Page & Anor v Hewetts Solicitors & Anor

A fiduciary duty owed by a solicitor in relation to a property sale does not make the solicitor a trustee of the property. A secret commission received through an unauthorised transaction is not trust property merely because it is connected with the sale. The exception to limitation for actions to recover trust property therefore does not apply.

For deliberate concealment under Limitation Act 1980, section 32, time begins when the claimant knows, or could with reasonable diligence discover, the facts needed to plead a prima facie case. Evidence sufficient to win the claim is unnecessary. Under CPR 7APD 5.1, an earlier receipt date assists only where the claim form received is the same claim form subsequently issued.

The claimants, administrators and beneficiaries of two estates, appealed against Master Bragge’s summary judgment dated 8 February 2011. Their claims against their former solicitors concerned an alleged secret profit made by a legal executive from the sale of estate property.

The claimants argued that the profit was trust property under section 21(1)(b) of the Limitation Act 1980; alternatively, that deliberate concealment postponed limitation under section 32(1); and that proceedings had been brought when an earlier claim form was allegedly delivered to the court in December 2008. The claim form eventually issued on 17 February 2009.

The appeal concerned whether the profit was proprietary trust property, when the claimants had sufficient knowledge, and whether the earlier documents could establish an earlier commencement date.

1. Proprietary claim and limitation. The appeal on the trust-property issue failed. Section 21(1)(b) of the Limitation Act 1980 is concerned with deemed possession of property by a trustee. The secret profit was not beneficially owned by the claimants, was not derived from estate property, and was not obtained by taking an opportunity or right properly belonging to them.
2. The solicitor’s retainer imposed fiduciary duties, including loyalty and the duty not to make an unauthorised profit, but did not make the solicitor trustee of the property being conveyed. The sale was not impeached and the claimants retained the ultimate decision whether to sell. The constructive trust arose, if at all, from the unlawful receipt of the secret profit and was a category-two constructive trust giving rise to a personal liability to account, not a proprietary claim within section 21(1)(b). The reasoning in Sinclair Investments (UK) Ltd v Versailles Trade Finance Group plc [2011] EWCA Civ 347, as applied in Cadogan Petroleum Plc v Mark Tolley and Others [2011] EWHC 2286 (Ch), was decisive.
3. Concealment and knowledge. Section 32(1) postponed time only until the claimants discovered, or could with reasonable diligence have discovered, facts necessary to establish a prima facie case. The claimants’ correspondence by November 2000 disclosed the gist of the undervalue and breach-of-retainer claims. By 6 February 2003 at the latest, the surrounding correspondence and the Sahana letter enabled them properly to plead the secret-profit claim. More evidence might have been required at trial, but was unnecessary to start time running.
4. Issue of the claim form. CPR 7.2(1) and CPR 7APD 5.1 concern the claim form actually issued. The earlier receipt rule applies where the claim form received by the court is the same claim form later issued. It does not apply where documents are lost or mislaid and a different, albeit copied, claim form is subsequently issued.
5. The claim form was issued on 17 February 2009. The evidence did not establish an earlier receipt by the court, and the claimants’ solicitors had failed to make timely inquiries. The claims were therefore statute barred. The appeal was dismissed.

High Court (Chancery Division): Master Bragge granted summary judgment for the defendants on 8 February 2011, holding that the claims were statute barred. On appeal, the Deputy Judge dismissed the claimants’ appeal.