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Williams v Central Bank of Nigeria
Factual and Procedural Background
The Plaintiff alleged that in 1986 he was defrauded by agents of Company A. He placed USD 6,520,190 with an English solicitor (the Trustee) on terms that the money would be held until matching funds became available in The State. The Plaintiff claims the Trustee dishonestly paid USD 6,020,190 to an account held by the Defendant and kept USD 500,000 for himself. The Plaintiff obtained permission to serve the claim form on the Defendant outside the jurisdiction; the Defendant applied to set that permission aside on limitation grounds. At first instance Judge [Lastname 1] held that only the “1986 trust claims” raised a serious issue and that limitation might not bar them. The Court of Appeal (Judges [Lastname 2], [Lastname 3] and [Lastname 4]) agreed. The Defendant appealed to the Supreme Court. Separately, permission has been granted for a “Nigerian law claim”, which is unaffected by the present decision.
Legal Issues Presented
- Whether a stranger to a trust who is liable to account on the footing of dishonest assistance or knowing receipt is a “trustee” for the purposes of section 21(1)(a) of the Limitation Act 1980.
- If not, whether an action against such a stranger is nonetheless “in respect of” a fraud or fraudulent breach of trust within section 21(1)(a), so as to disapply any limitation period.
Arguments of the Parties
Plaintiff's Arguments
- A recipient of trust property with knowledge of the breach is a constructive trustee; therefore section 21(1)(a) removes any limitation bar.
- Even if the Defendant is not a trustee, an action against a dishonest participant in the Trustee’s fraud is an action “in respect of” that fraud, bringing it within section 21(1)(a).
- The legislative history (Trustee Act 1888, Limitation Act 1939) shows an intention to equate dishonest assisters/recipients with trustees for limitation purposes.
Defendant's Arguments
- Section 21(1)(a) applies only to actions against trustees. A dishonest assister or knowing recipient is not a trustee and can rely on the ordinary six-year period under section 21(3).
- The words “to which the trustee was a party or privy” confine the subsection to claims against the trustee personally; Parliament could have stated otherwise had it wished.
- Modern authority distinguishes between true trustees and persons under purely ancillary liability; the latter are protected by limitation statutes.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Barnes v Addy (1874) | Two limbs: dishonest assistance and knowing receipt | Used to explain historic distinction between trustees and strangers |
| Hovenden v Lord Annesley (1806) | Equity’s treatment of fraud and limitation | Illustrated why limitation never aided fraudulent trustees |
| Beckford v Wade (1805) | Time runs in favour of strangers who take adversely | Supported majority view that ancillary liability differs from true trusteeship |
| Soar v Ashwell (1893) | Early dicta treating dishonest assisters like trustees | Majority declined to follow those dicta |
| Taylor v Davies (1920) | Construction of statutory term “trustee” | Relied on to limit section 21 to true trustees |
| Paragon Finance v Thakerar (1999) | Distinction between institutional and remedial constructive trusts | Key modern authority adopted by majority |
| Royal Brunei Airlines v Tan (1995) | Liability for dishonest assistance does not depend on trustee’s dishonesty | Cited in analysis of ancillary liability |
| Peconic Industrial Development v Lau Kwok Fai (2009) | Hong Kong analogue of section 21(1)(a) | Minority relied on; majority declined to follow |
Court's Reasoning and Analysis
A majority of the Supreme Court (Judges [Lastname 5] and [Lastname 6], with Judge [Lastname 7] concurring) allowed the appeal.
- Statutory construction began with section 38(1) of the Limitation Act 1980, which incorporates the Trustee Act 1925 definition of “trustee”. That definition embraces express and de facto trustees but not persons whose liability arises solely from participation in a breach.
- Equitable history shows two categories of “constructive trustee”: (i) those who assume fiduciary control of property (true or institutional trustees), and (ii) strangers subjected to a remedial liability (dishonest assisters/recipients). Only the first category falls within section 21.
- The legislature, particularly in 1939, aimed to relieve honest trustees but never intended to deprive strangers of limitation defences. The removal in 1939 of the words “against a trustee” did not expand section 21(1)(a) beyond actions against trustees; the focus remained on the person sued, not the nature of the wrongdoing.
- Section 21(1)(b) is expressly limited to actions “from the trustee”, reinforcing that paragraph (a) likewise concerns actions against trustees.
- Accordingly, the Defendant, as an alleged dishonest assister/recipient, is not a trustee. Section 21(1)(a) does not apply; section 21(3) applies and the six-year period has long expired.
- The minority (Judges [Lastname 8] and [Lastname 9]) would have held that an action against a dishonest assister is still “in respect of” the trustee’s fraud and therefore not time-barred, but this view did not prevail.
Holding and Implications
APPEAL ALLOWED; the 1986 trust claims are statute-barred and are struck out. The order granting permission to serve the separate Nigerian-law claim outside the jurisdiction remains unaffected.
Implications: The decision confirms that section 21 of the Limitation Act 1980 protects only claims against trustees. Persons liable merely for dishonest assistance or knowing receipt may invoke the normal six-year limitation period. The ruling narrows the scope of “constructive trustee” for limitation purposes and brings certainty to cross-border trust litigation in The State.
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