Tidal Energy Ltd v Bank of Scotland Plc [2014] WLR (D) 369

Guy appeared in the Court of Appeal in this important case, which is the first case concerning misdirected CHAPS transfers. The claimant was subject to a common fraud in which the fraudster impersonated one of its suppliers and provided it with false bank details for the payment of an outstanding invoice.

The claimant filled in a form of instruction for a CHAPS payment naming the correct beneficiary but using the wrong sort code and account number. The claimant’s bank initiated the transfer and Barclays Bank plc purported to accept the payment even though the account with that account number was held by someone completely different and the defendant made a debit entry on the claimant’s account. The claimant claimed and sought summary judgment on the basis that, as no payment had been made to its supplier, who did not even bank with Barclays Bank plc, its account should be restated. At first instance HHJ Havelock-Allan QC held on a cross summary judgment application that on the true construction of the form of instruction that the claimant had authorised its bank to pay whoever held the account and the information as to the identity of the beneficiary was irrelevant. The bank had therefore fulfilled its instructions and was entitled to debit the claimant’s account. Lewison LJ gave permission to appeal on paper because the point is of general application and a decision of the Court of Appeal was needed. The appeal was dismissed in the Court of Appeal by a majority. The leading judgment was given by the Master of the Rolls with a strong dissent from Floyd LJ. Tomlinson LJ found himself “in the invidious position of having to choose between them” and by the end of the hearing “was more or less persuaded that that instruction should be construed as Floyd LJ has done”, he ultimately however agreed with the Master of the Rolls’ conclusion albeit for different reasons. Tidal are seeking permission to appeal to the Supreme Court.