O'Keefe & Anor (In Their Capacity As Joint Liquidators of Level One Residential (Jersey) Ltd and Special Opportunity Holdings Ltd) v Caner & Ors

Under Jersey law, the default prescription period for personal movable claims is 10 years unless legislation, case law or a clear analogy makes another period applicable. Directors’ statutory duties of loyalty and care do not become tortious merely because they are expressed in legislation. Nor does the statutory limitation period for breach of trust apply directly to claims against directors, because directors do not ordinarily hold company property on trust by virtue of their office. The court must assess whether another period is clearly more applicable, having regard to legal coherence and practical consistency. On that analysis, both claims under Article 74 of the Companies (Jersey) Law 1991 were subject to the 10-year period.

Joint liquidators brought claims under section 212 of the Insolvency Act 1986 against former directors of two Jersey companies. They alleged that substantial payments had been made improperly and that the directors had breached their duties of good faith, loyalty, care, diligence and skill under Article 74(1) of the Companies (Jersey) Law 1991.

The respondents argued that the claims were prescribed after three years as claims in tort or breach of trust. The applicants relied on Jersey’s general 10-year period for personal claims. The preliminary issue was whether the claims were time-barred under Jersey law.

1. The court determined the content of Jersey law as a question of fact, assisted by expert evidence. The judge retained responsibility for interpreting Jersey legislation and resolving the legal issues, applying English principles of statutory interpretation where no different Jersey approach was shown.

2. The duty under Article 74(1)(a) was a fiduciary duty in the strict sense. It concerned loyalty, honesty and good faith. A fiduciary duty did not become a tort merely because it was placed in statutory form. Tortious duties and fiduciary duties arose from different legal relationships and attracted different remedial principles.

3. Article 57(2) of the Trusts (Jersey) Law 1984 did not apply directly. The statutory definitions of trust, trustee and breach of trust contemplated a conventional trust involving property that was not owned beneficially by the trustee. Company directors did not hold company property in that capacity. The position differed where a director separately received company property and became a trustee of it.

4. The duty under Article 74(1)(b) was an equitable or sui generis duty arising from the relationship between a director and the company. Although its content might overlap with a common-law duty of care, that did not make it tortious. Article 212 of the Companies Law did not determine the legal classification of the Article 74 duties.

5. The applicable period had to be selected by applying the approach in Re Esteem Settlement and the No. 52 Trust. The question was whether another period was clearly more applicable than the default 10-year period. The court considered the periods for tort, contract, quasi-contract and breach of trust, together with coherence between the two Article 74 duties.

6. The apparent analogy with the three-year trust period was incomplete because Article 57 contained interlocking provisions and no true equivalent existed for the rights and duties of successor trustees. Applying the three-year period would create inconsistency between directors’ duties and would artificially separate closely related claims. The prescriptive period for both causes of action under Article 74 was therefore 10 years.

This was a first-instance determination of a preliminary issue in the High Court. The judgment records no prior appellate decision in the proceedings.