Privy Council rejects extension of Quincecare duty of care

In recent months, the law around the Quincecare duty has been a hot topic in the courts, as highlighted in our earlier Perspectives pieces on Stanford International Bank Limited v HSBC Bank plc [2021] EWCA Civ 535 and Philipp v Barclays Bank UK Plc [2022] EWCA Civ 318.  

In summary, the general principle is that a bank can be liable if it has breached a duty to exercise reasonable care and skill in carrying out a customer’s instructions, where the relevant bank is put on enquiry that it may facilitate a fraud on the customer. The recent Privy Council decision, Royal Bank of Scotland International Ltd (Respondent) v JP SPC 4 and another (Appellants) [2022] UKPC 18, concluded that the duty owed to customers does not extend to the beneficial owner of an account, i.e. a trust sitting behind the bank’s customer.

The Quincecare Duty

The duty arises from the eponymous Barclays Bank plc V Quincecare Limited [1992] 4 All ER 363, in which it was held that a bank owes an implied duty to exercise reasonable care and skill when executing a customer’s instructions, which includes not executing payment instructions if there are reasonable grounds for believing they are an attempt to misappropriate funds.  Originally, the duty was intended to strike a balance between the desire to protect customers from fraud without imposing overly burdensome obligations on banking transactions, and whilst dormant in the courts for over two decades, since the Singularis judgment in the Supreme Court, it is now seeing a resurgence and is evolving rapidly, as the courts continue to determine the careful calibration of the competing interests.

Case background

The applicant, JP SPC 4, was a fund in the Cayman Islands (the Fund) set up as an investment vehicle through which funds were invested in low-value, high-volume litigation (the Scheme), such as claims related to payment protection insurance.  The claims were expected to yield a high profit for solicitors, which would ensure the loans would be repaid to the Fund with interest.  The Fund lent money to Synergy (Isle of Man) Ltd (Synergy), which would administer the Scheme, and which held two accounts with the Royal Bank of Scotland International Ltd (RBS).

The total investment in the Fund was claimed to be £110 million, but the investors allege only £65 million of that was applied to assisting law firms, whilst the remainder was alleged to have been moved to companies and accounts linked to two fraudsters, Mr Schools and Mr Kennedy, between 2009 and 2012.  As for the £65 million which was provided to law firms, £40 million was given to practices in which the fraudsters had an undisclosed interest.

The Fund commenced proceedings against the RBS, alleging that the money in Synergy’s accounts beneficially belonged to the Fund.  The Fund argued that a duty of care was owed to it in tort.  The duty was characterised as one of the Quincecare type, which required the Bank to take reasonable care to protect it from losses caused by the fraudulent misappropriation of the investments in the Scheme.  It was argued that the duty arose pursuant to the Bank’s knowledge that the money held in Synergy’s accounts was beneficially owned by the Fund (with RBS having identified the accounts as “high risk” at some point prior to 31 January 2012).

The application

At first instance (in an Isle of Man Court applying English law), RBS argued that the case should be struck out on a summary basis given that, as a matter of law, there was no duty of care in these circumstances.  In contrast, the Fund advocated that the duty should be extended to protect corporate clients when banks suspect fraud against individuals who are not customers, for example, beneficiaries of an investment fund.  The application was dismissed, but RBS’s appeal to the Isle of Man Court of Appeal was successful, and the Fund appealed to the Privy Council.

Privy Council decision

Quincecare duty

The decision was a robust rejection of the Fund’s case and referred to the dicta in the Quincecare judgment and the articulation of the nature of the duty.  Lord Hamblen and Lord Burrows gave the judgment (which the three remaining judges also unanimously agreed with) and highlighted the following elements which Steyn J had explained in the Quincecare decision:

  1. The duty is implied in the contractual relationship between a bank and its customer and arises under a co-extensive duty of care in the tort of negligence.
  2. The duty needed to be “carefully calibrated” to reflect the fact that it counteracts the bank’s receipt of what appears to be a “valid and proper order which it is prima facie bound to execute”. It, therefore, runs counter to a bank’s standard contractual duty, and the standard of care imposed should not place “too onerous a burden on banks”.
  3. Whilst Steyn J had referred to the law protecting “bank customers and innocent third parties”, that needed to be read in the context of the Quincecare The relevant parties were the bank and the customer.  They were in a contractual relationship, and the question was how far an implied term or a duty of care in the tort of negligence should be imposed to protect the customer. His statement was, therefore, to the effect that combatting fraud by recognising a duty owed to the customer protects not only the customer but also other victims of a fraud.

The Privy Council went on to discuss recent case law, concluding that it contained no support for the Fund’s argument:

  1. Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2019] UKSC 50: Lady Hale’s leading judgment contained “no hint” that a Quincare duty might be “owed to anyone other than the bank’s customer”.
  2. Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2018] EWCA Civ 84: the decision drew a contrast between the limited Quincecare duty of care and the potentially more wide-ranging duty of care owed by an auditor in reporting on a company’s financial statements, this was on the basis that the Quincecare duty is limited to customers only.
  3. JP Morgan Chase Bank NA v Federal Republic of Nigeria [2019] EWCA Civ 1641: the judgment was “entirely framed” in terms of the duty being owed by a bank to its customer, with “no indication” it might be owed to others. 
  4. Philipp v Barclays Bank UK plc [2022] EWCA Civ 318: this decision was handed down after this case was heard. However, the Privy Council also concluded there was nothing in it to support the extension of the duty.

The Privy Council concluded that there was no equivalent duty of care to a party who is not a customer of the Bank and that the lender had no "special level of control" over its customer.

Other grounds

The Fund sought to advance other arguments, including those based on the assumption of responsibility and accessory liability, neither of which were ultimately successful.

The Fund’s claim was therefore struck out on the basis it had no real prospect of success, and the Fund had no reasonable ground for bringing it.


Whilst this decision was made by the Privy Council it will have a sizeable impact on English law. The Supreme Court has confirmed that, whilst Privy Council decisions are not binding on any judge of England and Wales and should not override decisions of such courts, at least on common law issues, it should normally be regarded as being of great weight and persuasive value (Willers v Joyce [2016] UKSC 44). In this particular case, a majority of the judges also sit in the highest divisions of the English Courts.

As the courts continue to carefully calibrate the extent and nature of the Quincecare duty, this decision is the first in recent years to limit its scope.  We expect it will divide opinion, with some commentators suggesting that such an extension of the duty is necessary to ensure that victims of fraud have some form of meaningful protection, given the prominent role that banks play in combatting fraud at all levels. 

Hausfeld continues to work on a number of instructions in this dynamic area of law, and we expect further developments connected to the Quincecare duty in the coming months, with (i) judgment from the Supreme Court awaited in Stanford International Bank Limited v HSBC Bank plc; (ii) the first instance trial judgment awaited in JP Morgan Chase Bank NA v Federal Republic of Nigeria; and (iii) Philipp v Barclays Bank UK plc likely heading to the Supreme Court.

Perspective re Stanford International Bank
Perspective re Philipp
The Privy Council decision