201605.31

£800,000 Casino Loss Triggers Credit Reference Test Case

CasinoIn a decision which will cause serious concern in the gaming industry, the Court of Appeal has ruled that a bank which gave a gambler a glowing credit reference did not owe a duty of care to the casino where he lost over £800,000 at the roulette wheel.

In order to preserve the confidentiality of its clients, many of whom wished to keep their gambling activities private, the casino routinely requested bank references anonymously, through an intermediary. In the particular case, the bank had provided an unusually positive reference, which described the punter as financially healthy and trustworthy to the extent of £1.6 million in any one week.

Reassured by the reference, the casino extended cheque cashing facilities to the punter, who lost heavily. The cheques that he had presented were counterfeit and bounced when presented. His account at the bank had in fact never risen above a nil balance. He had flown out of the country before the truth emerged and all the casino’s efforts to pursue him for the debt had failed.

The casino sued the bank to recover its loss, arguing that it had been negligent in providing the reference. A judge found that the casino was 15 per cent responsible for the loss due to its failure to spot the odd-looking cheques. However, the casino’s claim was otherwise upheld on the basis that it had been lulled into a false sense of security by the reference and would otherwise have only dealt with the punter on a cash basis.

In overturning that decision and entering judgment in favour of the bank, the Court noted that it had had no way of knowing that the reference was being sought on behalf of the casino. By maintaining its anonymity, the casino had deliberately concealed its interest in the matter. In those circumstances it was not fair, just or reasonable to impose a duty of care on the bank. There was no proximate relationship between the bank and the casino and the former did not assume responsibility for any loss that the latter might suffer.

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