The parties had been involved in investing in an airline to secure its future, but it was now said that one party had broken the shareholders’ or voting agreement in not allowing further investments on a pari passu basis. The defendants argued that the claim was out of time unless the claimant could bring the case within section 21 of the 1980 Act.
Held: The appeal failed. The property was held as trustee, and the exception to the limitation period applied.
‘Section 21(1) provides an exception to the ordinary limitation rule that civil actions are barred after six years. Such an exception needs to be clearly justified by reference to the statutory language and the policy behind it. It is important therefore to keep in mind the reasoning behind the exception. It is not about culpability as such; fraud may not be sufficient to avoid the ordinary rule.[1] It is about deemed possession: the fiction that the possession of a property by a trustee is treated from the outset as that of the beneficiary. In the words of Millett LJ, the possession of the trustee is ‘taken from the first for and on behalf of the beneficiaries’ and is ‘consequently treated as the possession of the beneficiaries’. An action by the beneficiary to recover that property is not time-barred, because in legal theory it has been in his possession throughout.’
Judges:
Sir Andrew Morritt Ch, Lord Justice Tuckey, Lord Justice Carnwath
Citations:
[2006] WTLR 1241, [2006] EWCA Civ 801
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Appeal From – Halton International Inc (Holding) and Another v Guernroy Ltd ChD 9-Sep-2005
Parties had entered into a shareholders’ agreement as to voting arrengemets within a company. Thay disputed whether votes had been used in reach of that agreement, particularly as to the issue of new shares and their allotment, but the court now . .
Cited – Keech v Sandford ChD 1726
Trustee’s Renewed Lease also Within Trust
A landlord refused to renew a lease to a trustee for the benefit of a minor. The trustee then took a new lease for his own benefit. The new lease had not formed part of the original trust property; the minor could not have acquired the new lease . .
Cited – DEG-Deutsche Investitions und Entwicklungsgesellschaft mbH v Koshy and Other (No 3); Gwembe Valley Development Co Ltd (in receivership) v Same (No 3) CA 28-Jul-2003
The company sought to recover damages from a director who had acted dishonestly, by concealing a financial interest in a different company which had made loans to the claimant company. He replied that the claim was out of time. At first instance the . .
Cited – JJ Harrison (Properties) Ltd v Harrison CA 11-Oct-2001
A director had bought land belonging to the company, without disclosing its development potential.
Held: He had acquired the property as a constructive trustee for the company, and was accordingly accountable for it. . .
Cited – Taylor v Davies PC 19-Dec-1919
(Ontario) An assignee for the benefit of creditors conveyed mortgaged property to the mortgagee in satisfaction of part of the debt due to him. The mortgagee was also one of the inspectors required by the Canadian legislation to supervise the . .
Cited – Clarkson and Another v Davies and Others PC 23-Oct-1922
Ontario – Discussing the Taylor case, the Board said: ‘ . . it was there laid down that there is a distinction between a trust which arises before the occurrence of the transaction impeached and cases which arise only by reason of that transaction.’ . .
Cited – Clarkson v Davies PC 1923
In a case involving fraud, referring to Taylor v Davies, Lord Justice Clerk said that: ‘it was there laid down that there is a distinction between a trust which arises before the occurrence of the transaction impeached and cases which arises only by . .
Cited – Regal (Hastings) Ltd v Gulliver HL 20-Feb-1942
Directors Liability for Actions Ouside the Company
Regal negotiated for the purchase of two cinemas in Hastings. There were five directors on the board, including Mr Gulliver, the chairman. Regal incorporated a subsidiary, Hastings Amalgamated Cinemas Ltd, with a share capital of 5,000 pounds. There . .
Cited – Paragon Finance Plc (Formerly Known As National Home Loans Corporation Plc v D B Thakerar and Co (a Firm); Ranga and Co (a Firm) and Sterling Financial Services Limited CA 21-Jul-1998
Where an action had been begun on basis of allegations of negligence and breach of trust, new allegations of fraud where quite separate new causes of claim, and went beyond amendments and were disallowed outside the relevant limitation period. . .
Cited by:
Cited – Williams v Central Bank of Nigeria SC 19-Feb-2014
Bank not liable for fraud of customer
The appellant sought to make the bank liable for a fraud committed by the Bank’s customer, the appellant saying that the Bank knew or ought to have known of the fraud. The court was asked whether a party liable only as a dishonest assistant was a . .
Lists of cited by and citing cases may be incomplete.
Company, Contract, Limitation
Updated: 07 July 2022; Ref: scu.242876
