Action for account – six-year limitation period under s. 4(2) – claim based on fiduciary duty of company director/de facto director to account to company for monies – claim for equitable relief so that s. 4(2) had no direct application – however, s. 4(2) applied “by analogy” under s. 4(7) exception
P and D1 were shareholders and directors of C, a Hong Kong company, used to conduct a tobacco business in Zimbabwe. P brought a common law derivative action against D1 for breach of fiduciary duty involving money belonging to C. D1, by para.125 of his defence and counterclaim (“para. 125”), alleged in substance that P, in breach of his fiduciary duties to C, as a director or a de facto director, had failed to provide information relating to the “use” or “application” of funds remitted by D1 to Zimbabwe pursuant to P’s requests, totalling HK$447,636,928.67; and sought an account of those monies. P sought to strike out para. 125 to the extent of any of the alleged remittances made on or before 12 July 2007 (the “Remittances”), being the date which was six years prior to the commencement of the action, on the ground they were time-barred under s. 4(2) of the Limitation Ordinance (Cap. 347).
Held, granting P’s application, that:
- D1’s claim was for equitable relief because it was based on P’s fiduciary duty, as a director or de facto director of C, to account to it for C’s monies remitted by D1 to Zimbabwe pursuant to P’s requests which came under P’s control. Therefore, s. 4(2) had no direct application.
- Notwithstanding, s. 4(2) could apply “by analogy in like manner as the corresponding enactment contained in the Limitation Act 1980 … is applied in the English Courts” under the exception in s. 4(7). Where the equitable claim for an account was ancillary to another equitable claim, the same limitation period applicable to the latter would apply to the former. However, if there were no limitation period for the other equitable claim, the claim for an account would likewise have no limitation period.
- As a matter of principle, the six-year limitation period under s. 4(2) could be applied by analogy under s. 4(7) to D1’s claim against P for an account. A fiduciary had a general duty to account without the need to prove any breach of fiduciary duty. D1’s action for an account, insofar as it concerned remittances made on or before 12 July 2007, would be time-barred.
- D1’s claim could not be regarded as an action to recover trust property belonging to C or the proceeds thereof in P’s possession, so that no limitation period applied by virtue of s. 20(1)(b) of the Ordinance. Para. 125 pleaded that insofar as the account sought might reveal that P had misappropriated any part of the impugned monies, P was liable to repay the same and account for the profits made out of the same. An account was only the first step which might lead to further remedies against P.