The Law Society v Sephton and Co and others: CA 13 Dec 2004

The Society appealed dismissal for limitation of its claim against the defendant firm of accountants arising from alleged fraud in approval of a solicitor’s accounts.
Held: The liability did not arise until the Society decided to make compensation to those who had been affected by the solicitor’s default. The claims in negligence were not time barred, but those in fraud were.
Neuberger LJ (dissenting) said that an assumption is made for the purposes of assessing what the claimant could have discovered with reasonable diligence that the claimant desires to discover whether or not there has been a fraud.
Lord Justice Carnwath, Lord Justice Neuberger and Lord Justice Maurice Kay
[2004] EWCA Civ 1627, Times 11-Jan-2005, [2005] QB 1013
Bailii
Solicitors Act 1974, Limitation Act 1980 2
England and Wales
Citing:
CitedLaw Society v KPMG Peat Marwick and Others ChD 3-Nov-1999
An accountant, auditing a firm of solicitors, and providing a certificate to the Law Society knew that the Society and its compensation fund would rely upon that certificate and so owed it a duty of care. A negligently given certificate could lead . .
CitedCave v Robinson Jarvis and Rolf (a Firm) HL 25-Apr-2002
An action for negligence against a solicitor was defended by saying that the claim was out of time. The claimant responded that the solicitor had not told him of the circumstances which would lead to the claim, and that deliberate concealment should . .
CitedPolley v Warner Goodman and Streat (A Firm) CA 30-Jun-2003
A cause of action in negligence is complete once the claimant has suffered loss as a result of the negligence, even if the existence of the loss (and indeed of the negligence) is not, and could not be, known to him, and even where that loss is much . .
CitedCartledge v E Jopling and Sons Ltd HL 1963
The plaintiffs were steel dressers who, in the course of their employment, had inhaled quantities of noxious dust which had caused them to suffer from pneumoconiosis. They issued proceedings on 1 October 1956 but were unable to show any breach of . .
CitedForster v Outred and Co CA 1981
A mother signed a mortgage deed charging her property to H as security for a loan to her son. She claimed the solicitor had been negligent in his advice. The solicitor replied that the claim was out of time. The loss accrued not when demand for . .
CitedNykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) HL 27-Nov-1997
A surveyor’s negligent valuation had led to the plaintiff obtaining what turned out to be inadequate security for his loan. A cause of action against a valuer for his negligent valuation arises when a relevant and measurable loss is first recorded. . .
CitedKhan v R M Falvey and Co (a Firm) CA 22-Mar-2002
The claimant sought damages from his former solicitors for failing to act to avoid his case being struck out. The second action was itself delayed, and the defendants asserted that the cause of action occurred not when his claim was actually struck . .
CitedHatton v Messrs Chafes (A Firm) CA 13-Mar-2003
The defendant firm appealed against a refusal to strike out the claimant’s claim for professional negligence, asserting that the judge should have considered the limitation issue in the light of Khan v Falvey.
Held: By the time that the . .
CitedKnapp v Ecclesiastical Insurance Group Plc and Another CA 30-Oct-1997
A claim in negligence was brought against insurance brokers for failing to advise the claimant of certain matters with the result that an insurance policy entered into by the claimant was voidable for non-disclosure.
Held: The claimant . .
CitedWardley Australia Ltd v Western Australia 1992
(High Court of Australia) A claim was based on a statutory trade indemnity scheme. The insurers claimed damages from Wardley, on the basis that its alleged deceit induced them to grant an indemnity, which was subsequently called on.
Held: . .
CitedTelfair Shipping Operation SA v Inersea Carriers SA, the Caroline P 1984
A claim was made in contract based on an indemnity.
Held: The claim was not time-barred. Time normally begins to run against a claim on a general indemnity only from the moment when the liability of the indemnified is accepted by him or . .
CitedMilton v Walker and Stanger 1981
The plaintiff instructed her solicitor to prepare documents and advise on a gift from P’s uncle to P and her cousin W in the proportions 2/3:1/3. P and W agreed that, should the farm be sold, the costs and capital gains tax (CGT) arising there from . .
CitedRobert Mark Gordon v J B Wheatley and Co (a Firm) CA 24-May-2000
The defendant solicitors had negligently advised the claimant in connection with a mortgage scheme he operated for customers. His case was that the defendants had negligently failed to advise him to register under s3 of the 1986 Act. The claimant . .
CitedD W Moore and Co Ltd v Ferrier CA 1988
The company took in a new director and shareholder, and relied upon their solicitors to draft a covenant to restrain him competing within a set time of leaving the company. The covenant turned out to be ineffective. The defendant solicitors replied . .
CitedPirelli General Cable Works v Oscar Faber and Partners HL 2-Jan-1983
The plaintiff asked the defendant consulting engineer to design an extension to their factory in 1969. Not later than in April 1970, cracks developed in the chimney. In 1977 the cause of the damage was discovered. It arose from design faults in the . .
CitedJames Brocklesby v Armitage and Guest (a Firm) CA 9-Jul-1999
A failure by an adviser to make his position clear when he thought he had been negligent, could constitute a ‘deliberate’ act within section 32 even if the defendant’s actions were not motivated by any intention to deceive the claimant: ‘it is not . .
CitedParagon Finance Plc (Formerly Known As National Home Loans Corporation Plc v D B Thakerar and Co (a Firm); Ranga and Co (a Firm) and Sterling Financial Services Limited CA 21-Jul-1998
Where an action had been begun on basis of allegations of negligence and breach of trust, new allegations of fraud where quite separate new causes of claim, and went beyond amendments and were disallowed outside the relevant limitation period. . .
CitedRegina v Law Society ex parte Ingman Foods Oy Ab Admn 17-Jan-1997
The claimant sought compensation from the respondent for the actions of his solicitor. The Society resisted saying that the claimant was himself largely responsible for his losses. . .
CitedBell v Peter Browne and Co CA 1990
Mr Bell asked his solicitors to transfer the matrimonial home into his wife’s sole name. He was to receive a one-sixth interest of the gross proceeds on a sale. His interests were to be protected by a trust deed or mortgage. The solicitor drafted . .
CitedDaniels v Thompson CA 18-Mar-2004
The executor brought an action against the solicitor who had advised his client in connection with the transfer of her house in which she was to continue to live, saying he should have advised her that the gift would not protect her from Inheritance . .
Appeal fromThe Law Society v Sephton and Co and others ChD 2004
The Law Society claimed in negligence against the defendant firm of accountants who had wrongly certified the accounts of a firm of solicitors. The Society sought to recover the payments it had made from its compensation fund. The defendant pleaded . .

Cited by:
Appeal fromLaw Society v Sephton and Co (a Firm) and Others HL 10-May-2006
A firm of solicitors had a member involved in a substantial fraud. The defendant firm of accountants certified the firm’s accounts. There were later many calls upon the compensation fund operated by the claimants, who sought recovery in turn from . .
CitedGresport Finance Ltd v Battaglia CA 23-Mar-2018
Henderson LJ referred to the judgment of Neuberger LJ in Sephton in which he discussed the need for there to be an assumption that the claimant desires to know that there has been a fraud. Henderson LJ observed: ‘Another way to make the same point . . .
CitedBoyse (International) Ltd v Natwest Markets Plc and Another ChD 27-May-2020
Claim alleging misselling of interest rate hedging products. The court considered the defendants strike out application, and applications for leave to amend pleadings.
Held: it will normally be appropriate for summary judgment to be pursued on . .

These lists may be incomplete.
Updated: 12 May 2021; Ref: scu.220349