Fiona Lorraine Philipp v Barclays Bank UK PLC

A bank’s duty to execute a customer’s payment instruction is not absolute. The bank must exercise reasonable skill and care in and about execution. If reasonable grounds put an ordinary prudent banker on inquiry that an order is an attempt to misappropriate funds, the bank must refrain from executing it while making inquiries. The duty is not confined to instructions from an agent. It may apply where the customer personally gives the instruction while deceived by authorised push payment fraud. Whether the facts trigger the duty, and what reasonable banking practice required, are fact-sensitive questions. They should not be resolved summarily where disputed evidence about banking practice and the transaction is material. The duty is carefully calibrated and does not require scrutiny of every payment.

The appellant was deceived into transferring more than £700,000 from her Barclays account to accounts in the United Arab Emirates. She claimed that the bank had breached duties in contract, tort and under the Supply of Goods and Services Act 1982 by failing to identify and prevent the authorised push payment fraud.

The High Court, sitting in the Circuit Commercial Court, struck out the action on the basis that no relevant duty of care existed. It left causation for trial. The appeal concerned whether the Quincecare duty was confined to payment instructions given by an agent, and whether the alleged duty and standard of care could properly be determined without a trial.

1. Appeal allowed. The summary judgment in favour of the bank was set aside. The issue whether the duty arose on the facts was left for trial.
2. The Quincecare duty is a duty to exercise reasonable skill and care in and about executing a customer’s orders. It operates in tension with the bank’s duty to execute promptly. Where reasonable grounds put an ordinary prudent banker on inquiry that an order is an attempt to misappropriate funds, the bank must refrain from executing it while making reasonable inquiries. The duty protects the customer.
3. The reasoning supporting that duty does not depend on the instruction being given by an agent. It is capable of applying where the customer personally gives the instruction but is an unwitting victim of authorised push payment fraud. Whether the circumstances would put an ordinary prudent banker on inquiry remained properly arguable.
4. The duty is objectively based on negligence and the standard of the ordinary prudent banker. It is not limited to cases involving actual knowledge, dishonesty, recklessness or want of probity. The duty is carefully calibrated and does not require banks to question every payment or assess the commercial wisdom of each transaction.
5. Whether the relevant facts would have put the bank on inquiry, and what ordinary banking practice required in March 2018, involved disputed evidence. The pleaded policies and procedures were principally relevant to the standard of care and were matters of fact. Duty and standard were closely intertwined. A summary determination would risk conducting a mini-trial.
6. Recognition of the duty in this context would apply established principles governing a bank’s duty of reasonable skill and care. It would not create a novel duty outside a recognised category. The matter was therefore to proceed on the basis that the legal duty was arguable and its factual application required trial.

• Court of Appeal (Civil Division) allowed the appeal and set aside the summary judgment. It held that the Quincecare duty was not confined to instructions given by agents and that the factual application of the duty required trial.
• High Court, Business and Property Courts, Circuit Commercial Court struck out the action on the basis that the bank owed no relevant duty of care. The judge declined to determine causation summarily.