CCP Graduate School Limited v National Westminster Bank Plc & Anor
[2024] EWHC 581 (KB)
Philipp v Barclays Bank UK PLC
12 July 2023
[2023] UKSC 25
Supreme Court
A couple was scammed out of £700,000. They blamed their bank. The court said the bank only has to follow instructions, not act as a fraud detective unless there are strong signs of something wrong. The court will look into whether the bank did enough to recover the money *after* the scam was discovered.
Key Facts
- •Mrs. Philipp and her husband were victims of APP fraud, losing £700,000.
- •Fraudsters tricked them into authorizing payments to UAE accounts.
- •Mrs. Philipp sued Barclays Bank, claiming they owed a duty to prevent the fraudulent payments.
- •The High Court granted summary judgment for the bank.
- •The Court of Appeal overturned the summary judgment.
- •The Supreme Court heard the appeal.
Legal Principles
A bank's primary duty is to execute valid payment instructions promptly.
Common law principles of banking law
A bank's duty of care applies only when the customer's instruction is unclear or leaves the bank with a choice in execution.
Supply of Goods and Services Act 1982, Consumer Rights Act 2015, common law
The 'Quincecare duty' is an application of the general duty of care, requiring inquiry if the bank has reasonable grounds to believe an agent is defrauding the customer.
Case law, particularly *Barclays Bank plc v Quincecare Ltd*
An agent's authority does not extend to acting dishonestly in fraud of the principal; dishonesty negates actual authority.
Bowstead & Reynolds on Agency, case law (*Lysaght Bros & Co Ltd v Falk*, *Reckitt v Barnett, Pembroke & Slater Ltd*, *Midland Bank Ltd v Reckitt*),
Apparent authority can be negated if the third party (bank) has reason to believe the agent is acting without authority and fails to make reasonable inquiries.
Case law (*Hambro v Burnand*, *East Asia Co Ltd v PT Satria Tirtatama Energindo*), Bowstead & Reynolds on Agency
Fraud does not negate intention; it gives the defrauded party a right to rescind the transaction, but this doesn't invalidate the instruction given to a third party.
Case law (*Shogun Finance Ltd v Hudson*, *Fox, Property Rights in Money*),
Outcomes
The Supreme Court allowed the bank's appeal.
The bank owed no duty to prevent the payments because the customer's instructions were valid, and the bank had no reason to believe they were invalid.
Summary judgment was granted for the bank on the main claim.
The bank's duty to execute payment instructions is not overridden by a duty to prevent fraud unless the bank is on notice of the agent's dishonesty.
Summary judgment was refused on the alternative claim regarding the bank's post-fraud actions.
There are factual disputes regarding whether the bank acted reasonably in attempting to recover the funds after the fraud was discovered.