Dr Williams alleged the Central Bank of Nigeria dishonestly assisted, and knowingly received funds from, a fraudulent breach of trust by an English solicitor in 1986. The Supreme Court held, by majority, that section 21(1)(a) of the Limitation Act 1980 did not disapply the limitation period against strangers to a trust such as the Bank, so the claims were time-barred.
Facts
Dr Williams claimed to be the victim of a fraud instigated by the Nigerian State Security Services in 1986. He alleged that he was induced to act as guarantor of a bogus transaction for the importation of foodstuffs into Nigeria, and paid US$6,520,190 to an English solicitor, Mr Reuben Gale, to be held on trust. Mr Gale allegedly paid US$6,020,190 in fraudulent breach of trust to the Central Bank of Nigeria’s account at Midland Bank in London, retaining US$500,000 for himself. Dr Williams claimed the Central Bank was party to Mr Gale’s fraud, and brought claims for (i) dishonest assistance, (ii) knowing receipt, and (iii) a proprietary tracing claim.
The Central Bank applied to set aside permission to serve out of the jurisdiction. The only relevant question on this appeal was whether the 1986 trust claims were time-barred under section 21 of the Limitation Act 1980. It was common ground that, unless section 21(1)(a) disapplied the ordinary limitation period, the claims were out of time.
Issues
Two questions arose under section 21(1)(a) of the Limitation Act 1980:
- Whether a stranger to a trust liable to account on the basis of dishonest assistance and/or knowing receipt is a “trustee” within section 21(1)(a) (as defined by reference to section 68(17) of the Trustee Act 1925).
- Whether an action “in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy” extends to an action against a party which is not itself a trustee.
Arguments
Appellant (Central Bank of Nigeria)
The Bank submitted that a person liable only as an ancillary participant in another’s breach of trust (whether by dishonest assistance or knowing receipt) is not a true trustee, and is therefore outside the statutory definition. It further argued that section 21(1)(a) is concerned only with actions against trustees themselves, relying on the legislative history, the statutory context (particularly section 21(1)(b)), and the modern line of authority commencing with Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400.
Respondent (Dr Williams)
Dr Williams accepted that a dishonest assister was not a trustee but contended that a knowing recipient was. He also argued that section 21(1)(a) applied to any action in respect of a fraudulent breach of trust to which the trustee was a party or privy, regardless of whether the defendant was the trustee, relying on Soar v Ashwell [1893] 2 QB 390, the Law Revision Committee’s Fifth Interim Report (1936) and the wording of section 21(3).
Judgment
The Supreme Court (Lord Sumption and Lord Neuberger, with Lord Hughes agreeing; Lord Mance dissenting and Lord Clarke dissenting in part) allowed the appeal, holding that the 1986 trust claims were time-barred.
Two categories of constructive trust
Lord Sumption drew the central distinction between two categories of so-called constructive trustee. The first comprises persons who have lawfully assumed fiduciary obligations in relation to trust property without formal appointment (such as trustees de son tort, directors and similar fiduciaries) — these are “true trustees”. The second comprises persons who never assumed the status of trustee but are exposed to equitable remedies because of their participation in the misapplication of trust assets (dishonest assisters and knowing recipients). This latter category is liable only as a remedial formula, and is not, in truth, a trustee at all.
Section 21 and the legislative history
The Court traced the equitable rule that statutory limitation did not run in favour of express trustees to Hovenden v Lord Annesley (1806) and Beckford v Wade (1805), explaining that the rationale was that a trustee’s possession was the beneficiary’s possession. By contrast, strangers under ancillary liability held adversely to the beneficiary from the outset, and time always ran in their favour. The Privy Council confirmed this in Taylor v Davies [1920] AC 636 and Clarkson v Davies [1923] AC 100. Although Soar v Ashwell contained obiter dicta extending the rule to dishonest assisters and knowing recipients, these were inconsistent with principle and the earlier authority.
The first issue: meaning of “trustee”
Section 38(1) of the 1980 Act adopts the definition of “trustee” in section 68(17) of the Trustee Act 1925, which is concerned with true trusts. Lord Neuberger emphasised that the meaning of “trustee” in the 1980 Act must be determined by construing the 1925 Act, and that the 1925 Act’s many provisions (concerning investments, powers, appointment of new trustees and so on) are wholly inapt for persons whose only obligation is to account for or restore property. A knowing recipient “never assumes the position of a trustee”; his possession is at all times adverse to the beneficiary. A dishonest assister is in an even weaker position, since he does not even hold the property. Accordingly, neither falls within the statutory definition.
The second issue: actions against non-trustees
The Court held that section 21(1)(a) applies only to actions against trustees in respect of their own fraud or fraudulent breach of trust. The references to “the trustee” being a “party or privy” would be otiose if the section extended to strangers, because by definition there must be a trustee who is party or privy to any breach of trust. The contrast with section 21(1)(b), which is plainly limited to actions against the trustee, reinforced this reading. Furthermore, the liability of a dishonest assister or knowing recipient does not depend on the dishonesty of the trustee (see Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378), making it irrational to tie the limitation position of strangers to the trustee’s state of mind.
Modern authority
The conclusion was supported by Paragon Finance Plc v DB Thakerar & Co (Millett LJ), Cattley v Pollard [2007] Ch 353, JJ Harrison (Properties) v Harrison [2002] 1 BCLC 162, Gwembe Valley Development Co Ltd v Koshy (No 3) [2004] 1 BCLC 131, Halton International (Holdings) Inc Sarl v Guernroy Ltd [2006] WTLR 1241 and the Hong Kong Court of Final Appeal in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135.
Dissents
Lord Mance dissented, holding that the 1939 Act was intended to give effect to the Law Revision Committee’s 1936 Report, which endorsed the assimilation of dishonest assisters (and knowing recipients) with express trustees for limitation purposes as recognised in Soar v Ashwell. He also relied on parliamentary material and contemporary textbook writers. Lord Clarke agreed that the Bank was not a “trustee” but considered, on the natural reading of section 21(1)(a) and in light of the common ground that the same phrase in section 21(3) covers actions against dishonest assisters, that section 21(1)(a) applied to any action in respect of a fraudulent breach of trust to which the trustee was party or privy.
Implications
The decision authoritatively confirms, at the highest level, the distinction first articulated by Millett LJ in Paragon Finance between true (institutional) constructive trustees and persons against whom equity imposes a remedial liability to account as if they were trustees. Only the former fall within the disapplication of the statutory limitation period in section 21(1)(a) of the Limitation Act 1980.
Practically, the case means that claims for dishonest assistance or knowing receipt are subject to the ordinary six-year limitation period under section 21(3) (subject to possible postponement under section 32 in cases of fraud, deliberate concealment or mistake), even where the trustee assisted was fraudulent. The decision provides important certainty for banks, professional advisers and other third parties who may be drawn into trust-related litigation, by confirming that they are not deprived of a limitation defence simply because they are alleged to have participated in another’s breach of trust.
The case also illustrates the Supreme Court’s approach to statutory interpretation where a definition is incorporated by reference from an earlier statute: the meaning is fixed by the earlier Act and cannot be altered by extraneous material such as Law Revision Committee reports or Hansard. The limits of the decision should be noted: it does not affect the position of true fiduciaries (such as directors and trustees de son tort), who remain within section 21(1)(a) and (b). The unresolved question of whether the policy distinction between fraudulent trustees and their dishonest accomplices is satisfactory was the subject of strong dissents and may continue to attract academic and judicial debate.
Verdict: Appeal allowed. The Supreme Court declared that the English court had no jurisdiction which it ought to exercise in respect of the 1986 trust claims, which were struck out as time-barred under section 21 of the Limitation Act 1980. The Nigerian law claim was unaffected and could proceed.
Source: Williams v Central Bank of Nigeria [2014] UKSC 10
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National Case Law Archive, 'Williams v Central Bank of Nigeria [2014] UKSC 10' (LawCases.net, June 2026) <https://www.lawcases.net/cases/williams-v-central-bank-of-nigeria-2014-uksc-10/> accessed 30 June 2026
