Analysis
In 1986, Dr Williams (D) participated in a transaction under which, he alleges, he was defrauded of $6,520,190. He commenced proceedings on 10 March 2010 against Central Bank of Nigeria (CBN) alone, asserting that: an English solicitor, Reuben Gale (R), held that sum of money in his client account in trust for D on terms that he would only release it if and when certain funds had been paid in Nigeria; in May 1986 R fraudulently paid away $6,020,190 of the sum held by him for D to the account of CBN with Midland Bank in England; CBN was party to the fraud; and R retained the balance of $500,000 for himself. D claimed that he is entitled to follow the $6,020,190 paid into CBN’s account, trace into the proceeds of such money and to be repaid such money or proceeds on the basis that, inter alia, CBN received and/or retained $6,020,190 paid by R into its account knowing that they were paid in breach of trust and/or in circumstances where it would be unconscionable to retain them and by reason of its dishonest assistance in the breach of trust CBN is liable to account to him as a constructive trustee of $6,520,190 paid by R in fraudulent breach of trust.
On 8 April 2010 CBN applied for a declaration inter alia that the matter was statute barred and an order that service of the claim form and amended particulars of claim be set aside. The application was dismissed by Supperstone J (see Williams v Central Bank of Nigeria [2011] EWHC 876 (QB)). CBN appealed arguing that D’s claims were barred by s21(3) Limitation Act 1980 since, in order to qualify for the exception that such a bar set out in s21(1)(a), the action, by implication, had to be against the trustee. In response, D argued that the claim against the defendant is within s21(1)(a) because it is ‘in respect of’ the actual trustee’s fraudulent breach of trust.
Held (dismissing the appeal)
Was it implicit in s21(1)(a) that the cause of action described might only be pursued outside the primary limitation period against the trustee(s) who were party or privy to the fraud or fraudulent breach of trust? The only words that could import that requirement were the passage reading ‘being an action… in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy…’ The definite article preceding the word ‘trustee’ connoted the trustee of the relevant trust, but the phrase of which it forms a part was descriptive of and a limitation on the generality of the phrase ‘any fraud or fraudulent breach of trust’. Of itself, it could not justify any implication that ‘the action’ could only be brought against that trustee [32]. Nor, after consideration of the history of the relevant provisions and all the other points argued as bearing on the point of construction did the wording of s21 Limitation Act 1980 justify the implication sought by counsel for CBN. Accordingly, the legislative history of an unambiguous provision in a consolidating act was irrelevant. An action by a beneficiary under a trust might be brought in respect of any fraud or fraudulent breach of trust to which the trustee was party or privy against both that trustee and any other person who dishonestly assisted him in such fraud or fraudulent breach of trust, in either case, after the expiration of the six-year limitation period for which s21(3) of the Limitation Act 1980 provided [37].
Per Black LJ: CBN’s argument that W’s construction would give rise to undesirable consequences, including an unjustifiable anomaly because, in a case of dishonest assistance, the claimant’s escape via s21(1)(a) from the normal s21(3) limitation period would be dependent on whether the trustee was fraudulent or not, whereas dishonesty of the trustee would not be required in order to establish the substantive cause of action against the dishonest assister arose out of the case of Royal Brunei Airlines v Tan [1995] UKPC 4. But Tan was not decided until 1995. In contemplating a claim in respect of dishonest assistance, the draftsman of s21 would therefore have had in mind a claim which could have been described as an action for ‘fraudulent breach of trust to which the trustee was a party or privy’. Might it be possible therefore that the words ‘to which the trustee was a party or privy’ were intended to do no more than to label the action to which the subsection referred in such a way as to reflect that necessary element of a claim? The intervention of Tan in the jurisprudence gave rise to the anomaly identified by CBN, which must be regarded as unforeseen. Before Tan, subsection (1)(a), if it applied at all, would have operated uniformly, denying the benefit of the limitation period to all dishonest assisters because liability required a dishonest trustee. After Tan, if an action against a dishonest assister was within subsection (1)(a) at all, it would only be caught if the trustee was dishonest. If the trustee was not dishonest, the assister (still no doubt just as dishonest himself) would have a limitation defence. While the anomaly could not be ignored, it must be remembered that it was an accident of the developing law and would not have been in the contemplation of the pre-Tan draftsman [57-59].
JUDGMENT THE CHANCELLOR: Introduction [1] In 1986 the claimant Dr Louis Elmovbira Williams, a national of Nigeria who had been resident in England since 1979, participated in a transaction whereunder, he alleges, he was defrauded of $6,520,190. He asserts, in proceedings commenced by him on 10th March 2010 against Central Bank of Nigeria (CBN) alone, …Continue reading "Central Bank of Nigeria v Williams [2012] EWCA Civ 415"