The Supreme Court has affirmed the long understood principle that unfair prejudice petitions brought under sections 994 to 996 of the Companies Act 2006 are not subject to limitation periods under the Limitation Act 1980 (the "Act"). The decision reverses the decision of the Court of Appeal and re-establishes that the issue of timing in bringing an unfair prejudice petition remains a subjective test as to which the Court has a broad discretion.
Zedra Trust Company (Jersey) Ltd, a substantial shareholder in THG Plc, presented an unfair prejudice petition in 2019. In 2022, it sought to amend its petition to include a claim for compensation arising from exclusion from a 2016 bonus share issue. THG resisted the amendment, arguing that the new claim was time-barred under section 9 of the Act.
Statutory limitation
It was common ground on the appeal to the Supreme Court that only limitation under sections 8 (i.e. 12 years) or section 9 (i.e. 6 years) could potentially apply.
The Court of Appeal relied on the decision in Collin v Duke of Westminster1, which had been widely interpreted as authority that any statutory claim constitutes an “action upon a specialty” and therefore is subject to the limitation period under section 8 of the Act. The Supreme Court held that this interpretation was a misreading of Collin and that properly understood, Collin was confined to the enforcement of obligations which were created by statute. In an unfair prejudice petition, the Companies Act does not create obligations, rather it grants the Court a wide discretion as to the remedies it can order. Section 8 of the Act is therefore not applicable.
The Court of Appeal held that where a petitioner seeks a monetary remedy, section 9 of the Act would apply to that specific relief. However, the Supreme Court held that the relief in unfair prejudice petitions is entirely at the Court's discretion. Even were compensation awarded, it is not a pre-determined statutory entitlement to which a limitation period should apply.
Summary
The decision narrows the wide interpretation previously attributed to Collin and provides conclusive authority that not all statutory claims should be considered as "actions upon a specialty" and fall under section 8 of the Act. It also determines that differing types of relief sought should not be subject to different limitation periods under the Act.
Although no fixed statutory limitation period applies, unfair prejudice petitions remain subject to equitable doctrines such as laches and acquiescence.
The absence of a defined limitation period does not entitle a petitioner to relief regardless of delay. Where the Court has discretion as to the remedy in unfair prejudice petitions, it also has discretion as to what can be considered a reasonable time period for bringing those claims. Claimants should not, therefore, rely on this judgment as being authority that any delay can go unpunished, that remains at the discretion of the Court.
[1] [1985] QB 581
