The Rural Voice, 1993-08, Page 16SEE US AT THE
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12 THE RURAL VOICE
Agrilaw
Objecting in time
What is a customer's obligation
to notify a bank of errors in its
accounting? Frequently, banks
require customers to sign a form
called a
"verification of
accounts
agreement"
which provides
that the
customer must
notify the bank
of any errors in
the bank's
monthly
statements
within 30 days
of receipt;
thereafter, the
customer is
conclusively
deemed to accep the bank's
accounting. Will such an
agreement preclude a customer
from later challenging the bank's
accounting, particularly with
respect to such issues as interest
overcharge?
Until recently, our courts have
permitted banks to rely upon
verification of accounts agreements
to prevent customers from
recovering amounts wrongfully
charged to a customer's account if
the customer has failed to provide
the bank with the requisite notice.
However, the Ontario Court of
Appeal has indicated that a bank
may not be permitted to rely upon
an account verification agreement
where representatives of the bank
knowingly participate in conduct
which results in loss to the
customer. Other cases in Alberta
and Saskatchewan have held that
customers will not be prevented
from asserting a claim for interest
overcharge, even if they have not
complained to the bank after receipt
of monthly statements. In these
cases, the courts have determined
that the monthly statement simply
did not provide the necessary
information to the customers to
enable them to determine if they
were being charged interest on a
basis different than their agreement
with the bank.
In a recent decision of the British
Columbia Court of Appeal, the
court held that an account
verification agreement must be
strictly interpreted and, in the
absence of express wording, will
not release a bank from the
consequences of its own
negligence. In coming to this
conclusion, the court stated:
"There is nothing fundamental in
the banking relationship that
would require a mistaken debit to
the customer's account to be
rectified within 30 days or not at
all. One can see that a bank
could be led into wrong banking
decisions by a mistaken credit to
the account, but there is nothing
in a standard verification
agreement that prevents a bank
from rectifying such an error at
any time. It is only if the error
favours the bank and is
detrimental to the customer that
the verification agreement
precludes rectification. If the
error favours the bank, then
credit decisions are not affected
by it.
Having regard to those
considerations, there does not
seem to have been anything in
the contractual matrix of the
bank/customer relationship in
this case that requires an
interpretation to be given to the
standard verification agreement
that would result in the releasing
the bank from the consequences
of its own negligence."
Increasingly, our courts appear
disposed to adopt such a strict
construction of account verification
agreements. Thus, while bank
customers may be deemed to have
accepted charges debited to their
accounts on monthly statements,
the courts will not imply that, for
example, such customers have
thereby acknowledged that the
loans have been properly handled in