In O'Hare v Coutts & Co [2016] EWHC 2224 (QB) the High Court determined that Coutts had not breached its duty to exercise reasonable skill and care when advising O'Hare and others on certain investments.

Traditionally, the preferred test for establishing professional negligence has been known as the 'Bolam' test. While this started out life as a test for establishing medical negligence, it has since been developed for other professional disciplines. Essentially, the test asks whether the professional defendant acted in a way that would be deemed acceptable by other professionals in that sector.

In this case, however, the judge held that a more appropriate test was that espoused in Montgomery v Lanarkshire Health Board [2015] UKSC 11. The key difference between the Bolam test and the Montgomery test is that the latter requires a defendant to take reasonable care to inform the claimant of any material risks involved, thus enabling the claimant to make his or her own decision about whether to proceed. In a financial context, this means that there is an increased focus on whether investors are informed. The decision suggests that if they are so informed, they must take responsibility for the investment risks that they assume.


Mr and Mrs O'Hare were a husband and wife who had built up and subsequently sold a successful chemical engineering business. In 2001 they opened a bank account with Coutts and made various investments. In 2007/08, their relationship manager at Coutts advised them to invest over £8 million in three hedge fund products that were being marketed by the bank at the time. In 2010 they were further advised by their new relationship manager to invest £10 million in two products issued by RBS International, a sister company to Coutts.

The O'Hares sought damages against Coutts for losses arising out of these investments. In essence, they claimed that the 2007/08 investments were unsuitable because there was no capital protection, the risk was downplayed and, as unsophisticated investors, too high a proportion of their personal wealth was put at risk. In relation to the 2010 investments, the couple claimed, among other things, that too much of their personal wealth had been pooled with one institution.


The court dismissed the claim in its entirety.

It noted that the suitability or otherwise of the investments would usually be determined in accordance with the Bolam test, but in this case it preferred to adopt the approach taken by the Supreme Court in Montgomery. Its reasoning was that the evidence given at trial suggested that there is a lack of general opinion within the finance industry on how to manage risk appetite. Moreover, the Conduct of Business Sourcebook rules give no reference to a responsible body of opinion within the finance profession. As such, it considered that the Bolam test was difficult to apply properly and so the Montgomery test should be adopted.

2007/8 investments

The court found that although Coutts had used salesmanship to induce Mr O'Hare to take the risk, this did not mean that the 2007/08 investments were unsuitable. Rather, responsibility for this investment decision could fairly be taken by Mr O'Hare, as there was no room to suggest that he did not understand the products. Moreover, the court noted that the couple would remain "wealthy beyond the dreams of most ordinary mortals" even if the investments were to result in losses.

2010 investments

The court also found that the 2010 investments were suitable; the fact that the 2010 investments were RBS International products had been discussed with Mr O'Hare specifically. The court determined that it was not negligent of Coutts not to ""save him from himself" by talking him out of this confident attitude".

Other issues

The claim was brought in tort, as any claim in contract was time barred. However, the court stated in obiter that if the claim had succeeded, then the higher damages potentially available in a claim in tort would not have been awarded, as the narrower contractual test for damages would be applied, even though the limitation period applicable to the claim in contract had expired.

The court also stated that the fact that a key witness did not give evidence at the trial because he was "too busy" did not mean that any oral evidence contradicting him should be automatically preferred.


Chiefly, this decision serves as an indicator to finance professionals and clients that the court will take a purposive approach to determining whether an investment was suitable, and that responsibility can lie with a "reasonably informed" client. In doing so, it arguably puts more pressure on the "mezzanine duty" that was described in Crestsign Ltd v National Westminster Bank Plc [2014] EWHC 3043 (Ch) as less onerous than a duty to advise, but more onerous than a bare duty not to misstate; essentially, a duty to give sufficient information to make an informed choice as between the complex swap arrangements being presented. The decision in Crestsign is subject to appeal, but it will be interesting to see how this area evolves.

For further information on this topic please contact Sarah Bishop at RPC by telephone (+44 20 3060 6000) or email ( The RPC website can be accessed at

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