The Gazette 1996

GAZETTE

MARCH 1996

Joint Bank Accounts - A Judicial Reappraisal

resulting trust for the benefit of the estate.

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

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 2 , 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.

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

the deceased was that the joint account holder would become

absolutely entitled to the proceeds of the account, because the donor was in

70