Limitation and alleged breaches of duty (Burnden Holdings (UK) Ltd (in liquidation) v Fielding)

Limitation and alleged breaches of duty (Burnden Holdings (UK) Ltd (in liquidation) v Fielding)

In the case of Burnden Holdings (UK) Ltd v Fielding, the Court of Appeal had to determine the relevant limitation period in a claim in respect of alleged breach of duty by two directors. Marc Brown, barrister at St Philips Chambers, explains the background to the appeal and implications of the judgment.

Original news

Burnden Holdings (UK) Ltd (in liquidation) v Fielding and another [2016] EWCA Civ 557, [2016] All ER (D) 111 (Jun)

The Court of Appeal, Civil Division, in allowing a company’s appeal against a judge’s ruling that its claim for breach of fiduciary or statutory duty was time-barred, held that section 21(1)(b) of the Limitation Act 1980 (LA 1980), which provided that no period of limitation prescribed by LA 1980 applied to an action by a beneficiary under a trust to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, included a transfer to a company directly or indirectly controlled by the trustee. Accordingly, no period of limitation applied to the present claim. Further, the availability of a postponed limitation period, such that those proceedings had been commenced in time, under LA 1980, s 32, could not be determined on an application for summary judgment.

What was the background to the appeal?

This case concerned a claim by a company in liquidation against some of its former directors for breach of fiduciary duty and breach of statutory duty under sections 171–173, 175 and 177 of the Companies Act 2006, alleging that a distribution in specie of the claimant company’s shareholding in another company on 12 October 2007 was unlawful and in breach of duty, including on the basis that the claimant did not have sufficient accumulated realised profits to make the distribution.

It was common ground that the claim form was issued more than six years after the date of the distribution in specie which occurred on 12 October 2007.

The defendants made an application for summary judgment

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