Julien and others v Evolving Tecknologies and Enterprise Development Company Limited

For the purpose of postponing limitation under section 14 of the Limitation of Certain Actions Act 1997, the relevant knowledge or discoverability is ordinarily that of the company, through its directors or appropriate agents. A shareholder’s knowledge does not automatically become the company’s knowledge merely because the shareholder can influence the company or bring proceedings for its benefit. The Board left open whether particular facts, such as a sole shareholder’s active control, might justify attribution. It held, however, that a court may use the absence of a trigger putting the shareholder on inquiry as a forensic means of deciding whether a deliberate breach was unlikely to be discovered for some time. The appeal was dismissed.

Evolving Tecknologies and Enterprise Development Company Limited invested US$5m in Bamboo Networks Limited in June 2005. After the investment was lost, the company brought negligence proceedings in 2011 against its former directors, alleging inadequate due diligence and a related misstatement concerning the share valuation. The directors pleaded limitation.

At a preliminary issue hearing, the trial judge held that knowledge or discoverability by the company’s sole shareholder, the Minister of Finance, was not attributable to the company while the directors were the alleged wrongdoers. The Court of Appeal affirmed that conclusion and alternatively held that the alleged breach was unlikely to be discovered by the Minister for some time. The Privy Council considered whether shareholder knowledge was attributable under section 14 and whether the Court of Appeal had erred in its approach to discoverability.

1. Appeal dismissed. The Board held that the Court of Appeal was entitled to conclude that the alleged breach was unlikely to be discovered by the Minister of Finance for some time, within section 14(2) of the Limitation of Certain Actions Act 1997. That conclusion was sufficient to dispose of the appeal.
2. The burden under section 14(2) remained on Eteck to show that the breach was unlikely to be discovered for some time. The Court of Appeal was entitled to ask whether the evidence disclosed a trigger putting the Minister on inquiry. That was a forensic tool, not an invariable statutory requirement. The Government had received reports that the specific due diligence it requested had been undertaken. The alleged breach instead concerned the directors’ failure to ensure fuller due diligence appropriate to the risks of the investment.
3. The Board rejected the arguments that non-discoverability had not been pleaded or supported by evidence. The pleading that discovery was unlikely until a new board was appointed necessarily included non-discoverability by the Minister. The evidence provided an ample basis for the Court of Appeal’s conclusion.
4. The Board considered, but did not finally decide, whether knowledge or discoverability by a company’s sole shareholder could be attributed to the company where the claim was against directors who retained control. The general rule attributes company knowledge to its directors and, where appropriate, agents. Shareholders owe no corresponding duty to report knowledge or exercise reasonable diligence for the company. A derivative action is not an action by the company for section 14 purposes.

• Privy Council: Julien and others v Evolving Tecknologies and Enterprise Development Company Limited, [2018] UKPC 2, appeal dismissed.
• Court of Appeal of the Republic of Trinidad and Tobago: affirmed the trial judge’s conclusion that shareholder knowledge was not attributable to the company and alternatively held that the alleged breach was unlikely to be discovered for some time.
• Trial judge (Rampersad J): held that discoverability by the Minister of Finance was irrelevant to when time began to run against the company while the appellants remained its directors.