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Commentary on the ruling in O’Keefe & Anor v Caner & Ors

17.05.17

In O’Keefe & Anor v Caner & Ors [2017] EWHC 1105 (Ch) it was held on a preliminary issue, and as a matter of fact, that the appropriate prescription period for a claim against directors of Jersey company for breach of their duties under Article 74 of the Companies (Jersey) Law 1991 (which contains no express limitation period) was the default period applicable to personal claims in Jersey, of 10 years from the date of breach. The period is 10 years regardless of whether the breach in question was a breach of the fiduciary duty to act honestly and in good faith with a view to the best interests of the company, or of the duty of care and skill.

In the absence of a statute relating to prescription under Jersey law, the default period of limitation applies to personal claims unless otherwise provided for by statute or by judicial decision, or unless another period is “clearly more appropriate” by analogy than the default period. It was common ground that the only judicial decisions relating to this question contain obiter dicta. It was argued for Mr Caner that the tort period and the trusts period – both 3 years - were “clearly more appropriate” by analogy, for a variety of different reasons which may be distilled as follows:

  1. that both claims were for breach of statutory duty, which claims have on many occasions been held to attract the tort period;
  2. that under customary Jersey law (which is relevant because the Jersey approach to ascertaining limitation involves characterisation of causes of action in accordance with jurisprudential architecture, not direct identification), there was a recognition of torts as “a harm-based claim with less emphasis on the remedy”, but traditionally no conception of equity or equitable claims as understood in English law, only the subsequent incremental grafting on to Jersey law of certain such claims on an ad hoc basis; and
  3. that there was no difference of substance relevant to prescription between a fiduciary duty owed by a company director and one owed by a trustee (who is after all the archetypal fiduciary); nor any difference of substance relevant to prescription between a duty of care owed by a company director and one owed by any other professional.

In every case, reaching for an analogy should be broad-brush process, not one tripped up by mechanical objections. Ultimately, however, these arguments did not find favour.

The decision has the practical consequence that these directors would not escape any viable claims on the basis of limitation alone. It also accords with judicial observations as to the likely position, made in other Jersey cases, that the applicable period should be the default period of 10 years, applicable to personal claims. These observations have been informed at least partly by the fact that the 10-year period applies to claims for breach of contract, and some directors have service contracts into which the duty of skill and care (at least) might be implied.

It is generally accepted that as a matter of principle, a ten year period is these days a very long period for limitation against directors, particularly as under Jersey law there is in any event a principle whereby any applicable limitation period (such as 3 years) can be extended on the basis that there is a practical or a legal impediment to bringing the claim (including not knowing about the facts which underlie the cause of action).

The only way to resolve the conflicting points of principle that have arisen in this case and may yet arise again in others is through legislation. Until then, the impact is that the two lines of professional services offerings in Jersey, corporate service providers and professional trustees, are treated very differently by the law of limitation, possibly with a consequential impact on their indemnity insurance premia; and this even though, in many wealth management structures, the same individuals act wearing different hats. 

Kathryn Purkis was led by Lord Goldsmith PC QC for the First Respondent.


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