Bank held liable to casino for negligent reference article banner image

In the case of Playboy Club London and others v. Banca Nazionale Del Lavoro SPA [2014], decided last month, a bank has been held liable to a casino after a finding that it was negligent in providing an inaccurate reference for one of the casino’s customers (B).

The reference stated that B held an account with the bank and was “trustworthy up to the extent of £1.6 million in any one week”. Having reviewed the reference, the casino granted B a cheque-cashing facility (CCF). B drew down on the CCF by presenting cheques that were subsequently found to have been forgeries.

The reference was inaccurate, as B never had funds in his account with the bank. It also appeared to have been sent by a bank employee without actual authority. However, the court held that the wrongful conduct could fairly and properly be regarded as done by the employee in the course of her employment. Accordingly, the bank was responsible, whether based on apparent authority or vicarious liability. Further, even though the reference was given to the casino’s sister company, and the principal was undisclosed, there was sufficient proximity to establish a duty of care.

The court found some contributory negligence on the part of the casino; the flaws in the cheques presented by B would have been revealed if the casino had examined them more carefully, in which case the cheques would have been refused.

Damages were assessed by comparing the loss actually suffered with what the casino’s position would have been had it not granted the CCF, and then determining what element of this loss was attributable to the inaccuracy of the reference. The court held that the consequences of B’s subsequent gambling were res inter alios acta (a separate matter). Therefore, the fact that B had made significant losses at the casino did not affect the recoverable damages. In the circumstances, the casino was entitled to recover the amount paid out under the CCF, subject to a deduction of 15% for contributory negligence.