Bank unable to apply different limits to account mandate

Account mandates,
Ana and her husband Lee had a joint cheque account with a mandate allowing either to sign cheques. Ana wanted to change the mandate so that both had to sign cheques over $10,000. When she emailed her request to the bank, it did not respond.
August 2012

Several weeks later, Lee wrote a cheque with just his signature on it for $10,000. Ana had agreed to the cheque on the understanding it was to repay Lee’s credit card debt at another bank.

Ana found out several years later that Lee had used the cheque for another purpose and complained to the bank that it had failed to contact her in response to her instruction, and that in the absence of a response she had assumed it had acted on her request. She had made the request because she suspected Lee of fraud. She sought reimbursement of half of the cheque’s value.

The bank declined her claim, saying it was impossible to do as she asked and so it did not act on her request. It also said it was unreasonable to assume the mandate had changed without confirmation from the bank. Dissatisfied with the bank’s response, Ana complained to us.

Our investigation

We agreed with the bank that an account mandate could not have different limits, but we considered the bank had to advise her of this, and had breached a duty to her by not doing so.

Ana was adamant the mandate was changed after emailing the bank, despite receiving no confirmation, but we could not accept this because:

  • she agreed that Lee could issue the $10,000 cheque
  • she knew she had not seen or signed the cheque
  • she was not surprised or concerned at the time that the cheque had been cashed
  • she raised no objection to only Lee’s signature being on the cheque
  • she didn't ask whether the mandate had, in fact, been changed.

If Ana believed Lee was defrauding her and she also believed the mandate had been changed, it followed that she would have questioned his signature alone on the cheque. But she did not.

Ana had also suffered no loss because she agreed to the fund's withdrawal. The bank had no responsibility for the fact Lee used the money for a different purpose.

Ana did not accept our findings and produced a cheque for $10,000, payable to Lee, which they both had signed. She believed Lee had substituted the cheque with just his signature for this one. However, we were not confident about Ana’s memory of how the cheque came to be issued three years earlier.


We didn't uphold her complaint.

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