West Law Report

BEREZOVSKY v ABRAMOVICH

Posted in trust, Westlaw Reports by mrkooenglish on June 18, 2008

Last Updated: 7:17PM BST 11/06/2008
Queen’s Bench Division (Com) Judge Mackie QC May 22, 2008
Amendments – Breach of fiduciary duty – Breach of trust – Claim forms Fraud – Further information – Particulars of claim – Time limits – Application to amend claim form – Failure to distinctly plead fraud allegations – Pt 17 Civil Procedure Rules 1998 – S. 21 Limitation Act 1980 – R. 17. 4(2) Civil Procedure Rules 1998 – R. 16.2 Civil Procedure Rules 1998

FACTS

The applicant (B) applied to amend its claim form and particulars of claim advanced against the respondent (R). B and R were businessmen. B alleged that both he and R owned shares in a foreign company and that B’s share was controlled and legally owned by R, but held on trust for B. B alleged that R had conducted a campaign of intimidation against him, which had induced him to sell his beneficial interest to R at a considerable undervalue. B’s original claim was in respect of tortious liability, in particular for intimidation, arising from the sale of his beneficial interest in the company. B applied under CPR Pt 17 to amend the claim form to add claims for breach of trust, breach of fiduciary duty and an account of profits. R opposed the amendment on the grounds that it was time barred. B submitted that there was no relevant period of limitation for the amendment as the claim was for a fraudulent breach of trust and was covered by the Limitation Act 1980 s. 21, and even if the relevant limitation period had expired, the new claim put a different label on essentially the same case to comply with the requirements of CPR r. 17.4(2) and it contained a sufficiently concise statement of the nature of the new claim in accordance with CPR r. 16.2.

ISSUE

Whether there was no relevant period of limitation for the amendment as the claim was for a fraudulent breach of trust and was covered by the Limitation Act 1980 s. 21.

HELD (application refused)

(1) Although B had put forward in his submissions a proposed new claim for fraudulent breach of trust and fiduciary duty, those claims had not been explicitly pleaded in the draft amended claim form. It was necessary for the fraud allegations to be separately and distinctly pleaded, firstly on the grounds of fairness and secondly so that any permitted amendment did not enable B to bring in otherwise statute barred claims for non fraudulent breach of trust and breach of fiduciary duty, Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400 CA (Civ Div) applied.

(2) It was likely that the draft amendments would give rise to dispute as to the proper law involving factual investigation of the circumstances of the alleged trust as part of a dispute as to whether a trust existed, and if it did, what the trustee’s duties were. Such a claim would involve the exploration of potentially wide ranging matters that did not arise on the claim for intimidation, and for that reason it was clear that the claims for breach of trust or fiduciary duty did not meet the requirements under CPR r. 17. 4(2).

(3) CPR r. 16. 2(1)(a) required a claim form to contain a concise statement of the nature of the claim. The original claim form quite simply did not give such a statement with regards to breach of trust and fiduciary duty.

Barbara Dohmann QC, Andrew George and Tom Richards (instructed by Cadwalader, Wickersham & Taft) for the claimant. Andrew Popplewell QC, Helen Davies QC and Paul Mitchard QC (instructed by Skadden Arps) for the defendant.