Lawyer Monthly - April 2022

37 APR 2022 | WWW.LAWYER-MONTHLY.COM QUINCECARE DUTY EXPANDED: WHAT ARE THE IMPLICATIONS FOR BANKS? Lambi Petroleum Ltd. The couple had been convinced that they were moving money into safe accounts to protect it from fraud. Having no recourse to the fraudster, Mrs Philipp brought a claim against Barclays for breach of its duty to exercise reasonable care and skill when executing her requests. It was argued on her behalf that the bank’s duty was derived from common law tort or by way of statute under section 13 of the Supply of Goods and Services Act 1982, and that the duty was a species of the Quincecare duty established by the High Court in the well-cited case of Barclays Bank v Quincecare [1992] 4 All ER 363. The Quincecare duty requires a bank to exercise reasonable care and skill in carrying out a customer’s instructions, including to refrain from acting on the customer’s instructions in circumstances where it has been put on inquiry. The High Court Judge dismissed the claim and granted summary judgment in favour of the bank, finding that: (1) The duty contended for by Mrs Philipp was not a species of the recognised duty in Quincecare to exercise reasonable care the necessary questions whenever any payment instruction was authorised by the customer attending the bank in person, regardless of the sum involved. Mrs Philipp appealed. The Decision of the Court of Appeal Setting the summary judgment aside, the Court of Appeal held that as a matter of law the duty identified in Quincecare, which is a duty on the bank to make enquiries and refrain fromacting on a payment instruction in the meantime, does not depend on whether the bank was instructed by an agent of the customer or the customer themselves. It therefore decided that it was possible, at least in principle, that a relevant duty of care could arise in the case of a customer who instructs her bank to make a payment when that customer has themselves been the victim of APP fraud. The right occasion on which to determine whether the duty in fact arises is at trial. The question to be answered at trial will be whether the bank was put on inquiry by virtue of the facts and circumstances present and known by them at the time of the transactions, including the applicable banking practices, that executing the order would result in Mrs Philipp’s funds being misappropriated. Commentary This decision of the Court of Appeal extends the scope of the duty imposed on banks in Quincecare to include instances where individual customers have themselves authorised the bank to transfer money as a result of APP fraud committed against them and appears to suggest a willingness on the part of the English courts to confront increasing levels of APP fraud head-on. This extension of the duty imposed on banks will come as welcome news for victims of APP fraud, particularly individuals, but is likely to receive a less enthusiastic response from banks and other financial institutions which may find themselves reimbursing customers for losses caused by fraudsters. and skill when executing a customer’s instructions because that duty only relates to properly interpreting, ascertaining and acting in accordance with those instructions. (2) Quincecare is irrelevant because it only arises when the instructions are being given by an agent. (3) The duty contended for by Mrs Philipp would be unworkable in practice on the basis that it would be commercially unrealistic to require bank staff to ask This extension of the duty imposed on banks will come as welcome news for victims of APP fraud.

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