Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2018] EWCA Civ 84 (01 February 2018)

Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2018] EWCA Civ 84 (01 February 2018)

The fraudulent conduct and knowledge of Mr Al Sanea were not attributable to Singularis for the purposes of its claim against Daiwa. The Quincecare duty was owed by Daiwa to Singularis, and Daiwa breached that duty by negligently authorising payments without proper inquiry. The illegality defence failed as the three-stage test in Patel v. Mirza was not satisfied, and denying the claim would undermine public reliance on banks to prevent financial crime. Damages were reduced by 25% for contributory negligence due to Singularis's vicarious liability for Mr Al Sanea's fraud and the failure of other directors to intervene.

Citation
[2018] EWCA Civ 84
Parties
Claimant / Respondent: Singularis Holdings Limited (in Official Liquidation); Defendant / Appellant: Daiwa Capital Markets Europe Limited
Jurisdiction
England and Wales
Judgment Date
01 February 2018
Procedural Posture
Appeal From High Court (chancery Division, Financial List) / Court of Appeal Judgment
Outcome
Appeal dismissed; High Court judgment largely upheld
Legal Topics
Negligence, Breach of Contract, Illegality Defence, Attribution of Knowledge, Contributory Negligence, Fiduciary Duty
Banking Law Company Law Tort Law Negligence Breach of Contract Illegality Defence Attribution of Knowledge Contributory Negligence +1 more

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Parties

Singularis Holdings Limited (in Official Liquidation)

Claimant / Respondent

Daiwa Capital Markets Europe Limited

Defendant / Appellant

Procedural Posture

Appeal From High Court (chancery Division, Financial List) / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the defence of illegality is available to defeat a bank customer's claim in negligence and breach of contract
  2. 2 Whether the fraudulent knowledge and conduct of a director should be attributed to the company
  3. 3 Scope of the Quincecare duty

Ratio Decidendi

The fraudulent conduct and knowledge of Mr Al Sanea were not attributable to Singularis for the purposes of its claim against Daiwa. The Quincecare duty was owed by Daiwa to Singularis, and Daiwa breached that duty by negligently authorising payments without proper inquiry. The illegality defence failed as the three-stage test in Patel v. Mirza was not satisfied, and denying the claim would undermine public reliance on banks to prevent financial crime. Damages were reduced by 25% for contributory negligence due to Singularis's vicarious liability for Mr Al Sanea's fraud and the failure of other directors to intervene.

Court Disposition

Appeal dismissed; High Court judgment largely upheld

Orders

  • Daiwa held liable to Singularis for breach of duty of care
  • Damages reduced by 25% for contributory negligence