Ten Year Limitation Period For Breach Of Directors' Duties Under Jersey Law

The vexed question (still unresolved by the Jersey courts) as to the correct limitation period under Jersey law for bringing a claim against a director of a Jersey company for a breach of his statutory duties as a director has been decided in the English court in English liquidation proceedings by a judgment dated 15 May 2017. Because the content of foreign (in this case Jersey) law is a question of fact, the English court received evidence as to the state of Jersey law from three Jersey Advocates called by the parties as "expert witnesses" on Jersey law. Their role as experts required them to be impartial in their evidence. Advocate John Kelleher, head of the Dispute Resolution team at Carey Olsen, was one of the expert witnesses.

O'Keefe v Caner and others [2017] EWHC 1105 (Ch)

In the fullest judicial treatment of the subject so far (on either side of the channel) Keyser J. held that such claims are barred after 10 years from the date of the breach of duty by a director. It is fair to say that this is the way the Jersey cases so far on the subject had been leaning, albeit tentatively.

The background

The liquidators' claim was for breach of duty against Mr Caner as the ultimate beneficial owner and director and against four other professional directors of the companies in liquidation.

The liquidators claimed that, between April 2007 and June 2008, improper payments of €34m were made to Mr Caner or to companies owned beneficially by him from the companies' bank accounts. The allegation was that, in causing or permitting the payments to be made, the directors had acted in breach of their duties under Article 74(1) of the Companies (Jersey) Law 1991 (the "1991 Law") to:"(a) act honestly and in good faith with a view to the best interests of the company; and(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."

It is significant that the two duties are quite different and they were therefore dealt with separately in the judgment.

In their defences, the directors claimed that those claims were made out of time because, they said, the limitation period (or as it is known in Jersey the "prescription period") for such claims is three years. Their counsel argued that this was because such claims should be regarded for prescription purposes as a case of breach of trust for which a three year statutory period applies in Jersey or, alternatively, should be regarded as a claim in the law of tort for which a statutory limitation period of three years also applies under Jersey...