‘It is perhaps too late now to suggest that the Trustee Act, 1888 was intended to do away with the distinction between express and constructive trusts for the purpose of the limitation of actions, though the definition of ‘trustee’ in section 1 (8) seems to point to that conclusion. At any rate we consider that the distinction should now be abolished, and we recommend that the exception in section 8 of the Trustee Act, 1888 should be expressly made to extend to trustees whether holding on express or constructive trusts, including personal representatives.’

Interestingly, the report followed up with the recommendation,[25] ‘that the Statutes of Limitation should only apply to constructive trustees to the extent to which they do to express trustees.’
 
Shortly after, the Limitation Act 1939 (UK LA 1939)[26] was passed. This new statute contained S.19(1) and (2) which were substantially similar with S.21(1) and (3) of the UK LA 1980 as set out above. Since 1939, the English Courts have shifted towards adopting the Privy Council’s approach in Taylor and Clarkson, thereby drifting away from Soar.[27]
 
To what extent did the report influence such legislative reform? Which approach did the report actually advocate? Is the report even a useful interpretive aid to ascertain Parliament’s intention in drafting such provisions? The answers are not clear-cut, as will be illustrated below. 

B.   Williams v Central Bank of Nigeria
We finally come to the case which sought to clear the clouds of uncertainty behind S.21(1) of the UK LA 1980 — the Williams case. Whilst the judicial tailwind blew strongly against the applicability of limitation on trust claims arising out of ancillary trustees, the specter of Soar and the Wright Report still loomed at large to cast doubt as to the true legal position.
 
The facts of Williams are fairly straightforward. Dr. Williams alleged that he was a victim of a fraud, dating back to 1986, in which he was induced to act as a guarantor of a fraudulent transaction to import food into Nigeria. In this connection, Dr. Williams paid $6,520,190 to Mr. Gale, an English solicitor, that was to be held on trust pending the release of certain funds to Dr. Williams in Nigeria. It was alleged that Mr. Gale — in fraudulent breach of trust — whilst knowing that the funds had not been released to Dr. Williams in Nigeria, transferred $6,020,190, a huge portion of the trust funds held by him to the Central Bank of Nigeria (CentralBank), and personally retained the remaining $500,000.00. Dr. Williams brought a claim against the Central Bank on the basis that it was a constructive trustee that had dishonestly assisted with Mr. Gale’s fraudulence and/or knowingly received funds from a fraudulent transaction. Dr. Williams also sought to trace the misappropriated sums into the Bank’s assets. Dr. Williams was initially granted permission to serve the claim on the Central Bank in Nigeria. The Bank then applied to set aside such order on the ground that the English court lacked the jurisdiction to hear the matter. This application necessitated an examination of whether there was a ‘serious issue to be tried’, which in turn depended on whether Dr. Williams’ claims were time-barred under S.21 of the UK LA 1980.

In light of this backdrop, two questions were raised before the Supreme Court, both of which will be addressed separately.

i) 1st Question – Whether the Central Bank, alleged to be a stranger to a trust, liable to account on the footing of dishonest assistance in breach of trust or knowing receipt of trust assets, is a trustee for the purposes of S.21(1)(a) of the UK LA 1980?

The majority by 4:1 answered this question in the negative by adopting a two-pronged approach. First, by looking at the historical context of limitation and trust laws.[28] Second, by way of statutory construction.[29] 
 
On the first approach, the majority once again highlighted the importance of drawing a clear line between the two distinct categories of constructive trustees. Ultimately, the issue boiled down to one question — should the Soar dicta or the Privy Council decisions on appeal from Canada hold more sway? The majority were more persuaded by the latter.
 
First, it must be noted that Soar and the subsequent cases following suit were decided in the context of limitation laws developed by the Courts of Equity, and not within the statutory framework of the UK TA 1888.[30] Second, if one were to carefully scrutinise the dicta in Soar, especially by Lord Esher, nothing in his Lordship’s words explicitly suggest that the no-limitation exception applies to ancillary trustees.[31] In stark contrast, the Privy Council’s decisions of Taylor and Clarkson ought to have higher referential value as the Privy Council was interpreting a Canadian limitation statute couched in similar terms with S.1(3) and S.8(1) of the UK TA 1888.[32]
 
However, Lord Mance, the lone dissenting voice, advanced an equally compelling argument. His Lordship critically observed that the Wright Report made zero reference to the diverging views in Soar and the cases following suit and in Taylor and Clarkson respectively. Such oddity was taken by Lord Mance to indicate two things. First, the Wright Report’s lack of reference to Taylor and Clarksonindicated that such decisions did not and should not form part of English law which led up to the UK 1939 LA.[33]
 
Second, the Wright Report contained not a hint of disagreement with the principles in Soar.[34] Further, one of the committee members of the Wright Report was Romer J, who had previously affirmed Soars[35] in both his decisions In re Eyre-Williams[36]and In re Mason.[37] Hence, such report ought to be construed as recognising Soars as the prevailing legal position in UK during that period.[38]  
 
The second approach — which is perhaps the more clinical factor — is by ascertaining Parliament’s intention in the passing of the UK 1939 LA (in which our current statutory provisions take similar form). When it comes to construing a statute, there are generally two approaches available – the contemporaneity approach[39] and the evolutive approach.[40] Lord Neuberger adopted the former, in the following words:

‘Given the unambiguous way in which the 1939 and 1980 Acts incorporate the definition in the 1925 Act, the definition of “trustee” in the 1925 Act simply cannot have a different meaning in the later Acts from that which it has in the 1925 Act itself, simply because any wording is “subject to the context”, or because of “the mischief being addressed” in the later Acts, or because of “Parliament’s evident intention when enacting” the later Acts. When interpreting a statute, the court’s function is to determine the meaning of the words used in the statute. The fact that context and mischief are factors which must be taken into account does not mean that, when performing its interpretive role, the court can take a free-wheeling view of the intention of Parliament looking at all admissible material, and treating the wording of the statute as merely one item. Context and mischief do not represent a licence to judges to ignore the plain meaning of the words that Parliament has used…’[41]

Since S.21(1) of the UK LA 1980 still incorporated the definition of ‘trustee’ under S.68(1)(17) of the UK TA 1925, one must necessarily look at the meaning of ‘trustee’, or more specifically meaning of ‘constructive trustee’ as at 1925. Since the prevailing position as at 1925 was reflected by the Privy Council’s decisions in Taylor and Clarkson, it naturally followed that the term ‘trustee’ under S.68(1)(17) did not extend to ancillary trustees.
 
Another compelling reason to side with Lord Neuberger on his impeccable statutory construction is to look at the UK TA 1925 as a whole. The UK TA 1925 undoubtedly only governed classic trusts, or in the words of Millet LJ in Paragon Finance, was concerned with ‘the powers and duties of trustees properly so called’, rather than ‘persons whose trusteeship is merely a formula for giving restitutionary relief’.[42] Hence, the UK TA 1925 has little, if not zero, application on ancillary trustees.[43]
 
Further, affixing 1925 as the critical date also overcomes the vexing hurdle posed by the Wright Report. As put succinctly by Lord Neuberger:

‘I also consider that it is self-evident that statements made in the 1936 Report, and by the Solicitor General in Parliament in connection with the Bill which became the 1939 Act must be irrelevant to the resolution of the first issue on this appeal. What a committee recommended in 1936, or what was said in Parliament in 1939, cannot, as I see it, possibly affect the meaning of a definition in a statute enacted in 1925.’ [44]

In other words, Lord Neuberger’s contemporaneous interpretive approach quite elegantly killed two birds (Soars and Wright Report) with one stone.

​(ii) 2nd question – Whether an action ‘in respect of’ any fraud or fraudulent breach of trust to which the trustee was a party or privy includes an action against a party such as the Central Bank, which is not itself a trustee?

The majority by 3:2 answered this question in the negative. This issue involved a comparative analysis of both S.21(1)(a) and S.21(3) of the UK LA 1980. Both were considered two sides of the same coin — the former reflected the exemption of any limitation period, whilst the latter imposed a general limitation period of six-year period on trust claims.[45]

S.21(1)(a) embodied the phrase ‘an action … in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy’, whilst s.21(3) stated ‘an action … in respect of any breach of trust’. The question was whether ancillary trustees fall within S.21(1)(a) or S.21(3)?
 
The majority leaned towards the latter based on several factors. First, they considered the legislative history of limitation laws in the UK. Indisputably, S.21(3) was intended to relieve trustees, save for cases of fraudulent exception and trust property exception under S.21(1).[46] Second, from a linguistic point of view, the application of S.21(1)(a) was only limited to fraud or fraudulent breaches of trust ‘to which the trustee was a party or privy’. This additional phrase in S.21(1)(a), which was absent in S.21(3), was intended to relieve trustees who acted in good faith, including honest co-trustees.  If indeed ancillary trustees were meant to be covered under this paragraph, the inclusion of such phrase would be redundant as any actions based on ancillary trustees must necessarily be one ‘to which the trustee was a party or privy’.[47]
 
Third, the majority considered the core underlying principles governing ancillary trustees. It is trite that ancillary trustees do not depend on the liabilities of the true trustees.[48] Fourthly, as S.21(1)(b) only extended to actions in recovering trust property in the possession of true trustees, but not knowing recipients,[49] it therefore logically followed that S.21(1)(a) only applies to true trustees as well.[50] Fifth, the expression ‘the trustee’ at the end of S.21(1)(a) was employed to only mean that the section must only apply against a trustee, specifically, the trustee referred to at the end of the paragraph.[51]
 
With due respect, the majority has resorted to linguistic gymnastics to justify a conclusion (and seemingly coloured by their earlier conclusion on ancillary trustees in the first question). If S.21(1)(a) was truly intended to cover an action against fraudulent trustees only, why was the provision not worded to explicitly state ‘an action against a trustee… in respect of any breach of trust to which the trustee was a party or privy’?[52]
 
There are several compelling reasons why S.21(1)(a) should be construed more expansively to include dishonest assisters and knowing recipients arising from constructive trusts.

First, in explaining what must have been intended to be covered under S.21(1)(a) in contrast to S.21(3), Lord Mance provided an example of an action against an innocent trustee, or against an innocent solicitor or accountant acting for trustees for failure to discover and prevent a fraud by a guilty trustee assisted by a dishonest stockbroker. The action against the guilty trustee and the dishonest stockbroker would fall under S.21(1)(a), whilst the action against the innocent trustee, or innocent solicitor and accountant acting for trustees would not be ‘in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy’ falling under S.21(3).[53] Put simply, S.21(1)(a) was intended to preclude fraudulent trustees and their dishonest assisters from invoking limitation as a defence, whilst S.21(3) was meant to only shield non-fraudulent actors.[54]
 
Second, take for example a dishonest assister. There is no doubt that he will fall under S.21(3), being ‘an action by a beneficiary … in respect of any breach of trust’, but it also means that this dishonest assister can fall under S.21(1)(a). As long as it is proven that he ‘assists a fraud or fraudulent breach of trust to which the trustee was a party or privy’.[55] Of course, theoretically speaking, liability of a dishonest assister should not depend on the main liability of the trustee.[56] However, is it really possible that a dishonest stranger to a trust may assist in bringing about a fraud or a fraudulent breach of trust to which the trustee himself is not a party or privy? According to Lord Mance, such scenario is practically implausible.[57]
 
Third, what the majority has glossed over is the fact that the Parliament deliberately omitted in S.19(1)(a) of the UK LA 1939 and S.21(1)(a) of the UK LA 1980 the phrase ‘any action or other proceeding against a trustee or any person claiming through him’ which was originally inserted in S.8(1) of the UK TA 1888.[58] Further, if Parliament had truly intended to restrict the operation of S.21(1)(a) of UK TA to true trustees, the opening phrase should have been amended to read ‘an action by a beneficiary against a trustee…’ Hence, such omission demonstrated the Parliament’s intention to broaden the scope of persons of whom an action can be brought against by a beneficiary outside the general limitation period, so long as the alleged breach is tainted by fraud.

Hence, whilst the term ‘trustee’ under S.21(1)(a) of the UK LA 1980 should follow the orthodox definition, the absence of any caveat qualifying the persons of whom a beneficiary can bring an action against under this provision indicates that the minority’s view should be preferred. 

V.   CONCLUSION
The UK Supreme Court’s decision in Williams is truly a judicial watermark. The painstaking lengths taken by the Law Lords in justifying their respective majority and minority opinions have not only enriched the jurisprudence on constructive trust, but provided great insights into the historical development of equity through the years.
 
Nevertheless, despite their compelling reasoning, the outcome of the decision is not without lingering doubts.
 
Statutory construction aside, policy reasoning dictates that the no-limitation exception should apply to ancillary trustees, especially in instances of fraud. After all, the primary remedy to trust claims is to recover trust property. It is rather unfair to leave the claimant barred by limitation simply because the trust property lies in the hands of a dishonest assister or knowing recipient (instead of the trustee). Moreover, fraudulent breaches of trust are often discovered late in the day due to the meticulous planning of fraudulent trustees and their accomplices. To draw the line of limitation between true trustees and ancillary trustees may even have the unintended consequence of incentivising mischievous trustees to dissipate trust property even more quickly.
 
In light of the slim majority in Williams, there is likely to be further judicial developments in the UK, as well as other Commonwealth countries. Perhaps the decision could even prompt another legislative reform, either to crystalise the view of the majority or minority. For instance, the statutory definition of ‘trustee’ could be further refined to include (or distinguish) institutional and remedial constructive trustees. On the other hand, S.21(1)(a) could be amended to clarify that only actions ‘against a trustee’ are exempt from limitation.
 
Whatever the true legal position, there are still loose ends that need to be tied up. Statutory intervention is much desirable. Until clarity is found, lawyers and scholars will continue to wade in the murky waters of this century-old conundrum.