Law:

Section:

(a) Contract--- ----Bank fraud---Duty of care owed by bank---Scope---Bank customer, rights of---Certain fraudster induced claimant/customer to instruct bank to make authorised transfer from her account---Question as to whether bank was under a duty not to execute instruction if on inquiry that could result in misappropriation of customer's funds; whether such duty only arose where instruction was given by customer's agent; and whether bank was in breach of duty owed to customer---Scope of duty of care owed by the bank to its customers in cases of "authorised push payment" (APP) fraud stated. The claimant/respondent was deceived and persuaded by fraudsters to instruct the defendant bank, with which she had a current account, to make two authorised push payments totalling 700,000 to accounts in the United Arab Emirates. On each occasion, the payments were made after she visited a branch in person and gave instructions to transfer the money and after the defendant had telephoned her and obtained confirmation that she had made the transfer request and wished to proceed with it. By the time the fraud had been discovered the sums could not be recovered. The claimant brought proceedings against the bank, contending that there were various circumstances which should have caused it to question the transactions and to stop or delay them, or alternatively that it was in breach of duty after the fraud had been discovered in not taking adequate steps to recover the money. The trial judge granted the bank's application for summary judgment, holding that although a bank was under a duty not to execute a payment instruction where it was on notice that its customer's agent was attempting to misappropriate funds, such a duty did not arise where the instruction had been given by the customer herself. The Court of Appeal allowed the claimant's appeal and set aside the order for summary judgment, holding that it was at least possible in principle that a relevant duty of care could arise in the case of a customer instructing her bank to make a payment when that customer was the victim of "authorised push payment" (APP) fraud. It is a basic duty of a bank under its contract with a…

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