It is not unusual for a bank to be asked to provide a reference as to the financial standing of a customer by a party that intends to do business with the customer. Often, however, the party requesting the reference is simply an intermediary and not the party that will ultimately rely on the reference.

In such circumstances, a question which arises is whether the bank owes a duty of care to that third party such as to enable the third party to recover from the bank for any losses it might incur as a result of relying on the reference.

The recent case of Playboy Club London Limited & Ors v Banca Nazionale Del Lavoro Spa [2016] EWCA Civ 457 is a helpful reminder of the factors the court will consider in determining whether a bank providing a reference will be taken to have assumed a duty of care to third parties who may rely on that reference.

The background

The claim concerned a reference given by Banca Nazionale Del Lavoro (the “Bank“) in relation to its customer, Mr Hassan Barakat. Mr Hassan Barakat wanted to gamble at The Rendezvous casino in Mayfair operated by Playboy Club London Limited (“Playboy“) with access to a cash chequing facility for £800,000. Before Playboy would agree Mr Barakat’s request, they required a positive bank reference for twice the amount of the facility.

The request for a reference for Mr Barakat from the Bank was not made by Playboy, but instead by an intermediary, Burlington Street Services Ltd (”Burlington“), through Playboy’s own bank, Natwest. Burlington was used by Playboy to obtain references in order to preserve customer anonymity. Burlington did not disclose the purpose of the reference request to the Bank.

The reference provided by the Bank stated that Mr Bakarat held an account with the Bank, and that he was “trustworthy up to the extent of…one million six hundred thousand sterling pounds in any one week”; the reference provided that the information was “given in strict confidential [sic]”.

After receiving the reference, Playboy approved Mr Barakat’s cash chequing facility allowing him to gamble at the casino. Mr Barakat presented counterfeit cheques to Playboy, with the effect that the casino was left out of pocket in the amount of £802,940. It transpired that Mr Barakat’s account with the Bank had always maintained a nil balance. Playboy sought to recover its loss from the Bank, claiming that the Bank owed it a duty of skill and care in preparing the reference.

The High Court Decision

At first instance, the High Court found that there was sufficient proximity between the Bank and Playboy to establish a duty of care, and that the Bank has breached that duty. The fact that the Bank was not aware of the purpose for which the reference was sought nor the existence of Playboy did not prevent a duty of care arising. Playboy was awarded damages of £802,940 less a deduction of 15% for its deemed contributory negligence.

The Bank appealed the first instance decision. There were a number of issues before the Court of Appeal, but the matter was decided on the first issue: whether the Bank owed a duty of care to anyone other than Burlington and, if so, whether that duty was owed to Playboy.

Delivering the leading judgment of the court, Lord Justice Longmore held that the Bank did not owe a duty of care to Playboy. Applying the principles for determining when a duty of care to a third party arises set out in Caparo v Dickman [1990] 2 A.C. 605, Lord Justice Longmore found that:

  • the Bank could not have assumed a responsibility to Playboy (rather than to Burlington) in circumstances where the true purpose of the reference was not revealed;
  • it was difficult, if not impossible to describe the Bank and Playboy as having a special relationship when the Bank did not know of the existence of Playboy and only knew that the reference was requested on behalf of a company called Burlington; and
  • in circumstances where Playboy did not ask for a reference in its own name in order to conceal its own interest in the matter and to protect the confidentiality of its customer, it would not be fair, just and reasonable to impose a duty of care on the Bank.

Lord Justice Longmore considered that the case could be distinguished from the classic bankers’ reference case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1946] A.C. 465 (where a duty of care to a third party was established) as it was clear in that case that Hedley Byrne’s bankers were not asking for a reference about another bank’s customer for their own purposes, but for another (albeit unnamed) party who was contemplating entering into advertising contracts with the bank’s customer.


Whilst the decision of the Court of Appeal turned very much on the facts before it (with Playboy’s desire to preserve anonymity being a crucial factor in the court’s analysis) the decision is a helpful reminder that a party seeking to rely on a bank reference should consider carefully: the means by which the reference is sought; the information provided to the bank as to the purpose for the reference being sought; and to ensure that it is clear as to which party is entitled to rely on the reference.