Fielding v Royal Bank of Scotland Plc

An express joint-and-several mandate for a matrimonial joint account ordinarily authorises the bank to grant credit by honouring cheques drawn by either account-holder, whether the account is in credit or overdrawn. Both holders are liable for the resulting balance. An agreed overdraft facility fixes the bank’s obligations and interest terms within the facility, but does not cap the mandate or prevent further borrowing unless that restriction is expressly or necessarily implied. A possible duty may arise where the bank has reason to suppose that the mandate is being abused, but no such circumstances existed here. An account-holder who authorised an agent to agree the application of sale proceeds could not reopen the transaction merely because she was unaware of the outstanding balance.

Mrs Fielding appealed from an order made by Hart J in the High Court, Chancery Division, on 2 May 2003. The order required her to pay the Bank £3,559,652.31, representing the overdrawn balance on a joint account.

The appeal concerned the construction of the joint-account mandate, the effect of a £200,000 overdraft facility agreed in 1988, and whether the Bank owed a duty of care requiring it to obtain Mrs Fielding’s consent before allowing further borrowing by her husband. She also challenged the application of sale proceeds from a property to the loan and joint accounts. The central questions were whether the borrowing was authorised, whether the Bank’s conduct constituted a breach of duty, and whether the counterclaim could succeed.

Lord Justice Jonathan Parker gave the judgment of the court. Lord Justice Potter and Mr Justice Charles agreed.

1. Disposition. The appeal was dismissed.
2. Mandate. The express mandate authorised the Bank to honour cheques drawn by either account-holder even when the account was, or thereby became, overdrawn. It also imposed joint and several liability for all sums due or becoming due. In a matrimonial joint account, no restriction to domestic purposes, equal use, or mutual benefit was implied merely from the marriage. Any limitation had to be self-imposed and known to the Bank. The court relied on the reasoning in Gage v King [1961] 1 QB 188.
3. 1988 facility. The facility required the Bank to allow borrowing up to £200,000 on specified terms. It did not expressly or impliedly restrict the wider mandate or prevent further borrowing by one account-holder without reference to the other.
4. Duty of care. The court proceeded, without deciding, on the basis that a bank might in some circumstances be required to stop acting on a subsisting mandate or obtain the other holder’s concurrence where it had reason to suppose that the mandate was being abused. The authorities concerning fraud and banks being put on inquiry, including Quincecare [1992] 4 All ER 363, did not assist Mrs Fielding on the facts. Regular statements, her own occasional use of the account, properties acquired in her name, her signature of the facility, and the absence of any queries or warning signs meant that the Bank had no reason to suppose the mandate was being abused. The breach-of-duty claim therefore failed.
5. Counterclaim. Mrs Fielding had given Mr Fielding actual authority to agree the application of the sale proceeds. Ignorance of the outstanding balance did not amount to common mistake capable of vitiating the agreement. In any event, the solicitors acting for her had ostensible authority to remit the proceeds, which precluded reopening the transaction.

The appellant was ordered to pay the respondent’s costs, make an interim payment of £50,000 on account, and was refused leave to appeal to the House of Lords.

• Court of Appeal (Civil Division): [2004] EWCA Civ 64 — appeal dismissed.
• High Court, Chancery Division: Hart J ordered Mrs Fielding to pay the Bank £3,559,652.31 inclusive of interest and rejected her claims concerning the mandate, breach of duty, abuse of confidence, and the counterclaim.