Gail Stevenson and Another v. The Chartered Bank

CACV000038A1976

-----------------

-----------------

Coram: Pickering, J.A., Leonard & Cons, JJ.

Date of Judgment: 18th November, 1977.

-----------------

JUDGMENT

-----------------

Pickering, J.A.:

The appellants, who are husband and wife maintained a joint savings account with the respondent bank. The account was operable upon the signature of either the husband or the wife and on the date with which we are concerned it had a credit balance of almost $333,000. At the same time the husband's personal current account was overdrawn as was that of a private limited company called William J. Stevenson & Company Limited of which the husband was the managing director. The total indebtedness of the company and the husband to the bank was approximately $370,000 and in respect of these overdrafts the husband executed a personal guarantee in favour of the bank. The wife did not execute the guarantee, Subsequently the bank applied the whole of the balance standing to the joint savings account towards satisfying the indebtedness of the limited company to the bank purporting to do so under the authority of the guarantee given by the husband. Husband and wife thereupon, by originating summons, claimed a declaration that the bank was not entitled to debit, apply, charge or retain the credit balance in the savings account for the purpose of satisfying the indebtedness of William J. Stevenson & Company Limited to the bank. That summons was dismissed, the learned judge at first instance holding that the savings account was a joint and several account and it is against such dismissal that the present appeal is brought.

2. It was contended on behalf of the appellants that whereas it is possible to have joint and several obligations it is not possible to have joint and several rights. It was common ground that the wife had no obligations to the bank under the guarantee signed by the husband and the argument for the appellants was that the obligation of the husband under that guarantee could not be set off against a joint right of the husband and wife against the bank; that the rights of the husband and wife in respect of the savings account were joint rights and not joint and several or merely several was said to follow from a line of authority which had not, as in England, been interfered with by section 60 sub-section (1) of the Conveyancing and Law Property Act 1881 which was re-enacted in section 81 sub-section (1) of the Law Property Act 1925. In support of these contentions counsel quoted the case of Watts v. Christie⁽¹⁾ where it was said by the Master of the Rolls:-

"If, where there is an account between a firm and the bank, and another account with one particular member of the firm, it be once held, that the bank has a lien upon the balance due upon the separate account of the individual partner for a balance due to the bank from the firm, there would be an end to some transactions, which it is most important to commence should be continued. I cannot hold that the bank would have such a right of disposition or lien, as would prevent a customer from dealing with the bank with that confidence, which is so important to the trade and commence of this country."

3. In Ex parte Morier⁽²⁾ Cotton L.J. said:-

"The question we have to deal with is whether, when there is no legal right of set-off, it can be said that the money so absolutely belongs to that one of the two persons in whose joint names the account stands, who has another account of his own, that we must treat it as his sole property, and require the balance to be struck between the two accounts."

4. A strong case in the appellants' favour is that of Piercy v. Fynney⁽³⁾, a case involving partnership debts and the separate debts of one partner where Sir R. Malins V.C. said:-

"Now the law is clearly settled, and authorities have been cited on both sides which shew, as I have said, that a person may pay a debt owing to a partnership to any one of the partners, even after its dissolution: but it is equally clear, if any person takes a partner's bill or cheque for the payment of a private debt due from one of the partners, with a knowledge that the bill or cheque or payment is made without the assent of the other partners, in a certain sense he becomes a party to the fraud on the other partners, and he cannot recover upon the bill or cheque; and if he receives the money he cannot retain it."

5. A further case pointing strongly in the same direction is that of Hirschorn v. Evans⁽⁴⁾. In that case judgment having been obtained against the husband, the judgment creditor served a garnishee order upon a bank which had no account in the name of the husband but only a joint account standing in the names of the husband and his wife. It was held that the debt which the bank owed was not a debt due to the husband alone but to him jointly with his wife, that it could not be attached to answer the judgment against the husband and that notwithstanding that either husband or wife could sign cheques upon the account. In that case Slesser L.J. said:-

In the case of Macdonald v. Tacquah Gold Mines Company⁽⁵⁾ Bowen L.J. said:-

"Where money is due on a covenant made with two persons jointly by which it is to be paid to such two jointly, no one of those two has any right to that money without the other of them."

6. In the same case Fry L.J. said:-

"Can it be said that the defendant company was indebted to the judgment debtor when they were indebted to him and another person jointly only? It seems clearly it cannot, and that the words of the rule are not applicable to such a case. If they were the result would be to enable a judgment creditor to attach a debt due to two persons in order to answer for the debt due to him from the judgment debtor alone, which would be altogether contrary to justice."

7. The common law rule is that a promise cannot be made to several persons both jointly and severally but that where a promise is made if the interest of the promisees is joint the covenant can be construed as joint and if the interests be several it can be construed as several. An example of the former is Slingsby's case⁽⁶⁾ and of the latter Withers v. Bircham⁽⁷⁾.

8. The case of Bradburne v. Botfield⁽⁸⁾ contains some strong language on the part of Baron Parke as to the rigidity of this rule. He says:-

"There is no occasion to refer to the cases relating to the rule of construction as to covenants being joint or several according to the interest of the parties, which is perfectly well established. In the case of Sorsbie v. Park 12 M. & W. 146, Lord Abinger and myself, on referring to the established rule, as laid down by Lord Chief Justice Gibbs in the case of James v. Emery 2 Moore, 195, approved of Mr. Preston's qualification and explanation of it in his edition of the Touchstone, 166, namely, that, if the language of the covenant was capable of being so construed, it was to be taken to be joint or several, according to the interest of the parties to it. Mr. Preston adds, that the general rule proposed by Sir Vicary Gibbs, and to be found in several books, would establish that there was a rule of law too powerful to be controlled by any intention, however express; and I consider such qualification to be perfectly correct, and at variance with no decided case, as it is surely as competent for a person, by express joint words, strong enough to make a joint covenant, to do one thing for the benefit of one of the covenantees, and another for the benefit of another, as it is to make a joint demise where it is for the benefit of one. I mention this, because the Court of Queen's Bench, in the case of Hopkinson v. Lee 14 Law J.N.S. (Q.B.) 104, have supposed, that Lord Abinger and myself had sanctioned some doctrine at variance with the case of Anderson v. Martindale, and Slingsby's case, which it was far from my intention, and I have no doubt from Lord Abinger's, to do; it being fully established, I conceive, by those cases, that one and the same covenant cannot be made both joint and several with the covenantees. It may be fit to observe, that a part of Mr. Preston's explanation, that, by express words, a covenant may be joint and several with the covenantors or covenantees, notwithstanding the interests are several, is inaccurately expressed: it is true only of covenantors, and the case cited from Salkeld, p. 393, relates to them; probably Mr. Preston intended no more, and I never meant to assent to the doctrine that the same covenant might be made by any words, however strong, joint and several, where the interest was joint; and it is this part, I apprehend, of Mr. Preston's doctrine to which the Court of Queen's Bench objects. I think it right to give this explanation, that it may not be supposed that there is any difference on this point with the Court of Queen's Bench."

9. It was on the basis of these cases that Mr. Horton, for the appellants, contended that the account could not be a joint and several account as had been found by the judge at first instance; if the common law principle was right, the argument went, then no matter how much the parties tried to turn the rights of the husband and wife into joint and several rights that could not be brought about no matter how many documents were involved.

10. Mr. Mills-Owens, for the respondent bank, sought to counter these arguments largely by reference to a printed form of letter dated 17th June, 1974 addressed to the Manager of the respondent bank and signed by both husband and wife and which constituted an authorization to the bank to convert a current account then in the name of the wife into a joint account in the names of herself and her husband. In construing that document Mr. Mills-Owens placed some reliance upon the fact that where the printed form allowed for the deletion of either a reference to joint participation or to independent participation it was in each case the reference to joint activity which had been deleted. I think that this argument carries no weight for all the references to either joint or independent participation (one or other being intended to be deleted) are references not to rights in the account but to the method of operating the account; they refer to signatures, instructions, requests and are concerned purely with the mechanics of how the account shall be operated. Mr. Mills-Owens placed the greatest reliance however upon the final sentence of the letter which read:-

"In the absence of contrary written instructions signed by both/either of us the foregoing instructions shall apply to each and every account of whatever nature now or hereafter opened by you in our joint names."

11. The savings account which we are concerned was opened approximately seven months after the execution of this letter of authorization. Mr. Mills-Owens relates the above-quoted last sentence to paragraph 6 of the letter which reads:-

"We agree that any liability whatsoever incurred to you by us in respect of the foregoing shall be joint and several."

What is to be observed is however that the reference is to liability incurred to the bank by the husband and wife and not, as in the case of the savings account, by the bank to the husband and wife. For my part I can find nothing in the document relied upon to invest the savings account with either joint and several or several characteristics.

12. It was Mr. Mills-Owens' further contention however that the common law rule relied upon by the appellants was no longer the law in Hong Kong. I have already observed that the rule did not suffer statutory interference in Hong Kong as it did in England but counsel's argument was that the possibility that a promise to a number of persons could be joint and several came to be recognised in the late 19th century in England. In this connection counsel quoted the case of Palmer v. Mallet⁽⁹⁾ where an agreement by an employee not to set up a particular profession in a particular area was held to be for the protection of the business jointly carried on by two partners, his employers, who had a joint interest in the business during the partnership and several interests in the event of a dissolution. It was held that the agreement must be taken to be several as well as joint and that, after the dissolution of the partnership, one partner alone could sue for breach of it.

13. It is to be observed however that Palmer v. Mallet as also McEvoy v. Belfast Banking Company Limited⁽¹⁰⁾, a further case cited by counsel for the respondent bank, were both decided after the statutory interference with the common law to which I have referred had taken place and, as we have observed, no such statutory interference had been enacted in Hong Kong.

14. It was however Mr. Mills-Owens' further contention that section 81 sub-section (1) of the Law of Property Act 1925 did not deal with simple contracts but only with contracts under seal so that the statutory interference did not extend to simple contracts, the 1925 draftsman having used the word "covenant" in the normal drafting sense of that word. There is however authority to the effect that a covenant need not be an agreement by deed although admittedly that is its most common connotation (see Hayne v. Cummings⁽¹¹⁾ and Leahy v. Canavan⁽¹²⁾.) Quite apart however from those cases the language of section 81 appears to me to be susceptible only of the construction that the word "covenant" therein used is not intended to apply only to a promise made under seal for the section refers to '"a covenant", and a contract under seal, and a bond or obligation under seal.' Had the word "covenant" been intended to refer only to a promise made under seal it would have been unnecessary to have differentiated a contract under seal and a bond or obligation under seal.

15. Mr. Mills-Owens did suggest that there was one case in which a promise to a number of persons was held to be joint and several even before the statutory intervention which commenced with the Conveyancing and Law of Property Act of 1881. That was the case of Thompson v. Hakewill⁽¹³⁾. The case is referred to in the Fourth Edition of Treitel on The Law of Contract in a footnote at page 412 but the text merely states that the possibility that a promise to a number of persons could be joint and several was recognised in the late 19th century. In Thompson v. Hakewill that possibility was certainly discussed but in the event the court held that the tenants in common, the promisees in that action, must join as plaintiffs in the action of covenant. The case is in fact no authority for the proposition for which counsel strives and the possibilities therein discussed run contrary to the stream of the common law rule.

16. In my view the savings account was a joint account and neither joint and several nor several and the learned judge, who gave no reasons for his findings that the account was joint and several, was in error. I would allow the appeal and make the declaration sought in the terms of paragraph 2 of the amended originating summons. The appellants should have their costs here and in the court below. Certified fit for counsel in the court below.

Representation:

G.F. Horton (Baker & McKenzie) for appellants.

R. Mills-Owens (Deacons) for respondent

(1) 11 Beav. 546.

(2) 12 Ch. 491 at 502.

(3) 12 Eq. 69.

(4) (1938) 2 K.B. 801.

(5) 13 Q.B.D. 535

(6) Co. Rep. Part V 18a-18b.

(7) 3 B. & C. 254.

(8) XIV M. & W. 559

(9) 36 Ch. 411.

(10) (1935) A.C. 24.

(11) (1864) 16 C.B.N.S. 421.

(12) (1970) Qd. R. 224.

(13) (1865) 19 C.B.N.S. 713.

-----------------

-----------------

Coram: Pickering, J.A., Leonard & Cons, JJ.

Date of Judgment: 18th November, 1977.

-----------------

JUDGMENT

-----------------

Leonard, J. :

This is an appeal from the dismissal of the application of the first appellant wherein she sought a declaration that the respondent was not entitled to debit the sum of $332,736.85 from the above-mentioned account No. 411-209-2085-7 and to apply the same for the purpose of satisfying the indebtedness of W.J. Stevenson & Co. Ltd. to the respondent. The facts giving rise to this application as appearing from the papers before us are as follows : (1) Prior to the 17th of June 1974 the first appellant has a current account No. 11-073-5460-6 in her name in the books of the respondent. On that date she requested the respondent to convent this account into a joint account in her name and in the name of the second appellant to be operated by them jointly and/or severally with benefit of survivorship; authorised them to place to the credit of this account all sums of money, interest, dividends etc. which the respondent might receive on account of either of the appellants on their joint and several account or on their joint account on various terms. The first of these terms entitled the respondent to accept the signature of "either/any of us or the signature of the survivor" as a sufficient discharge for the repayment of any moneys deposited with the respondent. Term 6 of these terms read :

"We agree that any liability whatsoever incurred to you by us in respect of the foregoing shall be joint and several." (my emphasis) (I pause to remark that it is not easy to say what is meant by "the foregoing" I take it to mean "the foregoing general request" a phrase used earlier in this document.)

The final paragraph of this request read :

"In the absence of contrary written instructions signed by both/all of us the foregoing conditions shall apply to each and every account of whatever nature now or hereafter opened by you in our joint names."

This again might lead to difficult questions of interpretation because of the expression I have underlined in Term 6 but as will appear later it is irrelevant to this appeal. This request which was for a current account and in respect of a current account was signed by the first appellant and the second appellant signified his concurrence in it. It is to be noted that this document expressly provided for "benefit of survivorship" so that it is difficult to see how the account created as a result of it could be other than joint.

(2) On or about the 18th January 1975 the first and second appellants opened the savings account No. 411-209-2085-7 with the respondent. The savings account passbook in respect of this account which was headed with the name of the respondent identified the respondent's clients as "Name : William John Stevenson and/or Mrs. Gail Stevenson" and stipulated that

(3) This pass-book shows that on the 18th January 1975 a deposit of $445,905.25 (we know from other evidence that this was the proceeds of a telegraphic transfer dated 16th January 1975 from Australia sent by order of the first appellant and represented an inheritance to which she was solely entitled.) was made. The sum of $30,000 was withdrawn on the same day and a further sum of $30,000 was withdrawn on the 23rd January 1975 and a sum of $20,300 was withdrawn on the 30th January 1975. The pass-book shows two further debits and one further credit which are so far as I can determine dated the 20th of October 1975 the two debits being $35,000 and $3,000 respectively and the credit $5,076.63.

(4) On the 31st July 1975 the second appellant in consideration of the fact that the respondent did "at our request agree to grant or agree to continue to grant William J. Stevenson & Company Ltd. (hereinafter referred to as 'the Borrower') accommodation by way of clean overdraft and/or secured overdraft or cash credit or other accommodation by way of discount or purchase of Bills, Bills of Exchange or Promissory Notes, issue of Letter of Credit or otherwise we the undersigned jointly and severally agree with you ..." to guarantee to pay to the bank on demand all principal, interest and all costs, charges and expenses due and which might at any time become due by the limited company to the respondent. Notwithstanding the use of the plural form throughout the only signatory to this document was the second appellant. The form used called for signature by more than one person. Clause 12 of it reads :

"So long as any money remains owing under this guarantee the Bank shall have a lien on any monies standing to the credit of us or any of us with the Bank and on any securities in the Bank's hands belonging to us or any of us or under control of us or any of us."

Clause 15 provides :

"This guarantee shall bind our respective heirs executors and administrators."

It was common case that this guarantee could not, of itself, bind the first appellant. Clause 16 of it states that it shall be additional to any other guarantee for the limited company signed by "us or any of us". It has not been suggested to us however that there was any other such guarantee.

(5) The limited company was apparently a family concern or an alter ego of the second appellant. The first appellant was a director of it. It had become heavily indebted to the respondent by March the 26th 1976 at which stage the respondent indicted to the second appellant that it was not prepared to permit withdrawal of funds from what it then referred to as "joint account No. 11-209-2085-7" - the number given by the respondent to the savings account evidenced by the pass-book mentioned above. By their letter of the 26th March 1976 the solicitors for both appellants wrote to the respondent by a letter captioned "William J. Stevenson and/or Mrs. Gail Stevenson Joint A/C No. 11 209 2085 7". In it they stated that they had been informed by the second appellant that it was his belief that the respondent intended to liquidate

"the credit balance in the subject account to its favour on or before March 31,1976 in satisfaction of an amount apparently owed to the Chartered Bank by W.J. Stevenson & Co. Ltd. Our clients have been advised that the Chartered Bank is not entitled to liquidate the subject account to its favour in these circumstances. We ask that you please confirm to us that you will not take such action vis-a-vis the subject account and further that Mr. William J. Stevenson and/or Mrs. Gail Stevenson are at liberty to withdraw amounts in the subject account."

By their letter of the 31st March 1976 the solicitors for the respondent refused this confirmation and indicated that the appellants were not at liberty to withdraw funds. Proceedings were thereafter commenced.

(6) There are other facts to which I should refer for completeness. On the 28th June 1975 the respondent had at the request of W.J. Stevenson & Co. Ltd. opened a letter of credit in favour of Prodev Ltd. for the sum of $37,125, the second appellant agreeing to the transfer from the savings deposit account of HK$35,000 the initial sum for which application was made and later to a further $3,000 being debited when the amount of the letter of credit application was increased to $37,125. On March the 11th 1976 the position of the second appellant in the books of the respondent was as follows :

On that date an officer of the respondent demanded of the second appellant that he should forthwith repay the sum of HK$347,263.07 and also the sum of $20,000 "being the amount called up by the Diners Club (H.K.) Ltd. in terms of our guarantee in your personal name and also the sum $4,328.52 being the amount standing to the debit of the second appellant's joint personal account". It indicated that the bank would in default of payment by 31st March 1976 "exercise our rights to apply the balance standing to the credit of your joint savings account towards settlement of the outstandings in our books in the name of yourself and your company." The second appellant failed to comply with this request.

2. Relief was sought by the first appellant only in this summons. The agreed note of judge's reasons on dismissing the summons reads as follows:

The grounds of the appeal set out in the notice of appeal read as follows :

The only ground of appeal that in effect raises a question of law is the third ground. Presumably this is intended to indicate that the learned trial judge was wrong in that he failed to take the common law rule (if it now exists) into account when deciding that the deposit account was a joint and several account and that the money in it could be treated as money belonging to the second appellant. In my resume of the facts I have not referred to the pledges mentioned by the learned trial judge as no reliance was placed on them in the argument before us and the learned trial judge's decision that they were irrelevant was in no way questioned.

3. The sole questions for decision then are whether a common law rule that a promise cannot be made to several persons both jointly and severally exists and if so whether this rule precludes the possibility of the joint deposit account being a joint and several one to which the respondent could have recourse.

4. Mr. Horton for the appellants paved the way for his argument firstly by pointing out that the liability of the second appellant on the guarantee was a separate obligation of the second appellant to the respondent. The wife was not a party to it and cannot be bound by it. For all we know she was in ignorance of it. There can be no doubt that she can have no obligation to the bank on the guarantee simpliciter. Mr. Horton goes on to argue that the separate obligation of the second appellant could only be the subject of set off by the respondent against the separate and several rights of second appellant against the respondent and not against a joint right of the first and second appellants against the respondent.

The Common Law Rule

5. This Mr. Horton argues is laid down in Slingsby's Case⁽¹⁾ and is to the effect that an interest cannot be granted jointly and severally although a power or authority may be. The reason for the rule is there expressed as follows :

"a man cannot bind himself to three, and to each of them make it joint and several at the election of several persons, for one and the same cause; for the Court would be in doubt for which of them to give judgment, which the law would not suffer."

6. In White v. Tvndell⁽²⁾ premises were demised to G & A "their executors administrators and assigns" and after the death of G it was sought to make his executors liable for breaches of covenants entered into by G & A. It was held that the covenants were joint and that the executors were not liable. As the case concerned the liability of covenantors and not covenantees it does not affect the Common Law Rule for which Mr. Horton argued but it is to be noted that Slingsby's Case⁽¹⁾ was mentioned in argument it being stated that :

"The rule for determining whether a covenant is joint or several ... is that where the words are expressly joint the covenant is joint but where they are ambiguous the interest of the parties must be looked at. That rule however is applicable only to covenantees, not to covenantors. Where the right of action in covenantees is considered their interest may be regarded; where the liability of covenantors is considered the words and the form of the covenant must be regarded."

Fitzgerald L.J. observed :

"Slingsby's Case dealt with the several interests of covenantees and the illustration put by the court to some extent shows the reason of the rule in the case of covenantees; and so the rule in Eccleston v. Clipsham is confined to the interest of the covenantees ... There are reasons for the rule applicable to separate interests in the covenantees as regulating the right and the form of suit on the covenant, but no authority has been brought under our notice that the rule was applicable to the case of separate interests in covenantors."

From Withers v. Bircham & Another⁽³⁾ it appears

"The general rule established by the authorities cited in the note to Eccleston v. Clipsham is that wherever the interest of the covenantees is joint, although the covenant be in terms joint and several the action follows the nature of the interest, and must be brought in the names of all the covenantees; but where the interest of the covenantees is several they may maintain separate actions, although the language of the covenant be joint."

In Bradburne v. Botfield⁽⁴⁾ Parke B. refers at page 572 to the rule that "if the language of the covenant was capable of being so construed it was to be taken to be joint or several according to the interest of the parties to it" as "perfectly well established" and goes on to say:

"Mr. Preston adds that the general rule proposed by Sir Vicary Gibbs, and to be found in several books, would establish that there was a rule of law too powerful to be controlled by any intention however express; and I consider such qualification to be perfectly correct and at variance with no decided case, as it is surely as competent for a person by express joint words, strong enough to make a joint covenant, to do one thing for the benefit of one of the covenantees and another for the benefit of another, as it is to make a joint demise where it is for the benefit of one."

The general rule here referred to would appear from Eccleston v. Clipsham⁽⁵⁾ to be that if a man covenant with two or more jointly, yet if the interest and cause of action of the covenantees be several and not joint the covenant shall be taken to be several notwithstanding the words are joint.

7. In none of these cases is it suggested that vis-a-vis covenantees the covenant can be both joint and several and the headnote in that last cited suggests that it cannot for it reads:

"Though a covenant be joint and several in the terms of it, yet if the interest and cause of action be joint the action must be brought by all the covenantees; and on the other hand, if the interest and cause of action be several the action may be brought by one only."

All this is really no more than common sense for it is pointless to compel a number to be parties to an action in which only one is concerned to obtain relief and illogical to permit one only to seek relief when a number are jointly interested in the relief sought.

8. The cases and Slingsby's Case⁽¹⁾ in particular indicate that the learned authors of Halsbury 4th Edition are correct when they say "the common law rule is that a promise cannot be made to several persons both jointly and severally" (op. cit. Vol. 9 page 426 para. 620).

9. If this be accepted the promise made by the bank to the appellants when the joint deposit account was opened must have been made to them either jointly or severally. Mr. Horton suggests that the promise must have been made to them jointly although it was to the effect that either would be paid on signing the necessary withdrawal slip and presenting the passbook. Both, he suggests, would have to join in any action against the bank in the event of its failure to pay. I have no hesitation in holding that if the promise made by the bank could not be made to the two appellants both jointly and severally it was made to them jointly. If that be accepted the bank cannot set off against the several liability of the second appellant under the guarantee the joint rights of the first and second appellants notwithstanding the fact the second appellant could by production of the passbook and a stroke of the pen require the bank to make payment to him of the amount standing to the credit of the joint account. The position in so far as bankers are concerned is set out succinctly in Vol. 34 Halsbury's Laws of England 3rd Edition page 404 at paragraph 695:

This proposition is supported by Watts v. Christie⁽⁶⁾ and Re Willis Percival & Co. Ex p. Morier⁽⁷⁾. It is from the final paragraph of the judgment of Cotton L.J. in the latter case that the proposition derives. In the case of Hirschorn v. Evans⁽⁸⁾ the facts were remarkably similar to those in the present case although that case concerned the rights of a garnishee rather than rights to set off. There husband and wife opened a joint account with a bank upon the terms that the signature of either would be a sufficient discharge for the repayment of any moneys deposited with the bank. A garnishee summons was served on the bank attaching so much of the debts due from the bank as would satisfy the judgment debt. This the bank ignored and it was held entitled to do so inasmuch as the debt due by the bank was not for a debt due to the judgment debtor alone but to him jointly with his wife. It was there unsuccessfully argued that the account was a joint and several account. Slesser L.J. stated :

"The principal question which arises, in my opinion is this: whether it was the fact that the bank at that time were so indebted to the judgment debtor as there stated. In my view the right construction to put on the opening of the account on February 8 1935 notwithstanding the fact that authority was thereby given both to judgment debtor and his wife to sign cheques, is that the account was a joint account. I entertain no doubt that if the bank had failed to meet its obligations the rights under this account could only have been exercised by both the persons, the husband and wife joining in whatever claim might be appropriate."

MacKinnon L.J. observed:

"It is true that there was an authority on the bank to honour cheques upon that joint account if the cheques were signed by one or other of them. That simply means: either of us has authority on behalf of and as agent for both of us to sign cheques."

In that case the husband and wife opened the account in the following terms:

"We request you to receive money from time to time to the credit of this account and hereby authorize you to accept the signature of either" of us "jointly severally or the signature of the survivors or survivor as a sufficient discharge for the repayment of any moneys so deposited with you."

Both signed that request.

10. On the question as to whether the savings account here was joint or joint and several (on the assumption for the moment that a bank account can properly be said to be joint and several in Hong Kong). I cannot see that the respondent is in any different position here than was the Bank in Hirschorn's Case⁽⁸⁾. The account is expressed to be joint and that it is expressed to be in the names of the first appellant "and/or" second appellant means to me no more than that it was the intention of the parties that either husband or wife could give a good discharge for any withdrawals on production of the pass-book.

11. Mr. Mills-Owens for the respondent referred us to the document of the 17th June 1974 from which I have quoted at the outset of this judgment and in particular to the final paragraph of it arguing that this document showed that insofar as it is capable of existing in law any account in the names of the appellants was joint and several. I think this is to ignore that Term 6 governs the liability of the appellants to the respondent and it is to the liability of the respondent to the appellants that I must address my mind when considering if the savings account is several as well as joint. That liability may be satisfied by payment to the survivor of either by Term 1 and that Term 6 and the final paragraph are "subject to the foregoing" suggests to me that the intention is that that account and therefore any other account in the joint names is intended to be joint not joint and several. This however is by the way; the learned Chief Justice did not pray in aid the request of 17th June 1974 to assist him in deciding if the savings account was joint and several. It may therefore be disregarded as there has been no cross notice.

12. Again Mr. Mills-Owens argued that the rule in Slingsbv's Case⁽¹⁾ is anachronistic. In support of this he refers to a passage from Treital on Contracts 4th Edition at page 412 which reads :

"The common law did not originally recognise the possibility that a promise to a number of persons could be joint and several. The possibility was however recognised in the late nineteenth century."

For this proposition Treital relies on Thompson v. Hakewill⁽⁹⁾ and Palmer v. Mallet⁽¹⁰⁾. In the former case it was obiter, Byles J. indicating that there were four possibilities arising in the consideration of covenants given by tenants in common the fourth being that "such a covenant may be construed as a covenant in suing on which the tenants in common may joint or sever at their election." It was however there held that all the covenantees must join in the action.

13. Palmer v. Mallet⁽¹⁰⁾ I find difficult to reconcile with the common law rule. In that case Mallet entered into a covenant with two partners Palmer and Hall by whom he was employed not to set up business within 10 miles of the Newtown in which they practised. Palmer's partnership with Hall was dissolved in an action for dissolution but each of the partners continued to practise in Newtown, Hall retaining the services of Mallet. Palmer obtained an injunction against Mallet without joining Hall. Chitty, J. observing at page 416:

"But then comes the question whether the plaintiff can sue alone. The result of what has been done by Mr. Hall is - and counsel at the bar are agreed upon this - that he has in substance released this particular breach, and Mr. Hall clearly could not sue - it would not be in his interest to sue." (I pause to remark that he could have been joined as a defendant) "He has taken a gentleman whose services he considers to be of value to him and unless I interfere at the suit of Mr. Palmer alone, Mr. Palmer would be left without remedy."

That alone did not dispose of the case in Chitty, J.'s eyes but it seems not unreasonable to assume that he disapproved strongly of what might to-day be regarded as "poaching" by Mr. Hall. His reasoning went like this :

14. Mallet was not to carry on business whthout the consent in writing of both Hall and Palmer; it was well-known that the businesses of country practitioners were from time to time passed from hand to hand by way of sale and it was that business that was to be protected by the agreement with Mallet "But it does not stay there but goes on thus 'their executors administrators or assigns' that points at once to the kind of interest that exists it ... is directed to such a case as one of the partners retiring, as often occurs." On appeal Cotton L.J. had this to say :

"although they were partners for life, that partnership might be put an end to ... so that they had a joint interest as partners in the business they carried on ... and they had several interests in it in the event of a dissolution. That being so, the proper construction of this ... agreement is that it is an agreement entered into by the appellant with the partners jointly and severally. I think that in this I am only following the rule in Sorsbie v. Park 12 M. & W. 146, 158

... We ought to consider this as an agreement both joint and several."

Bowen L.J. concurring said :

"... there must have been separate interests as well as a joint interest in these two persons and, though the interest in the bond would be joint so long as they continued in partnership, nevertheless there was the possibility that it might be severed ..."

Thus none of the judges in this case considered the possibility that joint and several interests could co-exist. It was the dissolution of partnership that created severalty. To that extent Palmer v. Mallet⁽¹⁰⁾ is clearly distinguishable. It is perhaps also proper to note that it was decided after the Conveyancing Act 1881 and at a time when Common Law and Equity did not run so happily in harness as they do today. To my mind Palmer v. Mallet ⁽¹⁰⁾ does not go so far as Treital suggests and I find Hirschorn's Case ⁽⁸⁾ more persuasive.

15. As to Mr. Mills-Owens contention that the rule in Slingsby's Case⁽¹⁾ is archaic and should not be followed today I have come to the conclusion that in so far as it can be said so to be it has become so only by reason of the legislation - section 81 of the 1925 Law of Property Act and its precursor in the Conveyancing Act 1881. These do not apply in Hong Kong. It appears from the judgment of Greer L.J. in Josselson v. Borst⁽¹¹⁾ that the rule would still apply in England today were it not for that legislation.

16. The essential question when considering the nature of the "joint savings account" is, it seems to me, whether it was the intention of the parties that the bank should undertake separate and several obligations towards both of the appellants. I cannot see that it was, the obligation undertaken to both was to pay either on presentation of the passbook until the fund was exhausted. It was to be a matter of agreement between the appellants as to who should be in a position to present the passbook and who should present it was a matter of indifference to the respondent for its obligation to both would be satisfied by payment to either. Were it otherwise the position would be such that in claims by each severally against the bank the court would in the words used in Slingsby's Case⁽¹⁾ be in doubt for which of them to give judgment. I would therefore hold that the account was joint and not joint and several. I consider that so to hold results in no injustice for the difficulties in which the respondent now finds itself could have been avoided if it had insisted on the first appellant being a party to the guarantee before providing facilities to the limited company.

17. That perhaps is an unnecessary consideration for on the papers before us the only question to which I need address myself is whether the Common Law Rule applies and as a consequence the account could not have been both joint and several. I would hold that it does and as a consequence allow this appeal and grant the necessary declaration. I would allow this appeal with costs here and below.

Representation:

(1) 5 Co. Rep. 18.

(2) (1888) 13 A.C. 263.

(3) 3 B. & C. 254.

(4) 14 M. & W. 559.

(5) 1 Saund. 153.

(6) (1849) 11 Beav. 546.

(7) (1879) 12 Ch. D. 491.

(8) (1938) 2 K.B. 801.

(9) (1865) 36 Ch. D. 410, 421.

(10) (1887) 36 Ch. D. 410, 421.

(11) (1938) 1 K.B. 723.

-----------------

-----------------

-----------------

Coram: Pickering, J.A., Leonard and Cons, JJ.

Date of Judgment: 18th November, 1977.

-----------------

JUDGMENT

-----------------

Cons, J.:

I too would allow the appeal, although I do so with some misgivings. I find it difficult to accept that the interests of two persons in what is commonly known nowadays as a "joint" bank account are truly "joint" within that concept as it was known to the common law. There is of course the right of survivorship, which is one of the distinctive characteristics of that concept. But there the resemblance ends. The interest may be dealt with at any time by either one of the parties to the complete exclusion of the other by the simple act of drawing on the account, even to the extent of exhausting it entirely. Were it not for modern authority I would be inclined to look upon it as a special situation, giving to either party a several right during his or her life time or for so long as the account is maintained, but with a joint right on the death of the other, in the sense that the survivor becomes entitled at law to any balance then standing in the account. Palmer v. Mallet⁽¹⁾ is sufficient authority that the nature of an interest may be intended to change with circumstances. If that were so the only question for the court now to consider would be whether the husband's guarantee in relation to his interest in the account was sufficient authority for the bank to act. However, this approach, which underlay the dissent of Greer L.J. in the English Court of Appeal in Hirschorn v. Evans⁽²⁾, was specifically rejected by the majority. That was nearly forty years ago and the decision has, I feel sure, been equally accepted by the banking community in Hong Kong as by their colleagues in England. It is too late now for change. I am content to rest my decision in this appeal on that case alone.

Representation:

G.F. Horton (Baker & McKenzie) for appellants.

R. Mills-Owens (Deacons) for respondent.

(1) 36 Ch. 411

(2) [1938] 2 K.B. 801