The case arose from an authorised push payment (APP) fraud perpetrated by a third-party, which tricked Mrs Philipp and her husband into transferring £700,000 to fraudsters in the UAE. She sued Barclays for not exercising reasonable care and skill and for breaching its Quincecare duty, which requires a bank to stop a payment if it suspects attempted misappropriation of funds.
Lorna Bramich, senior associate, Taylor Wessing, said the Quincecare duty ‘was established over 30 years ago and from the handful of cases since, it was thought that the duty applied to corporate customers only, where an agent of a corporate entity (for example, company director) issues a payment instruction as part of a fraud on the company.
‘The Supreme Court has clarified that the duty is limited to these situations. The rationale for it arising in such situations is because the customer has given an agent authority to make a payment on its behalf and that authority could not be said to include acting dishonestly. Where an individual customer gives the payment instruction, the validity of the instruction is not in doubt’.
Simon Fawell, partner at Signature Litigation, said ‘This brings to an end a recent line of cases which have suggested a widening of the Quincecare principle and, while entirely sound in its reasoning, reduces the avenues through which victims of fraud might recover their losses.
‘Perhaps the biggest gap for victims of fraud currently is that claims against a fraudster's bank remain difficult under English law, notwithstanding the measures in place requiring banks to diligence their customers and monitor for potentially fraudulent activity.’
Gerard Heyes, partner at Farrer & Co, said there are ‘ongoing efforts by government and regulators to see that the banks play a central role in the prevention of APP fraud and the reimbursement of victims’.
David Greene, NLJ consultant editor and head of Class Action and Finance Litigation at Edwin Coe, said: ‘The banks will breathe a sigh of relief that the Quincecare liability has been restricted only to the circumstances when the fraudster acting ostensibly as the victim’s agent instructs the bank to make a payment from the victims account, and not the much wider liability determined by the Court of Appeal where the victim themselves give the instruction.
‘The one glimmer of hope for the claimant is that her case that the bank should have acted sooner to undo the payment remains an issue to be tried.’
