Following the judgments in recent years on attribution to a company of its directors' knowledge in Bilta (UK) Ltd (In Liquidation) v Nazir [2015] UKSC 23 and UBS AG (London Branch) and another v Kommunale Wasserwerke Leipzig [2017] EWCA Civ 1567, the UK Supreme Court has once more returned to this issue in Singularis Holdings Ltd (in Official Liquidation) (a Company Incorporated in The Cayman Islands) v Daiwa Capital Markets Europe Ltd [2019] UKSC 50, in a case where a bank (Daiwa) was held liable for breaching its Quincecare duty of care to its customer, a company named Singularis, by not preventing an individual who was both the customer's sole shareholder and chairman from making fraudulent transfers of the company's assets. 

Singularis was a company registered in the Cayman Islands which had been set up to manage the personal assets of a Saudi Arabian businessman, Mr Al Sanea. He was the sole shareholder, a director and the chairman, president and treasurer; he also had sole signing powers over the company's bank accounts. Singularis had six other directors but they did not exercise any influence over the management of the company. The bank argued that Mr Al Sanea was Singularis' controlling mind and will.

In June and July 2009, Mr Al Sanea instructed the bank to make payments totalling approximately $204.5m to third parties out of monies held in Singularis' account. The payments were held by the judge at first instance to be a misappropriation of Singularis' funds (a point which was not appealed) and left Singularis unable to meet the demands of its creditors. On 20 August 2009, Mr Al Sanea placed Singularis in voluntary liquidation. On 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed. The liquidators subsequently brought a claim in Singularis' name against the bank for damages amounting to the value of the misappropriations made by Mr Al Sanea from the company's bank account.

The judge at first instance, Mrs Justice Rose, found that the bank's employees had acted honestly and therefore the bank was not liable for dishonestly assisting Mr Al Sanea. However, she found that the bank had been negligent, with Singularis being held 25% contributory negligent. As established in Barclays Bank Plc v Quincecare Ltd [1992] 4 All E.R. 363, an implied term of the contract between a bank and its customer is that the bank owes a duty of care not to execute the customer's order if it knows the order to be dishonestly given, or shuts its eyes to obvious dishonesty, or acts recklessly in failing to make inquiries. In this case, the judge found on the facts that any reasonable banker would have realised that there were many obvious, even glaring, signs that Mr Al Sanea was perpetrating a fraud on the company.

The bank argued that Mr Al Sanea's knowledge that the payment instructions were fraudulent should be attributed to Singularis. It also raised defences to Singularis' Quincecare claim against the bank, arguing that it should fail for illegality, lack of causation or because of a countervailing claim for deceit in that the bank had acted on the basis of dishonest misrepresentations made by Mr Al Sanea.

The Supreme Court (Lady Hale giving judgment) upheld the decision of the courts below that the bank was liable to Singularis.

The two 'illegalities' relied on by Daiwa were Mr Al Sanea's provision of false documents in relation to the payments and his breach of fiduciary duty towards Singularis. Relying on the leading case on illegality of Patel v Mirza [2016] UKSC 42, [2017] AC 467, the Supreme Court upheld Mrs Justice Rose's ruling that fiduciary duties are intended to protect a company from becoming the victim of the wrongful exercise of power by its officers. Lady Hale said that purpose would not be enhanced by preventing the company's recovery of the money wrongfully removed from its account. As to the second illegality – the provision of false documents – the purpose of the prohibition on making false statements was said to be to protect both the bank from being deceived and the company from having its funds misappropriated. Although the purpose of protecting the bank would be enhanced by denying Singularis' claim, Lady Hale thought that purpose was achieved through the Quincecare duty, which strikes a careful balance between the interests of the customer and those of the bank. Undermining that balance by denying the claim on the grounds of an illegality would not enhance the integrity of the law when the exceptional circumstances needed for the duty to arise and be breached are present. The power to make a deduction for contributory negligence enabled the court to make an appropriate adjustment on liability. 

As an alternative defence, the bank argued that if the fraud was attributed to Singularis, its loss was caused by its own fault and not that of the bank. The Supreme Court held, however, that the purpose of the Quincecare duty is to protect the bank's customers from harm caused by people for whom the customer is responsible. The fraudulent instruction to Daiwa gave rise to the duty of care which Daiwa breached, thus causing the loss. Similarly, the Supreme Court also dismissed the bank's countervailing claim in deceit, agreeing with Mrs Justice Rose that it was the bank's breach of duty and not Mr Al Sanea's misrepresentations that was the cause of the bank's exposure to the claim for Singularis' loss. The bank could not rely on the very fraud which gave rise to its duty to escape liability for that duty.

On the question of attribution, the Supreme Court held that Mr Al Sanea's fraud should not be attributed to the company for the purposes of the Quincecare claim. The basic principle was that a properly incorporated company has an identity and legal personality separate from that of its shareholders and directors. The company has to act through the medium of real human beings but the acts of those persons are only treated as the acts and intentions of the company in circumstances specified by its constitution, or the ordinary rules of agency and vicarious liability, or other particular rules of law. Lady Hale said that the Supreme Court had held unanimously in Bilta v Nazir that where a company had been the victim of wrongdoing by its directors, the wrongdoing of the directors cannot be attributed to the company as a defence to a claim brought against the directors – and their co-conspirators – by the company's liquidator for the loss suffered by the company as a result of the wrongdoing. The key to any question of whether to attribute the knowledge of a fraudulent director to the company is always to be found in consideration of the context and purpose for which the attribution is relevant.

The context here was the bank's breach of its duty of care to protect Singularis against this sort of misappropriation of its funds, which by definition would be done by a trusted agent of the company who was authorised to withdraw money from the account. The Supreme Court said that to attribute the fraud of a trusted agent of the company to the company would denude the duty of any value in cases where it is most needed and would be a retrograde step.


In the end, the Supreme Court’s decision was straightforward: Mr Al Sanea's knowledge was not attributable to Singularis. Consequently, the bank’s three defences – illegality, lack of causation and an equal and countervailing claim in deceit, of which Lady Hale cuttingly said none was "a very promising basis for denying liability" in any case – failed.

If Lady Hale’s judgment is looked at in the round, a common theme can be discerned. The Quincecare duty, although not the subject of the appeal, appears throughout the judgment as contextually relevant to the decisions on the other legal principles.

  • A defence of illegality, based on the prohibition on making false statements, was not available because the balance of interests achieved by the Quincecare duty satisfied the purposes of that prohibition, and would be undone by permitting a defence of illegality.

  • It would be self-contradictory to say that the liability for breach of a duty to protect a person from causing themselves harm (as in the Quincecare duty) can be avoided because the breach could not have been the cause of the harm since the victim caused it to himself.

  • As to the countervailing claim in deceit, because the existence of fraud was a pre-condition for Singularis' claim based on breach of the Quincecare duty, Lady Hale thought it would be a "surprising result if Daiwa… could escape liability by placing reliance on the existence of the fraud that was itself a pre-condition for its liability."

  • Following Bilta, the key to any question of attribution is to be found in the context and purpose for which it is relevant. Where that context is a breach of the Quincecare duty, the purpose of which is to protect the company against misappropriation of funds, attributing the fraud of the director to the company would "denude the duty of any value in cases where it is most needed", such that in a case like this, there would in reality be no Quincecare duty. Lady Hale thought that would be a "retrograde step.

The Quincecare duty by its nature will only arise and be breached in exceptional circumstances involving dishonest activity. As such, once breached, it appears the Court will take a dim view of paradoxical attempts to escape liability by reason of that very activity – this would nullify the entire purpose of the Quincecare duty. Banks should be mindful that the Quincecare duty exists to protect companies against dishonest activity by a person who is, as Lady Hale said, by definition a trusted agent of the company. This judgment is a further step in the trend to put the onus firmly onto banks to ensure the robustness of their systems for detecting and acting on potential dishonest activity, even, and perhaps especially, by those so closely connected with their customer's genuine activities.