In the ordinary course of events a banker is required to honour its customer's instructions and will be strictly liable for any failure to do so.  However there has been a longstanding exception to this principle: namely where a bank suspects that the payment instructions are themselves fraudulent, even if the person giving the instructions is acting within the four corners of the bank mandate and potentially where the person giving the instructions is themselves acting honestly.

On 23rd and 24th July 2019, the Supreme Court heard the case of Singularis Holdings Limited (in liquidation) v Daiwa Capital Markets Europe Limited, an appeal against the Court of Appeal’s decision that the defendant bank was liable to the claimant for US$152m under the principle set out in Barclays Bank plc v Quincecare Limited [1992] 4 All ER 363 for failing to stop fraudulent payments authorised by a director.

The panel, consisting of Lady Hale, Lord Reed, Lord Lloyd-Jones, Lord Sales and Lord Thomas, heard argument as to the scope of the Quincecare duty of care where a bank is on enquiry that fraudulent payment instructions are being given. The issue of attribution and the proper application of the principles set out by the Supreme Court and House of Lords respectively in Bilta  (UK) Limited (in liquidation) v Nazir (No 2) [2016] AC 1, and in Tesco v Nattrass [1972] AC 153 were also in play because the defendant argued that it had an ex turpi causa defence since the claimant was a “one-man” company, so the director’s dishonesty should be attributed to the claimant.

Judgment is awaited and may not be available before the end of the year; but Paul Downes QC and Simon Oakes have analysed the proceedings before the Supreme Court and will seek to anticipate the outcome of the appeal based on the judicial interventions in the course of argument.  The seminar will also consider the extent of a banker's duty to prevent fraud in this and other analogous situations.

The issue of whether and in what circumstances a banker is required not to honour its customer's mandate where fraud is suspected is a matter of increasing importance given the growth of phishing and banker impersonator confidence frauds.  This seminar is essential for anybody advising banks facing claims for negligence where the customer has been the victim of a fraud. 

Timings: 5:45pm welcome refreshments for a 6:00pm start. (please note the slightly earlier start time).  Followed by a networking reception from 7pm.