At mediation, they reached an agreement whereby the business account would be used on a “two-to-sign” basis, and the business would continue as usual until they had negotiated and agreed the details of a deal to buy Pip out.

The business partner later went to the bank and asked it to close the business account and open a new account for a new company with a similar name to run the same business. The bank did so, and all the business was transferred to that account. Despite the bank’s previous advice about requiring “two-to-sign”, it acted without instructions from Pip. 

Pip complained that the bank’s actions had caused her to lose her investment in the business and incur $15,000 in legal costs. The bank accepted it had acted incorrectly in acting on the instructions of her business partner, but did not consider its actions had caused Pip any financial loss. It offered her $6,500 for stress and anxiety. Pip was seeking compensation of $55,000. 

Outcome

Pip believed that she had lost her ability to negotiate a satisfactory buy-out agreement for her share in the business because the bank closed the account.  However, we noted that very shortly after the mediation, the relationship between Pip and her business partner completely broke down and this was the thing that negatively affected negotiations.  It also became clear that the business had not been performing well and it appeared unlikely there was any value in it. We therefore found Pip had not suffered a direct loss as a result of the bank’s mistake. 

We were however able to facilitate a higher inconvenience payment of $9,000. The case was settled on that basis.