Typically the right will be exercised where one account is overdrawn and the other is in credit so that the bank can secure full repayment of overdraft without the need to take any further action with respect to the customer.
Most of the authorities relating to this are older cases,[9] but the rule was applied more recently in Fraser v Oystertec plc [2006] 1 BCLC 491.
Although slightly anachronistic, the rationale appears to be that the customer of the bank should not be at risk of the bank combining a short-term current account on which the customer writes cheques for daily expenses with a long-term loan account which is not due for repayment until some future time.
[1] Although there is one case which argues to the contrary, the orthodox position is that the bank does not need to provide the customer notice prior to exercising a right to combine accounts.
[10] The banker's right to combine accounts has been recognised at appellate level by the courts of various other common law jurisdictions, including Australia,[4] Canada,[7] Guyana[12] and Singapore.