Moorwand Ltd v Gareth Anthony Hamblin & Ors

A bank or payment service provider must ordinarily execute a customer’s apparently valid payment instruction. Its duty to exercise reasonable care requires inquiry only where it has reasonable grounds to believe that an agent’s instruction is an attempt to misappropriate the customer’s funds.

An appellate court may not substitute its own assessment of evidence for that of a trial judge unless an error of principle or an evaluation outside the range of reasonable conclusions is shown. Regulatory shortcomings may be relevant facts in a Quincecare inquiry, but a trial judge does not err by concluding that, notwithstanding them, the evidence did not put the provider on inquiry.

The Hamblins were victims of an authorised push payment fraud. Their £160,000 payment was credited to an account held by RND Global Ltd with Moorwand, an electronic money institution, and was then paid away on instructions given by the fraudster.

RND was restored to the register so that the Hamblins could bring a derivative claim in its name. The trial judge dismissed the claim, finding that Moorwand was not put on inquiry that the payment instructions lacked RND’s authority. On a first appeal, Marcus Smith J allowed the claim and ordered Moorwand to re-credit the account: [2025] EWHC 817 (Ch). He later awarded interest: [2025] EWHC 2789 (Ch).

Moorwand’s second appeal principally concerned whether the High Court was entitled to overturn the trial judge’s evaluative finding.

1. Appeal allowed. Foxton LJ, with whom Nugee and Peter Jackson LJJ agreed, held that the High Court was not entitled to disturb the trial judge’s finding that Moorwand was not put on inquiry that the transfer instructions were made without RND’s authority. The trial judge’s evaluation was open to him on the evidence, including the untested joint expert report.
2. The Quincecare duty is an application of the bank’s general duty to ascertain and act on its customer’s instructions. It arises where there are reasonable grounds to believe that an agent’s instruction is an attempted misappropriation. If that threshold is met, the provider must make inquiries before paying and cannot rely on apparent authority without doing so. The trial judge was entitled to find that the threshold was not met here.
3. The High Court had wrongly treated the trial judge as having attributed the fraudster’s conduct to RND or treated the fraudster as possessing actual authority. The trial judge had instead proceeded on the premise that the fraudster lacked actual authority, but held that Moorwand could rely on apparent authority because it was not put on inquiry.
4. It would have been an error to treat the real Mr Stanfield as RND’s authorised director or member merely because his identity had been used in the incorporation documents. He had neither agreed to become a member nor consented to act as a director. It was unnecessary, however, to decide whether the fraudster himself was RND’s actual director or shareholder.
5. Although facts underpinning regulatory failures may also bear upon the common-law duty, the trial judge had not treated them as automatically irrelevant. He had accepted the expert’s view that, notwithstanding the onboarding concerns, the transfers did not suggest misappropriation of RND’s funds.
6. The court also concluded that statutory interest under section 35A could not run before RND had a cause of action. A credit balance, including one arising from a wrongful debit, is generally payable only after demand. That issue was academic because the liability appeal succeeded.

• Court of Appeal (Civil Division): Moorwand’s second appeal was allowed. The order requiring it to re-credit RND’s account was set aside.
• High Court, Chancery Division: Marcus Smith J allowed the Hamblins’ appeal from the trial judge and ordered Moorwand to re-credit £160,000 to RND’s account: [2025] EWHC 817 (Ch) . He subsequently awarded interest under section 35A of the Senior Courts Act 1981: [2025] EWHC 2789 (Ch).
• County Court: HHJ Raeside KC dismissed the derivative claim after a two-day trial.