Fiona Lorraine Philipp v Barclays Bank UK Plc
| Jurisdiction | England & Wales |
| Judge | Russen |
| Judgment Date | 18 January 2021 |
| Neutral Citation | [2021] EWHC 10 (Comm) |
| Docket Number | Case No: CC-2020-BRS-000004 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 January 2021 |
[2021] EWHC 10 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN BRISTOL
CIRCUIT COMMERCIAL COURT (QBD)
Bristol Civil & Family Justice Centre
2 Redcliff Street
Bristol BS1 6GR
HH JUDGE Russen QC
(Sitting as a Judge of the High Court)
Case No: CC-2020-BRS-000004
Hugh Sims QC (instructed by Squire Biggs Law Limited) for the Claimant
Alexia Knight (instructed by Dentons UK and Middle East LLP) for the Defendant
Hearing dates: 26 th and 27 th October 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HH JUDGE Russen QC
HHJ Russen QC:
Introduction
The claimant ( Mrs Philipp) is the victim of a so-called “APP fraud” which was perpetrated against her in March 2018 and which has led to her losing £700,000. She made two international payments from her bank account which the fraudster (or fraudsters) deceived her into making in her belief that the monies would be safe and that she was assisting an investigation by the Financial Conduct Authority and the National Crime Agency. Her husband ( Dr Philipp) is just as much a victim of the same fraud because the monies lost to the couple represented the greater part of a sum of £950,000 held in his investment account with Tilney Financial Services (“ Tilney”) until very shortly before the £700,000 was transferred by Mrs Philipp by payments of £400,000 and £300,000 to separate bank accounts in the United Arab Emirates. The fraud extended to inducing Dr Philipp to make the transfer of that larger sum to his wife from his account with Tilney.
However, Mrs Philipp is the only claimant in these proceedings because she was the sole holder of the bank account with the defendant, Barclays Bank (“ the Bank”), into which the proceeds of Dr Philipp's financial investment were paid and out of which Mrs Philipp was induced by fraud to make the two international payments.
The acronym “APP” stands for “authorised push payment”. As will be apparent from my analysis below of the parties' rival legal contentions, the word “authorised” has some significance in this case.
In its December 2016 Response to a Which? Super-complaint about “Consumer Safeguards in the Market for Push Payments”, submitted to it in September 2016, the Payment Services Regulator (“ PSR”) said the following which assists in identifying the characteristics of an APP fraud:
“2.2 Push payments are payments where a customer instructs their bank to transfer money from their account to someone else's account. In contrast to push payments, pull payments are payments where the person who is due to receive the money instructs their bank to collect money from the payer's bank.
2.3 Both push and pull payments can either be authorised or unauthorised. An authorised payment is one where the customer has given their consent for the payment to be made – and this can include situations where the customer has been tricked into giving that consent. An unauthorised payment is one made without the customer's consent – for example, a payment made due to bank error or one made using a stolen payment card.”
The PSR's Response said that push payments from one payment services provider (“ PSP”) to another were typically made by a consumer using the Faster Payment Scheme, CHAPS or “On-Us payments” (where the payer's PSP and the payee's PSP are the same entity and internal systems are used). A later paper published by the PSR in February 2018 referred to APP fraud as being the second biggest type of fraud reported by UK Finance (the trade association for the UK banking and financial services sector) after card fraud. That paper was produced in anticipation of the banking industry developing a voluntary system for reimbursement for victims of APP fraud which became the Contingent Reimbursement Model Code for Authorised Push Payment Scams (“ the CRM Code”). The CRM Code was introduced in late May 2019 and therefore more than a year after the two payments in this case. In any event, the code does not extend to international payments.
On the PSR's categorisation, the APP fraud in the present case involved a “malicious payee”, operating a scam, rather than payments “maliciously misdirected” where the payer thinks he is paying a legitimate payee (such as a trade supplier) but is tricked into paying some other account.
The PSR had treated the focus of the Which? Super-complaint as being upon fraud cases involving consumers in the UK transferring money between two UK bank accounts and the observation about the typical methods of payment was made in that context. In this case the international transfers made by Mrs Philipp to the bank accounts in the UAE were made using “BIPS Priority”, the Bank's international payments system.
In these proceedings Mrs Philipp seeks to hold the Bank accountable in damages for the loss she has suffered by making the two payments. In very simple terms, her position is that the Bank failed to comply with a suggested duty upon it to protect her from their financially devastating consequences. She says the Bank's observance of that duty would have led to those authorised and ostensibly freely willed transactions being questioned further by the Bank and, as a consequence, either stopped or delayed. If the international transfers had at least been delayed, she says she would have had the chance of recovering the monies before they reached the hands of the fraudster. On this basis, Mrs Philipp says she has a claim for damages in respect of the £700,000 plus interest or at least one which reflects the loss of that chance.
The Bank says that the claim is misconceived. It says that the alleged duty to protect Mrs Philipp from the consequences of the payments willingly made by her in reliance upon the fraudulently induced belief is one which is not recognised in law, and should not be recognised, not least because it conflicts with the established duty upon a bank to comply with its customer's mandate. The Bank also says that Mrs Philipp's willingness to make the payments, in the circumstances outlined below, is a reason why her claim must inevitably fail as a matter of causation. The alternative case based upon the loss of a chance is sought to be met by the Bank with the argument that there was no prospect of recovering the monies from the fraudster by the time Mrs Philipp became disabused of her belief. The Bank's confidence in its position on these points has led it to issue an application for the dismissal of the claim.
The Bank's Application
Soon after the close of pleadings in the case, on 20 August 2020, the Bank issued its application for Mrs Philipp's claim to be struck out, under CPR 3.4(2)(a), and/or that summary judgment be entered on the claim in favour of the Bank, under CPR 24.2, on the basis that that there are no reasonable grounds for bringing the claim or no real prospect of success on the claim.
The application is supported by the witness statement of Ms Teresa Stothard of Dentons, the Bank's solicitors. Ms Stothard identifies the absence of a legal duty of the kind alleged by Mrs Philipp and what she says is a fanciful case on causation (even if such a duty was owed and was breached) to say that the claim is without merit.
Exhibited to Ms Stothard's statement were notes which Dr and Mrs Philipp gave to the police (“ the Police Notes”) after they came to accept that they had been the victims of fraud.
The witness statement of Mr Grant Squire of Squire Biggs was served on behalf of Mrs Philipp opposing the application.
The Bank had objected to much of Mr Squire's statement on the grounds that it strayed into inadmissible argument, engaged in a protracted commentary on the documents and sought to give expert evidence by reference to “expert evidence” from Mr Nigel Brigden whose report (“ the Brigden Report”) was exhibited to Mr Squire's witness statement even though the court had not granted permission for expert evidence. There is considerable force in these points. Counsel for the Bank, Ms Knight, cited the decision of Mr John Kimbell QC in Cathay Pacific Airlines Ltd v Lufthansa Technik AC [2019] 1 WLR 5057, [4]–[7], where the deputy judge commented upon the desire of the Business and Property Courts to eliminate the service of witness statements which stray into argument and a commentary upon the documents.
Reading Mr Squire's witness statement certainly reinforces the impression that the outcome of his client's claim really turns upon questions of law. In saying that I do not ignore Mr Squire's point that full disclosure by the Bank is required before a trial on the evidence if Mrs Philipp's case on the law is correct or has a real prospect of being shown to be correct.
The Brigden Report was directed to establishing Mrs Philipp's case as to what steps the Bank's employees ought to have taken, on her separate visits to the two branches at which instructions to make each payment were given, to satisfy themselves that the payment was not part of a scam. Mr Brigden's view is that the facts I summarise below, by reference to the Police Notes, were such as to raise concerns about both money laundering and APP fraud and that a properly trained branch employee “ ought to have readily identified the risk factors involved on the basis of the information provided to them …. and escalated matters to more senior and dedicated fraud officers within the Bank.”
At the outset of the 2 day hearing of the Bank's application I was required to...
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