Barclays Bank plc v Quincecare Ltd

The main facts of the case appear in the judgment. Barclays Bank agreed to lend £400,000 to Quincecare Ltd, a company formed specifically to purchase four chemists shops. The chairman of the company, Mr Harry Stiller, caused a sum of about £340,000 to be drawn down and to be misapplied for his dishonest purposes. Mr Stiller was later sentenced to four years' imprisonment, but almost the entire sum was lost. The bank then sued the company as principal debtor, and its guarantor (a company called UniChem). Both the principal debtor and the guarantor defended the claim, and put forward counterclaims. The central issues related to the question whether the bank acted in breach of duty towards either the principal debtor or the guarantor. The trial judge, Steyn J summarised the principal issue as follows: ==Decision==

The decision of the court was given by Steyn J. Having identified the central issue from the outset, much of the decision was a detailed review of the evidence to consider to what extent the bank knew, or ought to have known, of the fraudulent designs of Quincecare's chairman. This included a review of the dealings of the bank with Mr Stiller, and also consideration of expert evidence of the usual customs and practices of bankers. Although the company and its guarantor advanced a number of different defences, all of which were addressed in the judgment, the most important aspect of the judgment in terms of jurisprudence was the decision in relation to whether or not the bank was in breach of its duty to its customer by failing to be alive to possible fraud, and the test laid down by the court to be applied. The judgment briefly reviewed the principal authorities, being Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 1 WLR 1555 and Karak Rubber Co Ltd v Burden (No 2) [1972] 1 WLR 602, and the more recent first instance decision in Lipkin Gorman (a firm) v Karpnale Ltd [1987] 1 WLR 987 (subsequently appealed after the decision in Quincecare was handed down). In an oft-cited passage, Steyn J held that: He went on to stress that "trust, not distrust, is also the basis of a bank's dealings with its customers", citing with approval similar comments from Bowen LJ in Sanders Bros v Maclean & Co (1883) 11 QBD 327 at 343. Accordingly, he dismissed the defences and counterclaims of the defendants and gave judgment for the bank in the amount of the loan, plus interest and costs. ==Authority==

Until 2023 the decision in Quincecare had been broadly accepted as authoritative ever since it was handed down. It was recognised as authoritative by leading academic texts. Philipp v Barclays Bank Quincecare was considered in a unanimous decision of the Supreme Court, in which Lord Leggatt explained that attempts to extend the so-called Quincecare duty to situations where the customer gives payment instructions directly, instead of via an agent, are misconceived. The bank's obligation is only to carry out its customer's instructions. "It is not for the bank to concern itself with the wisdom or risks of its customer's payment decisions." Where payment instructions are received through an agent, then the bank has to follow the agent's instructions, unless the agent is attempting to defraud the customer, in which case the agent will have no actual authority to act. Even then, the agent will still have apparent authority, unless there are facts apparent to the bank which suggest dishonesty by the agent; only then will the bank have a duty to exercise reasonable skill and care in enquiring into whether the instructions have been given with its customer's authority. The court rejected the notion that Quincecare requires banks to protect customers from their own decisions when they have been tricked into sending money to a fraudster. ==Footnotes==