On 9th September the High Court handed down judgment in O’Hare & O’Hare v Coutts & Co  EWHC 2224 (QB). The claim related primarily to five investments made by the O’Hares on the advice of Coutts & Co in 2007, 2008 and 2010 (‘the Investments’), each of which was said to be unsuitable for the O’Hares’ risk appetite. At the time they had accepted that the Investments were suitable following the advice of Coutts’ salesperson, Mr Shona, although that did not mean that that advice was correct. The claim was brought for breach of contract, negligence, breach of statutory duty (for failure to comply with COBS) and negligent misrepresentation. The total claim was for just under £3.3m plus interest.
Coutts defended the claim on the basis that the advice provided in relation to the Investments was suitable: the complaints related to poor performance, motivated by hindsight. The O’Hares were sophisticated investors who could afford to invest in high-risk, high-return products. Further, a limitation defence was raised in relation to the breach of contract claim for the Investments dating from 2007 and 2008 (although it was accepted that the equivalent claims in tort on those Investments were within time).
The court undertook a detailed consideration of the relevant test for whether a financial advisor had acted in accordance with an implied term of reasonable care and skill in making recommendations which were “suitable”. The court rejected the application of the common law Bolam test. Since there was very little consensus within the financial services industry on how to treat risk appetite, there could be no generally accepted and responsible practice by which to benchmark Coutts’ approach. Instead, the regulatory regime reflected in COBS was “strong evidence of what the common law requires” and, on the facts, were held to “add nothing” to the duties implied into the parties’ contract and imposed by the common law of negligence.
As a result, the Investments were held to be suitable despite the strong element of salesmanship from Mr Shona. In addition, there was a preliminary issue in relation to Mr Shona’s absence from the trial. Although he had primarily dealt with the O’Hares, he had left Coutts’ employ and declined to participate in proceedings. However, all of his contemporaneous notes and records had been disclosed, were available in the trial bundle and were relied upon by Coutts to challenge the O’Hares’ oral evidence. Accordingly, the court undertook detailed analysis of the weight to be afforded to such material.
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