Court of Appeal Judgment Supports Bank’s Decision Not To Authorise Client To Withdraw Funds From His Account

This article was written by​ Dr Maria Lisa Buttigieg & Tessa Borg Bartolo.

In a recent decision delivered by the Court of Appeal in its Inferior Jurisdiction, the Court of Appeal overturned a decision delivered by the Arbiter for Financial Services concerning BNF Bank’s decision not to authorize a client to withdraw funds from a bank account held in the client’s name and this after the Bank was informed by the client that his mother, who was indicated as a debtor in a number of garnishee orders, was using his account to deposit her salary.

Although the client had admitted that his mother was using his bank account to deposit her salary, the Arbiter for Financial Services had ordered the Bank to release the funds held in the said account back to the Client. The Arbiter for Financial Services arrived at this decision on the basis that no garnishee orders were filed against the client himself.

The Bank felt aggrieved by this decision and filed an appeal before the Court of Appeal in its Inferior Jurisdiction. The Bank’s two main grievances were that the Arbiter for Financial Services did not have the necessary competence to decide on the matter in question since the Bank was observing a court order issued by a different court and that the Arbiter had wrongly interpreted the law and the facts of the case.

The Court of Appeal in its decision observed that the Arbiter for Financial Services Act (Chapter 555 of the Laws of Malta) does not provide that the Arbiter for Financial Services has the necessary competence to decide on all matters involving financial service providers. Indeed, the Court of Appeal agreed with the Bank that it is only the relative court that has issued the garnishee order, and not the Arbiter for Financial Services, that has the necessary competence to revoke or issue any such other decision concerning the garnishee order.

The Court of Appeal further agreed with the Bank that in view of the information provided by the client himself it was evident that the funds actually appertained to the client’s mother and not the client himself.In the circumstances, the Court of Appeal deemed it was reasonable for the Bank to rely on the garnishee orders of the issuing Court and withhold the withdrawal of funds from his account and concluded that the legal position taken by the Bank in the case in question, where it directed the client to clarify the situation and obtain a court decree authorizing him to withdraw the funds, was correct.

Consequently, the Court of Appeal overturned the Arbiter’s decision by dismissing the client’s complaint on the basis that the Arbiter for Financial Services does not have necessary jurisdiction to decide on the matter at hand and decided the matter in favour of the Bank.

Dr Maria Lisa Buttigieg from MamoTCV Advocates appeared for the Bank.