Philipp v Barclays Bank was argued in the UK Supreme Court on 1-2 February 2023.  Judgment will affect the circumstances in which victims of push payment frauds can look to their banks for recovery.

The appeal concerns the basis and scope of the duty propounded by Steyn J in Quincecare v Barclays Bank [1992] 4 All ER 363, obliging banks to refrain from executing customers’ order so long as ‘put on enquiry’ that they may be an attempt to misappropriate funds.

Ms Philipp contends that the duty extends to ‘push’ situations in which customers are deceived into giving payment instructions which appear to the bank to be authorised.  The claim was struck out at first instance on the basis that it would not be not fair, just and reasonable to extend the duty that far (coincidentally followed in Hong Kong: Luk Wing Yan v CMB Wing Lung Bank [2021] HKCFI 279).  The Court of Appeal reversed that decision, however, and Barclays appeals to the Supreme Court.

The judgment may also re-conceive the duty’s juridical basis. The orthodox view is that terms of reasonable care and skill in and about executing orders are implied to banking/customer contracts, existing also in tort.  Lords Reed and Leggatt expressed concern with this position during argument, proposing instead (1) an agency model, under which the real question is whether there is ‘authority’ to make the payment order in question and (2) a single duty model, under which banks simply agree to execute payment orders, but impliedly agree (as reasonable agents would) not to give away their principal’s monies to fraudsters. 

Quincecare was all but forgotten for ~ 25 years in England and Wales. But in Hong Kong it has been deployed with varying degrees of success, including where:

• the bank had notice that the customer had ceased trading (Dao Heng Bank v Liu Lai Shing [2001] HKCFI 457)

• a practice of telephoning the customer had been departed from (Oriental Pearl South Africa Project CC v Bank of Taiwan [2006] 4 HKLRD 242)

• ambiguity in an instruction had not been clarified (Chiu Chit v Bank of China [2009] HKDC 204)

• drawdown limits in a security agreement between the bank and customer were contravened (Bank of East Asia v Labour Buildings & Ors [2008] HKCFI 54)

• unusual activity or ‘red flags’ were said to have arisen (HSBC v SMI Holdings [2020] 1 HKC 515; PT Asuransi v Citibank NA [2022] HKCA 510).

Josh Baker’s practice includes civil fraud, asset tracing and recovery and he advises in the banking and financial services context.