THG Plc v Zedra Trust Company (Jersey) Limited

The Court of Appeal decided that petitions under section 994 of the Companies Act 2006 are proceedings within the scope of the Limitation Act 1980 and that the applicable limitation period depends on the nature of the relief sought.

• Where the petitioner seeks a monetary award (compensation), such a claim is an "action to recover any sum recoverable by virtue of any enactment" and falls within section 9 of the Limitation Act 1980, with a six-year limitation period.
• Where the petitioner seeks non-monetary relief (for example, orders to regulate future conduct or a buy-out order), the claim is analogous to an action on a specialty and prima facie falls within section 8 (a twelve-year limitation period), subject to examination of the substance of the relief sought.

The court rejected the view that unfair-prejudice petitions are wholly outside statutory limitation, held that Cherry Hill Skip Hire Ltd did not bind the court to a contrary approach, and concluded that the proposed amendment to plead a compensation claim based on the 11 July 2016 allotment was statute-barred. The judge below was therefore wrong to permit the amendment; the appeal was allowed.

Background and procedural posture: Zedra presented an unfair-prejudice petition under section 994 CA 2006 on 7 January 2019. The re-amendment before Fancourt J (application dated 22 June 2022 and heard 16 December 2022) permitted Zedra to plead exclusion from a bonus share issue on 11 July 2016 and to seek equitable compensation for dilution and alleged loss on THG's flotation. Fancourt J allowed the amendment, rejecting a limitation defence and considering himself bound by this court's decision in Bailey v Cherry Hill Skip Hire Ltd [2022] EWCA Civ 531.

Relief sought: the re-amended petition alleged breaches of directors' statutory duties and sought an order that the relevant directors pay equitable compensation under the court's powers in section 996 CA 2006.

Issues before the Court of Appeal: (i) whether any statutory limitation period applies to petitions under section 994 CA 2006; (ii) if so, which Limitation Act 1980 provision applies (section 8, section 9 or otherwise); (iii) whether section 21(3) (trust claims) or section 36 (analogy for equitable relief) or laches/acquiescence principles affect the outcome; and (iv) whether court procedure (CPR and the 2009 unfair-prejudice rules) permitted the late amendment.

Court’s reasoning: the court held that a petition initiating proceedings is an "action" for Limitation Act purposes. Where the only relief sought is the payment of money by virtue of the statutory remedy conferred by sections 994/996, the claim is a claim "to recover any sum recoverable by virtue of any enactment" and falls within section 9 of the Limitation Act 1980 (six-year period). By contrast, non-monetary relief of the sort that effectively seeks to set aside or regulate transactions may fall within section 8 as an action on a specialty (twelve-year period), and the court must look to the substance of the relief sought in each case. Section 21(3) (actions by beneficiaries to recover trust property) did not apply to a shareholder claiming against directors because the beneficiary for s21 purposes is the company, not individual shareholders. Section 36 and the doctrine of analogy did not displace the statutory application of sections 8 and 9 in the circumstances. On procedure, the Court held that the Companies (Unfair Prejudice Applications) Proceedings Rules 2009 operate as "rules of court" so that CPR amendments rules (including CPR 17.4) apply with necessary modification; consequently a late new claim that would be out of time under the Limitation Act could not be permitted absent satisfaction of CPR 17.4 conditions. Applying these principles, the Court held the proposed compensation claim was statute-barred and the amendment should not have been allowed.

Wider implications: The Court observed that long-standing practice had assumed no statutory limitation for unfair-prejudice petitions, but concluded that the Limitation Act framework governs such petitions. The decision does not remove the court’s discretion to refuse relief for delay, acquiescence or laches where appropriate; rather it clarifies the statutory limitation framework that applies to different types of relief under section 994/996.

Appeal allowed. The Court of Appeal held that petitions under section 994 CA 2006 are proceedings for Limitation Act purposes. Where the petitioner seeks monetary compensation recoverable by virtue of the statutory remedy, section 9 of the Limitation Act 1980 (six-year period) applies; where non-monetary relief is sought the claim may fall within section 8 (twelve-year period) depending on the substance of the relief. The proposed amendment to plead compensation for the 11 July 2016 allotment was statute-barred and should not have been permitted. Cherry Hill Skip Hire Ltd was not treated as a binding precedent on this point. The judge below was therefore wrong to allow the amendment.

Appeal from the High Court of Justice, Business and Property Courts in Manchester, Insolvency and Companies List (ChD) – Fancourt J (Vice Chancellor of the County Palatine of Lancaster) [2023] EWHC 65 (Ch); now determined by the Court of Appeal [2024] EWCA Civ 158.