05.11.2026
For some time, there has been a practice of issuing a so-called “Mareva by letter” to banks in respect of client funds to which a wronged third-party claims to have a right. A “Mareva by letter” seeks to put a bank on notice of fraud or other proprietary claims in order to freeze funds without the wronged party having to apply for a freezing order or proprietary injunction. A recent decision of the Sheriff Appeal Court of Scotland in the case of Bibby Factors Ltd v Bank of Scotland Plc [2026] SAC (Civ) 66, which applied many of the principles developed in the English Courts regarding fiduciary duties and accessorial liability, suggests that this is a risky strategy.
Background
The Claimant company, Bibby Factors Ltd (“Bibby”), was engaged in the provision of debt-factoring services, providing funding facilities to customers in return for an assignment to Bibby of the right to recover the customer’s outstanding debts. Each Bibby customer undertook to account to Bibby for any payment received directly from a debtor in respect of the relevant debts. In July 2024, one such customer of Bibby, Lumos Telecom Limited (“Lumos”), wrongfully arranged for a debtor to make payment to its bank account (held with the Defendant bank) (the “Lumos Account”). The relationship between Bibby and Lumos was temporarily suspended; it resumed once the July 2024 payment was remitted to Bibby.
On 31 October 2024, Bibby became aware that another debtor was due to pay assigned sums to the Lumos Account. Accordingly, Bibby wrote to the Bank on or around that time as follows:
- informing it of the agreement between Bibby and Lumos (by which a trust was created in favour of Bibby), and of Lumos’s account details;
- explaining that a sum due to Bibby was about to be paid into the Lumos Account; and
- stipulating that Lumos was obliged to hold the forthcoming payment amount on trust for Bibby.
The Bank acknowledged receipt of the letter. In late November 2024, Lumos entered into administration. Bibby discovered that the monies had been received by the Bank into the Lumos Account, and that the Lumos Account had subsequently been substantially emptied.
Accordingly, Bibby brought a claim against the Bank for breach of fiduciary duty allegedly owed to it by virtue of the Bank’s knowledge of the trust established between Bibby and Lumos. Bibby argued that once a bank is aware that there is a trust, it must have in mind the interests of the trust, the beneficiaries, itself and the trustee [21], and the Bank had failed to do so. At first instance, the Court found in Bibby’s favour.
The absence of a fiduciary duty
In allowing the Bank’s appeal, the Court reconsidered the nature of the relationship between Bibby and the Bank. Dismissing Bibby’s argument as summarised above, the Court observed that the imposition of a fiduciary duty depends on some element of voluntary conduct and the Bank had not expected, invited or benefitted from any relationship with Bibby that suggested this [24].
In grappling with the authorities on this point, the Scottish Court relied upon the Supreme Court’s decision in Hopcraft v Close Brothers Ltd [2025] 3 W.L.R. 42, which addressed the imposition of broader fiduciary duties outside of well-known situations, particularly in the context of commercial relationships. In Hopcraft, the Supreme Court had found that there was no fiduciary relationship between (i) Claimant purchasers of cars on credit and (ii) the car dealers who had approached and received commissions from the Defendant lenders (who subsequently provided finance to the Claimants on hire purchase terms). The Supreme Court noted the importance of not distorting the parties’ bargain by implying fiduciary obligations into a commercial relationship too readily [102]. Additionally, the suggestion that fiduciary relationships might be defined by trust and confidence or dependency/vulnerability was dismissed [282]-[283]. The Supreme Court also found that there must be “an assumption of responsibility by the fiduciary to act exclusively on behalf of the other in the conduct of the other’s affairs” [100]. Considering such factors, the Court noted that imposing on the Bank the obligation to act exclusively in the interest of Bibby would “be immediately in conflict, to the point of nullification, with the contractual duty” to Lumos [31].
Accessorial liability
By way of amendment following the first-instance decision [20], Bibby invited the Court to consider the Bank’s accessorial liability in knowing receipt and/or dishonest assistance (the Bank having acknowledged that both form part of Scots law [16]). The Court did not consider that the plain reading of the amendment was sufficient to advance a claim in dishonest assistance [49] and it found that Bibby had not pleaded beneficial receipt of the funds so as to enable a claim in knowing receipt to bite [55]. The need to plead claims as accurately and as fully as possible is as applicable in claims before the English Courts as it is in Scotland.
More fundamentally, however, when considering the possibility of a knowing receipt claim, the Court observed that “knowledge of breach of trust was not proved by mere assertion of breach of trust” [60]; the level of knowledge that the bank actually had would be crucial were the claim in knowing receipt to be permitted to advance. This calls into question whether a letter of this kind would ever be capable of providing a bank with the level of knowledge required to found a knowing receipt claim.
It could be open to a wronged third party to bring a claim against the bank in dishonest assistance, but that would require fixing a particular individual within the bank with dishonesty, which is likely to be difficult to plead and prove.
Negligence
Although the Court addressed negligence only very briefly at [9], it pointed to the Privy Council case of JP SPC4 v Royal Bank of Scotland International Ltd [2023] AC 461 as authority for the proposition that a duty of care would not generally be owed by a bank to a party other than its customer. This serves as a further reminder that it will be very difficult for a non-customer to establish any cause of action in either tort or contract against the bank in a scenario of this kind.
Conclusions
This case is a warning for those who seek to rely on a “Mareva by letter” as a standalone means to prevent the dissipation of assets. Whilst such a letter could provide some level of practical protection, it is unlikely, by itself, to prevent the transfer of monies by a bank.
The Bibby decision confirms, as a matter of Scots law at least, that no fiduciary relationship arises between the bank and the third party. On top of this, the decision suggests that there will be no liability for breach of duty or knowing receipt for a bank if it is honouring its customer’s instructions, even if on notice that the customer may be acting in breach of trust.
Litigants must take care to understand the limited obligations on banks towards non-customers. It will be rare for non-customers to bring a successful claim against a bank for monies which are (i) received by that bank for one of its customers and (ii) paid out by the bank on that customer’s instructions. This reflects the fact that a bank’s duties towards its own customers are paramount and can be overridden only in exceptional circumstances.
In light of the above, the most appropriate method for those finding themselves in Bibby’s position remains an application for urgent injunctive relief, ideally to be made at the earliest possible stage.
Authors: Zoe Vanhegan; Tom Crisp & Gary Orritt
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