Casino succeeds on negligent reference claim against Italian bank

29/07/14

Playboy Club London Limited and others v Banca Nazionale del Lavoro SPA

Playboy Club, a London casino, has succeeded on its claim against an Italian bank, Banca Nazionale del Lavoro, for the provision of a negligent banker’s reference.

Playboy granted a cheque cashing facility to a customer in the amount of £1.25 million, allowing the customer to obtain gaming chips immediately upon presenting a cheque to the casino. Playboy did so in reliance on a banker’s reference provided by the bank to a sister company of the casino, which confirmed that the customer was good for the money. The customer drew down on this facility for the full £1.25 million, but the cheques he presented turned out to be counterfeit. It transpired that the customer had a nil balance on his account with the bank. Playboy sued the bank for providing a negligent reference. Issues arose as to whether the reference was provided at all by the bank; if so whether the bank was liable for the reference prepared by its former employee; whether the bank owed a duty of care to Playboy; the time at which the casino’s losses crystallised; and whether the losses suffered fell within the scope of duty owed by the bank.

The Mercantile Court today gave judgment for Playboy Club. Among other matters:

1. Although the Judge held that the employee who provided the reference lacked actual authority to do so, the provision of a banker’s reference fell within the scope of her apparent authority.

2. The Judge rejected the bank’s argument that no duty of care was owed to Playboy since the reference was addressed to its sister company and not to it. The Judge held that there was sufficient proximity on the facts of the case.

3. The Judge rejected the bank’s argument that the counterfeit nature of the cheques broke the chain of causation or that the losses fell outside the scope of duty owed by the bank. Subject to a modest reduction on grounds of contributory negligence, Playboy Club succeeded in recovering the sums paid away in reliance on the reference.

The judgment is here.