By Ian Weatherall, Turon Miah, Jane Bates
The Supreme Court has held that a bank which negligently provided a favourable credit reference for one of its customers did not owe a duty of care to an undisclosed principal who acted on that reference.
In Playboy Club London Ltd & Ors v Banca Nazionale Del Lavoro Spa (the Bank), the Bank provided a customer reference through a requesting bank to the effect that its customer, HB, was financially sound and trustworthy and good for up to £1.6 million per week. The requesting bank named its own customer (Burlington) as requesting the reference. Burlington was in fact acting as an agent for an undisclosed principal, the claimant casino. The claimant sought the reference through Burlington so as to avoid disclosing the purpose of the reference, being to set up a credit facility for gambling purposes. On the strength of the reference, the claimant exchanged HB’s cheques for gaming chips. HB never had any money in the account with the Bank and the cheques he presented to the claimant were counterfeit. The claimant lost around £800,000 which it sought to recover from the Bank, HB having disappeared.