CAYMAN ISLANDS Law and Practice Contributed by: Alan Bercow, Jae Shin and Ross McLeod, Appleby
ments Company Limited), the UK Supreme Court has held that a claim for knowing receipt will fail where the claimant’s proprietary equi - table interest has been extinguished or over - ridden by the time of the defendant’s knowing receipt of the property in question (Byers v Saudi National Bank [2023] UKSC 51). A claim in know - ing receipt is a personal claim, not a proprietary claim. 1.4 Limitation Periods For most claims by victims of fraud, the limita - tion period is six years from the date on which the cause of action accrues, which is usually the date when the damage was suffered. Where the defendant has deliberately concealed any fact relevant to the right of the victim of the fraud to bring a claim, the six-year period does not begin to run until the claimant has discovered, or could with reasonable diligence have discovered, the fraud, concealment or mistake. There is no limitation period for a claim by a ben - eficiary under a trust in respect of a trustee’s fraud or a trustee’s conversion of property. 1.5 Proprietary Claims Against Property A claimant may assert an equitable proprietary claim in respect of any property that they were induced by fraud to transfer, as well as in respect of property representing the converted proceeds of the initially-transferred property (which is iden - tified by the process of tracing). Such a claim may be asserted against the fraudulent party to whom the claimant’s property was transferred. Such a claim may also be asserted against any person who subsequently receives the property (or its traceable proceeds) either: • with notice of the fraud at the time of receipt; or • for no consideration (ie, as a volunteer).
However, a proprietary claim will not be available against a party that acquires the property or its traceable proceeds as a purchaser in good faith without notice of the fraud at the time of receipt – such receipt will extinguish the proprietary claim, unless the property is re-acquired by a previous recipient of the property against whom a pro - prietary claim would have been available. Sub - sequent acquisition of notice or receipt by an otherwise good-faith purchaser cannot “revive” proprietary claim against them. Funds that have been mixed with other funds may be the subject of an equitable proprietary claim – although the rules used to identify trace - able proceeds from such mixed funds may vary from case to case (including first-in/first-out, roll - ing charge, and pari passu distribution bases). However, if property has non-fungible properties that allow it (by adducing appropriate evidence) to be identified with certainty from what would otherwise appear to be “mixture” , such rules may have no application. This may be the case, for example, for certain types of crypto-assets. 1.6 Rules of Pre-Action Conduct There are no pre-action protocols applicable to fraud claims. Often fraud claims are preceded by an application for a freezing injunction sought without notice to the other party in circumstanc - es where giving such notice would have given that party the opportunity to dissipate assets that would render any order nugatory. However, in the absence of such an application, the over - riding object requires parties to help the court to deal with cases in a just, expeditious and eco - nomic way and thus pre-action correspondence would be expected. The court has the power to penalise a party for failing to do so in costs.
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