Judge holding gavel in courtroom

In February 2018, we reported here that the Court of Appeal had rejected a stockbrocker’s (Daiwa Capital Markets Europe Ltd (“Daiwa“)) appeal against the High Court’s decision that it owed a client (Singularis Holdings Limited (“Singularis“)) a Quincecare duty.

The Supreme Court’s recent ruling in Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2019] UKSC 50 upheld the Court of Appeal’s decision. Singularis’ Quincecare claim was held not to have been defeated by illegality, as in the circumstances, the fraud of a sole shareholder of a company should not be attributed to the company itself.

For further details regarding the facts of the case, the High Court’s decision and an explanation of the Quincecare duty, please refer to our previous article here.

Brief Facts

The dispute involved payments made by Daiwa from the client account of Singularis. These payments were made on the fraudulent instructions of a sole shareholder. Following Singularis’ liquidation, the liquidators claimed back the payments from Daiwa. Daiwa argued that Singularis was effectively a one-man company. Therefore, the fraudulent payment instructions of the sole shareholder (who was also the chairman of Singularis and a director) should be attributed to Singularis, thereby defeating Daiwa’s Quincecare duty.

Court of Appeal

The Court of Appeal unanimously agreed with the High Court’s judgment.

Daiwa could not rely on the illegality defence. There were obvious indications that the payments were fraudulent, therefore in making the payments, Daiwa had breached its Quincecare duty. The shareholder had acted independently of Singularis in his fraud, therefore Singularis was not guilty of any illegality which would have defeated its Quincecare claim.

Daiwa appealed this decision on the issue of attribution.

Supreme Court

The Court unanimously dismissed Daiwa’s appeal finding that it had breached its Quincecare duty.

Singularis was not a one-man company and its other directors were not complicit in the fraud. Therefore, the fraud of the shareholder could not be attributed to Singularis.

The Court further considered that if the law of attribution applied so as to attribute the knowledge of a fraudulent director to a company, this would effectively remove the Quincecare duty’s practical value. The whole purpose of the duty is to protect a company against this type of misappropriation of funds. Therefore, the Court held that the context and the purpose for which the attribution is relevant, should always be considered when deciding whether to attribute the knowledge of a fraudulent director to a company.


The decision of the Supreme Court seems to have been driven by public policy considerations. If regulated entities could escape from the consequences of failing to identify fraudulent payments by blaming its client for the illegal conduct of its client’s employees, this would undermine the obligations of financial institutions to reduce and uncover financial crime and money laundering.