A High Court judge has dismissed a case brought by a former political candidate, Mr. Gobin Harbhajan, against Scotiabank's closure of his account, despite it being in good standing. But here's where it gets controversial: the judge also recommended the appointment of an ombudsperson to investigate such account closures, sparking debate over banking regulations.
The case, decided on February 11, 2026, involved Mr. Harbhajan, a former candidate for the We Invest in Nationhood (WIN) party, who challenged Scotiabank's decision to close his account without cause. The bank relied on a clause in the Personal Financial Services Agreement (PFSA) that allows them to terminate accounts without reason, given 30 days' notice.
Justice Nicola Pierre ruled that the bank's decision was within its contractual rights, stating, "It is an unqualified right...not requiring the decision-maker's judgement." However, she acknowledged the issue's complexity, especially with the increasing importance of digital banking and access to government services.
Justice Pierre proposed a novel solution: an independent ombudsperson to investigate account closures, a role common in other jurisdictions. This ombudsperson would assess whether banks act fairly and reasonably, rather than relying solely on public law principles.
The judge also clarified that Mr. Harbhajan's claim of procedural unfairness was unfounded, as the bank's decision was not subject to public law review. She emphasized the bank's duty to observe procedural fairness is a public law duty, but only when administering government schemes or performing public functions.
Interestingly, the court refused to declare WIN as distinct from its members, citing a lack of evidence regarding sanctions. This decision relied on a previous High Court ruling that unincorporated political parties lack legal personality.
Scotiabank, through Mr. Vibert Jones' affidavit, admitted the account was in good standing but denied any breach or reputational harm to Mr. Harbhajan. They also refuted claims that the closure was due to his WIN affiliation or lacked a lawful reason.
The judge noted that Mr. Harbhajan failed to provide compelling evidence that his political opinion led to the account closure. She dismissed his allegation of non-compliance with the Anti-Money Laundering Countering of Financing Terrorism (AMLCFT) Act, stating these obligations are primarily owed to the state.
This case highlights the delicate balance between contractual rights, banking regulations, and political affiliations. It leaves us with a thought-provoking question: should banks have more oversight regarding account closures, and how might this impact customers' rights and the banking industry?
