A recent case in the UK, Philipp v Barclays Bank UK PLC [2022] EWCA Civ 318, has potentially expanded the Quincecare duty of care.
The Quincecare duty requires banks to refrain from executing instructions if they have been put on inquiry that an agent representing the customer is attempting to misappropriate their funds.
Although the principle has not been explicitly adopted in Australia, Farah Custodians Pty Ltd v Commissioner of Taxation (No 2) [2019] FCA 1076 left its adoption a real possibility.
Philipp v Barclays Bank
Dr and Mrs Philipp were the victims of a fraud which persuaded them to transfer £700,000 to accounts in the UAE. Barclays Bank made the payments on Mrs Philipp’s instructions and the funds were lost to fraudsters. Mrs Philipp brought an action against Barclays for breach of the Quincecare duty.
The High Court granted summary judgment in favour of Barclay, though Mrs Phillip successfully appealed the decision. The case will now go back to the High Court for a full trial.
Mrs Philipp submitted that it is at least arguable that a duty of care does arise, describing the duty as one to act with reasonable care and skill in executing her instructions. Barclays argued that the only relevant duty relates to properly interpreting and acting in accordance with the customer’s instructions – generally when those instructions are given by an agent of a company.
Birss LJ confirmed that while Quincecare cases have generally involved fraudulent agents acting for a company, the duty is not necessarily limited to those circumstances. The Court of Appeal left open the possibility that the principle could apply where an innocent customer, who is the victim of fraud, authorises a payment. They did not however go so far as to say it necessarily did, leaving that issue to be determined at trial.
What is the impact of this potential expansion?
A subsequent English case, Federal Republic of Nigeria v JPMorgan Chase Bank NA [2022] EWHC 1447 (Comm), sought to read down Birss LJ’s potential expansion, by reaffirming that the duty is narrow and constrained.
However, with the Albanese government developing “tough new industry codes” for banks to improve consumer fraud protections, Philipp v Barclays Bank may spark renewed interest in Quincecare’s applicability in Australia. This comes as the Consumer Action Law Centre calls for the government to introduce mandatory rules for banks to prevent scams and reimburse blameless victims.
Alternatively, the judgment may encourage victims of fraud to consider fighting their case in court, in light of Birss LJ’s comment that “the purpose of the duty…is to protect the customer…It does not exist to protect the bank.”
While there are a number of uncertainties following the appeal in Philipp v Barclays Bank, we eagerly await the retrial of Mrs Philipp’s case for more clarity on this increasingly relevant area of law.
If you’ve been defrauded or have any questions about fraud law, contact us at Duxton Hill the only specialised law firm in Australia solely dedicated to pursuing claims for victims of fraud.
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