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Case Update: The Effect of Survivorship Clause in Joint Account

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CONTRACT
Joint account – Survivorship and Discharge Clause (Survivorship Clause) – Terms of the joint account contract – Privity to contract – Who has the cause of action against the appellant Bank for the wrongful discharge of money in joint account

Public Bank v New Ace Digital Print Sdn Bhd & Cheah Yang Kiang
[2019] 1 LNS 294, Federal Court
- see the grounds of judgment here

Facts The first and second respondents sued the appellant bank in relation to a joint current account opened by the late husband of the second respondent, Loo Keng Tatt (LKT) together with Lim Chee Wan (LCW). LKT was the controlling shareholder and the alter ego of the first respondent company known as New Ace Digital Print Sdn Bhd. LCW was its Managing Director. LKT passed away leaving LCW as the surviving joint account holder. Three weeks after the death of LKT, a sum of money was withdrawn by LCW on the account via a cheque and the cheque was honoured by the appellant bank, leaving a sum of money in the account. The deceased’s wife, the second respondent, complained to the appellant bank that the purported signature of her late husband LKT on the cheque was forged. On that complaint, the appellant bank proceeded to freeze the joint account. The High Court judge made a finding that the purported signature was indeed forged. The Court of Appeal found the appellant Bank liable only to the second respondent. Hence, this appeal.

Issue The main issue in this case was whether the respondents have a valid cause of action against the appellant Bank for the wrongful discharge of the sum of money to the surviving joint account holder?

Held In allowing the appeal, the Federal Court found that LCW would be in the position to sue but since he was the very person who committed the forgery, the second Respondent may step into the shoes of the deceased account holder, LKT, as an administrator, to sue the appellant bank for breach of the conditions of the joint account. However, this was not the pleaded case of the second respondent. Furthermore, the cause of action for the breach only arose after his death. Since no cause of action was available to LKT, hence, the second Respondent has no cause of action too.