THG PLC & Ors v Zedra Trust Company (Jersey) Limited

A petition under section 994 of the Companies Act 2006 is a statutory action and falls within the limitation scheme in the Limitation Act 1980.

Where the only relief sought is monetary compensation, the six-year period under section 9 applies. Where the substance of the relief is non-monetary, such as a buy-out order, the twelve-year period under section 8 applies. The court must examine the substance and essential nature of the relief sought.

A shareholder is not a beneficiary of the company’s property for section 21(3) purposes. Statutory restrictions also govern amendments introducing time-barred claims.

Zedra Trust Company (Jersey) Limited petitioned under section 994 of the Companies Act 2006, alleging that THG’s directors had unfairly prejudiced its minority shareholding by excluding it from a bonus share issue.

The High Court, Fancourt J, allowed an amendment claiming equitable compensation and rejected an argument that the claim was arguably time-barred. The judge held that no statutory limitation period applied, relying principally on Bailey v Cherry Hill Skip Hire Ltd [2022] EWCA Civ 531.

The Court of Appeal considered whether petitions under section 994 are subject to the Limitation Act 1980, which period applies to monetary compensation, whether section 21(3) applies, and whether the amendment was permissible.

1. The appeal was allowed. All three members of the court agreed with the judgment of Lewison LJ.
2. A petition under section 994 of the Companies Act 2006 is an action within section 38(1) of the Limitation Act 1980. The right to petition is purely statutory, so the claim is an action upon a specialty within section 8.
3. Where the petition alleges that company affairs have been conducted in a manner that was unfairly prejudicial, the cause of action is complete when the complained-of conduct occurs. A prior judicial finding that the petition is well founded is unnecessary.
4. The applicable limitation period depends on the substance of the relief sought. A claim for monetary compensation falls within section 9 and is subject to six years. Non-monetary relief, including a buy-out order, is not a claim to recover a sum of money and falls within section 8, subject to the statutory scheme.
5. The court should use a substance-based look-and-see approach. It is not confined to the wording of the pleading. Different heads of relief under the same statutory provision may attract different limitation periods.
6. Section 21(3) does not apply. The company, not an individual shareholder, is the beneficiary of property held or misappropriated by directors. Section 21 cannot be applied by analogy through section 36 because it is not one of the limitation periods identified there.
7. Section 35 restricts amendments introducing new claims after expiry of the applicable limitation period. The 2009 Rules are rules of court, and the Civil Procedure Rules 1998 apply with necessary modifications. The proposed amendment did not satisfy CPR rule 17.4(2), so it should not have been allowed.
8. Lewison LJ left open the precise circumstances in which delay or acquiescence may justify summary dismissal of a claim brought within the statutory period. Snowden LJ emphasised that the decision should not encourage stale complaints and that robust case management remains appropriate.

1. Court of Appeal (Civil Division): Appeal allowed. The amendment introducing the compensation claim should not have been permitted.
2. High Court (Chancery Division): Fancourt J, in [2023] EWHC 65 (Ch), held that no statutory limitation period applied to the petition and allowed the relevant amendment.