The shackles re-applied: Quincecare duty back under lock and key

In the aftermath of the Court of Appeal's decision in Philipp v Barclays last year, we published an article entitled 'Quincecare unchained?'. In a much-awaited appeal, the UK Supreme Court has unanimously re-applied the manacles to the duty, writes Paul Brehony.

Paul Brehonyis a partner at Signature Litigation with nearly 30 years' experience in complex multi-jurisdictional commercial and insolvency-related disputes. Contact him on paul.brehony@signaturelitigation.com.

The 'Quincecare duty' first came to light in the Barclays v Quincecarejudgment in 1988 (although not reported until later) and sets out circumstances in which a bank may be liable to its customer for allowing payments to be made where the payment instructions are given fraudulently. In such circumstances, the customer's bank could be liable where it is 'on inquiry' (ie, a reasonable banker would have grounds to believe) that the payment may be fraudulent without first taking steps to satisfy itself that the proposed payment is legitimate. Importantly, the Quincecare duty had only ever been applied in circumstances focussing on principles of agency where the bad actor was the individual actually giving the payment instruction (eg, a company employee or director diverting corporate funds to his own personal account).