Introduction
When two or more people open a joint bank account, the account opening document may contain a provision to the effect that the account holders are joint tenants and that the right of survivorship is to apply. What is the status of such a statement? Is it determinative of the legal and beneficial ownership of the account? Does it merely deal with legal title so that it is principally concerned with the relationship between the joint holders and the bank?
Seventy years ago, in Niles v Lake ([1947] SCR 294), the Canadian Supreme Court had to consider a clause providing that the holders of a joint bank account were joint tenants. The court decided that the clause dealt only with legal title. It had recourse to the presumed resulting trust; the account holder who had supplied all the funds in the account was the sole beneficial owner.
In Whitlock v Moree ([2017] UKPC 44) the Privy Council had to consider a clause (clause 20) in a bank’s standard joint account opening document very like that in Niles v Lake:
‘JOINT TENANCY: Unless otherwise agreed in writing, all money which is now or may later be credited to the Account (including all interest) is our joint property with the right of survivorship. That means that if one of us dies, all money in the Account automatically becomes the property of the other account holder(s). In order to make this legally effective, we each assign such money to the other account holder (or the others jointly if there is more than one other account holder).’
The majority (Lord Briggs, Lady Hale and Lord Sumption) concluded that the declaration of joint tenancy covered both legal and beneficial ownership. The clause was dispositive; it brought about the proprietary arrangements that it described ([37]).
The meaning to be attached to such a clause depends on the principles of contractual interpretation applied to each specific case. There is no general rule that account agreements are only about legal title. It is a question of contractual interpretation in each case ([42]).
Facts
L was a successful businessman. With his friend, M, he opened a joint bank account which contained $190,000 at the date of L’s death. All the money in the joint account came from another account in L’s sole name. A bank official inserted the comment that the purpose of the account was ‘to pay utilities’.
The account opening form signed by L and M included clause 20 (set out above). L died in 2010. He left his home to M who was also one of three residuary legatees. The question was whether the money in the bank account: (a) belonged to M because of the right of survivorship; or (b) was held on presumed resulting trust for L so that it now formed part of L’s estate.
The Privy Council decided that L and M were joint tenants for all purposes so that M became solely entitled to the money in the bank account on L’s death.
Lord Briggs’ statement of ‘first principles’ about the law of co-ownership
Paragraphs [21] to [28] of Lord Briggs’ judgment contain a set of statements of first principles concerning the law of co-ownership. One of these is that a written declaration as to beneficial interests, whether in the instrument transferring the property to the co-owners or in a declaration by the co-owners, is usually conclusive ([23] – [24]). In the context of a joint bank account, the account opening document is the instrument most likely to include an express declaration as to beneficial interests ([27]).
Where a clause such as clause 20, properly interpreted, is intended as a declaration of beneficial interests then that is the end of the matter: ‘the document is determinative of itself in relation to the beneficial interests in the account’ ([30]). There is no room for the application of the doctrine of presumed resulting trusts ([31]). Lord Briggs thought that it would be undesirable for the courts to go behind a written declaration ([33]). The declaration is not simply one guide (among several) to intention. It is definitive.
The relevance of the approach to co-ownership arrangements in other types of property
Here, Lord Briggs refers to the co-ownership principles developed in the residential property context. Where there is no express written declaration, the common intention constructive trust or, as a ‘last resort’, the presumed resulting trust ([25]) come into play to settle ownership rights. These principles, in the view of the majority, are not confined to real property ([26]).
Lord Briggs notes that in the context of English residential property, there is a presumption that beneficial ownership reflects the legal title ([25] referring to Stack v Dowden [2007] UKHL 17, [53] and following). It should be said, though, that in the context of a bank account there is no need for the account holders to hold on any kind of trust.
The proper construction of clause 20
The view of the majority of the Privy Council was that, on an objective interpretation, clause 20 dealt with beneficial ownership. Key phrases were: ‘joint tenancy’; ‘our joint property with the right of survivorship’; and ‘if one of us dies, all money in the account automatically becomes the property of the other account holders’ ([47]).
Lord Briggs commented:
‘The meaning of this phrase is to be ascertained by reference to an objective assessment as to what reasonable Bahamian private customers of a bank would think that they meant. Private customers of a bank, whether in the Bahamas or elsewhere in the common law world, do not go around, like lawyers, thinking constantly of distinctions between legal title and beneficial ownership when contemplating the ownership of property.’ ([47])
Essentially, the parties must be taken to have meant something by this clause in a document that they have signed. The most natural approach is to imagine that they meant what they said!
The minority’s approach to the construction: account opening documents are sui generis
Lord Carnwath, speaking for the minority, thought it much more likely that the account opening document was intended solely to deal with legal title.
Lord Carnwath said:
‘from the point of view of the customer, the purpose of a bank account is not generally seen as to effect the transfer of property in the longer term, but rather to provide a convenient vehicle for holding and dealing in money for the time-being’ ([55]).
The ‘first principles’ that are relevant are the first principles relating to joint back accounts. This context, argues Lord Carnwath, is an important factor to be borne in mind in the process of interpretation; the decision in Niles v Lake provides an important benchmark for assessing similar clauses.
Lord Carnwath could see nothing to suggest that clause 20 was intended to deal with beneficial ownership ([86]). It was, he thought, implausible to suggest that ordinary people would use clause 20 to make a gift ([86]). Clause 20 had to be interpreted in the context of the agreement as a whole ([87]). The clause was part of the bank’s standard documentation and was not the sort of document that one would expect to see used to make a very generous personal gift ([88]).
Michael Lower