Church conflict not bank's problem to resolve

Categories:
Freezing an account
Summary:
Ravi and his wife Hana were members of a church congregation. The church had two constitutions, one apparently a replacement for the other. A conflict arose within the church’s governing committee and wider congregation about control of the church and which constitution applied. One group sought a legal opinion, and the other group engaged lawyers to respond.

The conflict became increasingly heated, and each party held meetings and issued notices to dismiss members of the other group from the church. One of the law firms advised the church’s bank of the dispute, and asked it not to accept instructions from other group on the church’s bank account. The bank suspended the account and advised both law firms of its action. It said it would lift the suspension either when both sides notified it that they had resolved the dispute or when, failing that, a court had issued a ruling on the dispute. 

Both groups contacted the bank with their views on who could give instructions about the account and explained why they considered their group to be correct. The bank repeated that the account would remain suspended until the dispute was resolved. However, it was prepared to process individual transactions if both groups gave their approval. Neither group was prepared to give such approval.

Our investigation

Ravi and Hana complained to us that the bank was acting unreasonably in not accepting their view of which constitution applied and in refusing to allow their group to operate the account. They made detailed submissions in support of their position, and pointed to aspects of the other group’s conduct that, in their view, showed the other group was acting in bad faith. 

We explained that it was not for the bank or for us to decide which constitution applied. This was a matter for the church to resolve itself. Or it could seek a ruling from a court. 

We did, however, look at whether the bank acted properly in suspending the account and concluded it had. The account's terms and conditions said that, in the event of a dispute about the account's operation, the bank could suspend the account until the dispute was resolved.

Furthermore, the clause was in keeping with a provision in the Code of Banking Practice that a bank could suspend an account when it was notified of a dispute over either the ownership of funds or the operation of an account. The bank also followed correct procedure by notifying both groups of its decision to suspend the account and by setting out the steps required to lift the suspension.

Outcome

We did not uphold the complaint. 

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