Matthew Nicholas Tom v Ashkhan Darius Candey & Ors

The respondents applied to strike out and/or for summary judgment against an unfair prejudice petition under section 994 of the Companies Act 2006 on grounds principally founded on limitation under the Limitation Act 1980, delay, acquiescence and abuse of process. The judge held that the Court of Appeal decision in THG plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158 governs the approach to limitation in unfair prejudice petitions: non-monetary relief under section 994 is an action "upon a specialty" subject to the 12-year period in section 8 of the Limitation Act 1980, whereas purely monetary relief falls within section 9 and a six-year period.

Applying those principles, the court concluded that the petitioner’s case in relation to the directors’ loan account is not a stand-alone claim for a debt but forms part of a claim for a share purchase order under section 996, and so is governed by the longer 12-year period; accordingly it was not time barred. The separate claim for unpaid commission is in substance monetary and therefore potentially subject to section 9, but no limitation defence was pleaded and on the facts the point was not suitable for summary determination. The judge also rejected submissions that the petition was an abuse of process because it replicated a time-barred contractual claim, that the petitioner had acquiesced or made a tactical delay sufficient to deny relief, and that past offers to buy the shares were plainly reasonable such that the petition should be struck out. The respondents’ application was dismissed.

Background and parties: The petition under section 994 Companies Act 2006 was presented by Mr Matthew Tom in respect of the affairs of Candey Limited. He alleged various instances of unfairly prejudicial conduct by the other directors and members (including non-payment or under-crediting of a director’s loan account, unpaid commission, exclusion from management and dilution of his shareholding). The 1st–4th respondents applied (by notice dated 24 January 2024) to strike out and/or obtain summary judgment on parts or all of the petition under CPR rule 3.4(2) and/or Part 24, largely on limitation and abuse of process grounds.

Nature of the application (i): The respondents sought to defeat the petition on the basis that (a) monetary claims for payment (loan account and commission) were time-barred under the Limitation Act 1980 (sections 5, 6, 8 and 9 were argued); (b) the petition improperly sought to circumvent limitation by re-framing contractual claims as statutory unfair-prejudice remedies; and (c) the petitioner had delayed or acquiesced (or elected) so as to render relief inappropriate or abusive. They also relied on prior offers by Mr Candey to purchase the petitioner’s shares.

Issues framed by the court (ii):

• Whether unfair-prejudice relief is subject to limitation, and if so which Limitation Act period applies to different forms of relief;
• Whether the petitioner’s loan-account allegations amount to a standalone contractual claim for a debt (and are therefore time-barred) or form part of a non-monetary share-purchase remedy under section 996;
• Whether the unpaid commission claim was time barred or otherwise unsuitable for trial;
• Whether delay, acquiescence, election or abuse of process (including reliance on past offers to buy the shares) justified striking out or granting summary judgment.

Court’s reasoning and disposition (iii): Relying on the Court of Appeal’s decision in THG plc v Zedra Trust (the controlling authority), the judge held that unfair-prejudice petitions may attract different limitation periods according to the substance of the remedy sought: non-monetary relief (for example an order for purchase of shares under section 996) falls within section 8 (12-year period) while claims for payment are caught by section 9 (six-year period). Applying that approach, the judge found that the loan-account material was pleaded and advanced as part of a claim for a share purchase order (non-monetary relief to be valued and adjusted by the court), not as a freestanding contractual debt, and so was not time barred. The unpaid commission claim is monetary and therefore in principle subject to section 9, but no limitation plea was pleaded and issues of concealment, accrual, the date when the cause of action arose and the relevance of documents would require full trial evidence; summary determination was inappropriate. The court also rejected abuse/election/acquiescence arguments because the petitioner had not plainly elected to remain a shareholder to benefit from any rise in value, continuing complaints (including 2016 dilution) fell within relevant limitation periods, negotiations and other explanations for delay were material and fact-sensitive, and previous offers by the majority were not shown to be plainly compliant with O’Neill v Phillips guidance or to cure subsequent prejudice. Accordingly the strike out/summary judgment application was dismissed and the petition allowed to proceed to the trial listed for November 2024.

Other procedural points: The judgment summarises the legal tests for strike out and summary judgment and emphasises caution before making binding interim determinations where a trial is listed. The decision records the parties’ expert valuation reports and the listing of an eight-day trial.

The application by the 1st–4th Respondents to strike out and/or obtain summary judgment was dismissed. The judge applied the Court of Appeal’s decision in THG plc v Zedra Trust to hold that non-monetary unfair-prejudice relief (notably a share purchase order under section 996) is governed by the 12-year limitation period in section 8 of the Limitation Act 1980, so the petitioner’s loan-account related allegations (advanced as part of a claim for a purchase order) were not time barred. The court also found that the commission claim could not be summarily dismissed for limitation because no limitation defence had been pleaded and the factual issues required trial; further arguments of acquiescence, election, abuse and the sufficiency of prior offers were fact-sensitive and unsuitable for summary determination, so the petition was permitted to proceed to trial.