Third party litigation funding – Court of Appeal decision on costs liability

Excalibur Ventures LLC v. Texas Keystone Inc and others [2016] EWCA Civ 1144

November 2016 saw the Court of Appeal unanimously dismiss an appeal brought by various third party litigation funders regarding their liability for the defendant’s costs in connection with the Excalibur case.

In the first instance decision of the High Court, it was determined that the third party funders in the Excalibur case would face joint and several liability for the defendant’s costs on the same basis as the funded party itself, including where that party had been ordered to pay costs on an indemnity basis.

The third party funders sought to appeal the decision that they should pay costs on an indemnity, rather than a standard, basis. However, the court rejected the argument that it was inappropriate for the funders to pay costs on the indemnity basis where their own conduct, as opposed to the conduct of the claimant, had not been criticised. In that respect, the court referred to the fact that a claimant himself may face liability for indemnity costs not only on account of his own behaviour but on account of the conduct of others, including lawyers, experts or witnesses, even if he is not personally responsible for that conduct. The court stated that it was the derivative nature of a commercial funders’ involvement that should ordinarily lead to the funder being required to contribute to costs on the same basis as those whom he elected to fund. That is not to say that there is an irrebuttable presumption that this would be the outcome; rather, the court considered that this outcome would ordinarily be just and equitable.

Further, the court concluded that there was no reason to limit an order for non-party costs to only those funders who had entered into a contractual relationship with the claimant. Rather, the court determined that it would be just and appropriate to make an order for costs against a person who provided funding and who, in reality, will obtain the benefit of the litigation if the funded party is successful. Clearly, if this were not the case, then any risk of adverse costs orders could be circumvented through the use of an SPV.

This decision will mean, therefore, that an order for costs may be made against the parent company of the commercial litigation funder. The court rejected the argument of the funders that this approach served to pierce the corporate veil, on the basis that the exercise of the discretion to make a non-party costs order does not amount to an enforcement of legal rights and obligations, to which the doctrine of corporate personality is relevant. The relevant issue was whether, in the circumstances, it was just to make an order for a non-party to pay costs in light of the nature of its involvement in the case; this will not pierce the corporate veil, but simply gives effect to the proposition that it is just and appropriate to make an order for costs against a person who has provided funding and would, in reality, have obtained the benefit of the litigation if successful.

In addition, the court allowed that funds provided for security for costs should be taken into account in calculating the Arkin cap. That is, the principle which limits a funder’s liability on costs to the amount of funding which it has already provided.

Interestingly, Tomlinson LJ, in giving the leading judgment, addressed the concern that, to avoid being fixed with the conduct of the funded party, the funder would have to exercise greater control over the conduct of the litigation throughout and that this would give rise to a risk that the funding agreement itself was champertous.

Tomlinson LJ considered that such a concern was “unrealistic”. Champerty involves behaviour which is likely to interfere with the due administration of justice; litigation funding, on the other hand, is an accepted activity, perceived to be in the public interest. Tomlinson LJ considered that a rigorous analysis of the law, facts and witnesses in a case, consideration of proportionality and review at appropriate intervals is what is to be expected of a responsible funder and cannot, therefore, be champertous since such activities promote, rather than interfere with, the due administration of justice. Tomlinson LJ emphasised that, when conducted responsibly, there was no danger of such involvement or regular reviews of the case being characterised as champertous.

This decision is of considerable significance for commercial funders, and marks an important acknowledgment by the Court of Appeal that such funding arrangements are not themselves champertous. As such, commercial funders are likely to take comfort from the clarification provided by Tomlinson LJ that the funder need not avoid an active role in reviewing and monitoring the case for fear of champerty.

This is one of a number of cases recently before the courts concerning the role of third party funders. For example, in Wall v. The Royal Bank of Scotland plc [2016] EWHC 2460 (Comm), the High Court ordered that the claimant disclose the identity of the third party funder. The appeal of that decision is to be heard in March 2017 by the Court of Appeal.

Rights of Class G noteholders in CMBS transaction

Cheyne Capital (Management) UK (LLP) v. Deutsche Trustee Company Limited and another [2016] EWCA Civ 743

In our previous edition of this Update, we discussed the judgment of Arnold J in the first instance decision regarding this CMBS transaction. The Court of Appeal has since published its judgment upholding that first instance decision.

In this case, subordinated Class G notes were agreed to be the Controlling Class for the purposes of the transaction. This entitled that class of noteholders, represented by Cheyne as Operating Adviser, to exercise certain rights, including the power to replace the Special Servicer. Cheyne notified the trustee of the issue that it wished to replace the Special Servicer appointed in relation to defaults that had occurred in the underlying loan.

However, under clause 26.4(b) of the Issuer Servicing Agreement, replacement of the Special Servicer could take place only where the relevant ratings agencies had confirmed that the appointment of the successor special servicer

“will not result in an Adverse Rating Event, unless each class of Noteholders have approved the successor Issuer Servicer or successor Issuer Special Servicer, as applicable, by Extraordinary Resolution.”

The applicable ratings agencies in this case were Moody’s, Fitch and S&P. This meant that, in effect, before the replacement of the Special Servicer could take place all three ratings agencies would have to confirm that the replacement would not result in a downgrade of the notes. If each of the ratings agencies would not provide that confirmation, the replacement could only take place if approved by an extraordinary resolution of each class of noteholders. Problems arose because, from December 2012, as a matter of public policy Fitch would not provide such confirmations in the context of CMBS transactions.

In the proceedings, Cheyne contended that the relevant clause of the Issuer Servicing Agreement, as set out above, should be interpreted to mean that confirmations were required from the rating agencies that were willing in principle to provide them. However, the trustee argued that this was not what the agreement said; the relevant clause required confirmation from all three ratings agencies or, as an alternative solution if it was not possible to obtain such confirmation, an extraordinary resolution of noteholders.

The Court of Appeal upheld the first instance decision, and concluded that the natural and ordinary meaning of the relevant clause was that confirmation was required from all three rating agencies. This could not be disregarded because one ratings agency ceased to provide such confirmations as a matter of policy. Further, the natural and ordinary meaning of the words in that clause did not produce a commercially absurd result, since the wording provided the alternative of obtaining an extraordinary resolution.

Importantly, the CMBS transaction in this case followed a broadly standard structure, and Fitch’s policy is of general application. Accordingly, the judgment is likely to be of considerable significance for other CMBS transactions. This is unlikely to be the only CMBS transaction in which the contractual drafting, as here, does not achieve the result which the Controlling Class might wish.

Interestingly, the court considered the decision in US Bank Trustees Limited v. Titan Europe 2007-1 (NHP) Ltd [2014] EWHC 1189 (Ch), which also concerned the failure of a ratings agency to provide confirmation on the replacement of a special service provider. In that case the court concluded that the relevant clause did not require confirmation from all of the ratings agencies in question. However, crucially, the relevant clause in Titan did not contain the option for an extraordinary resolution. The court considered, therefore, that it would make no commercial sense for the replacement of the special servicer to be prevented by a general policy implemented by Fitch. Accordingly, there were material differences between the two documents in the two cases.

English court has no jurisdiction over US$800 million claim

Goldman Sachs International v. Novo Banco SA [2016] WL 06476222

In November, the Court of Appeal overruled a 2015 High Court decision and determined that a £835 million debt claim brought by Goldman Sachs and others against Novo Banco must be pursued in Portugal.

In August 2014, the financial difficulties of Banco Espirito Santo (BES) prompted the central bank of Portugal, Banco de Portugal, to establish a new financial institution, Novo Banco. Pursuant to the domestic legislation which incorporated the EU Reorganisation and Winding Up Directive (EC/2001/24) and the Recovery and Resolution Directive (2014/59/EU) most, but not all, of the assets and liabilities of BES were transferred by Banco de Portugal to Novo Banco.

However, questions arose as to whether the liabilities of BES under a facility agreement with investment fund, Oak Financing, had been transferred to Novo Banco. In December 2014, Banco de Portugal declared that the obligations of BES under the relevant facility agreement had not been so transferred.

The respondents, as assignees of Oak Financing, sought to recover interest and capital payments under the facility agreement and commenced proceedings in England against Novo Banco. They sought to argue that the liability owed to Oak Financing had been transferred to Novo Banco and that the decisions of the Bank of Portugal in December 2014 had no effect on that transfer. As such, Novo Banco was a party to the facility agreement, and was therefore bound by the English jurisdiction clause contained therein.

The High Court held that the claimants had the better of the argument that the Oak Financing liability had been transferred to Novo Banco, and was therefore bound by the English jurisdiction clause.

That decision was overturned on appeal, with the Court of Appeal concluding that the actions taken by Banco de Portugal under the relevant EU directive did not trigger the jurisdiction clause under the facility agreement.

The Court of Appeal stated that the fundamental principle underlying the reorganisation and winding-up of financial institutions within the EU is that it is for the home Member State to determine how to deal with a failing institution; its decisions should be accorded universal recognition. If that is to be achieved, it is essential that other Member States give reorganisation and resolution measures the same effect that they have under the domestic law of the relevant home state. If it were open to the English courts to hold that the effect of the decision to transfer certain liabilities to Novo Banco is other than the effect which the decision has under Portuguese law, this would violate the principle of universal recognition on which the law in this area is based.

Interestingly, one member of the court, Sales LJ, indicated that, if necessary, he would have held that the December 2014 decision by Banco de Portugal should be recognised as a re-transfer of the Oak Financing liabilities from Novo Banco back to BES. Gloster LJ disagreed, taking the view that the December decision should not be characterised as “rewriting history” in the manner proposed by Sales LJ. In any event, those points were not material since the court was in agreement on the appropriate disposition of the appeal.

The judgment is significant in reinforcing the importance of the universal application of the exceptional measures taken by Member States to ensure an orderly and consistent approach to the failure of credit institutions in the wake of the financial crisis. In that respect, the judgment is perhaps unsurprising. However, the decision may give rise to concerns for financial institutions in that it creates a measure of uncertainty around the application of jurisdiction clauses which will inevitably have formed part of innumerable standard form facility agreements.

This case also forms part of an emerging trend of financial markets cases concerning the application of jurisdiction clauses; the Court of Appeal considered similar issues in the Banco Santander case, which was also heard in November and in respect of which judgment is awaited.

The respondents are seeking permission to appeal to the Supreme Court.

First judgment in Shorter Trials Scheme

National Bank of Abu Dhabi v. BP Oil International Ltd [2016] EWHC 2892 (Comm)

In November, judgment was handed down in the first case conducted under the new Shorter Trials Scheme pilot.

The case concerned a claim brought by the National Bank of Abu Dhabi (the Bank) against BP for breach of warranty and representation contained in a purchase letter for a receivable debt which was owed to BP, and which the Bank purchased before the debtor fell into insolvency. The Bank was awarded damages of nearly US$70 million.

Whilst the facts of the case are not particularly noteworthy, the judgment does provide invaluable insight into the approach taken within, and the potential benefits of, the Shorter Trials Scheme.

In its judgment, the High Court praised the co-operative spirit with which the litigation had been conducted, which had resulted in such a speedy and effective process – as envisaged by the Scheme. The claim itself was issued in March 2016 and the trial took place on 7 November, with judgment handed down just two weeks later. There was only very limited disclosure in the case, no witness statements and no oral evidence at all. As a result, the case proceeded with considerable efficiency, in respect of costs as well as time; total costs for both sides amounted to approximately £350,000.

The benefits of such an approach are obvious. However, this approach is unlikely to be practicable for many financial markets cases given the complexity of the factual and legal issues which such litigation tends to involve. Here, the facts of the case were relatively straightforward, and the issue which it fell to the court to determine was one of contractual interpretation, and what should be the natural and ordinary meaning of certain clauses within the purchase letter. Further, despite the high value of the case, there was no dispute as to quantum.

It remains to be seen how the courts will approach other cases within the pilot, and whether the efficiencies and speed seen in this case are the exception, or can be achieved in a broad range of cases.

Meaning of “close of business” in repo transactions

Lehman Brothers International (Europe) v. Exxonmobil Financial Services BV [2016] EWHC 2699 (Comm)

In this Lehman Brothers International (Europe) (LBIE) case, the High Court has considered the construction of the termination provisions contained within the Global Master Repurchase Agreement 2000 (GMRA) following an event of default in a repo transaction.

When LBIE went into administration on 15 September 2008, there was an outstanding repo transaction between the parties under which LBIE sold ExxonMobil Financial Services (ExxonMobil) a portfolio of equities and bonds for US$250 million, and agreed to repurchase them the following day.

The primary issues in dispute concerned (i) when the Default Notice had been served, LBIE saying this took place on 15 September 2008 and ExxonMobil claiming it took place on 16 September 2008, and (ii) whether, in light of that timing, ExxonMobil had validly exercised the Default Valuation Notice procedure in the GMRA.

There were over 20 issues before the court for decision, the most significant of which are summarised below.

First, ExxonMobil claimed that its initial Default Notice, sent by fax on 15 September 2008, was invalid, as it did not specify what event of default had occurred. As a result, ExxonMobil argued that only its second fax, delivered on 16 September 2008, constituted a valid Default Notice – starting the clock running on timing for service of its Default Valuation Notice.

The court disagreed, and determined that it was not necessary for a default notice to state that an event of default had occurred, or to identify the specific event of default, in order for the notice to be valid.

Interestingly, paragraph 14(b) of the GMRA 2000 states that notices are effective if sent by “electronic messaging system”. The court stated, albeit obiter, that it considered this would include email.

As regards the Default Valuation Notice, LBIE claimed that this was invalid, on the basis that the fax number to which it was sent was not the number specified in the GMRA. The court considered that, in general, pursuant to paragraph 14 of the GMRA, faxed notices should be sent to the number contained within Annex 1 of the agreement.

However, it is possible for that requirement to be waived. In this case, LBIE had in fact received the faxed notice, which was sent to a different fax machine within the same office because the contractually specified fax machine was busy. The Default Valuation Notice was logged by LBIE in the usual way, and no point was taken that it was invalid, on the basis of having been sent to the wrong fax machine, either at the time or at any point during the following six years, including in LBIE’s original Particulars of Claim. As such, the court determined that LBIE had waived the requirement for service at the fax number specified in the agreement, and service of the Default Valuation Notice was valid.

The fax itself was received at 6.02pm on 22 September 2008 in London. Paragraph 14(b) of the GMRA provides that any notice delivered after the close of business on the day of receipt should be treated as given at the opening of business the following day. As such, LBIE claimed that the Default Valuation Notice was served on 23 September 2008, on the basis that the close of business in London is 5pm.

The court disagreed, and concluded that, for international commercial banks engaging in repo transactions, close of business was around 7pm. Accordingly, the notice was received on 22 September 2008.

The court emphasised that the decision in this case as regards the meaning of “close of business” was fact-specific. The meaning of the term is dependent upon the context in which it is used, and implies a degree of flexibility, allowing for commercial good sense, which will differ based on the particular facts of the transaction in question.

The court also considered the basis on which the securities themselves had been valued. In accordance with the GMRA, ExxonMobil, as the non-defaulting party, was to establish the Default Market Value of the relevant securities by reference to the Appropriate Market at the Default Valuation Time. In that respect, the court concluded that, whilst there was a “global market” in securities in the general sense, for the purposes of the GMRA, it was not open to ExxonMobil to determine a single Appropriate Market for all of the securities; this should have been done on a security-by-security basis.

The significance of the judgment for other transactions entered into under the GMRA is clear, and demonstrates the precision with which parties must follow the termination provisions set out in that agreement.

The court’s decision is also likely to have broader significance in the context of other finance transactions. In particular, the determination that the phrase “close of business” should be interpreted flexibly, and in accordance with the context of the particular transaction, serves as a reminder that, as the court itself noted, if the parties intend for there to be a definite cut-off time by which notice must be received, the safest approach is for the contract to expressly set out what that cut-off time is.

Court of Appeal overturns High Court decision on misrepresentation

Taberna Europe CDO II Plc v. Selskabet AF 1.September [2016] EWCA Civ 1262

The Court of Appeal has unanimously overturned the 2014 decision of the High Court concerning a claim for misrepresentation brought by Taberna, a purchaser of notes on the secondary market, against the issuer, the failed Danish bank, Roskilde.

The High Court found that, although Taberna had brought the notes from Deutsche Bank rather than Roskilde, section 2(1) of the Misrepresentation Act 1967 nevertheless applied to certain misrepresentations contained in an investor presentation published by Roskilde on its website.

The High Court judgment was somewhat controversial, not least because it appeared to be not entirely consistent with the decision in Secure Capital SA v. Credit Suisse AG [2015] EWHC 388 (Comm), which also concerned a claim brought by the purchaser of notes in the secondary market. Further, the courts have long recognised the danger of allowing such third parties to rely on documents which were produced for a purpose other than that to which they have been put, or directed at an audience of which they were not themselves members. Yet the first instance decision in this case gave rise to considerable concern that representations made by firms in publications intended for the primary market could be actionable by secondary market purchasers some time after the publication was issued.

It is of little surprise, then, that the Court of Appeal has allowed Roskilde’s appeal. The court stated that section 2(1) is concerned only with the contract which the representee has been induced to enter into directly with the representor, in respect of which a right of rescission would arise, and does not extend to an obligation of a contractual nature which the representee might acquire from a third party, in respect of which there would be no right of rescission. The court noted that the notes, in this case, represented obligations of a contractual nature, but considered that they were better regarded as a species of property which Taberna acquired pursuant to a contract with Deutsche Bank. Any loss suffered by Taberna was, therefore, incurred under that contract with Deutsche Bank, which could have been subject to a claim under section 2(1) of the Misrepresentation Act if any misrepresentation by the bank had induced Taberna to buy the notes – which had not been suggested.

FCA successful in striking out claim for misfeasance in public office

The FCA has been successful in striking out a claim brought against it for misfeasance in public office and conspiracy, in connection with the investigation by the FSA into Keydata Investment Services Ltd (Keydata) which resulted in its being placed into administration on 8 June 2009. The claimants alleged that the FSA had deliberately and maliciously targeted the firm with the intention of closing it down, in an effort to demonstrate its own effectiveness as a robust regulator in the wake of the financial crisis, and claimed damages in excess of £500 million.

The claim was struck out on 7 November 2016. The judgment itself provides a helpful summary of the elements required in order to establish misfeasance in public office or conspiracy, and is a reminder of the high threshold required to prove either tort.

Undue Influence

The Libyan Investment Authority (incorporated under the laws of the State of Libya) v Goldman Sachs International [2016] EWHC 2530 (Ch)

The Libyan Investment Authority (LIA) has lost a US$1 billion claim brought against Goldman Sachs on the basis that it was subject to undue influence by the bank.

Between September 2007 and April 2008, LIA entered into several transactions with Goldman Sachs, including nine disputed trades which formed the primary focus of this claim. Those trades were leveraged equity derivatives transactions. When the value of the shares to which the trades were linked fell during the financial crisis, the LIA lost its entire premium of US$1.2 billion and sought to rescind the trades on the basis of undue influence and unconscionable bargain.

The LIA sought to assert that, at the time of entering into the relevant trades, it was a naïve and unsophisticated institution and that Goldman Sachs took advantage of that fact. Further, the LIA alleged that Goldman Sachs had sought to improperly influence it to enter into the trades, including by conferring favourable treatment on the younger brother of the LIA’s then deputy director, offering him a prized Goldman Sachs internship just a month before the final trade concluded.

The LIA also alleged that the profits which Goldman Sachs made from the trades were so excessive as to give rise to a presumption in the context of a protected relationship that undue influence must have been exercised in order for the LIA to agree to the price offered.

The LIA’s claim was rejected in its entirety. The court found that there was no protected relationship of trust and confidence between the parties, and that their relationship did not go beyond the normal cordial and mutually beneficial relationship that arises between a bank and client. As regards the internship, the court rejected the idea that this had a material influence on the decision of the deputy director or the LIA itself. The internship, and the lavish hospitality and expensive entertainment provided by Goldman Sachs, may have contributed to a friendly and productive atmosphere during the negotiation, but nothing more.

The court also found that there were no grounds for concluding that the level of profits earned by Goldman Sachs were excessive. The LIA made much of the fact that Goldman Sachs, even on its own case, made a profit of at least US$130 million on the relevant trades combined. However, the court disagreed that the mark-up charged by Goldman Sachs on the trades was so high as to call for an explanation. Whilst the profits generated by Goldman Sachs may have been “on the high side”, this was justified in light of the unusual nature of the trades, the size and risk involved, as well as the work and expense which had gone into winning them, including the cost of travel to Tripoli and the like.

While the subject matter of this case is of considerable interest, the decision was necessarily fact specific. Accordingly, its impact on the wider market is limited.

It is worth noting that the LIA has brought a similar claim against Sociéte Générale, due to be heard in April 2017. However, in that claim the LIA has gone further, and alleges a fraudulent and corrupt scheme on the part of Sociéte Générale.

The LIA is seeking permission from the Court of Appeal to appeal the decision.

Mis-selling of investments

Mr and Mrs O’Hare v. Coutts & Co [2016] EWHC 2224

In September, Mr Justice Kerr dismissed a claim by investors, Mr and Mrs O’Hare, for damages of £3.3 million in relation to five investments made between 2007 and 2010 on the advice of Coutts, which they claimed was negligent. Each investment formed part of a hedge fund or structured derivative. The Court considered the scope of a bank’s duty in light of a customer’s attitude to risk and the issue of suitability.

Mr and Mrs O’Hare’s case in respect of investments made in 2007 and 2008 was that, contrary to their modest investment objectives and risk appetite, Coutts had recommended unsuitable high risk investments with no capital protection. They claimed that Coutts’ salesman had neglected to advise them in respect of an increase in risk exposure and applied pressure to invest. Mr and Mrs O’Hare claimed that investments made in 2010 were unsuitable because they involved high counterparty risk.

There was an Agreement to Provide Investment Advice (the Agreement) which conferred an obligation on Coutts “to work with” Mr and Mrs O’Hare “to develop an investment strategy” and advise from time to time on investments to implement that strategy. The Court found that this meant “no more than that Coutts would liaise with the O’Hares and recommend products as and when agreed or as and when Coutts considered it appropriate to recommend a particular product”.

In considering the test to be applied to Coutts’ advice, the Court took account of the Supreme Court decision in Montgomery v. Lanarkshire Health Board [2015] AC 1430, which found that when it comes to explaining risk, the extent of an adviser’s duty is not to be governed by the traditional test in Bolam v. Friern Barnet Hospital [1957] 1 WLR 582, namely whether the adviser was acting “in accordance with a practice accepted as proper by a responsible body of men ... skilled in that particular art”. Rather, the applicable duty was “to take reasonable care to ensure that the [advisee] is aware of any material risks involved ... and of any reasonable alternative”. Although Montgomery was decided in a medical context, the Court held that the decision had implications for investment advice.

The Court considered that the parties’ expert evidence indicated that there was little consensus about how the treatment of risk appetite should be managed. The regulatory regime was viewed as strong evidence of what the common law requires, since the skill and care to be expected of a financial adviser would ordinarily include compliance with the rules of relevant regulators. The Conduct of Business Sourcebook (COBS) did not include reference to a “responsible body of opinion with the profession”, but compliance with the rules would ordinarily be enough to comply with a common law duty to inform.

The Court concluded that COBS added nothing to the obligations found in the Agreement and the common law of negligence. Coutts was required to ascertain the O’Hares’ investment requirements and objectives and to advise and inform them in respect of suitable investments. Given the extent of the information provided to Mr and Mrs O’Hare, it was implausible for them to claim that the investments were mis-sold.

The Court found that there was nothing intrinsically wrong with a private banker using persuasive techniques to induce a client to take risks that the client would not otherwise take, provided the client could afford to take those risks and had shown himself willing to take them, and provided the risks were not – avoiding the temptation to use hindsight – so high as to be foolhardy. While it was accepted that Coutts had used persuasive sales tactics, provided the products were suitable there was nothing wrong with using persuasion. Indeed, this was part of the “raison d’être ... of any bank”. In addition, the Court found that it was not negligent of Coutts to avoid persuading Mr and Mrs O’Hare out of a confident attitude to risk.

Claimants often make much of banks’ sales incentives, alleging that they comprise evidence of mis-selling. The Court was not impressed by Mr and Mrs O’Hare’s claims in respect of Coutts’ “sales culture” and accepted that a bank may employ persuasive sales tactics. The Agreement meant that Coutts had to sell products to Mr and Mrs O’Hare (or earn commission from third party sales) for the relationship to be viable.

The Court’s role is to consider whether a bank has exercised the correct balance between ensuring that its client is willing and can afford to take risks and ensuring that the risks are not so high as to be foolhardy. Mr and Mrs O’Hare could afford to take the risks that they took and were provided with detailed information to assist them. The approach in O’Hare is significant as it puts much of the burden on the investor. The decision serves as an indicator that the Court will take an increasingly purposive approach to determining whether or not an investment was suitable; responsibility can lie with a “reasonably informed” client. The Montgomery test requires a bank to take reasonable care to inform its customer of any material risks, enabling the customer to make its own decision about whether to proceed.

Mr and Mrs O’Hare are seeking permission to appeal.