In THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6 (“Zedra”) the Supreme Court clarified whether any statutory limitation period bars a member of a company from petitioning the court for an unfair prejudice remedy under ss. 994 and 996 of the Companies Act 2006 (the “Companies Act”).
Overturning the Court of Appeal’s decision (with Lord Burrows dissenting), the Supreme Court held that no statutory limitation period applies to unfair prejudice petitions under ss. 994–996 of the Companies Act.
The Supreme Court’s analysis focused on the relevant provisions of the Limitation Act 1980 (the “Limitation Act”) and considered whether the timeliness of unfair prejudice claims is governed by:
- a 12‑year limitation period under s. 8 (limitation for actions upon a specialty);
- a 6‑year limitation period under s. 9 (limitation for claims under statute); or
- whether any limitation period is disapplied under s. 36 (no limitation for equitable relief, subject to the doctrine of laches).
Background
In 2019 Zedra Trust Company (Jersey) Ltd (“Zedra”), a minority shareholder in THG Plc (“THG”), petitioned the High Court under s. 994 of the Companies Act alleging that THG’s and nine of its current and former directors’ conduct had unfairly prejudiced it in several aspects. It claimed various forms of relief, including declaratory relief, equitable compensation, and payment of damages.
In 2022 Zedra applied to the High Court to amend its claim to include an additional ground of unfair prejudice for being excluded from the allotment of bonus shares paid up from funds from a distributable reserve account, and for that Zedra sought payment of equitable compensation for its loss. Crucially, this allotment of bonus shares was made more than 6 years prior to the petition amendment.
THG opposed the application on grounds that it was time-barred under s. 6 of the Limitation Act as more than 6 years had passed from the additional allotment of shares.
The High Court (Zedra Trust Company (Jersey) Ltd v THG Plc & others [2023] EWHC 65 (Ch))ruled at [100-106] in favour of Zedra and decided that no limitation period applied to claims under s. 994 of the Companies Act.
The Court of Appeal (THG Plc & others v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158) disagreed, finding at [72] (relying on Collin v Duke of Westminster [1985] QB 581) that all petitions under s. 994 of the Companies Act are “actions upon a specialty” and are subject to a 12-year limitation period under s. 8 of the Limitation Act unless they are for monetary relief, in which case they are subject to the 6-year limitation period in s. 9 of the Limitation Act. The Court of Appeal was content at [129] that the scope of s. 9 depends on what type of remedy is claimed, rather than the underlying cause of action.
The Court of Appeal concluded that because Zedra sought only financial compensation, its petition amendment fell under s. 9 of the Limitation Act and was therefore time-barred.
Zedra appealed, arguing that neither s. 8 nor s. 9 applied to unfair prejudice petitions.
Issues before the Supreme Court
Three principal issues were raised:
- Whether a claim under s. 994 is an “action on a specialty” falling within s. 8(1) of the Limitation Act and subject to a 12 year limitation period.
- Whether a claim under s. 994 in which the only relief sought is monetary falls within s. 9(1) as an “action to recover any sum recoverable by virtue of any enactment,” to which a 6 year limitation applies.
- Whether the monetary relief sought constitutes “equitable relief” under s. 36(1), such that any limitation period in s. 8 or s. 9 would be disapplied.
Decision
Meaning of “action upon a specialty” under s. 8 of the Limitation Act
The Supreme Court acknowledged at [30] that the meaning of “action upon a specialty” is not self-evident and at [125] that no statutory definition of a “specialty” exists.
Historically, the position at common law was that an action upon a specialty took the form of (i) an “action of covenant” or (ii) an “action of debt” (Zedra [32]).
An “action of covenant” was formerly an action in which a party claimed damages for the breach of a promise under seal (Zedra [33]). Nowadays an action of covenant is by its nature restricted to the enforcement of obligations contained in deeds made between parties (Zedra [40]). An “action of debt” upon a specialty was historically “an action to recover a liquidated or certain sum of money which was due as a debt by virtue of a document under seal [and required no further proof of debt]” (Zedra [32]).
Yet, after Collin v Duke of Westminster [1985] QB 581 (“Collin”) (a case concerning timeliness of tenant’s notice exercising their statutory right as a long leaseholder to purchase the freehold under the Leasehold Reform Act 1967), an action upon a specialty included an action seeking non-monetary relief.
In Zedra the Supreme Court noted that the Court of Appeal had adopted the broader Collin approach, which centres on the statutory right to initiate proceedings, and rejected the narrower view that the application of s. 8 of the Limitation Act turns on whether a statute or deed imposes an enforceable obligation (Zedra [112-114]).
The Supreme Court disagreed, holding at [115] that “it is of the essence of an action upon a specialty that it is an action to enforce an obligation created by a deed or statute.”
Yet ss. 994–996 of the Companies Act do not create or enforce obligations; they provide relief in respect of a state of affairs.
For this reason, the 12-year limitation period under s. 8 of the Limitation Act cannot apply to unfair prejudice claims.
Applicability of s. 9 to unfair prejudice claims
The Supreme Court then explored whether s. 9 of the Limitation Act (“any sum recoverable by virtue of any enactment”) could encompass the numerous discretionary reliefs available under ss. 994-996 of the Companies Act.
Although the Supreme Court observed at [136] that a claim for compensation for loss suffered by a shareholder could fall within s. 9 of the Limitation Act, an unfair prejudice claim at its heart is not a claim to enforce a liquidated or unliquidated obligation arising under a statute. While a court may order the respondent to pay a specified sum, such sum is ultimately not a sum “recoverable by virtue of” ss. 994–996 of the Companies Act.
In other words, the respondent’s obligation to pay will arise only because of the court’s exercise of its discretion. The claimant might request a monetary remedy, but, as practitioners in this area will know well, the court may order a different remedy if it considers it more appropriate to do so. Where the court orders non-monetary relief instead, such relief would automatically fall outside s. 9 of the Limitation Act.
In reaching its ruling, the Supreme Court disagreed with the Court of Appeal’s reliance on the analysis of s. 9 of the Limitation Act in the insolvency cases Re Priory Garage (Walthamstow) Ltd [2001] BPIR 144 (“Priory Garage”) and Hill v Spread Trustee Co Ltd [2007] 1 WLR 2404 (“Hill”).
In Priory Garage the judge held at [page 160 (sub-paragraphs (3)–(4)] that, although a court could select from a wide range of orders, a petition will be subject to s. 9 of the Limitation Act “if it can fairly be said that the substance or the essential nature of the application is ‘to recover a sum recoverable by virtue of’ those sections”, and that in the event of doubt, the court will apply a “look and see” approach, examining the true nature of the relief sought to determine whether s. 8 or s. 9 is the appropriate basis. A comparable point was made in Hill at [115 (non- majority ruling)].
The approach of waiting and seeing what relief the court is willing to grant at the end of the trial before deciding that the action was time-barred was (perhaps not surprisingly) not acceptable to the Supreme Court (at [152]).
The Supreme Court also disagreed with the Court of Appeal’s reliance on the analysis of the s. 9 of the Limitation Act in a consumer credit case Rahman v Sterling Credit Ltd [2001] 1 WLR 496 (“Rahman”). In Rahman the Court of Appeal found at [6-7] that the period of limitation depended on the nature of the relief sought. The Supreme Court similarly disagreed with this approach.
In light of its analysis, the Supreme Court found at [155] that Priory Garage, Hill and Rahman were wrongly decided as regards s. 9 of the Limitation Act.
In sum, claims under statutory provisions which provide the court with wide discretion as to remedy are not claims to which a 6-year limitation period under s. 9 of the Limitation Act applies.
For this reason, s. 9 of the Limitation Act cannot apply to an unfair prejudice petition under s. 994 of the Companies Act, even if such petition includes a request for monetary relief (Zedra [155]), because any monetary relief arises only from the court’s discretionary powers under s. 996.
Equitable relief under s. 36 of the Limitation Act
In principle, claims for equitable relief under s. 36 of the Limitation Act are not subject to statutory time limits. This is, however, subject to the equitable doctrine of laches.
Zedra’s alternative argument was that the monetary relief it sought against the THG’s directors constituted equitable relief under s. 36. Zedra contended that while the source of the court’s power is statutory, the nature of the monetary relief it sought, and its ultimate source, are in substance equitable.
The Supreme Court rejected this and found instead that relief on the basis of unfairly prejudicial conduct is available solely by virtue of the court’s discretionary powers under s. 996 of the Companies Act. Therefore, the monetary relief claimed in an unfair prejudice petition does not constitute an “equitable relief” within the meaning of s. 36(1) of the Limitation Act.
Comment
The Supreme Court has reinstated the previously accepted position that unfair prejudice petitions brought under ss. 994-996 of the Companies Act are not subject to any statutory limitation period.
In practical terms this means that time limitation will be assessed on a case-by-case basis. Determining the precise moment when a petition became time barred on grounds of undue delay could pose difficulties for post M&A cases in particular. The resulting uncertainty will likely have a rippling effect on the warranty and Indemnity insurance market and influence insurance providers’ risk appetite and pricing.
Even though there is no statutory time limit, petitioners should act promptly to minimise the risk that the court exercises its discretion to refuse relief, particularly where the delay is unjustified and would prejudice the respondent.
Because no statutory limitation period applies, petitioners cannot rely on s. 32 of the Limitation Act to apply for a limitation period postponement. Instead, petitioners, such as minor shareholders who often face limited information access, will need to demonstrate to the court that their delay in submitting the petition was justified, for example in light of practical obstacles to discover facts underpinning their petition, and that these circumstances outweigh the risk of prejudice to the respondent.
Companies may wish to revisit their key document-retention policies so that relevant board resolutions, minutes, and correspondence are preserved beyond the statutory 10-year period under s. 355 of the Companies Act. It is essential that documentary evidence remains available for addressing potential claims that may be arise long in the future.
Please contact Richard Levett or Valentina Pavušek if you have any questions.
For other recent limitation period related caselaw developments, please see: Out of time to add or substitute a party? Court of Appeal raises questions about test for mistake.