N – Negligence and scope of duty
4/6/24
LARSSON v REVOLUT LTD [2024] EWHC 1287 (Ch)
The claimant was the victim of authorised push payment (APP) fraud by which he was induced by unknown fraudsters to pay funds from his UBS account to purchase non-existent shares. The payments were made to accounts opened in third party names with Revolut and then paid away. Claims against Revolut in contract and tort were struck out. Although the claimant also held an account with Revolut, there was no contractual basis for a duty of care owed by Revolut to him in relation to payments made by him from an account with another bank to an account with Revolut held by someone else [37]. Nor was there any duty of care in tort owed by Revolut to the claimant as a third party payer even if the claimant happened to be a customer of Revolut [49]. To impose such a duty would be a radical extension of a bank’s duties with significant consequences for banking law [58]. The fact that Revolut did block one payment made no difference [60]. A claim against Revolut for dishonestly assisting a breach of trust was not struck out. It was arguable that funds obtained by fraud were impressed with a trust. The claimant was, however, required to amend his claim to identify the individual within Revolut who he said had been dishonest [77].
14/3/24
CCP GRADUATE SCHOOL LTD v NATIONAL WESTMINSTER BANK PLC [2024] EWHC 581 (KB)
A claim by a victim of authorised push payment (APP) fraud against the account holding/paying bank for breach of the so-called Quincecare duty was summarily dismissed because over 6 years had elapsed since the payment was made when the claim was started. The claimant could not rely on extension of time under s.32(1)(c) Limitation Act 1980 because mistake is not an ingredient of a claim for breach of the Quincecare duty. In any event, following Philipp v Barclays, 2023, the alleged breach of a duty was not sustainable in law. An amendment to claim breach of a duty by the paying bank to recover the sums paid was a new claim which did not arise out of the pleaded facts and could not be permitted. A claim against the recipient bank for failure to retrieve the money after notice of the fraud was within the limitation period so far as concerned payments made on one day and that claim could not be struck out as unsustainable in law.
1/2/24
WALKER v IRWIN MITCHELL LLP [2024] EWCA Civ 53
Solicitors offering advice on a helpline had no retainer with the caller but had owed the caller a duty of care. The firm had only given high-level preliminary advice which was accurate and the scope of its duty had not required it to give wider-ranging advice about steps the caller might take to protect her position before issuing proceedings and in particular steps to ensure that a tour operator notified its insurer so as to safeguard against the risk of unenforceability of any judgment later obtained if the tour operator became insolvent.
12/7/23
PHILIPP v BARCLAYS BANK UK PLC [2023] UKSC 25
A claim that a bank owed its customer a duty not to make payments which the customer had been induced to make by a fraudster (authorised push payment or APP fraud) was struck out. The duty recognised in Barclays Bank v Quincecare (1992) applies if an instruction is given by a customer’s agent, not by the customer personally. A bank is not required to consider the commercial wisdom of a transaction. It has a strict contractual duty to comply with its mandate unless to do so would be unlawful (eg by contravening money laundering regulation) or would dishonestly assist a breach of trust. If an instruction is given by a customer personally, a duty of care only exists if it is unclear or leaves the bank with a choice how to carry it out. It was not necessary to decide if a duty would exist if the bank knew facts which the customer did not, because here the customer knew the relevant facts. It was arguable that when the customer alerted the bank to the fraud, the bank should have tried to recall the payments sooner, so that part of the claim would be allowed to continue.
22/6/20
TARGET RICH INTERNATIONAL LTD v FOREX CAPITAL MARKETS LTD [2020] EWHC 1544 (Comm)
The claimant claimed losses caused by the alleged failure of the defendant to act on instructions (stop loss orders) requiring open positions in foreign exchange transactions to be closed out. The claim was dismissed. The court considered the extent to which duties under the FSMA 2000 may be relied upon as giving rise to co-extensive duties of care at common law [61]. The court rejected a submission that the COBS rules in the FCA Handbook were implied into the agreement between the parties [88]. The court considered the effect of the COBs rules on best execution [114] and held that even if they had been incorporated, they would not have been breached. Mere transmission of an instruction did not create a binding obligation on the defendant to do anything.
2/10/19
NATIXIS SA v MAREX FINANCIAL [2019] EWHC 2549 (Comm)
The claimant succeeded in a claim for damages for the defendant’s breach of contract in providing forged warehouse receipts in connection with repo transactions for the purchase of nickel. The court considered principles of common mistake [181], bailment [227], collateral contracts [251], estoppel [280], negligence [289], the impact of disclaimers [353], contributory negligence [445], the court’s approach to clauses negativing duties and liabilities [481], the reasonableness test under the Unfair Contract Terms Act 1977 [513] and mitigation [538].
24/5/17
ORAKI v BRAMSTON [2017] EWCA Civ 403
On the facts, the judge below had been right to dismiss claims by a bankrupt that that a trustee in bankruptcy had acted in breach of duty. The court left open whether a trustee in bankruptcy can be liable at common law in negligence to the bankrupt, whether the bankrupt’s only remedy is under the statutory regime in the Insolvency Act 1986, and whether the trustee can have no liability after being released from office. Obiter remarks of David Richards LJ (at [217-220]) suggest liability may well exist in negligence even after release.
22/3/17
BPE SOLICITORS v HUGHES-HOLLAND [2017] UKSC 21
A facility letter drafted by a solicitor incorrectly indicated that a loan would be used to develop land rather than to buy it. Had the lender known the truth, he would not have made the loan. But the solicitor was not liable for the lender’s loss in making the loan. The solicitor had not been instructed to advise the lender whether to enter into the loan, only to provide information relevant to the lender’s decision. The case was therefore an ‘information’ not an ‘advice’ case within the SAAMCO categorisation, and the solicitor’s liability was for the difference between the loss actually suffered and the loss which would have been suffered if the information about the loan had been right and the loan had been used to develop the property. On the facts the same loss would have been suffered because the expenditure would not have enhanced the value of the property. The loss actually suffered was therefore outside the scope of the solicitor’s duty.
27/11/15
THORNBRIDGE LTD v BARCLAYS BANK PLC [2015] EWHC 3430 (QB)
A claim for damages for mis-selling an interest rate hedge was dismissed. Considers when a bank assumes an advisory relationship [25]. On the facts the bank had given information not advice. A letter stating that the bank may from time to time provide advice did not amount to notification that it was advising. Even if advice was given, the bank assumed no advisory duty. The fact that the bank’s representative was said to be a Corporate Risk Adviser was not of significance. Disclaimers in the bank’s documentation prevented any advisory duty arising, were not exclusion clauses and were in any event not unreasonable contrary to UCTA. Any other duty to was limited to ensuring that information given was not misleading [118]. Reference in the bank’s terms of business to the agreement being subject to FSA Rules did not incorporate those rules into the terms. Nor on the facts could the bank be criticised for failing to give more information about break costs. The swap did what it was supposed to do and had not been unsuitable. The court was not satisfied that a cap would have been taken even if it had been offered so the case also failed for lack of causation.
18/2/15
BARCLAYS BANK PLC v GRANT THORNTON UK LLP [2015] EWHC 320 (Comm)
A company’s auditors owed no duty of care to a bank in relation to two reports which the auditors prepared and which contained disclaimers stating that no responsibility was accepted to anyone other than the company and its directors. The disclaimers were not unreasonable contrary to the Unfair Contract Terms Act 1977.
26/9/14
CRESTSIGN LTD v NATIONAL WESTMINSTER BANK PLC [2014] EWHC 3043
On the facts the bank had given advice, not merely information, to the claimant about interest rate swaps, and that advice had steered the claimant to taking a fixed interest rate swap. The relationship between the parties also satisfied the requirements of Hedley Byrne v Heller for a duty of care to arise. But the bank had successfully disclaimed responsibility for its advice in contract documents drawn to the claimant’s attention before the swap was concluded so the claim failed. The bank’s terms of business contemplated the bank giving advice if this was specifically agreed, but for such an agreement to arise there had to be something more than merely the giving of advice. The clauses on which the bank relied were not exclusion clauses, rather they defined the basis on which the bank was acting. Had they been exclusions clauses they would have been unreasonable contrary to UCTA 1977, especially because expert advice had not been readily available to the claimant. Had the bank not disclaimed responsibility, it would also have been held in breach of duty by recommending an unsuitable product especially because the swap had been for 10 years but the loan had a 5 year term and high break costs were payable to terminate the swap early. A cap should have been considered. Although the bank had a duty to ensure that the explanation it gave was not misleading that duty only required the bank to explain the products it was willing to sell, not other products. The bank had discharged its limited duty in that respect.
24/6/14
SAINSBURYS SUPERMARKETS LTD v CONDEK HOLDINGS LTD [2014] EWHC 2016 (TCC)
A main contractor in a building project was insolvent and the client sought to bring claims in tort directly against a director of the main contractor and a third party consultant which had advised the main contractor. The claims were struck out because the claims were for pure economic loss and neither defendant owed the claimant a duty of care to avoid pure economic loss.
BAYLEY v SG ASSOCIATES [2014] EWHC (QB)
Trust beneficiaries had derivative claims against an investment adviser for breach of duty.
20/2/13
SMEATON v EQUIFAX PLC [2013] EWCA Civ 108
Credit reference agencies do not assume a duty of care in tort to persons whose personal data they hold.
11/2/13
JEREMY D STONE CONSULTANTS LTD v NATIONAL WESTMINSTER BANK PLC [2013] EWHC 208 (Ch)
A bank which had operated accounts for a company which had operated a fraudulent investment scheme, and the bank manager responsible for the company’s accounts, were not liable to investors for dishonest assistance as they had not been aware of the fraud, nor had they been party to a conspiracy to injure the investors. There was no claim for unjust enrichment against the bank because the bank had been liable to the company for the funds which it received for the company’s account. The bank had only acted in a ministerial capacity and would also have had a defence of change of position. Nor had the bank manager acted incompetently or assumed any responsibility for information he gave so as to give rise to a claim in negligence.
5/12/12
CLEIGHTONHILLS v BEMBRIDGE MARINE LTD [2012] EWHC 3449
If parties are involved in a project but are not in a direct contractual relationship with each other, particularly in construction projects, the scope of any duty of care owed has to be seen in the contractual context and is primarily determinable by reference to what the party was employed to do. The fact that a party had acted in a breach of its contractual duties to others does not necessarily mean that party will also be liable to third parties for breach of a duty of care.
5/10/12
COMMERCIAL ADVICE WHO NEEDS IT? (2012) NLJ 1251
Considers when a solicitor has a duty to warn a client about information of potential significance in relation to a transaction in which the solicitor is instructed to act.
23/4/12
SWAIN-MASON v MILLS & REEVE [2012] EWCA Civ 498
Solicitors had no duty to advise on adverse tax consequences arising on a client’s death soon after a management buy-out when the client had not asked for tax advice and the death occurred during a routine medical procedure which the solicitors only knew about by chance.