The dispute remained unresolved, and in November 2021, the society appointed new officers, one of whom was Harlow. In March 2022, the Charites Service confirmed it considered the new officers were the legitimate representatives of the society, and that the dispute was resolved. Harlow relayed this to the bank and asked that it add new signatories to the account and unfreeze the accounts. The bank refused. It said the previous signatories no longer had any standing in the eyes of the society, but they were still in contact with the bank about the accounts, leading it to believe the dispute remained resolved. It would not add the new signatories to the account until it received a court order requiring it to do so, or the existing signatories agreed to be removed. The matter remained unresolved in August 2023, and Harlow asked us to investigate.

Our investigation

Generally speaking, a bank is obliged to follows its customers’ instructions on an account. However, if more than one person claims ownership of funds in an account, or to the right to operate the account the bank is faced with competing obligations – if it follows its customer’s instruction it may be liable to the other person for releasing funds. In such circumstances, a bank can freeze an account until satisfied there is no longer any dispute over who owns the funds or can operate the account. However, it must take all reasonable steps to ensure it does not freeze the account any longer than necessary. We considered the bank had no reasonable basis for keeping the freeze in place beyond March 2022. The previous signatories were still dissatisfied at this point, but they had no standing in the eyes of the society and no legal claim to any of the society’s assets. We conveyed our view to the bank, which gave the previous signatories a month to claim a legal interest in the funds, saying it would add the new signatories if they did not make any claim. They did not make a claim, and the bank added the new officers as signatories.

Outcome

The bank paid the society $12,600 for interest lost on term deposits while the accounts were frozen, and $7,500 for inconvenience.