Summary
An allegation of fraud must be expressly made and supported by the specific facts relied on. Under the CPR, this requirement remains substantial where dishonesty is alleged. A claim framed as fraudulent breach of fiduciary duty cannot survive summary judgment where the pleaded facts provide no realistic basis for inferring dishonesty. Claims against fiduciaries remain subject to limitation unless they concern trust property in a class 1 trust or fall within another statutory exception. A class 2 constructive trust arising from the impugned transaction is ordinarily subject to the six-year period. A later claim or amendment introducing fraud, dishonesty or conspiracy is a new cause of action and may be barred if it does not arise from substantially the same facts. For disability under the Limitation Act 1980, an overlapping disability existing when the claimant reaches majority may prevent time from running, but the relevant capacity test is generally that applicable when the cause of action accrued.
Factual background
Former members of Musical Youth claimed against their former solicitors, Woolf Seddon, and others concerning the 1984 settlement agreement relating to the songs Pass the Dutchie and Pass the Kouchie. The solicitors allegedly acted in a conflict of interest, failed to advise the band about copyright, and received or facilitated the distribution of royalties.
Woolf Seddon applied for summary judgment or strike-out. The claimants applied to amend their Particulars of Claim to add or expand allegations of fraud, fraudulent misrepresentation, conspiracy, knowing receipt and dishonest assistance. The principal issues were whether the fraud allegations were properly pleaded, whether the claims were statute-barred, whether the fourth claimant’s mental disability postponed limitation, and whether the proposed amendments arose from substantially the same facts.
Held
- Fraud pleading. An allegation of fraud must be clearly expressed and supported by particulars identifying its factual foundation. The CPR did not materially reduce the former requirement to plead the facts relied on. The express allegation against Woolf Seddon was procedurally sufficient, but the pleaded facts did not provide a realistic basis for inferring that Mr Seddon knew the band had a distinct copyright and acted dishonestly.
- Summary judgment. The claim had to have a realistic, rather than fanciful, prospect of success. The court must avoid a mini-trial, but may analyse pleaded facts and evidence where the alleged case is speculative. The fraudulent breach of fiduciary duty claim therefore failed.
- Limitation. The causes of action accrued in about 1984. Claims for breach of trust involving a class 2 constructive trust, personal claims for breach of fiduciary duty, misrepresentation and unlawful means were subject to a six-year limitation period. Section 21(1) of the Limitation Act 1980 did not assist because the alleged trust arose from the transaction being impugned. Section 36 applied the limitation period by analogy to the personal fiduciary claims.
- Disability. Under section 28(1) of the Limitation Act 1980, a claimant who remained under a different disability when attaining majority could continue to benefit from the statutory extension. The relevant mental-capacity test was that applicable when the cause of action accrued, rather than the stricter test introduced later. The fourth claimant nevertheless failed to produce sufficient evidence that he lacked the relevant, issue-specific capacity at majority or continuously until 2004.
- Amendments. The proposed additions of fraudulent misrepresentation, conspiracy and knowing receipt or dishonest assistance had no realistic prospect of success, were out of time, or introduced new claims not arising from substantially the same facts. Permission to amend against Woolf Seddon was refused. Summary judgment was entered for Woolf Seddon. Certain amendments concerning other defendants were refused, while the remaining amendments were permitted.
The court’s approach to earlier authorities
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Key cases cited
23 authorities cited.
- Three Rivers District Council v. Governor and Company of the Bank of England [2001] UKHL 16
- AC Ward & Son v Catlin (Five) Ltd & Ors [2009] EWCA Civ 1098
- ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725
- Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63
- Halton International Inc & Anor v Guernroy Ltd [2006] EWCA Civ 801
- The Law Society v Sephton & Co & Ors [2004] EWCA Civ 1627
- Gwembe Valley Development Co Ltd v Koshy (No. 3) [2004] 1 BCLC 131
- Hemmingway & Anor v Roddam (a firm) & Ors [2003] EWCA Civ 1342
- ED&F Man Liquid Products Ltd. v Patel & Anor [2003] EWCA Civ 472
- Masterman-Lister v Brutton & Co [2003] EWCA Civ 70
- THE ROYAL BROMPTON HOSPITAL NATIONAL HEALTH SERVICE TRUST v HAMMOND AND ORS [2001] Lloyd's Rep PN 526
- Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112
- Swain v Hillman [2001] 2 All ER 91
- Paragon Finance Plc v D B Thakerar & Co (A Firm); Thimbleby & Co v Paragon Finance Plc [1998] EWCA Civ 1249
- Armitage v Nurse [1998] Ch 241
- Bristol and West Building Society v Mothew [1998] Ch 1
- Fattal & Ors v Walbrook Trustees (Jersey) Ltd & Ors [2010] EWHC 2767 (Ch)
- Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church [2009] EWHC 780 (QB)
- Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch)
- Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd [1996] AC 102
- Redwood Music Ltd v Chappell & Co Ltd [1982] RPC 109
- Belmont Finance Corpn Ltd v Williams Furniture Ltd [1979] Ch 250
- Purnell v Roche [1927] 2 Ch 142
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Cases citing this case
3 later cases · 3 positive
Most senior citing decisions:
- Wheat v Monaco Telecom SAM & Anor [2017] EWHC 3150 (Ch) applied
- Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC 3272 (Ch) approved
- Honeywell International Middle East Ltd v Meydan Group Llc [2014] EWHC 1344 (TCC) followed
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