The Court of Appeal has handed down judgment in the second appeal in Moorwand Ltd v Hamblin & Ors[1], a case arising from an authorised push payment (“APP”) fraud. It restored the original trial judge’s dismissal of a claim brought by victims of an APP fraud, overturning the intermediate appeal judgment of Mr Justice Smith.
The case concerns the so-called “Quincecare duty”, the duty on a bank to refuse to comply with a payment instruction in circumstances where it is put on inquiry that the instruction may be part of a fraud. The trial judge determined the duty, when triggered, applies equally to payment institutions, like Moorwand, and this was not an issue in the appeal.
Background
In 2017, fraudsters used the stolen identity of a Mr Stanfield to incorporate shell company RND Global Ltd (“RND”), naming Mr Stanfield as a director. They then opened accounts for RND with Moorwand, an FCA-regulated e-money institution, despite initial concerns from Moorwand (e.g. that a proof of address document provided was fake). The fraudsters then induced Mr and Mrs Hamblin to pay just under £160,000 into RND’s account under a bogus investment scheme. The money was rapidly dissipated to third parties.
As the Hamblins were not Moorwand’s customer, they could not bring a direct claim against Moorwand for breach of the so-called “Quincecare duty”. Instead, the Hamblins brought their claim by way of a derivative claim, standing in the shoes of RND to allege that Moorwand had breached its “Quincecare duty” to RND.
The trial judge dismissed the claim, finding that Moorwand had not been put on inquiry of the fraud. On appeal to the High Court, Mr Justice Smith reversed that decision and ordered Moorwand to restore the monies paid out from RND’s account.[2] Moorwand then brought a second appeal to the Court of Appeal.
Issues before the Court of Appeal
The key issues before the Court of Appeal were, in summary:
- Pleadings ground: whether the Hamblins’ case was pleaded narrowly such that the question of whether Moorwand was put on inquiry was not properly before the court;
- Agent/principal ground: whether the fraudsters’ use of the accounts was attributable to RND; and
- The “ipso facto” ground: whether Moorwand’s breaches of regulatory and anti-money laundering (“AML”) duties were relevant to the “on inquiry” consideration.
The Judgment
Pleadings ground
The Court of Appeal found that the Hamblins had pleaded a general case that Moorwand was put on inquiry that the payments were not authorised by RND.
Agent/principal ground
Mr Justice Smith had held that the trial judge wrongly equated the fraudster with RND, contrary to the established principle that a dishonest agent’s knowledge is not attributed to an innocent principal.[3] The Court of Appeal found that this was not what the trial judge had done. Rather, he had rightly identified that the relevant question was whether Moorwand was put on inquiry that the payment instructions were given without RND’s authority.
The “ipso facto” ground
The Court of Appeal found that it would be an error of law to treat Moorwand’s breaches of regulatory and AML duties as irrelevant the question of whether Moorwand had breached its “Quincecare duty”. However, the trial judge had not made that error. He had considered Moorwand’s onboarding failings but concluded that, notwithstanding those failings, there was no reason for Moorwand to suspect misappropriation of RND’s funds.
Overall finding
As a result, the trial judge’s finding that Moorwand’s “Quincecare duty” had not been engaged (because it was not put on inquiry) stood. Moorwand’s appeal was allowed.
In reaching that conclusion, the Court of Appeal noted – without needing to decide – two related questions it left open for future cases: the actual authority of those controlling RND, and whether (and how) a Quincecare-type duty might apply to payment instructions processed without human intervention.
Commentary
Whilst this decision turned on a technical approach to when appellate courts should interfere with a trial judge’s evaluation of the facts – concluding, in this case, that they should not - the run of Moorwand decisions offers limited guidance on fraud claims against payment institutions. Instead, they identify important questions that will continue to require determination in future cases. In particular,
- When a modern payment institution is put “on inquiry” so as to trigger a Quincecare duty.
- The fact-specific circumstances where a (novel) derivative claim mechanism is available.
- The actual authority of directors where the company (who was Moorwand’s customer) is established as vehicle of fraud from the very outset – an issue left open here, given that Mr Stanfield had consented to being a director and that the fraudsters’ identity was never determined.
- What, if any, monitoring duty there might be where the payments instructions were implemented without human intervention – a point raised but left undecided in this case for want of evidence or findings on how the payments were processed.
For victims affected by APP fraud, the judgment is a reminder that recovery claims against payment institutions remain uncertain and carry significant costs risk.
Nevertheless, for payment institutions, maintaining robust and well-documented KYC/AML onboarding files and ensuring internal red-flag communications are properly escalated and resolved is key to avoiding similar claims in future.
The Court of Appeal also noted a stark disproportion in costs (around £1 million spent to recover just under £160,000), a reminder of the litigation risk involved. Jackson LJ Cited the House of Lords’ past disapproval of disproportionate litigation costs, expressing hope that flagging the issue might help others avoid similar outcomes.
Article co-authored by Jonathan Wright, Trainee Solicitor.
[1] [2026] EWCA Civ 942 (link)
[2] Hamblin & Ors v Moorwand & Ors [2025] EWHC 817 (Ch) (link)
[3] From Bilta v Nazir [2015] UKSC 23 (link), Singularis v Daiwa [2019] UKSC 50 (link)
