Dishonest Or Fraudulent Breaches Of Duty Know No Limits

Limitation is a perennial concern for plaintiffs, and knowing when time starts to run is particularly troublesome where plaintiffs have been unaware of their potential claim due to either a lack of information or worse, dishonesty. In CMC Holdings Limited v Martin Henry Forster & Ors1 the Jersey Court indicated albeit at a preliminary stage of the proceedings, that neither a trustee of an express trust nor a fiduciary who has acted dishonestly in breach of trust or fiduciary duty can successfully plead a limitation defence.

The Claim

The Plaintiffs were Kenyan companies that imported motor vehicles into East Africa (the Companies). They alleged that at some time between 1977 and 2011 certain former directors of the Companies participated in unlawful arrangements to receive secret commissions in respect of that importation. The First Defendant was one of the former directors whom it was alleged acted dishonestly in breach of his fiduciary duties and should thereby be considered to be a constructive trustee in respect of the commissions. The Second and Third Defendants were fiduciary and corporate services providers alleged to have dishonestly assisted the former directors. The Plaintiffs sought an account of the commissions received.

The Plaintiffs contended that they had only begun to gain an awareness of the commissions through a conversation in May 2011 between the First Defendant and a Mr Lay, the then managing director of the Companies' group. Disclosure of documents was sought by the Plaintiffs and provided voluntarily in July 2013. Proceedings were served in June 2016.

The Defendants contended the claim was time barred as the Plaintiffs had sufficient knowledge to plead their claim more than 3 years before 2016. The Defendants applied for an order that the issue of limitation be determined as a preliminary issue.

Parties' arguments on limitation

The principle application was by the Second and Third Defendants in relation to the dishonest assistance allegations against them. It was agreed that the limitation period in Jersey for dishonest assistance claim is three years, beginning on the date of the act of dishonest assistance.2 However, if a plaintiff is prevented from bringing its claim due to an empêchement (impediment) the running of time will be suspended.

The First Defendant argued that the claims against him were time barred insofar as they occurred more than 21 years before the proceedings were commenced, based upon the...

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