A recent case has considered the time frame within which a claim for a director’s breach of fiduciary duty can be made. The case of First Subsea Ltd v Balltec Ltd and Others [2017] EWCA Civ 186 examined section 21 of the Limitation Act 1980.

What is a Director’s Fiduciary Duty?

The fiduciary duties and responsibilities of a director are set out to ensure there is a relationship of trust and loyalty between the director and the company’s members and shareholders. These guidelines ensure that a director is acting within the best interest of the company at all times as well as when they are no longer employed as a director of the company.

Case Background

First Subsea Ltd’s former director formed a new company to rival First Subsea Ltd’s business. As a result, First Subsea Ltd issued a claim for a “breach of fiduciary duty, fraud and conspiracy to injure by unlawful means”.

The former director however claimed that the breach had taken place in 2004 and, therefore, with the claim being made in 2010, the limitation for such a claim had expired under section 21 of the Limitation Act 1980.

Section 21 states that a claim of this nature must be brought within six years of the alleged breach taking place except as a result of actions which involve fraud or embezzlement of company property. So the Court of Appeal were then issued with the task of considering whether or not this was the case.

The exact exemptions to the limitation rule are as follows:

‘(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) 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.’ 


In order to establish whether the former director could be considered a trustee, the court brought in the case of Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, and other cases, which have all concluded that a company director is a ‘trustee’ of a company’s assets.

The decision followed that the former director was indeed a trustee of First Subsea Ltd and therefore the time limitation was null and void in this case. His appeal was dismissed by unanimous decision that he had acted ‘fraudulently’ in his breach of his fiduciary duty.

If you feel you may have a claim for breach of fiduciary duty, it is vital that you seek legal advice at the earliest opportunity. Farleys’ corporate department can provide comprehensive legal advice relating to director’s duties. Call today on 0845 287 0939 or email us.