In the context of the current unsettled law regarding the scope of the so-called Quincecare duty, a recent Hong Kong decision analysing the nature of duty is an important development. While not binding on the English courts, the lead judgment was delivered by Lord Sumption (a former Justice of the UK Supreme Court) and is likely to have influence within this jurisdiction: PT Asuransi Tugu Pratama Indonesia TBK v Citibank N.A. [2023] HKCFA 3.
Does the Quincecare duty protect individuals?
In particular, Lord Sumption’s analysis is potentially relevant to an important question currently being considered by the Supreme Court, on an appeal from Philipp v Barclays Bank UK plc [2022] EWCA Civ 318. That appeal is from a Court of Appeal finding (discussed here) that the Quincecare duty is not limited to the traditional situation where the payment instruction to the bank was given by an agent/authorised signatory on behalf of a customer. That meant that the duty is not limited to protecting corporate customers and can, in principle, extend to protecting individuals (which could have particular impact in the context of ‘authorised push payment’ frauds).
In the Hong Kong judgment, Lord Sumption considered that a bank’s duty in this area is the same regardless of whether one looks at: (a) the duty to exercise reasonable skill and care or (b) whether the bank can rely upon the ostensible authority of authorised signatories on an account. That analysis strongly suggests that the duty is limited to where instructions are given by an agent of the customer.
The Supreme Court heard the appeal in early February 2023 and its judgment is currently reserved.
Limitation and contributory negligence
Lord Sumption’s analysis in the Hong Kong decision also includes interesting discussion of :
- limitation in Quincecare claims (suggesting the limitation period will not commence until the customer demands payment from the bank of the reconstituted balance); and
- the availability of contributory negligence as a defence to Quincecare claims (suggesting it is not available because, on his analysis, the nature of the action is a claim in debt rather than negligence or other claim for damages).
For more detail on the Hong Kong decision see this post on our Banking Litigation Notes blog.
For further information, please contact:
Jan O’Neill, Herbert Smith Freehills
jan.oneill@hsf.com
