Members of Quadrant Chambers will host this event in Leeds to examine two of the most important commercial cases of the last year: Sevilleja v. Marex Financial Ltd [2018] EWCA Civ 1468 and Singularis Holdings Ltd v. Daiwa Capital Markets Ltd [2018] EWCA Civ 84.  Both are presently under appeal to the Supreme Court, with argument having been heard in the spring and summer respectively, and with the judgments anticipated by the end of the year.  In addition to examining the important issues arising in, and commercial consequences of, each case, we will also anticipate the fate of the appeals and consider the wider implications of the decisions to date.

Singularis Holdings Ltd v. Daiwa Capital Markets Ltd

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, established in Barclays Bank Ltd v. Quincecare Ltd [1992] 4 All ER 363: 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.  If a bank is on enquiry as to a potential fraud, then it is under a duty to decline those payments and may be liable for failing to stop fraudulent payments that are duly authorised by a director.

The precise scope of that duty was centre-stage in this case, in which the Court of Appeal held that the defendant bank was liable to the Claimant for US$152 million for failing to stop fraudulent payments authorised by a director.   However, this was not the only issue of importance that fell for consideration.  The case also gives rise to difficult questions of attribution and the proper application of the principles recently considered by the Supreme Court in Bilta (UK) Ltd (In Liquidation) v. Nazir (No. 2) [2016] AC 1, because the defendant bank argued that it had an ex turpi causa defence, as the claimant was a “one-person” company, so the director’s dishonesty should be attributed to the claimant. 

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.  Equally important, given the explosion in the number of “one person” companies is the question of attribution of dishonesty.  Knowledge of Singularis is therefore a must for anybody advising the victims of fraud, or banks facing claims from victims of fraud.

Sevilleja v. Marex Financial Limited

This is another key commercial law case, in which the Supreme Court’s judgment (following a hearing on 8th May 2019) is keenly anticipated.  Its importance is made clear by the fact that the All-Parliamentary Group on Fair Business Banking appeared before the Supreme Court as an intervener.  The appeal lies against the decision of the Court of Appeal that a claim by a company’s creditor against an asset-stripping director was precluded by the rule against reflective loss.  Ever since the House of Lords re-stated that rule in Johnson v. Gore-Wood [2002] 2 AC 1, its precise scope has been the subject of keenly-fought judicial debate, with a number of cases being decided in an inconsistent manner.  This is the first opportunity in many years for the Supreme Court to re-consider the extent and application of the rule. 

The case itself concerns allegations by Marex that Mr Sevilleja asset-stripped two companies, by transferring money from their bank accounts in this jurisdiction into accounts in his personal control.  The effect of those transfers was that the companies were not able to pay a judgment debt to Marex.  Marex says that, by his actions, Mr Sevilleja (who is not resident in this jurisdiction) committed a tort.  Mr Sevilleja challenged jurisdiction, on the basis that the rule against reflective loss – which bars a party who has suffered a loss through a reduction in the value of their interest in a company from claiming directly against the person who caused the loss to the company – precluded Marex from showing a completed cause of action in tort.   The Court of Appeal held that a claim by creditors was barred by the rule.  The question for the Supreme Court – which carries potentially enormous consequences – is whether it was right to do so.

Timings: 5:15pm - registration, 5:30pm seminar, 6:30pm networking reception

Venue: Met 2, The Met Hotel, King Street, Leeds, LS1 2HQ