Nigeria: Right Of A Beneficiary To Seek Legal Remedy – Any Limitations

Last Updated: 11 November 2016
Article by Perchstone & Graeys

Trust in its simplest sense is an arrangement that allows a third party, known as a trustee, to hold assets (trust property) on behalf of another, usually referred to as the beneficiary. The peculiar nature of trust relationship imposes a fiduciary role on the trustee, which means that the trustee is expected to manage the trust property with utmost diligence, and display the highest standards of integrity, and business efficiency in the execution of his powers. Generally, the duties of a trustee include amongst other things the duty to safeguard trust assets, invest, not to make secret profit, to act impartially, provide accounts and information, and more importantly not to deviate from the terms of the trust instrument. Any act or neglect on the part of the trustee which is not authorized or excused by the terms of the trust instrument, or by law, is called a breach of trust. Essentially, where there is a failure, whether by a positive act or omission, on the part of a trustee to comply with the duties imposed on him, such erring trustee may be held personally liable for any damage resulting from his actions or inactions.

There are several remedies available to an aggrieved beneficiary in the event of a breach of trust by a trustee. Such remedies include claims for damages, injunction to restrain a breach, tracing and/or recovery of the trust property, criminal prosecution, amongst others. Notwithstanding the foregoing, the right of a beneficiary to seek certain remedies is subject to existing Nigerian limitation laws. For instance, Section 32 (1) of the Limitations Law, Laws of Lagos State 2015, Cap L84, any action by a beneficiary to recover money or other property, or in respect of any breach of trust, must be commenced within 6 years from the date on which the beneficiary's right of action arose. Any action instituted after the expiration of 6 years will not be entertained by any court of Law in Nigeria.

It is important to note however that the limitation of action does not exist in all cases of breach of trust. Simply put, where there is a fraudulent breach of trust to which the trustee was party or privy, or where, the claim is to recover trust property converted by the trustee to his own use, the Courts will chase the trustee, and recover the trust property.

The court will ensure that the fraudulent trustee return any financial gains he may have made from the conversion, no matter how long it takes to do so. What this implies is that the law does not place any limitation whatsoever on any fraudulent breach of trust, and as such, the beneficiary is at liberty to commence an action against an erring trustee at any time.

Effectively, the limitation period starts counting upon the commission of the breach by the trustee, and not necessarily when the beneficiary becomes aware of the commission of the breach. As such, if the beneficiary becomes aware of the breach after the breach of trust, he may be unable to seek legal remedies in a Court of Law. This of course excludes cases of fraudulent breach of trust as enumerated above.

Nevertheless, it appears that the intention of the law is to ensure that aggrieved beneficiaries diligently take steps to take advantage of the various remedies provided by the Law to enforce any breach by trustees. That said, perhaps beneficiaries of a trust would do well to seek professional advice for proper guidance if they suspect that a trustee is acting in breach of trust.

An article by the Firm's Private Client Group, editors of the Private Client Update, a bi-weekly publication dealing with issues touching on Succession Planning.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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