This case concerns allegations of (time-barred) professional negligence and breach of contract by a firm of solicitors in the 1980’s, and attempts by the Claimants to circumvent the limitation dates by pleading their case on the basis of fraud or breach of fiduciary duty (an approach that got short shrift).
The facts in Seaton & Ors v Seddon & Ors
Musical Youth (of which there were five members) were a successful reggae band in the 1980’s. They released an extremely successful song called “Pass the Dutchie” in 1983 and broke up shortly afterwards. “Pass the Dutchie” was accepted to have been a cover of a Mighty Diamonds song called “Pass the Kouchie”, which was itself apparently derived from a song by Jackie Mittoo called “Full Up”. However, it was established that Musical Youth’s “Pass the Dutchie” had sufficient originality to qualify for copyright protection under the Copyright Designs and Patents Act 1988.
Mr Seddon (a partner in “Woolf Seddon”) acted as legal representatives on Musical Youth’s behalf, their retainer being signed with Musical Youth in 1982. A dispute arose in 1984 concerning who was to be credited for “Pass the Dutchie” and Woolf Seddon investigated. The rights holder for “Pass the Kouchie” in Europe were found to be two companies (“Peter A” and “Peter B”), who wished to issue proceedings against an American company (“Sparta Florida”) with the intention that “Pass the Dutchie” should be solely credited to “Peter A” and “Peter B” (“the two Peters”), not “Sparta Florida”. Woolf Seddon agreed to represent the two Peters on this basis and reached an agreement with Sparta Florida later that year (“the Sparta Florida Agreement”), an agreement that split the proceeds of royalties for “Pass the Dutchie” half and half between the two Peters, the monies for the two Peters to be received into Woolf Seddon’s client account. This was apparently on the basis that Woolf Seddon believed that copyright for “Pass the Dutchie” would not be owned by Musical Youth but by the party that owned the copyright in “Pass the Kouchie”.
Mr Seaton, one of the members of Musical Youth, later discovered the existence of this agreement and suspected that he may have not been paid royalties in “Pass the Dutchie” that he was entitled to. He therefore issued claims against Woolf Seddon (among others) on the basis that there was fundamental conflict of interest in Mr Seddon acting for both Musical Youth and the two Peters. Further, he was in breach of contract for failing to advise Musical Youth on their entitlement to copyright in “Pass the Dutchie” and had failed to account for and represent the interests of Musical Youth in the Sparta Florida Agreement. This would generally give rise to claims of professional negligence and breach of contract but for the fact that these claims would have long passed their limitation dates. The Claimants therefore sought to advance their case on the basis of fraudulent breach of fiduciary trust and making false representations.
The Claimants issued their claim in 2010. Woolf Seddon applied for summary judgment in the claim against them on the grounds that there was no legal basis for the existing claims and any other claims were time-barred.
The law relating to professional negligence and breach of contract
A professional adviser can face a claim based on his work through various means:
- Breach of contract
- Breach of duty of care (tort of negligence)
- Breach of fiduciary duty
- Breach of statutory duty
Generally, professional advisers will have a contract (also known as a “retainer”) with their clients. This is, in effect, a contract of employment and outlines the rights and duties of each party – the professional adviser and the client. Whether there has been a breach of contract will entail an examination of the express and implied terms of the contract.
However, there may be liability in tort for professional negligence as well as contract. Generally, both grounds (if they are within their respective limitation periods) are pleaded rather than in the alternative. Professional negligence would occur if the professional adviser breached their duty of care to their client by undertaking (or failing to undertake) certain actions. The standard of care expected is a relatively complicated issue and will not be covered in this article.
The limitation period for both contractual and tortious actions (in the main) is six years from the date of which the cause of action occurs.
The High Court’s judgment in Seaton & Ors v Seddon & Ors
The High Court gave summary judgment to Woolf Seddon on the basis that it believed that the current proceedings were an attempt to transform a claim for professional negligence and breach of contract into fraud or dishonest breach of trust to avoid the problem that the claims were outside of their limitation date. The High Court further refused the Claimants permission to amend their Particulars of Claim to provide further particulars of the fraud allegedly committed by Woolf Seddon.
Our specialist dispute resolution & litigation solicitors’ views on Seaton & Ors v Seddon & Ors
This is an extremely complicated claim, arising from allegations of professional negligence and breach of contract committed by a firm of solicitors in the 1980s. Clients of professional advisers should be aware that there is a limitation on claims for professional negligence and breach of contract (if they don’t involve breach of fiduciary duty) and should be vigilant in determining whether their professional adviser has breached their duty of care towards them – or contract with them. Otherwise clients may find that they cannot pursue a remedy even though actionable loss has occurred.