Supreme Court Rules On The Limitation Period In Constructive Trustee Cases

The Supreme Court¹ has recently provided clarity on two questions where there have been inconsistent authorities for much of the 20th century. The first question was whether a third party who dishonestly assists or knowingly receives trust property in breach of trust is a trustee for the purposes of section 21 of the Limitation Act 1980 (the Act). Section 21 provides a six-year limitation period to an action to recover trust property, unless the action is one:

1. in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
2. to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.