In a judgment handed down by a majority of four to one, the Supreme Court ruled that no statutory time limit applies to claims brought under section 994 of the Companies Act 2006. The decision settles an important legal question and will have wide-reaching implications for shareholders, boards and advisers throughout the UK who are involved in company disputes.
The appeal concerned Zedra’s application to amend its existing section 994 petition to add a further allegation that it had been unfairly excluded from a July 2016 bonus issue of shares made by THG. By this amendment Zedra sought monetary relief by way of equitable compensation. THG argued that the new allegation was time‑barred under the Limitation Act 1980, contending that a petition seeking solely monetary relief was an “action to recover a sum recoverable by virtue of an enactment”, triggering the six‑year limitation period in section 9.
The High Court held that no limitation period applied to claims under section 994. The Court of Appeal allowed the appeal and held that all petitions under section 994 are subject to a 12 year limitation period under section 8 of the Limitation Act and that claims for monetary relief under section 994 are subject to a six year limitation period under section 9. The Supreme Court has now reinstated the longstanding position that section 994 petitions are not subject to a statutory limitation period, whether or not monetary relief is sought.
By a 4–1 majority, the Supreme Court held that:
- A petition under section 994 CA 2006 is not an “action upon a specialty” under section 8 of the Limitation Act 1980.
- Nor is a petition seeking monetary compensation an “action to recover any sum recoverable by virtue of any enactment” under section 9 of the Limitation Act 1980.
- The broad remedial discretion in section 996, which allows the court to grant any relief it considers appropriate, is incompatible with applying a fixed limitation period tied to the form of relief sought.
Accordingly, no statutory limitation period applies to unfair prejudice petitions, including those seeking compensation.
The DWF team was led by managing partner of DWF in Manchester and national head of dispute resolution, Joel Heap and senior associate Sam Pringle, who instructed Andrew Thompson KC of Erskine Chambers and George McPherson of 3VB.
This judgment provides important and welcome clarification for shareholders, companies, and practitioners advising on historical allegations of unfair prejudice. It confirms that petitioners are not barred from seeking relief, including monetary compensation, simply because more than six years have passed since the underlying events.
Joel Heap, partner at DWF, said: “This is a significant and very practical decision for minority shareholders and their advisors. The Supreme Court has re-affirmed what those specialising in shareholder litigation have understood for over 40 years, that is there is no limitation period in unfair prejudice. DWF is proud to have advised Zedra on a case that has clarified the law at the highest level and will have lasting importance for shareholder disputes across the UK.”
This latest ruling follows DWF’s recent success in the Supreme Court in the dispute between Dairy UK and Oatly, further underlining the firm’s strength in complex, high-profile appellate litigation and its growing reputation in market-leading disputes before the UK’s highest court.
