The Gazette 1996

GAZETTE

MARCH 1996

Joint Bank Accounts - A Judicial

Reappraisal

by Claire Mee, BCL, LL.B.

The decision of the Supreme Court in

the case of

Lynch -v- Burke and Allied

Irish Banks pic

(given on 7 November

1995) will be of interest to all

practitioners involved in the

administration of estates and tax

planning. In reversing the judgment of

O'Hanlon J in the High Court, ([1990]

1 IR1), the Supreme Court overruled

the judgment of the former Supreme

Court in the case of

Owens -v-

Greene,

[1932] IR 225.

Although

Owens -v- Greene

concerned

joint deposit receipts' the principles

established in that case have also been

applied by the courts to joint deposit

accounts. Practitioners, particularly in

rural areas, will be familiar with joint

accounts established solely for the

convenience of an account holder who,

for reasons of ill health or old age,

desires to allow another person to have

access to his account to carry out his

banking transactions for him. Here

there is no intention that the right of

survivorship should operate to confer

the beneficial interest in the joint

account on the second party. Equally

familiar is the practice of persons

opening a joint account with another

party with the intention that the second

party would be entitled to the proceeds

of the account on the death of the first

party.

Distinguishing between the two

situations on the death of the donor of

the funds has always been fraught

with difficulty. Unless the relationship

between the parties was such that the

presumption of advancement applied

(e.g. husband and wife, father and

child), a presumption of resulting trust

was implied in favour of the estate of

the deceased deposit holder. It was

held in

Owens -v- Greene

that even if

it could be shown that the intention of

the deceased was that the joint

account holder would become

absolutely entitled to the proceeds of

the account, because the donor was in

effect attempting to circumvent the

statutory requirements regarding

testamentary dispositions, his attempt

must fail and his estate would become

entitled to the funds in the account.

A different approach was taken by the

Supreme Court in

Lynch

-v-

Burke.

The case concerned a widow named

Frances McFadden who made her last

will on 20 July 1993, whereby she left

her entire estate to her sister Mary

Lynch (the plaintiff). The first named

defendant, Moira Burke, was a niece

of Frances McFadden with whom she

appears to have had a close

relationship. In September 1983,

Frances McFadden and Moira Burke

attended at the Falcarragh, Co.

Donegal branch of AIB Bank and

opened a deposit account in the joint

names of Frances McFadden and

Moira Burke. A sum of money was

lodged by Frances McFadden to the

credit of the account. The deposit

book was endorsed by the bank

official as follows "Payable to Frances

McFadden only or survivor". The

word "only" was underlined.

Sometime after the death of Frances

McFadden, the plaintiff took

proceedings seeking a declaration that

the monies held in the joint account

must be held by the defendant on a

resulting trust for the benefit of the

estate.

Although O'Hanlon J in the High

Court found that there existed an

intention on the part of the deceased

that any monies remaining in the joint

deposit account at the time of her

death should accrue to her niece by

right of survivorship, he reluctantly

found for the plaintiff, stating that he

considered himself bound by the

decision in

Owens -v- Greene

to hold

that the transaction should be regarded

as an unsuccessful attempt to make a

testamentary disposition otherwise

than by will and was therefore invalid.

The sole judgment of the Supreme

Court was given by O'Flaherty J.

Taking his lead from other common

law jurisdictions

, O'Flaherty J chose

to take a contractual view concluding

that Frances McFadden and Moira

Burke had made a contract with the

bank, contracting that only Frances

McFadden could make withdrawals

from the account but, that on her

death, Moira Burke would be

entitled to the monies standing to

the credit of the account. By her

presence and her signature, he stated

that it was manifest that Moira Burke

was a party to this contract from

the outset.

O'Flaherty J did not specifically

address the situation where the joint

account holder is not present when the

joint account is opened and only later

becomes aware of the existence of the

account. From the quotations he

extracted from the speech of Lord

Atkin in the case of

McEvoy

-v-

The

Belfast Banking Company

(1935) AC

24, 43, it is evident that he does not

consider it essential that the donee be

present at the outset. The doctrine of

ratification allows the donee to ratify

the contract made by the donor with

the bank on his behalf. Of couse, the

very fact that the Supreme Court

overruled

Owens

-v-

Greene

supports

this view.