High value Quincecare claim survives High Court strike-out: Arena Television Ltd (in liquidation) and another company v Bank of Scotland Plc and other companies; Sentinel Broadcast Ltd (in administration) v Lloyds Bank Plc [2025] EWHC 3036 (Comm)

On 19 November 2025, the Commercial Court refused applications by the Bank of Scotland and Lloyds Bank (Banks) to strike out, or obtain summary judgment on, the substantial Quincecare claim brought by the liquidators of Arena Television and Sentinel Broadcast. The Court held that the case had real prospects of success and would proceed to trial. This judgment has significant practical implications for directors’ and officers’ (D&O) liability and financial institutions’ (FI) risk management. 

Arena collapsed following the discovery of an extensive internal fraud, where Arena and its parent company allegedly raised over £1.2 billion through asset-backed lending against largely non-existent assets. Funds flowed through the Banks’ accounts, allegedly to perpetuate the fraud or benefit Arena’s directors, who fled when the scheme collapsed in late 2021, leaving lenders and counterparties exposed to significant losses.

Two sets of proceedings followed:

1. Arena Proceedings: Claims by Arena’s liquidators against the Banks for approximately £280 million for wrongfully executing payment instructions by Arena’s directors.
2. Sentinel Proceedings: Claims by Sentinel Broadcast (in administration) against Lloyds Bank alone, alleging wrongful repayments to Arena of over £1 billion.

The claimants allege, relying on the so-called Quincecare duty, that the Banks should have recognised warning signs and refused to execute the relevant payment instructions (given by Arena’s directors) and repayment instructions (given by Sentinel’s director). The duty, as clarified by the Supreme Court in Philipp v Barclays [2023] UKSC 25, forms part of a bank’s obligation to exercise reasonable skill and care when executing its customers’ payment instructions. It requires a bank to refrain from carrying out a payment instruction given by an agent if the bank has reasonable grounds to suspect that the agent lacks authority (including where the agent may be acting fraudulently).

The Banks applied to strike out the claim or obtain summary judgment, arguing that as the directors had actual authority to give instructions, the Quincecare duty was inapplicable and that Arena had suffered no loss because the company was a vehicle for the fraud. They also contended that the directors’ fraud should be attributed to Arena, so the company could not recover for payments made in furtherance of its own wrongdoing. 

The Court held that whether the directors acted within actual or apparent authority, and whether their dishonesty took them outside any authority conferred by Arena, are matters for trial. The Court also held that attribution – whether the fraud is to be viewed as “by” the company rather than “on” it – is a fact-sensitive issue for trial. 

The Court accepted that breach of the Quincecare duty is arguable on the pleaded facts, given the multiple “red flags”, including highly unusual payment activity and inconsistencies relating to Arena’s assets. The Court also opined that both the “no loss” and causation arguments were also unsuitable for summary judgment and should therefore be assessed at trial. 

For FI and D&O insurers, the judgment highlights a number of coverage challenges. 

For FI insurers, the Court’s decision reinforces that Quincecare claims remain fact-driven and difficult to dispose of summarily, particularly where allegations involve systemic fraud and complex authority and attribution issues. That means banks face longer litigation, expensive disclosure and expert evidence exercises and, therefore, higher defence costs. 

For D&O insurers, where directors are accused of fraud, any ultimate finding of fraud is unlikely to be covered by the policy.  However, in a typical D&O policy, until there is “final adjudication” – usually after all appeals have been exhausted – the fraud exclusion does not apply.  This means that insurers must continue to advance defence costs throughout the litigation, often for years, and may later face challenges in recovering those costs once the exclusion is triggered. There may also be complicated allocation issues. 

Attribution remains a key issue, with asymmetric consequences for FI and D&O insurers. If the directors’ conduct is treated as the company’s own act, the company may be prevented from recovering against third parties (the Banks in this case) – this is a result that favours FI insurers defending banks against Quincecare claims. However, for D&O insurers of a company and its directors, this is the worst outcome: they must fund all the defence costs and as the company is treated as the wrongdoer, it cannot recover from banks (for Quincecare breaches) or the directors themselves (though this is rare in any event). If there is no attribution finding, the D&O tower may share or shift the loss to FI insurers. 

The ongoing Serious Fraud Office investigation adds a further layer of uncertainty, creating potential timing and coordination issues for coverage decisions. Finally, the judgment also signals increased scrutiny of governance failures, which may lead to more claims against senior management and greater exposure for insurers across the financial institutions sector.