Philipp v Barclays Bank UK PLC: The "Quincecare" Duty Survives But The Supreme Court Rules That It Does Not Extend To Victims Of APP Fraud

• Law Firm: Travers Smith LLP
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Court Procedure, White Collar Crime, Anti-Corruption & Fraud
• Author: Ms Stephanie Lee, Natalie Puddicomb and Sara Meredith
• Published date: 07 August 2023

On 12 July 2023, the Supreme Court handed down its eagerly awaited judgment in Philipp v Barclays Bank UK PLC [2023] UKSC 25. As many had anticipated, the Supreme Court overturned the Court of Appeal's decision - granting summary judgment in favour of Barclays Bank (the "Bank") - holding that the Bank did not owe a duty to Mrs Philipp in respect of her own payment instructions. The Supreme Court did, however, permit Mrs Philipp to proceed with her alternative claim based on the Bank's alleged failure to act promptly to try to recall the payments after the fraud was discovered.

The Supreme Court held that the Quincecare duty does not extend to so-called "authorised push payment" (APP) fraud, whereby the victim is induced by fraudulent means to authorise their bank to send a payment to a bank account controlled by the fraudster. Pursuant to the first principles of banking law, it is a basic duty under a bank's contract with a customer to make payments from the credited account in compliance with the customer's instructions. That is a strict duty. The bank must carry out the customer's instruction if the customer itself has authorised and instructed the bank to make payment; "[i]t is not for the bank to concern itself with the wisdom or risks of its customer's payment decisions".

The Supreme Court noted that the Quincecare duty is simply an application of this general duty of care owed by a bank to "interpret, ascertain and act in accordance with its customer's instructions". Where a bank is put on inquiry that a payment instruction, given by an agent purportedly on behalf of the customer, is an attempt to defraud the customer, the bank's duty is to refrain from executing the instruction without first making inquiries to verify that the instruction has in fact been authorised by the customer. This principle cannot extend to a customer who is a victim of APP fraud, since the validity of the instruction is not in doubt.

1. Background
2. High Court and Court of Appeal's decisions
3. Supreme Court decision
4. Commentary

1. Background

Mrs Philipp, a music teacher, and her husband Dr Philipp, a retired physician, were deceived by a fraudster, JW, out of the bulk of their life savings. JW instructed them to transfer '700,000 into an account in Mrs Philipp's name with the Bank. Shortly thereafter (on 10 March 2018), acting on JW's suggestion, Mrs Philipp went in person to a Bank branch and instructed the Bank to transfer '400,000 of that money to a bank account in the United Arab Emirates ("UAE"). Three days later, she went in person to a different branch of the Bank and instructed them to transfer the remaining '300,000 to another bank account in the UAE. The Philipps had been convinced by JW that such transfers were necessary to protect their money from fraud. On each occasion, before making the transfer, the Bank telephoned Mrs Philipp to seek her confirmation that she had made the transfer request and wished to proceed with it, and she provided such confirmations.

A striking feature of the facts in this case is that Mrs Philipp and her husband were even persuaded by JW not to cooperate with the police when the police warned them that a fraud was being perpetrated. However, following a third visit from the police, the Philipps came to realise they had been victims of a fraud. Mrs Philipp notified the Bank of this on 27 March...