A relation that is based on trust, between relatives or business associates or otherwise, may lead people to open a joint bank account, either a fixed deposit or another type of account depending on their needs or circumstances. Such an account operates in accordance with the mandate given and the bank is authorised to allow deposits or withdrawals from the account by the beneficiaries individually or jointly. An agreement is created between the bank and the beneficiaries which allows the bank, based on the agreement’s explicit or implied terms, to act in accordance with their instructions. The closing of the account requires the signature of all beneficiaries. The relations between the beneficiaries may be differentiated later and one of them may order the bank not to allow the withdrawal of money from the joint account unless all the beneficiaries sign. Unless there is an expressed agreement excluding such a mandate, the bank is obliged to act in accordance with the new one and block the account until the bank receives new instructions from the beneficiaries or until they withdraw the money together. If the bank acts contrary to the mandate, it will be considered that it did not act as a reasonable banker and will be accountable to the affected person for the damage he will suffer.

The Supreme Court in a judgment issued on 11.3.2021, upheld the judgment of the Court of first instance which ordered the bank to pay as compensation to the co-beneficiary half of the money deposited in the joint account, which was blocked. In particular, the co-beneficiary opened a joint account with her mother and according to their instructions, any of them could deposit or withdraw money. The co-beneficiary later informed the bank orally and in writing that she would not accept any withdrawal of money from the joint account without the signature of both beneficiaries. Based on these instructions, the bank considered that the mandate had changed and asked the beneficiaries to give new instructions for the operation of the joint account or to withdraw the money together and blocked the account. The bank by blocking the account undertook not to allow the withdrawal of money by any of the beneficiaries and its employees were informed not to allow the mother to withdraw money from the account without the consent of her daughter. However, while the joint account was still blocked, the bank, without the daughter knowing or being asked, paid the money to the mother.

The co-beneficiary claimed from the bank half of the money of the joint account, alleging breach of explicit or implied agreement, negligence or breach of duty of care that the bank ought to have shown. The Court of first instance held that the bank in the exercise of its duties violated its contractual obligations resulting in the co-beneficiary suffering a loss, who lost half of the money of the account. It also considered that the acts and omissions of the bank’s employees constituted negligence and the bank was found to have vicarious liability for the damage the co-beneficiary suffered due to that negligence; the Court issued a judgment against the bank for half of the amount of the joint account.

On appeal, the Supreme Court held that the first instance judgment was correct that the bank was negligent in giving the money of the joint account to the mother. It stressed that it was reasonable to expect that the bank, when the mother asked to receive the money, would inform the co-beneficiary as it had done by informing the mother about the blocking of the account. It upheld the first instance finding that the bank, from the moment the co-beneficiary expressed her wish the money not to be paid only to her mother, should not have paid the money to her. Moreover, it should not have done so, since it also gave assurances about it to the co-beneficiary. The original mandate ceased to be valid and that was the reason the bank requested the signing of new instructions. The Supreme Court also upheld the finding that it did not matter what the source of the money was, which was deposited in the joint account in the name of the co-beneficiaries with instructions to the bank not to allow withdrawals or deposits from the account with the signature of either of them. Consequently, it dismissed the appeal of the bank.