Barrack v Westpac Banking Corporation [1994] FJHC 145; Hba0006.94s (13 October 1994)

IN THE HIGH COURT OF FIJI
(AT SUVA)
APPELLATE JURISDICTION

CIVIL APPEAL NO.HBA0006 OF 1994S

BETWEEN:

GERALD WILLIAM SYDNEY BARRACK
Appellant

- and -

WESTPAC BANKING CORPORATION
Respondent

D. Whippy for the Appellant
J. Howard for the Respondent

JUDGMENT

This is an Appeal from the Suva Magistrates' Court (T. Karunairetnam Esq).

On 14 January 1976 Trevor Thomas Barrack (Barrack) executed a Power of Attorney appointing the Appellant.

On 29 March 1976 Barrack opened a savings account N0.68185 with the Suva Branch of the Bank of New South Wales (now Westpac - the Bank).

In September 1989 Barrack died. Two Wills emerged after his death. The first was dated 8 August 1984 and appointed three Executors and Trustees namely Barrack's wife Anaseini Didrua Barrack and two of his children namely Ruveni Vatugata and Taito Miranalasekula. The second Will was dated 3 March 1988 and appointed the Appellant as the sole Executor and Trustee. The beneficial interests under the two Wills were substantially the same.

By September 1989 the balance in the savings account amounted to a figure exceeding $10,400 the bulk of this sum being accounted for by a single deposit into the account which was made on 22 July 1988.

On 21 November 1989 the High Court granted Probate of the first Will.

On 4 May 1990 Solicitors for the Appellant wrote to the Bank in
the following terms:-

"Estate of Trevor Thomas Barrack Deceased

Dear Sir,

You already have on record that we act for the Executor of this Estate: Gerald William Sydney Barrack. See our letter to you of 25th October 1989 and your subsequent Schedule I Return confirming that you hold to deceased's credit in his savings account No. 145478-30 the sum of $10,574.18 as at the date of death (5th September 1989). The Executor holds the relative Pass Book.

It has now come to the Executor's knowledge that certain relatives of the deceased have obtained a grant of Probate in the estate based on an earlier Will whilst our application for Probate which was filed on 18 December 1989 seems to have stalled in the Court Registry.

We are investigating the position with a view to having the current Probate (if in fact it has already been granted) revoked. In the meantime we are instructed to request you to be good enough -

(a) Not to dispose of the funds in any way pending our further advice.

(b) To advise us urgently whether any other application for the completion of a Schedule I Return form has been made to you.

Yours faithfully,

David Whippy & Co."

On 25 May 1990 the Bank replied as follows:-

"Dear Sir,

Estate of Trevor Thomas Barrack A/C N0.145478-30

We refer to your letter of 4th May 1990.

As requested we have noted our records not to dispose of funds in the above mentioned account without your consent.

Furthermore we have not received any other application for completion of a Schedule I Return form and will advice you accordingly if we do so.

Yours faithfully,

M. Robinson

for the Manager"

On 12 September 1990 Barrack's widow and her son Rupeni went to the Bank. They produced a copy of the grant of Probate which was duly endorsed by the Bank "records noted 12/9/90" (see Exhibit 2).

On 19 September 1990 after the precise amount of interest which had accrued had been calculated Barrack's widow and her son withdrew the entire amount of $10,961.02 standing to the account's credit (see Exhibit D1).

On 20 July 1992 the Appellant obtained an Order from the High Court revoking the grant of Probate dated 21 November 1989 and granting Probate of the second Will.

On 12 January 1993 the Appellant commenced proceedings in the Suva Magistrates' Court seeking recovery from the Bank of the sum withdrawn plus interest. The Appellant alleged that the Bank had had no lawful authority to pay out the sum in question in view of the fact that:-

(a) the Bank had received the letter dated 4 May 1990

(b) it had agreed not to release the funds in Barrack's account without first advising the Appellant

(c) it knew that the Appellant was contesting the grant dated 21 November 1989

(d) it knew that the Appellant had operated Barrack's account (and indeed that he still held the Pass Book) and

(e) that it knew or ought to have known that the grant of 21 November 1989 was of doubtful validity.

The Bank filed a defence on 12 February 1993. It pleaded sections 42 and 43 of the Succession Probate and Administration Act (Cap. 60), pointed out that the Appellant's Power of Attorney had been revoked as a result of Barrack's death and maintained that the Bank's payment out was made in good faith pursuant to a valid and sealed certificate of Probate dated 21 November 1989. The exchange of letters dated 4 and 25 May 1990 was admitted but not any inferences drawn by the Appellant therefrom.

The Suva Magistrates' Court heard the evidence on 11 August 1993 and delivered Judgment on 1 September following. The learned Magistrate dismissed the Appellant's claim. Without specifically mentioning sections 42 or 43 of the Act in his Judgment, the Magistrate held that the Bank, having been presented with a valid grant of Probate had "rightly legally paid out the money". The Bank had acted "bona fide in paying out". Somewhat surprisingly in view of the letter dated 4 May the Magistrate held that the Bank "could (not) have known or even suspected that the Plaintiff had any claim or held a later Will at the time application was made for withdrawal by the Widow". As for the letter of 25 May that was not an undertaking by the Bank not to pay out and did not "in any way" preclude the Bank from "paying all the amount to the Executors of the Will who held a valid Probate at the time of withdrawal".

The grounds of appeal are set out in full in the record of the proceedings of the Magistrates' Court and need now only be summarised. First it is said that the Resident Magistrate was wrong to uphold the statutory Defence based on the Act, second it is said that the Resident Magistrate failed properly to take into account and evaluate the legal effect of the letters of 4 and 25 May and a previous letter of 25 October 1989 and the fact that the Appellant had been operating the account and thirdly the Resident Magistrate was wrong in holding that the Bank did not require presentation of the Pass Book prior to paying out.

Both Counsel filed written submissions. These are also part of the record and again need not be repeated in full. Mr. Whippy, further expanding his grounds of Appeal, emphasised that sections 42 and 43 had no bearing on the matter, that the Bank had entered into a binding Agreement not to dispose of the funds without consulting the Appellant and that the Bank, with whom the Appellant had dealt for many years, had not acted bona fide. He also advanced an argument based on estoppel submitting that the Bank could not now say that it was not bound by its' Agreement not to dispose of the funds without first informing the Appellant. He also drew attention to a number of findings made by the Resident Magistrate which he submitted were at variance with the evidence heard.

For his part Mr. Howard once again re-emphasised the Defence based on sections 42 and 43 of the Act. He went on to argue that there was nothing to show that the Bank had not acted in good faith as required by section 42 (1) and relying on authorities, dictionary definitions and statutory definitions submitted that the defence would only fail if it were shown that the Bank acted dishonestly; whether it had acted negligently or not was irrelevant. So far as the exchange of letters of 4 and 25 May was concerned Mr. Howard argued that no representation was made by the Bank but that even if it was found that it had represented that the funds would not be paid out without advising the Appellant then the subsequent payment out was still perfectly proper in view of section 9 of the Act.

At first, and even on second sight it is hard not to feel some sympathy for the Appellant. Here was a prominent and respected member of the community who for many years had banked with Westpac. He wrote to them explaining that there was a dispute about the Will and they wrote back to him assuring him that they would not pay out the funds in question without first advising him. In complete disregard of this undertaking the funds which, as it later turned out, were his to administer were nevertheless paid out. The questions however, as it seems to me, are not now whether the Bank would have been sensible, honourable and prudent to notify him that an application for payment out had been made but whether they were under any legal obligation to do so and whether they incurred any liability to the Appellant when they acted as they did. After some hesitation I have concluded that the answers to both these questions must be in the negative.

In my view both sections 42 (1) and 43, taken together with section 9 of the Act, afford a complete defence unless (a) it was not shown that the Bank acted bona fide (b) that it could be shown that the letters of 4 and 25 May imposed a further legal constraint upon the Bank or (c) that the Bank could not lawfully pay out without presentation of the Pass Book.

The burden of proving that the Bank acted bona fide was on the Bank: ei qui affirmat non ie qui negat incumbit probatio (see Constantine Line v. Imperial Smelting Corporation [1942] AC 154, 174). Admittedly the evidence as to what precisely occurred on 19th September 1990 was someone sparse and the evidence of what occurred on the 12th was almost non existent. The mystery of why the undertaking offered on 25 May did not appear in the computer records nor was noticed was neither properly explained nor solved. I am satisfied however that the evidence, such as it was, revealed a normal banking transaction in which no suspicious circumstances came to light. As is clear from the authorities, whether or not the Bank actednegligently or not is irrelevant to the question whether they acted in good faith.

The next question is whether the letters of 4 and 25 May affected the legal relations between the Parties. In my view they did not. In the first place, although there was an agreement with the Bank I do not think that was enforceable since it lacked consideration. Secondly, Barrack having died the Appellant no longer held Power of Attorney and therefore no longer had any authority in his previous capacity to operate the account. Insofar as he had any interest in the sums standing in the account it was only in his capacity as an Executor and Trustee of a Will in respect of which Probate had not yet been granted. As I made clear to Mr. Howard I took the view that the Bank had acted poorly in not abiding by the undertaking which it had given but I do not think that the Bank's failure breached any legal duty owed to Appellant. In particular I do not think that the doctrine of estoppel can help the Appellant first, because the doctrine does not give rise to any cause of action and second, because I am not satisfied that the Appellant altered his position in any way as a result of any representation made to him by the Bank.

The final matter is the Pass Book. The High Court Library is poorly endowed with textbooks dealing with banking and perhaps this was reflected in the fact that the submissions of Counsel were devoid of authorities on this point. Neither were the terms and conditions applicable to the operation of a savings account with the Bank shown to me. I would however be most surprised if there was any provision making the presentation of a Pass Book mandatory. As Mr. Whippy pointed out in his written submissions Pass Books do get lost and arrangements must be made to deal with this eventuality. It seems to me that Pass Books must be regarded as convenient prime facie evidence of the state of an account holders account and as a device for protecting fraudulent withdrawals. In this case it will be noted that it is not claimed that the withdrawal was fraudulent. In the absence of authority or other guidance I conclude that the presentation of a Pass Book is not an essential precondition to a withdrawal and accordingly this aspect of the Appellant's argument fails.

In view of the way the Bank handled this matter I am reluctant to approve the Bank's conduct as unequivocally as did the Resident Magistrate but I agree with him that the Appellant's action had to fail and accordingly the Appeal is dismissed.

M.D. SCOTT
JUDGE

13 October, 1994

HBA0006.94S