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The Law on Garnishing Joint Bank Accounts

  1. Joint bank accounts usually operate in a manner where either of the account holders may withdraw the monies therein.
  2. As for garnishee proceedings, it is one of many enforcement proceedings that may be commenced by a creditor who has obtained a favourable monetary judgment against a debtor, and where the debtor refuses to pay their debt despite the judgment. The judgment creditor must first apply to court for a Provisional Garnishee Order. This leads to “show cause” proceedings where the garnishee (usually a bank) confirms that the judgment debtor is entitled to a sum of money. The court may then issue a Final Garnishee Order, which compels the garnishee to pay the judgment creditor instead of the judgment debtor.
  3. This article discusses the significance of the landmark ruling in Timing Ltd v Tay Toh Hin and anor [2020] SGHC 169 (“Timing 1”) and Timing Ltd v Tay Toh Hin and anor [2021] SGHC 5 (“Timing 2”) (collectively referred to as “Timing”).Previous Law
  4. Prior to Timing, joint bank accounts could not be subject to garnishee orders: One Investment and Consultancy Ltd v Cham Poh Meng [2016] 5 SLR 923 (“One Investment”).
  5. The previous legal position, as set out in One Investment, was based on the following considerations:-
    • Other Commonwealth jurisdictions and local academics were almost unanimous in their position that joint bank accounts could not be subject to garnishee orders.
    • Prejudice to banks: Banks would be heavily burdened with determining the respective contributions of parties to the joint bank accounts, which they are not well equipped to do. Such determination could also expose joint account holders to liability. Additional costs for such investigations would also warrant an increase in the costs awarded to banks for garnishee proceedings, which would ultimately have to be borne by the judgment creditors and debtors, thereby reducing access to justice.
    • Prejudice to other joint account holders: A presumption that a judgment debtor is entitled to an equal share of the joint account would be potentially unfair to the other account holders who may have contributed more than the judgment debtor. There was also no requirement that the joint account holders be notified or for the judgment debtor’s interest in the account to be determined. Even if the joint account holders were notified about the Provisional Garnishee Order, there was no remedy available to them except to register their objection with the bank or incur substantial costs by seeking to participate in the garnishee process.
    • Practical difficulties: Some portion of the bank account is to be frozen before the finalisation of the garnishee order— the difficulty arises in determining how much to freeze. Also, if the other joint account holder is not promptly informed of the garnishee order, there is nothing to prevent the judgment debtor from using the non-frozen portion of the bank account to the other joint account holder’s prejudice. This goes against the purpose of garnishee proceedings.

    Current Law

  6. In Timing 1, the High Court granted a Provisional Garnishee Order as there was strong prima facie evidence that the judgment debtor owned all the monies in the two joint-bank accounts held by the judgment debtor and his wife.
  7. Timing 1 addressed the above concerns in One Investment. A Provisional Garnishee Order could be made against joint bank accounts if the following criteria are fulfilled:-
    • There is a strong prima facie case that all monies in the joint bank account held by the judgment debtor and third party/parties belonged to the judgment debtor;
    • Notice was given to the non-judgment-debtor account holder(s); and
    • The applicant for the provisional garnishee order provides an undertaking to pay for any costs and reasonably foreseeable losses of the garnishee or non-judgment-debtor account holder(s), in the event the court deems that the monies subject to the provisional garnishee order are not in fact payable (in whole or in part) to the judgment debtor.
  8. However, when the judgment creditor applied to make the Provisional Garnishee Order final, it was dismissed by the court. The dismissal was on the basis that the judgment creditor had failed to prove on a balance of probabilities that all the monies in the joint accounts belonged to the judgment debtor alone. The judgment creditor appealed against the court’s decision, resulting in Timing 2.
  9. In Timing 2, the court’s decision in Timing 1 was affirmed and the appeal was dismissed. The High Court held as follows:-
    • The judgment creditor bears the legal burden of proof to show that the Provisional Garnishee Order should be made final, while the judgment debtor bears the evidential burden of proof to challenge the prima facie case. The court will look at the evidence as a whole.
    • Although there was a strong prima facie case that the judgment debtor solely owned the monies in the joint bank accounts, the application for a Final Garnishee Order required him to prove the same on a balance of probabilities, and he was deemed to have failed. In this regard, evidence of parties’ intentions in opening the joint bank account was crucial. It was relevant that the monies in the joint account were used as and when the debtor and wife needed, it was used for jointly incurred expenses, the wife had also used the monies for her own purposes and the wife had no other bank accounts in Singapore. Although the debtor had conducted business transactions using the same account, it cannot safely be said that once a joint account is used for a non-joint purpose, that will determine the ownership of monies in the account.
    • A strong presumption of advancement arose in favour of the wife which gave her a beneficial interest in the husband’s contributions to the joint accounts. This was based on, amongst other things: (a) the fact that they were married for over 36 years; and (b) the wife’s apparent financial dependence on the debtor. The presumption of advancement provided a further basis for the court to deny granting a Final Garnishee Order.

    The significance of Timing

  10. Going forward, Timing prevents judgment debtors from hiding their monies through joint bank accounts, thereby allowing judgment creditors to be repaid, while protecting the interests of other joint account holders. That is, if the judgment creditor is able to satisfy the rather heavy burden of proof in such applications to garnish a joint bank account as described above.