Pearson v Cayman National Bank Ltd

• Jurisdiction: Cayman Islands
• Judge: (Sanderson, J.)
• Judgment Date: 30 June 2000
• Court: Grand Court (Cayman Islands)
• Date: 30 June 2000

Grand Court

(Sanderson, J.)

PEARSON

and

CAYMAN NATIONAL BANK LIMITED, COCONUT GROVE BANK (as Personal Representative of the Estate of TARDIFF, deceased), SUBKLEW and NIMS

S.J. Barrie for the plaintiff;

G.A. Locke for the defendants.

Cases cited:

(1) Burgess v. Rawnsley, [1975] Ch. 429; [1975] 3 All E.R. 142, dicta of Denning, M.R. applied.

(2) Marshal v. Crutwell(1875), L.R. 20 Eq. 328; 39 J.P. 775.

(3) Russell v. ScottUNK(1936), 55 C.L.R. 440; [1936] Aust. L.R. 375, applied.

(4) Young v. Sealey, [1949] Ch. 278; [1949] 1 All E.R. 92, applied.

Banking-accounts-joint account-transfer of account into joint names with stranger for no consideration creates presumption of resulting trust in favour of original account holder-rebuttable by evidence of intention to create joint ownership

Banking-accounts-joint account-severance-joint owner may only sever joint interest in account by alienation of own interest, mutual agreement with other account holders, or behaviour showing intention to regard as interest in common-latter may be by notice to other holders in writing

The plaintiff claimed title to the funds in three accounts at the first defendant bank.

The deceased, a US resident, held three savings and term deposit accounts with the first defendant in the Cayman Islands. He became terminally ill and made arrangements to dispose of and give away certain valuable assets to family and friends. Shortly before his death he decided to add his sister, the plaintiff, as a second signatory to the accounts. He and the plaintiff signed a general amendment form, listing changes to various accounts in the deceased”s name, and specifying that the accounts in question were to be ‘either/or accounts’ and returned it to the bank. The deceased told the plaintiff that the accounts were to be jointly owned with her, and were to be given to their mother upon his death. The bank also sent a joint account mandate to be completed and returned, which the plaintiff claimed never to have received. The bank nevertheless added the plaintiff”s name to the accounts and subsequently issued statements showing her as joint account holder.

In the meantime, believing that he was about to die, the deceased requested that the fourth defendant, a lawyer and a trusted friend, assist him with his business affairs. He wrote to the bank requesting that it substitute the fourth defendant”s name for that of the plaintiff as second signatory of one of the accounts, close one of them and pay the balance into the third, and replace the plaintiff as signatory with the third defendant. The bank requested character references for the two new signatories and sent a new joint account mandate to be signed by them.

With the assistance of the fourth defendant, the deceased complied. A letter enclosing the necessary information was dispatched two days

before his death and received by the bank in the Cayman Islands four days after it. The letter specifically denied the plaintiff”s authority to change the deceased”s instructions regarding the accounts. The plaintiff brought the present proceedings claiming entitlement to the funds in the accounts. Both sides requested summary judgment in their favour.

The plaintiff submitted that (a) she was entitled, as the surviving joint tenant of the accounts, to the whole of the funds in them; or alternatively (b) any interest the third and fourth defendants had acquired had been through undue influence on the deceased and was therefore invalid.

The third and fourth defendants submitted in reply that (a) they were legally and beneficially entitled to the accounts, since the deceased had done everything required by the bank to remove the plaintiff as signatory and substitute them in her place; (b) the deceased had not created a joint tenancy of the accounts so as to confer a right of survivorship on the plaintiff, since equity presumed that jointly-owned property would be held as tenants in common; (c) the plaintiff held the accounts on a resulting trust for the estate or for them, as she had given no consideration for the gift from her brother; or (d) a joint tenancy with the plaintiff had been created, which the deceased had severed by his instructions to the bank, and as he had contributed all the moneys in the accounts, they were held on trust for his estate.

Held, giving judgment for the plaintiff:

(1) The deceased had created a joint tenancy of the accounts with the plaintiff by placing them into their joint names. In anticipation of his imminent death, and wishing to dispose of his assets to friends and family, he had conferred joint legal and beneficial title in the accounts on the plaintiff so that either of them could draw on them for their own benefit. This was the meaning of an ‘either/or’ account. As savings or term deposit accounts, they were not intended for use in paying the deceased”s day-to-day expenses. On this evidence, the plaintiff had rebutted the presumption that property transferred to a stranger for no consideration was held by that person on a resulting trust for the donor (page 250, line 38 – page 251, line 15; page 251, lines 25–45).

(2) The deceased had subsequently changed his mind and attempted to replace the plaintiff with the third and fourth defendants as his new joint tenants. However, he had failed to sever the existing joint tenancy so as to create a tenancy in common and deprive the plaintiff of the right to acquire sole beneficial ownership by survivorship. Severance of the tenancy in equity could have been achieved by the deceased”s alienating his own interest in the accounts, by mutual agreement with the plaintiff, or by a course of dealing showing that their interests were to be regarded as henceforth constituting a tenancy in common. Notice in writing to the plaintiff would have sufficed for the latter purpose. None of these had occurred. The deceased had retained his interest in the accounts until his death, he had made no agreement with the

plaintiff, and no attempt had been made to notify her that he wished the accounts to be held in common. Accordingly, no interest in the accounts had passed to the third and fourth defendants and the plaintiff acquired the whole interest by survivorship (page 251, lines 16–24; page 254, line 41 – page 256, line 18).

SANDERSON, J.: This is an application by the plaintiff pursuant to
O.14 for summary judgment. The third and fourth defendants have also
filed an application for summary judgment in their favour. Both counsel
20	have agreed that the matters before the court can be decided on a
summary basis.
The plaintiff was the sister of Dr. Jeffrey Tardiff, a medical doctor who
practiced in Miami, Florida. On October 29th, 1990, Dr. Tardiff opened a
savings account with the Cayman National Bank Ltd. (account No.
25	205349) and he signed the usual documents required for conducting
business with the bank. Dr. Tardiff opened two more accounts at the
bank; a certificate of deposit account (No. 347647) on July 8th, 1991 and
a second savings account (No. 206828) on March 23rd, 1993. He did not
sign any new account-opening forms in respect of the latter two accounts.
30	In 1993 Dr. Tardiff was terminally ill. From September to December
16th, 1993, when he died, he changed his will, changed his beneficiaries
under an insurance policy and made arrangements to dispose of, transfer
and give away a significant amount of his assets to his family, companion,
and friends. These assets were substantial in value. These proceedings
35	involve Dr. Tardiff”s dealings with the three accounts at the bank and
entitlement to the approximate amount of US$250m. which was deposited
in them.
Some time in November 1993 Dr. Tardiff spoke with an employee of
the bank indicating that he wanted to add the plaintiff as a second
40	signatory to the three accounts. He also told the plaintiff that he wanted to
add her name to his three accounts at the bank, which were to be held in
joint ownership, and that she was to turn the accounts over to their mother
upon his death. At this time Dr. Tardiff was making arrangements to
transfer other bank accounts and other assets directly to his mother as
45	well to other individuals. It was unexplained why Dr. Tardiff chose this

indirect method to transfer the accounts at the Cayman National Bank to
his mother but the evidence was uncontradicted.
The bank sent a general amendment form to Dr. Tardiff and it was
completed by him and the plaintiff on November 13th, 1993 and received
5	by the bank on approximately November 16th, 1993. It provided in part:
‘Account Nos. 205349/347647/206828

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