Central Bank of Nigeria v Williams

Section 21(1)(a) of the Limitation Act 1980 is not confined to claims against the trustee who was party or privy to the fraud. It removes the statutory limitation period for a beneficiary’s action in respect of that fraud or fraudulent breach of trust, including a claim against a person who dishonestly assisted the trustee. The requirement that the trustee was party or privy qualifies the fraud or breach relied on; it does not identify the only permissible defendant. The contrast with section 21(1)(b), which expressly refers to recovery from the trustee, supports that construction.

Dr Louis Emovbira Williams alleged that a solicitor had fraudulently paid trust money into an account held by the Central Bank of Nigeria. He claimed against the bank for dishonest assistance, knowing receipt and tracing. The bank, served in Nigeria, challenged the jurisdiction and sought to set aside service. Supperstone J dismissed that application in a judgment reported at [2011] EWHC 876 (QB).

Permission to appeal was limited to whether the claims were barred by section 21(3) of the Limitation Act 1980 or preserved by section 21(1)(a). The central issue was whether section 21(1)(a) applied only to an action against the trustee who was party or privy to the fraud.

Disposition and construction

The appeal was dismissed unanimously. The Chancellor gave the leading judgment. Black LJ agreed, albeit with considerable hesitation about the difficulty of the statutory language, and Tomlinson LJ agreed with the Chancellor’s reasons.

1. It was common ground that section 21(3) of the Limitation Act 1980 applied and that the bank was not a category 1 constructive trustee. The issue was therefore the scope of section 21(1)(a).
2. Section 21(1)(a) contains no express requirement that the action be brought against the trustee. The words referring to a fraud or fraudulent breach of trust to which the trustee was party or privy describe the qualifying fraud. They do not restrict the permissible defendant to that trustee. Section 21(1)(b), by contrast, expressly refers to recovery from the trustee.
3. The Limitation Act 1939 was an amending as well as a consolidating statute. Section 19(2) imposed the time bar on beneficiary claims against whomsoever they were brought, while section 19(1)(b) expressly limited its exception to recovery from the trustee. The statutory definitions extended trust and trustee to implied and constructive trusts generally. Section 21 re-enacted that scheme.
4. The Chancellor found the reasoning in G.L.Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216, and Evans-Lombe J’s criticism of Cattley v Pollard [2007] Ch 353, persuasive. He agreed with Statek Corporation v Alford [2008] EWHC 32 (Ch). He rejected Lord Hoffmann’s analysis in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135.
5. Royal Brunei Airlines v Tan [1995] 2 AC 378 established that dishonest assistance depends on the assistant’s dishonesty, not necessarily the trustee’s. That did not create an anomaly: section 21(1)(a) imposed an additional limitation-related requirement that the trustee was party or privy to the fraud.

An action by a beneficiary could therefore be brought outside the six-year period against the trustee and against another person who dishonestly assisted in the relevant fraudulent breach of trust.

• Court of Appeal (Civil Division): dismissed the Central Bank’s appeal on the construction of section 21 of the Limitation Act 1980.
• High Court, Queen’s Bench Division: Supperstone J dismissed the bank’s jurisdiction application and refused to set aside service, [2011] EWHC 876 (QB).