I recommend that the complaint by MRS. S. E. COADY (“Complainant”) against MIDLAND BANK PLC (“the Bank”) be withdrawn without the payment of any money or the provision of any valuable consideration by the Bank to the Complainant.
Following the issue of an Assessment on 11th October 1993, I have received further detailed submissions from the Complainant and a response to them from the Bank. All of that further evidence has been carefully considered and the evidence previously submitted has been reconsidered in detail. Nonetheless, that has not caused me to depart from the findings in the Assessment which I now confirm and repeat below with relatively minor change.
- The Complainant maintained a series of current accounts at the Forest Hill, Fleet Street and Mark Lane branches (“the Forest Hill Branch”, “the Fleet street Branch”, and the Mark Lane Branch”) for many years.
- She has produced to me, bank statements from the 9th September 1968 until the 5th February 1969 and from the 28th March 1974 until closure of the last account at the Mark Lane Branch on 30th October 1984.
- She has also produced the relevant cheque stubs and the paid cheques from the earlier period.
- The Complainant had a deposit account with the Mark Lane Branch from about 1980 until 30th October 1984 and has produced to me all but the first page of the statements relating to it.
- The Complainant also had a deposit account with the Forest Hill Branch. (The Forest Hill Branch was closed on 19 July 1991 and all accounts were transferred to Sydenham Branch). However, that deposit account (“the disputed account”) had been opened as long ago as 1971 at the Forest Hill Branch. The last entry in the passbook (“the passbook”) for the disputed account, which is still held by the Complainant, is 13th August 1973.
- From 1971 to 1973 the Complainant was living in Kuwait with her late husband. However, she was at their London address from July to September 1973 with their children.
- Activity is apparent on the disputed account from 9th July 1973 to 13th August 1973.
- Despite the passbook being in the Bank’s possession on several occasions, as evidenced by the entries mentioned in the above paragraph, no opportunity was taken by it to note in it the interest which must have accrued between 19th July 1971 and 13th August 1973. __
- In 1975 the Complainant commenced employment with H.M. customs & Excise (“C. & E.”).
- The Complainant’s husband, a doctor, was tragically drowned in October 1975. Thereafter, the Complainant concentrated primarily on bringing up and completing the education of their five children.
- Whilst the Complainant was employed by C. & E. she joined the “Custom Fund” which gave a good rate of interest and she used it as a deposit account.
- With her education pay, trust the for estate left by her husband the youngest son, she was and able an to manage.
- Her brother and sister-in-law died within five years of her husband and she inherited some further money.
- The passbook, the Complainant says, had been put “in a safe place with other papers”, before the death of her husband.
- For the reasons stated in the above paragraphs, she says (and I well understand) that her attention was “fully elsewhere”. It was not until she retired from the Civil Service and had the leisure to go through her papers that the disputed account again came to her attention. Her current accounts with the Bank had been transferred from the Forest Hill Branch to the Fleet Street Branch in 1976, and later, when she moved office, to the Mark Lane Branch.
- In 1984, when the Complainant closed her account at Mark Lane, she transferred the amount standing to her credit to two different accounts, one at the Bank of Scotland, the other being an Alliance Building Society Bank Share Account.
- On the 9th July 1991, having found the passbook, the Complainant went to the Forest Hill Branch and asked for the interest to be calculated to that date. She said that she would then withdraw the whole amount and move it to an account bearing a better rate of interest. She appreciated that the calculation of interest would probably take some time, as 22 years interest had to be worked out. She, therefore, left the passbook at the Branch.
- On the 29th July she wrote to the Manager of the Forest Hill Branch saying that, “as the deposit is redeemable on demand,” she was surprised not to have heard from him.
- 1 On the 31st July 1991 the Senior Branch clerk of the Sydenham Branch, to which Forest Hill Branch account had by then been transferred as explained in paragraph 5 above, wrote to the Complainant saying that no trace of a deposit account in her name could be found, and that “all records were computerised during the mid-nineteen seventies”. He said that he had researched the Branch records as far back as 1978 and could find no evidence that an account was open at that date.
- 2 Further correspondence followed. On 19 September 1991, the Manager of the Sydenham Branch wrote to the Complainant:
“Firstly, the Deposit Account passbook in your possession has no value as Deposit Account passbooks were withdrawn between the years 1973 and 74 and the passbook was superceded by an account number your deposit account was 53013340 ….. ”
- 3 On the 11th December 1991 Mr. PW of the Southbank Area Office of the Bank wrote saying that he had made “further enquiries” and that ” all Deposit Account Passbooks were abolished in 1972 and the Branch records produce nothing supporting the continued existence of your Account. As a result, I must advise you that I am unable to agree with your claim.”
- On the 13th January 1992 Mr. E., Manager of the Bank’s Customer Relations Department at Head Office, wrote to the Complainant as follows:
“Unfortunately I I regret at this stage that I can only re-emphasise the content of Mr. PW’ s letter to you of 1lth December 1991, in which he stated that following consultation with our legal department, Passbooks are no longer a valid claim to a deposit and in the absence of any further proof of your claim the Bank is unable to assist you further.
I do realise the disappointment that this must bring you and that this is not the response that you would have wished for. I do, however, thank you for taking the time and trouble to bring this matter to my attention affording me the opportunity of reviewing the situation.”
- The Complainant then brought her complaint to this Office and produced the passbook. It shows a balance of £4,102.66 as at the 13th August 1973. The Complainant claims that the Bank is in breach of its obligations in refusing to pay her that balance together wit~accrued interest.
- In my view, the legal principles which apply in such circumstances are as follows:
(a) Notwithstanding the period of time which has elapsed there is no question of the Limitation Acts applying, because monies on a deposit account are repayable only on demand and time does not start to run against an account-holder in a bank I s favour until a demand has first been made. Furthermore, the Bank itself has not in this case sought to invoke the Limitation Acts.
(b) Where there is, as here, an account which has been long dormant and an issue arises as to whether or not it is still subsisting, that issue falls to be resolved by striking a balance of probabilities in the light of all the relevant circumstances of the case, as was decided in the case of Douglass v. Lloyds Bank Ltd  34 Com. Cas. 263.
(c) It is a general principle of long standing that where there is a normal and regular course of events or procedures, it is to be assumed that these have taken place or been followed, in the absence of evidence to the contrary.
- 1 The Bank is unable to state exactly when the disputed account was computerised.
- 2 Mr. PW of the Area Office said, in his letter of 11 December 1991, that passbooks were abolished in 1972, (see paragraph 19.3 above). Yet earlier on the 31st July 1991, the Senior Branch clerk at the Sydenham Branch had said, “All records were computerised in the mid [my underlining] nineteen-seventies.” and on 19th September 1991 the Branch Manager of the Sydenham Branch had said “between 1973 and 1974.” (see paragraph 19.2 above), therefore, clearly there are discrepancies between the dates for computerisation given by different officials.
- 3 Mr. NPE of the Customer Relations Department on the 13th January 1992, after he had “completed a full enquiry” could “only re-emphasise the content of Mr. [PW] IS letter of 11th December 1991”. Mr. NPE also seems to have overlooked what had been said by the Senior Branch clerk and the Manager of the Sydenham Branch.
- 4 Finally, in writing to this Office, the Bank has plumped for “the latter months of 1973” as the date of computerisation. Presumably this was because the entries in the passbook in July and August of that year show that the disputed account had not yet been computerised.
- 5 In any event, the computerisation was clearly not 1972 as suggested by Mr. P.W. and Mr. N.P.E.
- 6 Nevertheless, because an account number was allocated, I am satisfied that the disputed account was computerised, at some time after 13th August 1973. The Complainant suggests 5 April 1974 as on that date her current account statement reverted to “Sheet I” with a new computer format of the Sheet itself. However, though regrettable that there is uncertainty about the exact date of computerisation, nothing in my view turns on that once satisfied as I am that it took place and that it did so after 13th August 1973.
- It was noticed, by this Office, that the Complainant had various shares held in safe-keeping by the Forest Hill Branch which were transfered to the Fleet Street Branch. It appeared a possibility that the money in the disputed account had been used to purchase these or other investments. The Complainant has satisfied me that this was not the case.
- 1 The Bank has resisted the claim and maintains that the account was closed, because:
- 2 It I S internal procedures, full details of which have been provided to me in confidence as is permitted under the Terms of Reference governing this Scheme, state that an account may be regarded as dormant two years after the last entry and where contact has been lost with the customer. In this case, the Bank did not lose contact with the Complainant until after she closed her accounts at the Mark Lane Branch on 30th October 1984.
- 3 Copies of the Forest Hill Branch’s Unclaimed Balances Register for surnames with the letter C. for the period 1914 – 1991 have been produced to this Office. They have been produced in confidence under the Terms of Reference governing this Scheme because they reveal the names of other accountho1ders which the Bank is not entitled to disclose to third parties. I have, however, inspected them and the names shown do not include an account in the Complainant’s name.
- 4 I accept on the evidence available to me that the disputed account was computerised when the number, 53013340, was allocated to it. Moreover, the Bank says and I accept that no account under that number can be traced at any of the branches mentioned in paragraph 1 above.
- 5 Under the Bank’s internal procedures, disclosed to me in conf idence, Ledger Records, Account Open and Closed Books may be destroyed after ten years and, therefore, generally at the time this complaint was brought they only went back to 1980/82. The Bank has, however, been able to produce Securities Record Sheets of the Forest Hill Branch showing the transfer of the Comp1ainant’s securities for safekeeping to the Fleet Street Branch.
- 1 When sending this Office the bank statements referred to in paragraph 2 above, the Complainant drew my attention to the fact that sheet number 18 of the Forest Hill Branch statements showed interest on the disputed account credited to the current account. This showed that the disputed account was still in existence at the date of that statement, which was for the period the 30th April to 24th May 1976.
- 2 However, no other entries showing from the deposit account occurx. a transfer of in any other interest of the about the
- 3 The interest was credited on 3rd May 1976 and was £30.03. It was expressed to be interest to 23rd March 1976. This seemed an unusual date for interest to be paid and I queried it with the Bank.
- 4 The Bank informed me and I accept that the standard date of application of interest on deposit accounts in 1976 was the third Monday in June and the third Monday in December. Tuesday, 23rd March was not, therefore, a date upon which standard interest would have been calculated.
- 5 It, therefore, seems to me likely, upon the balance of probabi1i ties, that the disputed account was closed on or about the 23rd March 1976. It was then found that a further small amount of interest was due to the Complainant. It could not, of course, be credited to the disputed account because it had by then been closed. It was, therefore, instead credited to the Complainant’s current account.
- 6 This point was put to the Complainant who replied at length.
Amongst other things she said:
“To summarise no interest is shown for the 5 years 1971 – 1975. No large capital repayment is shown in these years or in 1976 prior to the entry of May 3rd.
£30.02 is too small a sum to be the interest on £4,000 or thereabouts for 5 years as the closing payments would have had to account for all those years when no interest was calculated and entered. Had the account been closed at this point there should have been an entry of a final large transfer on 23.03.76 or in the quarter preceding.”
- Deposit account interest is normally credited to the deposit account in question. It is only if specific instructions to credit another account are given or when such an account has been closed that it would be credited to a current account. This, in my view, is why no other entries in respect of interest from the disputed account are shown in the current account statements which the Complainant has produced. Furthermore, it does not follow that a withdrawal from the disputed account would automatically be credited to the current account. It could well have been used for other purposes. The Complainant says that this would have been contrary to her normal practice and that it was not. She has also given full details of her normal expenditure, covering outgoings on her home, chi1drens education, car, holidays, food, furnishings and entertainment.
- The records provided by the Complainant are indeed meticulous. However, they do not include any statements supporting the existence of the disputed account after the allocation of the number 53013340 and following computerisation.
- 1 Despite the confusion on the part of the Bank as to exactly when the records were computerised, I am satisfied that they had been after 13th August 1973 and prior to March 1976. In my view, on the evidence available, I think it probable that from the date of computerisation of the disputed account until the date of closure in 1976, computer generated statements for the disputed account would have been produced and sent to the Complainant. The Complainant says that she has demonstrated, by the production of the current account statements, plus school accounts and so forth, that she is a “dedicated record keeper” and it would be a “psychological impossibility” for her to have destroyed the computer generated statements in respect of the disputed account if any had been sent.
- 2 I fully accept that the Complainant is indeed an excellent record keeper, but even the most meticulous of people occasionally both mislay records and misrecall events of many years ago.
- I find, on the balance of probabilities that:
(i) Prior to computerisation it was not a requirement that the passbook should be written up when presented for a transaction. Indeed the instruction to leave it at the Bank for that purpose indicates the opposite if anything. I do not, therefore, draw any inference from the fact that up to 13th August 1973 accrued interest could have been noted in the passbook but was not;
(ii) From the date of computerisation on a date after 13th August 1973 and prior to March 1976 the passbook became obsolete;
(iii) The Bank did follow its normal and regular procedures in this case;
(iv) The disputed account was closed on or about the 23rd March 1976, after the balance had been withdrawn or transferred elsewhere; and
(v) Following closure of the disputed account an adjustment of interest due to 23rd March 1976 was made and credited to the Complainant’s current account on the 3rd May 1976.
- In the circumstances and for the reasons given, I cannot recommend the payment of any compensation to the Complainant. Wi th hindsight this dispute might have been avoided had the Bank (and other banks) called in all old passbooks on computerisation. They were not obliged to do so and did not. It would also have been preferable if the Complainant had not, initially, been given contradictory dates for the date of computerisation when she first brought this complaint. However, these are not matters which entitle her to compensation under this Scheme.
- Despite finding against the Complainant, I should like to add that I am satisfied that she has brought this complaint in the genuine and honest belief that the balance was not in fact withdrawn or transferred from the disputed account. She has presented her cas~ coherently and fairly and has in all respects been as helpful and as straightforward as she could be to this Office in the course of carrying out its investigation. It is, therefore, with considerable regret that I find I have no alternative but to reject this complaint on the evidence available to me.
The Banking Ombudsman
19th April 1994