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The Quincecare duty is applied in United Kingdom since case Barclays Bank plc v Quincecare [1992] 4 All ER 363, issued back in 1992. In the most recent decision Fiona Philipp v Barclays Bank UK plc narrows the scope of application of the Quincecare duty.
In the case of Barclays Bank plc v Quincecare Limited [1992] 4 All ER 363 the Court decided that a Bank has the duty not to follow its client instructions where the payment or the “banking mandate” is made because of fraud on the customer, namely “[..] a banker must refrain from executing an order if and for as long as the banker is “put on enquiry” in the sense that he has reasonable grounds for believing that the order is an attempt to misappropriate the funds of the company [..].”
Specifically, according to Quincecare Duty, a Bank would be under a contractual and tortious duty not to follow and comply with the instructions of their clients, where there are reasonable grounds for believing that the instructions were an attempt to misappropriate the money of the customer, in the sense that there is an implied term in the banking contract between the customer and the Bank, that a Bank owes to exercise its duties against its client with reasonable duty.
In the following years, the Quincecare duty was raised again in different cases before the UK Courts by the Bank’s customers. In the recent JP Morgan v The Federal Republic of Nigeria [2019] EWCA Civ 1641, the Court of Appeal decided that the Quincecare duty can be excluded, but there is a need for the exclusion to be made clearly (see also Singularis v Daiwa [2019] 3 WLR 997 where is the first case in which it has been found to be breached).
In the most recent Fiona Lorraine Philipp v Barclays Bank UK PLC [2021] EWHC, Mrs. Philipp after believing a fraudster that he was working on a secret investigation with the National Crime Agency to uncover a fraud within HSBC, she transferred large amounts of money to accounts in the United Arab Emirates by visiting different branches of Barclays on separate occasions.
After the fraud was discovered, several weeks later, Mrs. Philipp filed a claim against her Bank claiming that the Bank breached the Quincecare duty, namely the Bank’s duty to prevent her loss by asking her questions or investigating the recipient of the money.
The Court of First Instance decided that “the Quincecare duty can properly be used to impose a higher (or more specific) set of standards which dictate that, in certain defined circumstances, the bank is obliged to question the customer’s instructions. It is a duty of care framed by concepts of knowledge (actual or constructive) rather than further negligence in failing to follow the rules of some code. [..] where the cause of the customer’s loss is her own desire to make the payments to their intended recipients. The Supreme Court said nothing about a bank protecting an individual customer (and her monies) from her own intentional decision. If the Quincecare duty was to be supported by matters going beyond the honest and reasonable conduct of the ordinary prudent banker then in my judgment it would have to be by reference to some form of industry-recognized rules from which a bank could identify the circumstances in which it should not act (or act immediately) upon its customer’s genuine instructions.”
The Fiona Lorraine Philipp v Barclays Bank UK PLC [2021] EWHC is important as it narrows the scope of application of the Quincecare duty and underlies that it does not impose an obligation to the bank to investigate the intentions of their clients or the recipients of the money. Otherwise, the effectiveness of the banking transactions would have been endangered. Furthermore, the Quincecare duty of a Bank is not extended to individuals, making a paying order and consequently, a Banker does not have the obligation to investigate the client’s intentions, where the case concern an individual. To the contrary, where an agent is making a payment instruction then, when there are reasonable grounds to believe that there is a misappropriation of funds, e.g., from the Director of a Company, then the Bank has the contractual obligation according to “Quincecare duty” to examine whether there is a misappropriation of funds.
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