In a much-awaited judgment, the Supreme Court has unanimously allowed the appeal in Philipp v Barclays Bank [2023] UKSC 25.
Lord Leggatt, in a judgment with which the rest of the Court agreed, described the Court of Appeal’s decision as “inconsistent with first principles of banking law”. His Lordship went on to conclude that the reasoning underlying the “Quincecare” duty is “flawed at each stage”, but that the leading cases on that duty could be explained on an alternative basis, one which focused on principles of agency.
The case concerned whether a bank owed a duty to its customer to refrain from executing an authorised payment instruction, when the bank had reasonable grounds for believing that the instruction had been induced by fraud. Mrs Philipp had been the victim of “authorised push payment” (or “APP”) fraud, by which she was persuaded to transfer substantial sums from her account at Barclays to the UAE. She alleged that there were numerous “red flags” (for example, as to the size and destination of the payments) which Barclays ought to have appreciated and warned her about, and ultimately refused to execute the instructions.
The Court of Appeal held that such a duty existed as a matter of principle, relying on the reasoning in the cases on the “Quincecare” duty.
In the Supreme Court, Mrs Philipp (supported by the Consumers’ Association) sought to justify that conclusion on a number of bases, including that APP fraud was a significant new problem, to which the common law needed to respond.
The Supreme Court rejected that approach. It agreed with Barclays, which was supported by written and oral submissions from UK Finance Ltd, that such matters were ones of social policy for the legislature, which was already active in this heavily regulated area.
The Court went on to conclude that the duty was unsupportable as a matter of principle. The “Quincecare” duty cases could only be explained on the basis that the bank did not, in fact, have a properly authorised payment instruction. That reasoning did not apply in a case like Mrs Philipp’s, as she had unquestionably authorised the payments in question.
The judgment is available below.
Sonia Tolaney KC and James Ruddell were instructed by White & Case LLP (London) to intervene on behalf of UK Finance Ltd (the trade body for the banking and finance industry in the UK).
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