Philipp: A "Quincecare" Lifeline To Retail Banking Customers?

• Published date: 12 April 2022
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Criminal Law, Financial Services, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Holman Fenwick Willan LLP
• Author: Mr Rick Brown and Nicola Gare

In a somewhat unexpected judgment¹ that widens the scope of the duty of care banks owe to their customers, the English Court of Appeal has held that the duty of care established

What happened?

In January 2021, the English High Court in Philipp v Barclays Bank UK PLC [2021] EWHC 10 (Comm) (Philipp) gave summary judgment in favour of Barclays Bank (the Bank), finding in the Bank's favour that the Quincecare Duty does not apply when a customer themselves gives instructions for an "authorised push payment" (APP), rather than via a third party.

Mrs Philipp (the Applicant) appealed the decision of the High Court and, in March 2022, the Court of Appeal overturned the summary judgment and re-instated the case, commenting that the matter needed to be assessed at trial and not at a more limited summary judgment hearing.

Background

In 2018, the Applicant and her husband were informed by fraudsters posing as representatives of the Financial Conduct Authority (FCA) and the National Crime Agency (NCA) that if they moved money into certain accounts, their money would be protected from fraud. On this basis the Applicant moved GBP 700,000 from the savings account she had with her husband into an account with the Bank.

The Applicant, acting on the advice of who she thought were the FCA and NCA, then instructed the Bank, to transfer GBP 700,000 from her bank account by way of two transfers of GBP 400,000 (the First Transfer) and GBP 300,000 (the Second Transfer, collectively the Transfers) to bank accounts held in the United Arab Emirates. The Transfers were ordered separately, a few days apart from each other.

The Applicant alleged that no safeguarding questions, nor scam warnings, were asked at the time of the Transfers, which the Bank contested. The Applicant asserted that the Bank owed her a duty of care:

1. in common law in tort;
2. as implied into the contract between her and the bank; or
3. by statute under s13 of the Supply of Goods and Services Act 1982.

The High Court summarily dismissed the Applicant's claim on the basis that:

1. the Bank did not owe a Quincecare Duty to the Applicant, which only applied where instructions were given by an agent or third party; but
2. even if the Bank did owe a Quincecare Duty, the Applicant was so deceived by the fraudsters that she would not have believed the Bank had it intervened and made inquiries, and therefore there was no causation.

The Appeal

On appeal. the Applicant sought to extend the Quincecare Duty owed by banks to include APP...