Legal Indicators for the Determination of the Beneficiary under the Joint Account

Legal Insight

April 2022

Christina Kapourani, M.Sc. (mult.), Pgcert, PhD Cand.

Summary: As we have set out in an earlier article (see "Practical Issues in the Joint Deposit Account Context", June 2020 - here) a common banking contract is that of opening and maintaining a "joint account" by two or more persons. This is, in essence, a deposit account with several beneficiaries, on which each beneficiary can act autonomously, depositing or withdrawing funds (even the entire deposited amount) or giving orders for transfers of funds. In the context of maintaining such an account, the relations between the beneficiaries are governed by their internal agreement (donation, loan, mandate, etc.) What happens, however, when the parties have not agreed on something specific about their claims against each other or, more importantly, when there is a breach of the internal agreement - and hence a dispute as to the identity of the true beneficiary - with one party usually taking over part or all of a deposit belonging to another co-beneficiary? Below, therefore, we will briefly try to analyse the criteria used by the case law of our courts in order to formulate a judgment on the person who owns the deposit in question in the joint account, when, of course, there is a judicial dispute to that effect (in particular, the relations between spouses - joint beneficiaries are enlightening case law examples).

1. Introduction

A joint account is a contract between a bank and its counterparties for the deposit of money into an account, provided that the account can be used, without the involvement of others, either by one or more of the so-called 'joint holders'. It should be noted that the banking institution cannot refuse to return the funds to the beneficiaries of the account and does not verify the true owner of the funds.

In the case where between the joint account holders a) no special internal relationship can be established (loan, mandate, donation, etc, see in more detail on the relations between the joint holders in our earlier article above) or b) the internal relationship does not result in the shares between the joint holders concerning the right of each party to turn and claim from the other the amount belonging to it (right of recourse between the joint holders, as it is typically called), the provision of Article 493 CC applies. According to the latter, the joint holders of the deposited amount are entitled to it, equally.

This provision, which has in words: "Recourse between lenders: Among themselves most creditors are entitled to equal shares, unless otherwise follows from the relationship",  establishes, as it were, a rebuttable presumption. What this means in the simple example of two joint creditors is how one can overturn it by proving, in short, that they own more than 50% or all of what is deposited in the account (because, for example, it comes from their own exclusive business activity or employment). Therefore, if there is a relevant dispute, the right to participate in the amount of money in the joint account becomes subject to litigation by filing a claim, regardless of whether the actual contribution or the presumed contribution is claimed (i.e. 50% in the case of two, 1/3 in the case of three and so on). 

In this way, the claimant-depositor, in recourse against the joint account holder, who took the entire amount of money or more than his share (this happens, in practice, in cases where one of the joint account holders has violated the internal relationship, usually the mandate to manage the account without his own right to the deposited amount), he is relieved of the burden of proving the size of his participation to the extent that it is covered by the statutory presumption (i.e., in the case of two joint holders, there is no need to prove the 50% share in the joint). Such an obligation exists in the same always example for proving a participation of more than half. The court, therefore, unless a different agreement (which may indicate a single true beneficiary of the entire account) is proved and, of course, a breach thereof is proved, the court will order the assuming joint owner to pay the plaintiff's constructive share. 

2. The individual jurisprudential indicators for finding the true beneficiary

Therefore, when hearing such an action, the courts, in order to reach a correct decision on the true owner of the amount deposited and for the correct application of the presumption of equal distribution, take into account the following important criteria - jurisprudential indicators. In particular, judicial decisions are based on:

a) The person who makes deposits into the account and in particular the management of all its movements, especially if they are also consistent with his/her income and take place in a branch near the beneficiary's place of work: Thus, the Athens Court of Appeal 1760/2021 includes a judgment according to which "[...] However, the above allegation of the defendant has not emerged from any significant evidence. On the contrary, the documents relied upon and produced by the defendant clearly show that the account in question was exclusively funded by the defendant's money, while he personally made deposits and generally 'moved' the account in question. The plaintiff never deposited any amount of money which could be shown to be her own money, nor does she describe any dates, amounts or any document to prove this claim. [...] On the contrary, it has been established that all the deposits in the account were made by the defendant, evidence of each deposit being provided in a number of diaries, most of them being made at the same branch of the bank [....], which was located close to his place of work, and the amounts ranging from EUR 200 to EUR 3 362, which is consistent with the nature of the defendant's work and his income from it'. 

b) To the person who carries out the most profitable activity and is more likely to save capital as the other person has allocated his/her own income to cover family needs due to its low value (especially in the case of couples). 136/2021 decision of the Piraeus Court of Appeal accepts that ' [...]. However, the above assertion is not, in this case, of any influence because the money deposited in the disputed bank accounts, from which the sums in question were withdrawn, concerned the plaintiff's personal income derived exclusively from the operation of his above-mentioned profitable business, whereas it was not proven that the defendant participated in the above deposits with her own money from any source, since the personal income mentioned was not saved but was used for the family's needs". 

c) The true income obtained through the evidentiary procedure without attachment to tax documents: Indicative, in this regard, is the decision of the Single Court of Appeal of Larissa, No. 463/2015, in which the true income of a farmer was taken into account despite his retirement and the "apparent" non-exercise of agricultural activity. According to this judgment, "The plaintiff-appellant and her husband [...], who later died on 26.10.2006, had a joint bank account at the Trikala branch of [...], at least since 1997, with the number [...]. in which they saved money, mainly from the OGA pensions, which they both received from 1998 and from income from agricultural crops and subsidies. In particular, the declared pension received by the applicant amounted to 700,000 drachmas per annum for 1998, while her husband's [...] pension amounted to 518,000 drachmas per annum. In 1998 [...], a farmer, retired from the OGA, but in reality he was working as a farmer on the farms together with his son [...], to whom he had granted them and received part of the income from them and the subsidies. This is the reason why the amount of the account in the years 1997-1999 reached the sum of 10,727,890 drachmas".

d) The documents proving the deposits in favour of the parties, such as cheques deposited by relatives in their favour (mainly parental benefits). 000 belonged to the claimant, as, moreover, was also agreed by the respondent, who also submitted the relevant bank document, and b) the remaining amount of EUR 13,841.46 belonged to the respondent and came from donations from her father [.... ], namely, EUR 3 500 on 20 August 2010, EUR 2 000 on 4 April 2011, EUR 1 000 on deposit of the [ ...] bank cheque of the same amount [....], EUR 3 000 on 30 May 2011 and EUR 4 341,46 on 22 August 2011, on deposit of the [....] bank cheque of the same amount [....]'.

(e) Any agreements that may have taken place between the co-owners regarding the management and the mutual claims on the accounts at any time: Interesting in this regard is, in this regard, the decision of the Athens Court of Appeal, No. 168/2018, which includes the following judgment "In the above circumstances, the out-of-court agreement of the parties with the aforementioned content bears the characteristics of a settlement agreement, as its meaning was developed in the legal reasoning in paragraph VI of this document, which agreement leads to the final resolution of their aforementioned disputes, which include the disputed ones. In particular, both parties, by the aforementioned mutual waivers of their respective claims, agreed, under the said settlement agreement, that the payment of the sum of EUR 61,628 to the plaintiff fully settles and settles all their financial disputes, expressly and unequivocally declaring that they waive any other claim between them, whether or not it has been brought before the Court, both in the past and in the future, and that no further claim exists between them. Consequently, accepting the relevant (rebuttal) objection to the settlement, which is admissibly raised by the defendant, the action brought by ... for a share in the amount of the joint account in dispute must be dismissed as essentially unfounded'.

f) The type of work of the beneficiaries, the declared amounts of the submitted tax returns, which, due to the lack of sufficient deviation and the lack of a special internal agreement between the parties, led to the application of the 50% presumption (see indicatively the Athens Court of Appeals 1553/2020).

g) Any out-of-court statements of the joint holders as to the true beneficiary of the funds: in general, the out-of-court statements of the joint holders exchanged between them even at an unsuspected time are taken into account for the correct judgment of the court as they undoubtedly reflect the true intention of the parties as to the beneficiary of the accounts. The Supreme Court decision 2032/2017 specifically states the following "From this agreement concerning the regulation of the internal relations of the account's co-owners, regarding the extent of the defendant's right to the disputed account, it follows that the defendant was not entitled to use the account (withdrawals), without the express instruction of the above. Since then, the above account has been fed by the rents of N.S.'s property in Heliopolis and by the income of him and the plaintiff from their work in Australia, which they imported into Greece. On the contrary, the defendant never deposited her own money in that account, as is evident from her own confession contained in her out-of-court reply to the plaintiff of 5/5/2007, in which she states "I was never the recipient of my brother's and your husband's money but I was typically the depositor of it". The defendant further alleges that the transfer of the above property from M.S. to her sons was made without consideration and thus, in gratitude and to provide for their parents, there was an agreement among all the brothers that the rents of the above property be made available for the needs of their elderly parents and after the death of their father for the plaintiff's elderly mother-in-law and therefore the defendant was made a joint beneficiary of the account ...".

h) The type of transactions, i.e. whether they consist of various amounts with decimal digits or are what we would call "round" deposits. In the first case the transaction indicates, according to the case law, a business account and not a savings account, so that the professional activity of the beneficiaries justifying such deposits must be taken into account in the first place: On this criterion, what is set out in the FPC 103/2013 is enlightening, according to which "At this point it is worth noting that the vast majority of deposits made with the euro currency show decimals, such as indicatively 48.10 - 25.60 - 128.20 - 236.10 - 474.70 - 233.20 - 229.80 - 233.20 - 32.60 - 31.20 - and so on, It is clear from the evidence that these were fees from the defendant's clients and in no way savings deposits [...]. The Court is therefore not convinced by the applicant's assertion that the account in question had the character of a savings account and that it operated in the context of the family economy, and even more so that the applicant himself deposited money in the same account and for the purpose of saving in the sense of a right to it'.

i) In particular, in the case of agreements upon the dissolution of a cohabitation and the general lack of approval of the transfer of amounts that led to the application of the 50% - 50% presumption. 2249/2013 decision of the Thessaloniki Single Member Court of Appeal in which "Further, the parties agreed after the termination of the cohabitation that the defendant would withdraw money from the above accounts only upon prior approval and instruction of the plaintiff. Upon the latter's departure from the matrimonial home on 24.2.2006, following an agreement between the parties, the bonds they had invested were sold and they divided the above amount equally, since, as is evident from the movement of their A joint account, the amount of EUR 38,997.35 was transferred to the defendant's individual account, while for the remaining equal amount she issued a cheque on the plaintiff's order, which the plaintiff received, as agreed. Subsequently, the plaintiff found that the defendant, acting in breach of their internal relationship and agreement, that is, without his approval and instruction, issued a cheque for the amount of 20. 000 euros, on her order, to the debit of their joint account held at the same bank A, the amount of which, as she concedes, she deposited in her personal account, which she maintains, which was fed by the rents of her father's house, which she herself was collecting [....] It has been established that the defendant withdrew the sum of EUR 71 332,42 from their aforementioned joint accounts without the plaintiff's approval. Therefore, the plaintiff is entitled to claim from her half of the amount withdrawn, namely the sum of EUR 35,666.21, that is to say, the defendant should be ordered to pay the plaintiff the sum of EUR 35,666.21 and its obligation to pay the plaintiff the sum of EUR 30,000 should be acknowledged, the action being upheld in part".

3. Instead of an epilogue

The above review of the case-law shows that the contract to open a joint account is common and is observed, in particular, between related persons (mostly spouses or parents and children) and is generally based on the relationship of trust which, as a rule, presumably governs the above-mentioned family ties. However, it is not infrequently the case that these relationships are disturbed, which very often leads to disputes as to the identity of the true beneficiary and to legal disputes between the joint beneficiaries. However, the above summary of the criteria of the case law of the courts in order to formulate a fair judgment on the identity of the beneficiary shows that 1) a substantive examination of each of the facts (tax data, true income resulting, in general, from the evidentiary procedure, type of profession and profitability of businesses, agreements of the parties, evidence of transactions, type and amount of deposits, out-of-court statements and previous pleadings of the parties, etc.) is carried out. and so on) and that (2) the correct legal handling through the proper collection and presentation of appropriate evidence leads to the acceptance of the remedies of the true beneficiaries.