LIMITATION ACT & PROPERTY OBTAINED IN BREACH OF TRUST

LIMITATION ACT & PROPERTY OBTAINED IN BREACH OF TRUST

Burden Holdings (UK) Ltd v Fielding & Another, see here for the full judgment, concerned the interpretation of section 21(1)(b) of the Limitation Act 1980 by the Supreme Court.

Section 21 as a whole states:

“21.- Time limit for actions in respect of trust property. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action – (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession”

For the purposes of section 21(1)(b), the Defendants were deemed to be in possession of trust property transferred to a company of which they were Directors.  This was on the basis that as Directors, they were “fiduciary stewards” of the company; in interpreting the provision, the Court considered the purpose of the provision, which was to give trustees a period of time to correct irregular transfers not made in bad faith but not to provide them with a limitation defence.