The Quincecare duty has become a popular tool for companies (or their liquidators) to claim against banks for funds misappropriated on wrongful payment instructions. It requires a bank to refrain from executing a payment order if and for so long as it was put on inquiry by having reasonable grounds for believing that the order was an attempt to misappropriate funds. The duty was established in Barclays Bank plc v Quincecare Ltd1 and endorsed by the UK Supreme Court (“UKSC”) in Singularis Holdings Ltd (in liquidation) v Daiwa Capital Markets Europe Ltd2 .

In 2022 and 2023, the UKSC and Privy Council delivered judgments and heard appeal in respect of the scope of the Quincecare duty. In JP SPC 4 v Royal Bank of Scotland International Ltd3 , the Privy Council confirmed that the Quincecare duty is limited to protecting the bank’s customer and does not extend to a beneficial owner of the monies in the customer’s account. In Stanford International Bank Ltd (in liquidation) v HSBC Bank plc4 , Lord Sales (giving the dissenting judgment) observed that the Quincecare duty should be kept within narrow bounds by a strict approach governing when it applies according to the standard of care under it and by careful analysis of the scope of the duty. On 1 and 2 February 2023, the UKSC heard the appeal in Philipp v Barclays Bank UK plc5 , in which the Court will decide whether the Quincecare duty will extend to the case of a victim being deceived into instructing their bank to transfer money from their account into an account controlled by the fraudster. The judgment is pending.

On 6 February 2023 the Hong Kong Court of Final Appeal (“HKCFA”) delivered the judgment in PT Asuransi Tugu Pratama Indonesia TBK v Citibank N.A.6 , which discusses the limits of the Quincecare duty – it could be time-barred and subject to claims of contributory negligence. Nonetheless, the HKCFA (with Lord Sumption giving the leading judgment) allowed the customer’s alternative claim in debt against the bank. As can be seen below, this alternative claim may present a more attractive route for unauthorised debit claims than Quincecare.

Lord Sumption also clarified the test for displacing reliance on apparent authority laid down in Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No. 2)7 and East Asia Co Ltd v PT Satria Tirtatama Energindo8 .


The final appeal arises from an action by Tugu seeking recovery of monies paid out from its bank account at the bank on the dishonest instructions of Tugu’s authorised signatories.

The mandate of the account provided that any two of the signatories could give instructions in relation to the account. Between 1994 and 1998, through 26 transfers, a total of US$51.64 million was paid out from the account to the signatories and another officer of Tugu. At the final transfer, the bank was instructed to transfer the balance and close the account, which the bank did in 1998. In 2006, Tugu informed the bank that the transfers were dishonestly authorised, and demanded payment of their aggregate amount. In 2007, Tugu commenced proceedings in furtherance of that demand.

The bank did not challenge the findings by the lower courts that by the time of the third payment instruction the bank knew enough to prevent it from relying on the ostensible authority of the signatories to direct the transfers. The Judge and the Court of Appeal found that the bank had acted in breach of its Quincecare duty by failing to make any inquiries or the necessary inquiries.

However the Judge and the Court of Appeal held that the cause of action for the wrongful payments accrued in 1998 upon the purported closure of the account (meaning that the limitation period had expired in 2004). It followed that Tugu’s claim was statute-barred when it commenced proceedings in 2007. They also held that but for limitation, contributory negligence would have lain, and assessed the contribution of Tugu’s fault at 50%.

Tugu’s Alternative Claim to Quincecare

Tugu advanced two claims, one for breach of contract or negligence relying on breach of the Quincecare duty, and an alternative claim in debt on the basis that the unauthorised debits were a nullity. Tugu’s focus in the final appeal was its claim in debt.

Tugu conceded that a claim for damages relying on breach of the Quincecare duty would be statute-barred. In any event, Lord Sumption observed that a case of contributory negligence could be advanced as a partial defence to such a claim.

However, Tugu ultimately won the alternative claim in debt.

The HKCFA found that an unauthorised debt is a nullity. The customer is entitled to disregard it and require the account to be reconstituted as it should have been. What is reconstituted is simply the bank’s records, and not the bank’s liability. The customer’s remedy is accordingly in debt for the reconstituted balance of the account, and the debt is payable on demand. In setting out this general principle, the HKCFA referred to the Privy Council judgment in Sagicor Bank Jamaica Ltd v YP Seaton9 handed down in 2022.

The HKCFA held that Tugu’s claim was not statute-barred. In its view, Tugu’s claim was essentially one for the payment of a debt owed by the bank, and it was well settled that, in the banking context, the six-year limitation period only began to run upon the customer’s demand for payment of the debt, in this case in 2006. This ruling means that the running of time for limitation purposes may be indefinitely deferred by the customer, and that an account may be dormant without activity for many years without affecting the customer’s right eventually to demand the balance. Lord Sumption acknowledged that this may be inconvenient to the banks, but it is a fundamental incident to their business.

The HKCFA rejected the bank’s argument that this case was different because the banker-customer relationship had come to an end when the account was closed in 1998. The HKCFA considered that the banker-customer relationship between Tugu and the bank had continued to subsist because:

  • The closure of the account was unauthorised, which showed an intention on the part of the bank to no longer be bound by its banking contract with Tugu. However, without Tugu’s acceptance this was insufficient to bring the contract to an end. Further, there was nothing in this case which called for the application of the principle that in exceptional cases a contract could be brought to an end by one party unilaterally; and
  • Whether the account had been closed with Tugu’s authority or not, there was no principle of law which entitled the bank to unilaterally write off a debt without paying it. The dishonest transfers were nullities, the aggregate amount of which constituted the debt that was payable by the bank on Tugu’s demand. Since the bank had never discharged this debt, it followed that the banker-customer relationship had not been effectually terminated.

On the question of contributory negligence, the HKCFA held that this defence was not available to the bank, since Tugu’s claim was one in debt which did not fall within the scope of the statutory provision for contributory negligence.

Akai Holdings and East Asia

There is long standing-authority that a person cannot rely on the apparent authority of an agent if it fails to make the inquiries that a reasonable person will have made to verify that the agent has the authority. The Privy Council in East Asia referred to this position as the “orthodox view”.

Doubt was apparently cast on the “orthodox view” by Lord Neuberger in the HKCFA in Akai Holdings. Lord Neuberger found that once apparent authority is established, the ability to rely on the representation so made out will be lost only if the third party has actual knowledge of the lack of actual authority or if that party’s belief in the agent’s authority was “dishonest” or “irrational”. The new concept of “irrationality” apparently was preferred to the orthodox test of “unreasonableness”.

The reasoning in Akai Holdings was followed in a number of English cases but was expressly not followed by the Privy Council in East Asia. The Privy Council noted that much of the criticism of Akai Holdings had considerable force.

Lord Sumption suggested that there is a misunderstanding of the reasoning in Akai Holdings. Although the judgments in Akai Holdings and East Asia offer different analyses of some of the authorities, in his Lordship’s view there is no difference between the law stated in the two cases. The “orthodox view” has always been that what a third party is entitled to rely on may differ according to the commercial context and the exigencies of business. Lord Neuberger’s preference for a test of irrationality was not intended to qualify the general principle, as expressed in the “orthodox view”. It was directed only to its application to a particular case.


It may take years for the company or its liquidators to discover misappropriation of funds based on wrongful instructions (typically by former management with dishonest intent). By then, a claim relying on breach of the Quincecare duty may well have become time-barred. Sometimes the company cannot be said to be entirely blameless and hence may be exposed to claims of contributory negligence.

Tugu illustrates that a claim in debt may present a more desirable alternative for unauthorised debit claims. In the banking context, the limitation period only begins to run upon the customer’s demand for payment of the debt. Contributory negligence is not available as a defence to a claim in debt. Following Tugu, liquidators should consider such alternative when seeking to recover misappropriated funds out of the company’s bank accounts.

Banks are expected to tighten their procedures for accepting instructions from corporate entities in managing potential risks arising out of unauthorised transfers as illustrated in Tugu.

Liquidators should also take note of Lord Sumption’s comments on the apparent conflict between Akai Holdings and East Asia, concerning claims relating to apparent authority.

1 (2010) 13 HKCFAR 479
2 [2019] UKPC 30
3 (Case ID: 2022/0075)
4 [2022] UKPC 18
5 [2022] UKPC 18
6 (Case ID: 2022/0075)
7 [1992] 4 All ER 363
8 [2019] UKSC 50
9[2022] UKPC 48

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