UK Supreme Court provides clear guidance on bank's liability to undisclosed third parties for credit references

The UK Supreme Court ("UKSC") has handed down its much anticipated judgment in NB Banca Nazionale del Lavoro SPA v Playboy Club [2018] UKSC 43, ruling that a bank owed no duty of care to undisclosed third parties who ultimately relied on their references.

In this instance, a bank had provided a credit reference for its client for the purposes of applying a cheque cashing facility at the London Playboy Club. The Club did not request for the reference in its own name, but through an associated company, to avoid disclosing the purpose of the reference. Subsequently, the cheques that were drawn by the client in the Club's favour were returned unpaid, and the Club suffered losses as a result. It was common ground that only the Club had an interest, given that other parties, including the associated company suffered no losses.

The issue was whether the bank owed any duty of care to the Club, which was an undisclosed third-party. The UKSC ruled in the negative, and it is likely that the Hong Kong Courts will adopt the same approach in similar cases. See our UK banking litigation e-bulletin for a more detailed discussion: https://sites-herbertsmithfreehills.vuturevx.com/34/17764/compose-email/supreme-court-provides-clear-guidance-on-liability-to-third-parties-for-bankers--references.asp