Philipp V Barclays Bank: UK Supreme Court Provides Definitive Guidance On The Quincecare Duty

• Published date: 26 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Court Procedure, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Mayer Brown
• Author: Mr Chris Chapman, Ian McDonald, Stephen Moi and Lauren Theodoulou

In a keenly awaited decision, the Supreme Court has unanimously allowed the appeal in Philipp v Barclays Bank UK PLC¹ and provided important clarity on the scope of the Quincecare duty owed by banks to their customers.

The Quincecare duty is derived from the decision in Barclays Bank plc v Quincecare Ltd²(the "Quincecare Case"). In this and other similar cases, courts have held that a bank has a duty not to execute a payment instruction from a customer's agent if it reasonably believes that the instruction is an attempt to misappropriate the customer's funds.

The key issue to be determined in this case was whether the Quincecare duty could apply in cases of authorised push payment fraud ("APP Fraud"). APP Fraud arises when a customer is induced by fraudulent means to authorise its bank to transfer funds to an account controlled by the fraudster. The Supreme Court has now confirmed that the Quincecare duty does not have any application to cases of APP Fraud, where the customer itself explicitly instructs and authorises the bank to make a payment.

Background

The claimant in this case, Mrs Philipp, became a victim of APP Fraud in 2018. Mrs Philip was deceived by fraudsters, posing as representatives of the National Crime Agency and the Financial Conduct Authority, into making a payment in the sum of '700,000 to an account in the UAE. The payment was made in two tranches. On each occasion, Mrs Philipp attended a branch of Barclays Bank (the "Bank") in person and gave instructions for the international transfers to be made.

When Mrs Philipp discovered that she had fallen victim to a fraud, she brought a claim against the Bank alleging that it had breached its Quincecare duty by failing to implement policies and procedures to detect and prevent APP Fraud. The Bank argued that the Quincecare duty was limited to cases of attempted misappropriation by an agent of a customer and did not apply in situations, such as this case, where the customer had directly provided instructions to the bank.

High Court and Court of Appeal Decisions

The Bank applied for summary judgment and was successful at first instance³. The case then went to the Court of Appeal⁴ where, in March 2022, it was unanimously held that as a matter of principle the Quincecare duty could apply to any case where the bank is put on inquiry that the instructions may be an attempt to misappropriate funds. Importantly, the Court of Appeal held for the first time that the duty does not depend on a bank being...