Limitation in trustee claims

We all know that limitation can often raise difficult questions. Raised correctly however, limitation and/or the equitable remedy of laches may help a trustee defend a claim. This article provides an overview of the time related defences which may arise.

This article seeks to provide an overview of some of the complex limitation issues facing those dealing with claims against trustees.

The starting point

The starting point is that limitation for breach of trust is six years from the date on which the right of action accrued ie, the date of breach, not the date of loss. The usual rule is, however, subject to certain exceptions set out in section 21(1) of the Limitation Act 1980 (the Act) which, in summary, states:

No limitation period shall apply to an action by a beneficiary under a trust:

(a) in respect of any fraud or fraudulent breach of trust by the trustee; or

(b) to recover trust property or the proceeds of trust property from the trustee.

The second category is self-explanatory. The first, however, requires some explanation.

For section 21(1)(a) to apply, there must first be a breach of trust. Case law confirms this to mean any claim against a trustee for breach of fiduciary duties (as opposed to breach of statutory or common law duties).

Secondly, there must be fraud, namely dishonesty, which “connotes at the minimum an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferent whether it is contrary to their interests or not.” (Armitage v Nurse)

But do the section 21(1) exclusions apply to constructive trustees?

In the Act, the terms "trust" and "trustee" are defined to include constructive trustees.

Constructive trustees have been categorised in two ways:

Category 1 – “true” trustees: persons, though not formally appointed, who assume fiduciary obligations in the administration of a trust.

Category 2 – persons who have never assumed fiduciary obligations, but have exposed themselves to equitable remedies eg, where the “trustee” is an accessory to a breach of trust or receives trust property.

The extension of the definition to constructive trusts led to many years of uncertainty and debate as to whether a limitation period applied to claims by beneficiaries against all constructive trustees or just some of them.

The position was finally clarified by the Supreme Court in the 2014 decision of Williams v Central Bank of Nigeria. It is now clear that section 21(1) of the Act applies only to “true” trustees ie, those who have assumed fiduciary responsibilities for trust property.


Therefore, no limitation period will apply to a claim for fraud or fraudulent breach of trust against a trustee and/or a “true” constructive trustee.

The statutory limitation period of six years will, however, apply:

(a) in the absence of fraud; or

(b) where a beneficiary seeks to claim an equitable remedy from a third party, as opposed to a trustee, in relation to trust assets eg, by bringing a claim for dishonest assistance or for knowing receipt of trust assets.

Are there any further rules that might apply?

The answer is “yes” in certain circumstances.

First, the trustee may seek to rely on the equitable doctrine of laches. By invoking laches a defendant is asserting that the claimant has delayed in asserting its rights and as a result can no longer bring a claim.

However, delay alone is not enough. The consequence of the delay must be that it would be unfair for the court to give relief. To rely on laches the defendant will usually therefore need to establish a lengthy delay coupled with circumstances which make it unconscionable for the claimant to be allowed to proceed.

Secondly, the usual six-year time limit may be extended if section 32 of the Act applies.

Section 32 postpones the limitation period in case of fraud, concealment or mistake. The section provides that time will not start to run for limitation purposes until the claimant has discovered the fraud, concealment or mistake, or could with reasonable diligence have discovered it where either:

(a) the action is based on the fraud of the defendant;

(b) any fact relevant to the claimant’s cause of action was deliberately concealed by the defendant; or

(c) the action is for relief for the consequence of a mistake.


The limitation position in claims against trustees varies according to the particular circumstances and parties involved and is often complicated. Broadly, the applicable time limit (if any) will depend upon whether or not the trustee has been fraudulent or has deliberately concealed relevant facts, whether the defendant is in fact a trustee at all and whether the trustee can rely on the doctrine of laches. Working through those questions will, however, be a complex exercise and one for which specialist advice is likely to be needed.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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