal liability.
Reliance is placed on the long-standing principle in the English law that states that a Joint account cannot be garnisheed. Cases adjudicated even after Hirschon such as Macdonald v The Tacquah Gold Mines Company[9], Catlin v Cyprus Finance Corp (London)[10] have held the position that, Joint Accounts as long as they remain so, cannot be attached by way of a garnishee in satisfaction of the judgment debt of one of the holders of same.
In the case of Macdonald v The Tacquah Gold Mines Company supra, the court took the position that “The debt, legal or equitable owing by the garnishee to the judgment debtor, which can be attached to answer the judgment debt, must be a debt due to such judgment debtor alone, and where it is only due to him jointly with another person, it cannot be attached. (emphasis ours) The Court speaking through Bowen L.J at page 538 said “Where money is due on a covenant made with two persons jointly by which it is to be paid such two jointly, no one of those has any right to that money without the other…”
The Singaporean Court has in the case of One Investment and Consulting Limited and Another v. Cham Poh Meng (DBS Bank Limited, garnishee)[11] held that Joint Accounts cannot be attached by way of garnishee.
The Court reasoned so, inter alia because doing so would prejudice the banks (garnishees), in terms of investigation of the respective contributions of parties and the enormous resources required to inform relevant parties, and in establishing whether monies in the joint account can be released, and that garnisheeing joint account will also prejudice the non-judgment debtors’ joint account holder, especially where there was no rule that the joint account holder should be notified about the attachment of the accounts. The position in this case therefore is that joint accounts cannot be garnisheed.
The parties to a joint account have equal drawing rights. The right to draw on the account must be exercised jointly in the holders’ names, unless one or more of them is authorized to withdraw solely[12] as per the mandate instruction.
The importance of honouring the mandate of the joint account holders cannot therefore be over emphasized. In the case of Jackson v White & Midland Bank Limited [1967] 1 Lloyd’s Report 68, the court held a defendant bank liable for honouring a forged cheque that had the signature of one of the two joint account holders and said “…the Bank made an agreement with the [Claimant] and the first defendant jointly that it would honour any cheques signed by them jointly, and also a separate agreement with the claimant and the first defendant severally that it would not honour any cheques unless he had signed them.
It follows, therefore, as the Bank has honoured cheques not signed by the [Claimant], the [claimant] is entitled to sue for breach of that separate agreement”.
From the cases in support of this position and in particular in the One Investment case supra, the courts are mindful of two policy considerations that undergird their reasoning. These two policy considerations are, prejudice to the Bank (garnishee) and prejudice to the Innocent third party joint account holder. It is these two policy considerations that make the attachment of joint accounts unattractive or undesirable in those jurisdictions.
Prejudice to the Bank – In the sense that there may be the lack of a framework for determining each joint holder’s contribution to the joint account, especially so when there is no presumption that the contributions of the account holders in the joint account are equal. This will require the banks/garnishee to conduct investigations to ascertain these things and that has its own logistical and costs implications to the banks. Even if there is such a framework, it is argued that it will result in operational and legal costs of compliance, in the sense that to ensure that third-party joint account holders are treated properly and their complaints are properly addressed, the garnishee would need to incur costs in notifying such third party.
Prejudice to the Innocent third party joint account holder – it is argued that where there is no framework for the third-party joint account holder to assert his or her interest in the joint account, and if there is also no requirement for the third party holder to be notified or informed, there is the likelihood that the proceedings will take place on the blind side of the non-judgment debtor holder and his funds will be prejudiced.
The authors are of the view that there are adequate measures under Ghanaian law to deal with these challenges posed by these policy considerations under the Civil Procedure Rules of the Courts and so these two considerations do not arise.
In the next part, we shall discuss the arguments for the position that Joint Account can be garnisheed and expatiate on the position of the law in Ghana.
[2] [1851] 10 CB 645
[3] ibid
[4] Hirschhorn v Evans [1938] 3 All ER 491
[5] in the case of D J Colburt & Sons Pty Ltd v Ansen; Commercial Banking Co of Sydney Ltd (Garnishee) [1996] 2 NSWR 289
[6] (see Gail Stevenson and another v The Chartered Bank [1977] HKLR 556)
[7] (see Belfast Telegraph Newspapers Ltd v Blunden (trading as Impact Initiatives) [1995] NI 351)
[8] (see Anumati v Punjab National Bank LNIND 2004 SC 1877)
[9] [1884] qbd535
[10] [1983] ALL ER 809
[11] [2016] 5 SLR 923
[12]Olabanjo O. Ayenakin, Temidayo Akindejoye, Joint Account Contract: Issues, Law and Challenges
