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Law Society v Sephton & Co (A Firm) [2006]

The Law Society’s cause of action in negligence against accountants in respect of negligent reports on a solicitor’s practice accrued when it first received a claim on the Solicitors’ Compensation Fund from a client whose money was misappropriated by the solicitor, because until such a claim was actually made no loss or damage had been sustained by the fund.

26 May 2006

The appellant firm of accountants (S) appealed against the decision ([2004] EWCA Civ 1627) that the respondent Law Society had commenced proceedings against it within the limitation period. S had on various dates between 1990 and 1995 negligently signed reports certifying that a particular solicitor had complied with the Solicitors’ Accounts Rules 1991. The solicitor had in fact misappropriated large sums of client monies during those years. The Law Society intervened in the solicitor’s practice in 1996 and clients that had suffered loss claimed compensation from the Solicitor’s Compensation Fund maintained by the Law Society. The Law Society sought to recover those sums from S and had issued proceedings just under six years from the date of the intervention. The issue before the House of Lords was whether the Law Society had suffered damage more than six years before the issue of proceedings so that the action had been commenced outside the limitation period. The Law Society ...

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