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Mareva injunction and safe custody in banking

June 7, 2021Contentshide1Mareva injunction meaning1.1Court injunction meaning2Safe Custody2.1Types of Bailee2.2Bailee Liability in bailment2.3Formalities for the deposit of articles into safe custody

This article give you the detailed explanation you need to know about mareva injunction and safe custody in banking.

Mareva injunction meaning

A defendant in a case especially civil case may decide to the deplete his assets so that in the event of the case being against him, the plaintiff will be left with little or nothing to recover.

A mareva injunction is issued to prevent this anticipatory evasion. A mareva injunction is wider in scope than a garnishee order because it is issued before the creditor obtains judgement and it applies to all assets of the defendant and not merely a cash fund or bank balance.

When a mareva injunction is served on the bank, it becomes a legal bar towards payment and the bank requires Court clearance before the customer can withdraw. All cheques issued by the customer should be returned with the inscription “refer to drawer”.

Court injunction meaning

A court injunction is an action taken by the court to restrain somebody, a group of people or corporate body from doing something until the determination of a matter before the court.

When an injunction is issued against the bank or is customer, it automatically revoked the customers mandate to the bank.

A court injunction could be a product of disagreement between parties and if they court feel that a party will be prejudiced if the other is allowed access to the asset issues an order to restrain use of the asset. It could also come when police is investigating a bank account which is suspected to have proceeds of crime. The police can apply to the court for injunction, to prevent the bank from paying out anything from the account.

These are the meaning of the mareva injunction and court injunction Ontario.

Safe Custody

Safe custody arises when a person gives his property to another person for safekeeping. It creates the bailor/bailee relationship. The person who deposits the property is the bailor while a person holding it is the bailee.

mareva injunction

In this case of a bank the bank is the bailee while the customer is the bailor.

Types of Bailee

There are two main types of bailee and they are as follows;

1. Gartuitous Bailee: This is a person who makes no charge for safe keeping. He is therefore required to take care of the property in his custody as would have a reasonable prudent and careful person take on his own property of like description. He is therefore only liable for gross negligence.

2. Bailee for reward or paid bailee: This is another type of Bailee who makes a specific charge or receives some reward for its safekeeping. He is expected to take the highest degree of care and adopt all precaution that could be reasonably expected of a person in that line of business.

Using the case of Houghland V. R. R. Low (Luxury Coaches LTD). Houghland a long distance coach passenger handed in her suitcase at the point of departure for loading in the luggage compartment of the coach.

The driver on completion of loading locked the compartment. The coach broke down in the course of the journey and the passenger and their luggage were transferred to a relief coach. The transfer took place in the dark and on arrival Houghland suitcase was missing.

Houghland, sued the coach operator for the value of her suitcase and contents.

The court of appeal held the coach liable and went to say that;

  1. The standard of care in any bailment is determined by the circumstances of the case
  2. The bailee must show that there was no negligence on his part if he is unable to re-deliver the goods to the person entitled to it.

Bailee Liability in bailment

A Bailee liability includes;

1. A conversion: Conversion is an unauthorized act which deprives a person of his property permanently or for an indefinite time. This liability will arise where the property is released to a wrong person.

2. Detinue: This is the wrongful detention of goods belonging to another person. This will happen when the bank fails to deliver the goods to the owner or his duly authorized agent.

This is likely to occur in a situation where the identity of the person demanding delivery is in doubt or where the depositor’s signature requesting delivery to a third party is not in order.

3. Theft: In the case of theft, there will no liability against the bailee if the there is no trace of negligence on it’s part.

4. Fraud by bailee’s employees: Loss or damage to customer’s property in safe custody maybe traced to dishonesty or carelessness of a bank employee. When this happen, the employer has vicarious liability for the wrongful act of the employee if he is acting in the course of his employment.

The fact remain that if an employee cheats or steal the property of a customer of his employer in the course of performing duties assigned to him, the employer is liable even when it knows that the employee acted dishonesty for his own benefit.

Formalities for the deposit of articles into safe custody

Banks maintain register for safe custody items. Where the items are known to the bank, they will be so registered and the depositor (bailor) is expected to sign the register.

A situation might arise where the items are deposited without covering letter, they will be registered and ticked against the covering letter. Some banks issue receipt to the bailor, and where the receipt is issued, it must be produced and given back to the banker before release is effected.

When locked box (key will be in custody of the depositor) or sealed envelope is deposited in which the contents are unknown to the bank. It will be so described in the register as well as the receipt where receipt is involved. However, these days contents unknown is no longer operational.


● Can a bank refuse a cash withdrawal

● What happens if I stop using my bank account

● Can a pending transaction be refunded

● How to stop recurring payments on debit card

That’s all on mareva injunction Ireland, Australia, and also safe custody meaning in banking.

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