Imagine waking up one day to discover that your bank account, holding a significant sum, has been frozen, and the bank refuses to let you access it. Now imagine this continuing for almost three years. That is exactly what happened in the case of Bolum Twenty-Three Limited et al v Petrus Private Bank Limited, recently decided by the High Court of Saint Lucia, Commercial Division.
What Happened
Bolum Twenty-Three Limited (“Bolum”) maintained an investment account with assets valued in excess of seven figures. In 2021, a third party in Canada claimed entitlement to the funds as heir to the estate of an individual under a Canadian will. Bolum had, however, become entitled to the funds upon that individual’s death through a trust established during his lifetime. Despite this, the bank immediately froze the account and maintained the freeze for nearly three years, even though no legal proceedings were ever initiated by the third party.
What the Court Said
The Court drew an important distinction:
1. The bank was justified in placing an initial hold on the account once a potentially legitimate claim had been raised.
2. However, maintaining that restriction indefinitely, without conducting an investigation or requiring the third party to commence legal proceedings, was found to be unreasonable and unlawful.
The Court made it clear that banks must act rationally when exercising powers such as freezing an account. Doing nothing is not an option. They must assess whether a third-party claim has merit and cannot hold customers’ funds in limbo indefinitely.
Why This Matters
This case reinforces a legal principle known as the Braganza duty. In simple terms, when a bank has discretion that affects the rights of its customer, it must exercise that power fairly, in good faith, and not arbitrarily.
For customers, the lessons are straightforward:
1. A bank cannot keep your account frozen indefinitely on the basis of mere third-party allegations that are unsupported by legal proceedings or a court order.
2. If no court case is filed, or if investigation shows no substantive merit, the bank must release your funds.
3. Even broad contractual clauses giving a bank “absolute discretion” remain subject to the requirement of reasonableness.
The Bolum judgment is a significant victory for fairness in banking. It sends a clear message to financial institutions that protecting themselves cannot come at the expense of their customers’ rights.
If you have ever faced unexplained restrictions on your account, this case is a reminder that the law provides safeguards and remedies.
This article is for general information purposes only. It is not, nor should it be construed or relied on as, individual legal advice.