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Case Update: The effect of survivorship clause on joint account

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BANKING & FINANCE
Cheque – Forgery – Joint account – Survivorship clause – Whether High Court erred in her findings on the effect of the survivorship clause – Bills of Exchange Act 1949, section 24
 
New Ace Digital Print Sdn Bhd & Anor v Public Bank Bhd
[2017] 9 CLJ 439, Court of Appeal
 
Facts The appellant claimed that the respondent, a bank, had wrongfully paid out a sum of MYR500,000 from a joint account maintained by the respondent bank in the name of two joint account holders, Loo Keng Tatt (“LKT”) and Lim Chi Wan (“LCW”), through a forged cheque, which bore only one of the two required signatures. The appellant claimed that the payment based on a forged cheque is a nullity and void ab initio as provided under section 24 of the Bills of Exchange Act 1949 (“the Act”). It was also claimed that there was a breach of mandate given by both the joint account holders pursuant to the terms and conditions in the opening of the account form that every cheque drawn on the joint-account must bear the signatures of the two mandatory signatories, LKT and LCW. The High Court dismissed the appellant’s claim and held that the forged cheque had no effect on LCW’s right as the surviving account holder to all the monies based on the survivorship clause. Hence, this appeal.
 
Issue The relevant issue was whether the High Court had erred in her findings on the effect of the survivorship clause.
 
Held In allowing the appeal, the Court of Appeal held that a survivorship clause is just a contractual arrangement between the bank and the joint-account holders as to how to deal with the money in the joint account. It is not conclusive evidence of the parties’ intention as to ownership of the money. Greater weight is to be given to the source of the funds in the joint account and the presumption of resulting trust in favour of the joint account holder who provided the funds than to the survivorship clause. Therefore in this case, although the account was opened in the names of LKT and LCW, in reality the account was opened for the benefit of the first respondent company, in which funds were provided by LKT, who was also the director and managing director. In conclusion, the High Court had erred in her findings on the effect of the survivorship clause and that any prima facie intention in the survivorship clause that the beneficial ownership of the moneys in the joint account would go to LCW has been rebutted.