Quincecare Duty: Supreme Court rule on Stanford International Bank Ltd v HSBC Bank PLC

On 21 December 2022 the Supreme Court handed down its decision in the case of Stanford International Bank Ltd (in liquidation) v HSBC Bank PLC [2022] UKSC 34. Stanford International Bank’s (‘SIB’) appeal was ultimately struck out as it was determined that it did not suffer a recoverable loss.


The original claim was brought by Antigua-based SIB in relation to several accounts it held with HSBC Bank PLC (‘HSBC’) in London between 2003 to 2009. 

In early 2009, the Securities and Exchange Commission brought fraud charges against SIB’s Chairman, Robert Allen Stanford, for running a multi-billion-pound Ponzi scheme. Prior to the freezing of SIB’s accounts, payments totalling approximately £118.5 million were authorised and paid to SIB’s customers. It was common ground that all but £2.4 million of the £118.5 million payments in the relevant period were contractually owed and were not capable of clawback. SIB became insolvent later that year.

Through its liquidators, SIB claimed that HSBC was on notice that the payments may have been part of a fraud. As a result, SIB argued that HSBC owed it a Quincecare duty and should therefore be liable for its alleged failure to discover the fraud before the payments were made. 

SIB advanced two distinct causes of action:

  1. A negligence claim alleging breach by the Bank, of the Quincecare duty not to execute payment instructions when “on enquiry” that the payment in question may be a fraud on SIB; and
  2. An allegation that HSBC dishonestly assisted Stanford in carrying out the Ponzi scheme through alleged “corporate recklessness” and/or “blind eye” application of its policies.

The High Court struck out SIB’s dishonest assistance claim but dismissed HSBC’s application to strike out SIB’s loss claim. This led both parties to appeal the decision.

Court of Appeal Decision

On appeal, the Court found in favour of HSBC in respect of both claims.

With regards to the existence of a Quincecare duty, the Court restated that Quincecare duties are owed to customers, in this case SIB, rather than its investors or creditors. Further the Court reasoned that the payments made to SIB’s creditors prior to its insolvency were in satisfaction of existing debts. The payments, therefore, had a net neutral effect on SIB’s balance sheet and could not qualify as a loss suffered by SIB.

The Court of Appeal also upheld the High’s Court’s decision to dismiss SIB’s allegation of dishonesty stating that to attribute dishonesty to a corporation requires dishonesty or blind-eye knowledge of one or more natural persons. As such knowledge was not established, the claim was struck out.

Supreme Court Decision

SIB’s appeal to the Supreme Court proceeded on the hypothetical basis that there had been a breach by HSBC of the Quincecare duty and was concerned solely with whether a breach would have given rise to a recoverable loss. SIB’s argument evolved slightly as they alleged that their loss was not monetary, but instead was the loss of a chance to distribute the £116 million more equitably between their creditors.

The Court considered that in the hypothetical scenario, SIB may indeed have had an extra £116 million in the liquidation. SIB would, however, not have discharged any of the debts it owed to customers who received the payments. The Court concluded that the same amount of SIB’s debt would have been discharged in both the hypothetical and real-world scenario and only the distribution of the payments would have differed.

Although the judgment acknowledged the harsh result for ‘late creditors’, the Court clearly stated that the fairness or unfairness of the payments was not a matter for them to assess and was instead a matter of policy within the applicable insolvency regime. Lord Leggatt observed that "There is no way of escaping the simple truth that paying a valid debt does not reduce the payer’s wealth"[40]. Therefore, the Court reaffirmed the net asset approach to loss and, as a result, concluded that SIB did not suffer a recoverable loss.

The Supreme Court (with Lord Sales dissenting) ultimately upheld the Court of Appeal’s decision in favour of HSBC.


Ultimately, the appeal was limited to one narrow issue on loss and largely avoided comments on the scope of the duty. Nevertheless, the decision will be encouraging for financial institutions as Quincecare claims become more commonplace.

Those wishing to stay up to date with the Court’s approach to Quincecare claims should also be aware of the recent Court of Appeal case of Philipp v Barclays Bank UK Plc [2022] EWCA Civ 318 in which the scope of Quincecare duties was broadened. Philipp v Barclays was granted an appeal to the Supreme Court which is set to be heard in early February 2023. You can find a detailed analysis on the Court of Appeal decision here.


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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