Question
Smith Co Ltd has two accounts with Wellington Bank Co Ltd (WB). One is in debit, and other is in credit. Jones Ltd applies for,
Smith Co Ltd has two accounts with Wellington Bank Co Ltd (WB). One is in debit, and other is in credit. Jones Ltd applies for, and obtains, a freezing order from the High Court against Smith Co Ltd. WB does not instruct lawyers to appear in court on its behalf at the hearing of the application for the freezing order. Pursuant to that order, Smith Co Ltd's accounts with WB are frozen until further order of the court. However, the order also authorises Smith Co Ltd to make withdrawals for payments in the ordinary course of business. Smith Co Ltd makes demand on its account in credit to pay a large trade debt. Its account in credit has sufficient funds to cover the demand.
Required:
Advise Wellington Bank Co Ltd whether it is entitled to refuse to pay Smith Co Ltd, giving legal reasons.
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