Electro Mechanical Installations Ltd v Royal Bank of Scotland

LADY JUSTICE GLOSTER: I am just about persuaded in the light of Miss Muth's submissions that it is realistically arguable that the facts of which the bank had knowledge put it on enquiry that there was a real possibility of fraud involved in the transfer; and that, accordingly, a duty of care to warn the customer arose of the nature referred to in cases such as Barclays Bank v Quincecare Ltd [1992] 4 All ER 363 and Lipkin Gorman v Karpnale Ltd [1988] UKHL 12. I am persuaded that it is realistically arguable that cases such as Redmond v Allied Irish Banks [1987] FLR 307 and Winnetka Trading v Julius Baer [2012] 1 BCLC 588 are distinguishable on their facts. In those two cases the transactions which the customer wished the bank to implement or effect were inherently risky and the risks involved were known to the customer/claimant, and were clearly risks to be assumed by the customer itself.

In my judgment there is an argument with a real prospect of success that the principles articulated in cases such as Lipkin Gorman and Quincecare are not restricted to circumstances in which the instructions were unlawful because they were given by an agent who was in fact unauthorised or acting fraudulently. It seems to me that a duty to warn can arise in other circumstances. The critical issue here is whether on the particular facts a duty to warn did arise on the facts known to the bank. With some hesitation, therefore, I give permission to appeal.