Following a majority decision by the Supreme Court in Williams v Central Bank of Nigeria (2014), beneficiaries are no longer able to benefit from an indefinite limitation period when seeking to bring a claim against third parties for fraudulent breach of trust. A statutory limitation period of 6 years normally applies to beneficiaries seeking to bring an action in respect of any breach of trust.  However, Section 21(1)(a) of the Limitation Act 1980, (the "Act"), provides an exception in cases involving fraud. The Supreme Court's decision in Williams has narrowed the application of this exception so that it does not extend to claims against third parties based on dishonest assistance or knowing receipt. As such, beneficiaries seeking to make such claims against third parties will now have to ensure that their claims are brought within the 6-year limitation period.


In 1986, Dr Williams (the "Claimant") had agreed to act as guarantor of a transaction importing foodstuffs to Nigeria. The Claimant paid $6,520,190 (the "Trust Funds") to an English Solicitor (the "Solicitor") to be held on trust for the Claimant until certain funds had been released to him in Nigeria. It was alleged that the Solicitor acted in fraudulent breach of trust because he knew that these funds would not be released to the Claimant. The Claimant alleged that the Solicitor subsequently paid a large part of the Trust Funds into an account of the Central Bank of Nigeria in London (the "CBN") and kept the remainder for himself.

The Claimant brought proceedings against the CBN, arguing that the CBN was a constructive trustee which had either dishonestly assisted the Solicitor in breach of trust and was, therefore, liable to account for the full amount of the Trust Funds, or that it had knowingly been in receipt of the Trust Funds and was accordingly liable to account for the proportion of the Trust Funds paid into the London account. The claim was served on the CBN in Nigeria. In April 2010, the CBN applied for a declaration that the English court had no jurisdiction and asked for the claim to be set aside. Supperstone J dismissed the application in the first instance and the CBN appealed.

Upon appeal, the main issue to be decided by the Court of Appeal was whether the Claimant was time-barred from bringing his claim against the CBN. Since the alleged breach of trust occurred in 1986, the 6-year limitation period for breach of trust claims contained in Section 21(3) of the Act had expired. However, the Claimant sought to rely on the exception contained in Section 21(1)(a) of the Act, which removes this limitation period if the claim is "in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy." It was not disputed that the Claimant could rely upon this exception in his primary claim against the Solicitor; however, the question arose as to whether it applied in relation to the Claimant's secondary action against the CBN.

The Court of Appeal decided in favour of the Claimant, holding that the exception in Section 21(1)(a) of the Act was applicable. The CBN appealed to the Supreme Court.


The Supreme Court overturned the Court of Appeal's decision by a majority (Lord Mance dissenting with Lord Clarke dissenting in part) and allowed the CBN's appeal, holding that the English court had no jurisdiction over the Claimant's claim because he was unable to invoke the exception contained in Section 21(1)(a) of the Act and the claim's limitation period had therefore expired.

In reaching this decision, the Supreme Court asked two key questions. The first question was whether a stranger to a trust who dishonestly assists the trustee in, or knowingly receives trust funds from, a fraudulent breach of trust constitutes a "trustee" for the purposes of the exception contained in Section 21(1)(a) of the Act. The second question was whether there was some other means by which the Section 21(1)(a) exception would apply in the present scenario. In relation to the first question, the Court held that the exception in Section 21(1)(a) of the Act only applies to "true trustees." The Court, therefore, had to decide if the CBN, as a constructive trustee, was also a "true trustee."  In his leading judgment, Lord Sumption acknowledged that there has historically been much ambiguity surrounding the legal definition of "constructive trustee." It was held that a constructive trustee is a true trustee when it is also a "de-facto" trustee, which has assumed fiduciary duties and fraudulently breached these duties. When a constructive trusteeship arises in cases of ancillary liability for dishonest assistance or knowing receipt, the constructive trustee is not a true trustee. On this basis, the CBN was held not to be a true trustee. In relation to the second question, it was found that the CBN was not a party sued "in respect of" the Solicitor's fraud and therefore there was no other means by which the Section 21(1)(a) exception applied.


The decision of the Supreme Court in Williams has brought clarification to the question of whether a limitation period applies to claims against third parties in fraudulent breach of trust cases, an area which had previously received uncertain and inconsistent judicial treatment. Claimant-beneficiaries seeking to bring secondary claims against third parties for dishonest assistance or knowing receipt in cases of fraudulent breach of trust need to be aware that these claims now have a time limit. If the Claimant does not issue proceedings before the end of the 6-year statutory limitation period, there will be a complete defence.

A further impact of the Supreme Court's decision is that dishonest assistants and knowing recipients are now subject to limitation periods under trust law in the same way as those liable for fraud under common law.

The decision will prove significant for future trust fraud cases in that it brings long-awaited clarification to the legal definition of "constructive trustee", and summarises the different types of constructive trusteeship.

It is noteworthy, however, that beneficiaries in secondary liability claims may still benefit from Section 32 of the Act, which postpones the commencement of the 6-year limitation period in cases of deliberate concealment of trust fraud, which the Claimant could not, with reasonable diligence, have discovered.