Combination of accounts
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The banker’s right to combine accounts arises where a customer has multiple bank accounts, usually where some are in debit and some in credit. This stands to reason, obviously — unless there are multiple accounts, all overdrawn, but only some of them benefit from a security interest — though see also the rules about bailment. It is sometimes called a Banker’s set-off but, in 1972’s (still leading) case National Westminster Bank Ltd v Halesowen, Lord Buckley noted it isn’t a set off right so much as a function of accounting:
- “Nor is it a set-off situation, which postulates mutual but independent obligations between the two parties. It is an accounting situation, in which the existence and amount of one party’s liability to the other can only be ascertained by discovering the ultimate balance of their mutual dealing.”
Multiple currencies
Combination of accounts is arguably available in any situation where one party has multiple accounts with another in one currency. Some questions arise when they are in different currencies[1] though the Judicial Committee of the Wikipedia Division of the High Court feels confident you can combine accounts across currencies, even if there isn’t any actual authority for the proposition.[2] In the same vein but — we are obliged to note, with about as much credibility — the editor of Ellinger’s Modern Banking Law muses:
“There is some uncertainty whether a bank may combine accounts held within the same jurisdiction but in different currencies, or accounts held at branches in different jurisdictions. There seems no reason why accounts held in different currencies should not be combined. The mere fact that the customer has elected to hold accounts in different currencies does not evidence an implied intention to keep those accounts separate and immune from combination.”[3]
This strikes us as rather a weak appeal to common sense, especially if one regards combination of accounts as at least analogous to common law set-off — even if not actually an application of it — since set-off generally does require mutuality of currency. But anyway.
See also
References
- ↑ See also Fearns v Anglo-Dutch Paint and Chemical Company Limited [2010] EWHC 2366.
- ↑ quoth Wikieditor J: “Although it has not been finally determined by case law, most commentators accept that accounts in different currencies may be combined, as may accounts in different countries (so long as the governing law in each country permits such combination).”
- ↑ Ellinger’s Modern Banking Law 5th ed., OUP, 1 Jun. 2010.