Zedra Trust Company (Jersey) Limited v THG Plc & Ors.

Permission to amend a petition is refused where the proposed case is merely inferential and lacks evidential support giving it real substance and conviction. The court must avoid a mini-trial, but may reject allegations that are fanciful, implausible, incoherent or insufficiently particularised.

A technical breach of pre-emption provisions may support contractual relief, but relief against directors personally requires a properly arguable case of bad faith or improper purpose. An unfair prejudice petition under section 994 of the Companies Act 2006 has no statutory limitation period. Delay is instead relevant to the court’s discretion whether to grant relief.

Zedra, a minority shareholder, sought permission to re-amend its unfair prejudice petition concerning share allotments, pre-emption rights, information rights and a bonus share issue. The proposed First Complaint alleged that pre-emption rights had not been validly disapplied in relation to eight allotments and that the directors had acted in bad faith. The proposed Second Complaint concerned the exclusion of Zedra from a bonus issue on 11 July 2016.

The respondents opposed the amendments on merits and limitation grounds. The court had to determine whether the First Complaint had a real prospect of success and whether the Second Complaint was barred or otherwise excluded by limitation principles.

1. First Complaint refused. The proposed case had to be more than merely arguable. It required a coherent and properly particularised pleading supported by evidence establishing a sufficiently arguable factual foundation. The court could reject unsupported or implausible allegations without conducting a mini-trial.
2. The evidence did not establish a sufficiently substantial case that Zedra’s pre-emption rights had not been validly disapplied. In relation to the two allotments involving disputed shareholder consents, there was no realistic basis for concluding that the necessary consents had not in fact been obtained. In the remaining cases, documentary gaps and late disclosure did not justify the inference that the allotments were ineffective.
3. Even if a technical failure to comply with the Articles were proved, that would ordinarily give rise to contractual relief against the Company or potentially contracting shareholders. Relief against all directors personally required a properly arguable case that their powers had been exercised in bad faith or for an improper purpose. The substantial capital raised, the absence of any allegation that the shares were under-priced or commercially illegitimate, and the evidence of an intention to comply with the Articles defeated that inference.
4. Second Complaint permitted. A claim under section 994 of the Companies Act 2006 is a petition for discretionary relief, not a conventional claim of right. No statutory limitation period directly applies to such a petition. Delay and acquiescence may affect the exercise of the court’s discretion under section 996, but that issue was for trial rather than a reason to refuse permission summarily.
5. The Second Complaint was therefore permitted, while permission to plead the First Complaint was refused.

The judgment records that the Court of Appeal had previously allowed the respondents’ appeal in part and remitted the reduced petition for case management. The present decision concerned Zedra’s subsequent application to re-amend the petition.