Supreme Court Holds That No Statutory Limitation Period Applies To Unfair Prejudice Petitions

The decision confirms that denying relief on grounds of delay is a matter of judicial discretion, not fixed time bars, in unfair prejudice petitions under s.994 of the Companies Act 2006.

The Supreme Court has held by majority that statutory limitation periods under the Limitation Act 1980 do not apply to petitions for relief from unfair prejudice under ss. 994 and 996 of the Companies Act 2006: THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6.

The court rejected arguments that such petitions fall within the 12-year “action upon a specialty” category of statutory limitation periods under s.8 of the Limitation Act or the 6-year “sum recoverable by virtue of an enactment” category in s.9, even where monetary remedies are sought. As a result, there is no statutory time bar for bringing an unfair prejudice petition. This conclusion avoids the difficulty that would otherwise arise in applying a limitation period to s.994 petitions, where the state of affairs occasioning the petition is often the product of an accumulation of long-running historical complaints.

The court's decision is consistent with “40 years of received wisdom” that no limitation period applies to s.994 petitions, but overrules the Court of Appeal which had concluded that a 6-year limitation period applies at least where an unfair prejudice seeks monetary relief. Nevertheless, as the court's power to grant relief is discretionary, unjustified delay with an adverse effect on a respondent or third party may prompt the court to deny relief. Indeed, while there remains some uncertainty as to the effect of delay within a limitation period (which was considered in detail in Lord Burrows's dissenting judgment), in the absence of a limitation period the court might well apply the principles applicable to delay with particular rigour.

Both judgments also noted the public interest against stale claims and in favour of finality in litigation, though they differed in the application of such policy considerations to the interpretation of the Limitation Act.

It remains to be seen what impact the Supreme Court's decision may have in the context of other statutory provisions, typically in a company or insolvency law context, which give the court a wide discretion to grant monetary or non-monetary relief. Examples include ss. 213 (fraudulent trading), 214 (wrongful trading), 239 (preferences) and 423 (transactions defrauding creditors) of the Insolvency Act 1986, and the powers of the court in relation to unfair relationships under ss. 140A and 140B of the Consumer Credit Act 1974. It would appear, based on the Supreme Court's analysis, that claims which lead to such broad relief may not be subject to any statutory limitation period but may instead be regulated by broader principles applicable to delay.

Background

Under s.994 of the Companies Act 2006, a member of a company may petition the court for an order on the grounds that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of all or some members, or that an actual or proposed act or omission of the company will be prejudicial. If the court is satisfied that the petition is well founded, s.996 provides that the court may grant relief as it sees fit. The court is not constrained to grant the relief sought by the petitioner, even if all other aspects of the petitioner's case are established at trial.

Zedra, a minority shareholder in THG plc, presented a s.994 petition in 2019, and in 2022 sought to amend the petition to add a complaint concerning a 2016 bonus share allotment. The application was heard and judgment given more than six years after the allotment complained of. 

Unusually for claims under s.994, Zedra was seeking an order requiring the directors who were involved in the alleged breaches of duty to pay equitable compensation for its loss, rather than a non-monetary remedy (such as an order requiring the majority to buy the shares of the minority at a fair price, adjusted to unwind the impact of any unfairly prejudicial conduct). At first instance, Fancourt J permitted the amendment, holding that no statutory limitation period governs s.994 petitions and that delay is managed through the court’s discretion, by analogy with the doctrines of laches and acquiescence applicable to equitable remedies. 

The Court of Appeal, in contrast, found that unfair prejudice falls within the Limitation Act framework. Section 8 of the Limitation Act provides for a 12-year time bar on an “action upon a specialty”, unless a shorter limitation period is otherwise prescribed. Section 9 then provides for a 6-year time bar on an “action to recover any sum recoverable by virtue of any enactment”. The Court of Appeal reversed the first-instance decision, applying the 12-year limitation period under s.8 and then the 6-year period as an exception under s.9 to petitions seeking monetary relief. Zedra was granted leave to appeal to the Supreme Court. 

The Supreme Court identified three principal questions in relation to the application of the Limitation Act:

1. whether an unfair prejudice petition is an “action upon a specialty” attracting a 12-year period under s.8; 
2. whether a petition seeking only money is an “action to recover any sum recoverable by virtue of any enactment” attracting a 6-year period under s.9; and 
3. whether s.36, which provides that nothing in the Limitation Act affects any equitable jurisdiction to refuse relief on the ground of acquiescence or otherwise, disapplies ss. 8 or 9 because the relief is “equitable.”

Decision

Majority

The Supreme Court allowed Zedra’s appeal, holding that that neither s.8 nor s.9 applies to unfair prejudice petitions. Lord Hodge and Lord Richards gave the majority judgment with which Lord Lloyd-Jones and Lord Briggs agreed.

In relation to s.8, the court held that, historically, actions upon a specialty (at common law and in statute) targeted monetary obligations under seal or statutory debts. Obiter comments in Collin v Duke of Westminster [1985] QB 581 for the first time extended the concept of an action upon a specialty beyond monetary claims (in that case, to a right of a lessee to acquire the freehold in accordance with the Leasehold Reform Act 1967). The court identified two bases for Collin – a “narrow view” that s.8 of the Limitation Act applies only to obligations created by deed or statute, and a “wider view” that an action on a specialty includes any action which can only be brought under a statutory provision – and preferred the former, despite the latter having been adopted in later cases. 

In applying this view to an unfair prejudice petition, the Supreme Court clarified that, in keeping with previous enactments in substantially similar terms to the Limitation Act, it is the essence of an action upon a specialty that it is an action to enforce an obligation created by a deed or statute. By contrast, ss. 994 and 996 of the Companies Act do not create any substantive obligations, but merely exist to provide relief in respect of a “state of affairs” that constitutes unfair prejudice to one or more members, whether or not involving a breach of fiduciary or contractual obligations. The court therefore concluded that s.8 of the Limitation Act does not apply to actions under s.994. The majority was divided as to whether an action upon a specialty in the present day encompasses non-monetary obligations, but was not required to express a conclusion on this point.

On the second issue, the Supreme Court held that s.9 of the Limitation Act properly covers statutory monetary entitlements where the statute itself confers a right to recover money, with a wider ambit than ascertained statutory debts. However, s.994 provides a discretionary jurisdiction in which any monetary payment flows only from the court’s order, not from a statutory money entitlement. The court considered that claims under statutory provisions which confer a wide discretion as to relief are not subject to s.9, whether or not such claims include a request for monetary relief; the alternative, that a petition could proceed for any relief that the court considered fit otherthan a monetary order, was absurd, and would apply arbitrary distinctions between different claims under the same statutory provisions depending on the relief sought. 

In reaching this conclusion, the court considered whether a “look and see approach” adopted in previous cases – waiting to identify the remedy sought or ultimately ordered before determining whether the claim was subject to s.9 – was appropriate. It found no justification for that approach in the legislation, emphasising that such an approach is uncertain and ill-suited to limitation analysis.

Given these conclusions, the Supreme Court found it unnecessary to rely on s.36, and in any event considered that s.36 is not apt to the unfair prejudice jurisdiction, which is statutory and discretionary rather than equitable.

Dissent

Lord Burrows, in a dissenting opinion, emphasised that limitation periods are a statutory creation unknown to the common law, with an important role in protecting defendants from stale claims and avoiding the deterioration of helpful evidence. He rejected the distinction between obligations created by statute and other causes of action created by statute, as well as the view that unfair prejudice provisions are concerned not with a cause of action but with the regulation by the court of a state of affairs. He would have affirmed a limitation scheme: six years under s.9 where a monetary order is sought; otherwise 12 years under s.8, using a “look and see” approach to the remedy. He considered this consistent with authority and policy favouring limitation periods, though he noted that in an ideal world (and contrary to the Limitation Act as currently drafted) there would be a single limitation period for all remedies for the same cause of action, rather than certain remedies being time-barred. 

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.