Entities in the Preston Motors Group claimed that two directors had entered into several transactions on their behalf that were not in the companies’ interests or were otherwise in breach of the directors’ fiduciary or equitable duties. The transactions occurred over a 20-year period, the earliest of which was three decades before proceedings were commenced. Key witnesses had died, as had one of the directors.
Riordan J held that the claims were time-barred on two bases. First, statutory limitation periods applied by analogy in equity with respect to alleged breaches of fiduciary directors’ duties; and secondly, the doctrine of laches applied to all claims. The plaintiffs also failed in all aspects of their claims for fraud, breach of fiduciary duty under the second limb of Barnes v Addy and breach of numerous directors’ duties (save that there was a breach of the duty to avoid conflicts of interests with respect to some transactions, but the plaintiff companies did not suffer any loss nor did the surviving director obtain any unauthorised benefit). The judgment includes detailed discussion about the operation of attenuation clauses in companies’ constitutions, what is required to prove fraud, exceptions to the application of statutory limitation periods by analogy in equity, and principles of laches.