First Subsea Ltd v Balltec Ltd & Ors [2017] EWCA Civ 186 (30 March 2017)

First Subsea Ltd v Balltec Ltd & Ors [2017] EWCA Civ 186 (30 March 2017)

Claims against directors for breach of fiduciary duty are not statute-barred under s.21(3) of the Limitation Act 1980 if the breaches are fraudulent within s.21(1)(a), as directors are class 1 fiduciaries. The breaches by Mr Emmett were found to be dishonest and intended to injure the company, thus falling within s.21(1)(a) and exempt from the limitation period. There was no proprietary claim under s.21(1)(b) as there was no misappropriation of pre-existing company property.

Citation
[2017] EWCA Civ 186
Parties
Claimant/respondent: First Subsea Limited (formerly BSW Limited); Defendant/appellant: Balltec Limited; Defendant/appellant: Robert Emmett; Defendant/appellant: Russell Benson; Defendant/appellant: Roger Bacon
Jurisdiction
England and Wales
Judgment Date
30 March 2017
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)
Outcome
Appeal dismissed
Legal Topics
Directors' Fiduciary Duties, Limitation of Actions, Constructive Trusts, Fraudulent Breach of Trust, Equitable Compensation
Company Law Equity and Trusts Civil Procedure Directors' Fiduciary Duties Limitation of Actions Constructive Trusts Fraudulent Breach of Trust Equitable Compensation

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Parties

First Subsea Limited (formerly BSW Limited)

Claimant/respondent

Balltec Limited

Defendant/appellant

Robert Emmett

Defendant/appellant

Russell Benson

Defendant/appellant

Roger Bacon

Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Whether claims against a director for breach of fiduciary duty are statute-barred under s.21(3) of the Limitation Act 1980 or fall within the exceptions in s.21(1)
  2. 2 Whether the breaches of fiduciary duty were fraudulent within s.21(1)(a)
  3. 3 Whether the claims relate to recovery of trust property under s.21(1)(b)

Ratio Decidendi

Claims against directors for breach of fiduciary duty are not statute-barred under s.21(3) of the Limitation Act 1980 if the breaches are fraudulent within s.21(1)(a), as directors are class 1 fiduciaries. The breaches by Mr Emmett were found to be dishonest and intended to injure the company, thus falling within s.21(1)(a) and exempt from the limitation period. There was no proprietary claim under s.21(1)(b) as there was no misappropriation of pre-existing company property.

Court Disposition

Appeal dismissed

Orders

  • Order for account or equitable compensation against Mr Emmett for breaches of fiduciary duty stands
  • No limitation period applies to the established breaches of fiduciary duty under s.21(1)(a)