Limitation of Actions Consultation - Law Commission

express but implied and constructive trusts and trustees. 21
After 1939, therefore,
the question whether a trust is an express trust or a constructive trust has not been
relevant to the question whether section 21 of the 1980 Act (or its predecessor
section 19 of the Limitation Act 1939) applies.
4.11 The courts were slow to recognise this. Tintin Exploration Syndicate Ltd v Sandys, 22
decided under section 19 of the Limitation Act 1939, suggested that the
distinction between express and constructive trustees still applied. In this case the
defendant acted as a de facto director of the plaintiff company, and received an
ultra vires payment from the company. When an action was brought for the return
of the money, he argued that the action was barred by the Limitation Act 1939,
because he was only a constructive trustee. Roxburgh J rejected this argument,
finding that he had assumed the liabilities of an express trustee (so coming into
one of the categories of constructive trustees which the courts would treat as
express trustees for limitation purposes). Roxburgh J cited Soar v Ashwell with
approval, and appears to have assumed that section 19(1)(b) (now section
21(1)(b)) would not apply to a constructive trustee. This ignores the definition of
trust incorporated into the 1939 Act, and it is suggested that it is unhelpful to
distinguish between express and constructive trusts in interpreting section 21 of
the 1980 Act. 23
4.12 This has become clearer in cases since Tintin Exploration. For example, in G L
Baker Ltd v Medway Building and Supplies Ltd, 24
Danckwerts J did not find it
necessary to examine whether the breach of trust alleged came within one of the
categories of constructive trust treated as express trusts for limitation purposes. A
good recent example is Nelson v Rye, 25
which we have mentioned above. 26
Here the
agent of a musician was being sued for an account for moneys he had received
during the ten year period in which he managed the musician’s affairs. Counsel
for both plaintiff and defendant accepted that section 21 applied to both express
and constructive trusts. The issue was instead whether everyone occupying a
fiduciary position must necessarily be treated as a trustee.
21 See para 4.2, n 2 above. The definition of “trustee” in the Trustee Act 1888 was deemed
“to include an executor or administrator and a trustee whose trust arises by construction or
implication of law as well as an express trust”. This does not however seem to have
removed the distinction between express and constructive trusts for limitation purposes.
See Taylor v Davies [1920] AC 636 (PC). In this case it was argued that following the
enactment of section 47(1) of the Limitations Act ((RS Ont, 1914, c 75), an Ontario
Statute which duplicated the provisions of the Trustee Act 1888 on limitation provisions in
respect of trusts), the exclusion of claims “to recover trust property or the proceeds thereof
still retained by the trustee” applied equally to express and constructive trustees. This
argument was rejected by the Privy Council, who applied the distinction between
constructive trustees to be treated as express trustees, and “mere” constructive trustees
examined in Soar v Ashwell [1893] 2 QB 390.
22
(1947) 177 LT 412.
23 One commentator describes the approach taken by the court in Tintin Exploration as
“misplaced”: see A McGee, Limitation Periods (2nd ed 1994), p 250.
24 [1958] 1 WLR 1216. See para 4.16 below for a discussion of this case.
25 [1996] 1 WLR 1378.
26 See para 4.7 above.
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