No time limit for unfair prejudice petitions: THG Plc v Zedra Trust Company (Jersey) Ltd

The Supreme Court has handed down its judgment in THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6. The case concerned a question of practical importance to company law: whether unfair prejudice petitions under sections 994-996 of the Companies Act 2006 (the CA 2006) are subject to a statutory limitation period under the Limitation Act 1980 (the Limitation Act) and, if so, what the relevant limitation period is.

In upholding 40 years of “received wisdom”, a majority of four to one found that no limitation period applies to unfair prejudice petitions. In this article, we examine the Supreme Court’s decision in Zedra and its significance for companies and their directors.

Background

Zedra Trust Company (Jersey) Ltd (Zedra) was a minority shareholder in THG Plc (the Company). In 2019, it presented a petition under section 994 of the CA 2006, alleging that the Company’s affairs had been conducted in a manner that was unfairly prejudicial to its interests.

The petition underwent various amendments and strike-out applications. The key issue on appeal concerned one such amendment, which alleged that Zedra had been wrongly excluded from a bonus share issue on 11 July 2016 during which 16,802 shares were allotted to four other shareholders but not to Zedra (the July 2016 Complaint).

Zedra argued that, by excluding Zedra, the Company’s directors had breached several directors’ duties, including their duties to act lawfully, in good faith, for proper purposes and fairly as between the Company’s various shareholders. Zedra sought an order requiring the relevant directors to pay equitable compensation for its loss, which was estimated at between £1.8-1.9m.

At first instance, the High Court permitted the amendment, holding that no limitation period applied to unfair prejudice petitions under section 994. The Court of Appeal reversed that decision, holding that the six-year limitation period under section 9(1) of the Limitation Act applied and that the July 2016 Complaint was therefore time-barred. Zedra appealed this decision to the Supreme Court.

Three principal issues fell to be determined by the Supreme Court:

1. Is an unfair prejudice petition an “action upon a speciality” under section 8(1) of the Limitation Act (and so subject to a 12-year limitation period)?
2. Alternatively, is an unfair prejudice petition an “action to recover any sum recoverable by virtue of any enactment” under section 9(1) of the Limitation Act (and so subject to a six-year limitation period)?
3. Did any of the relief sought by Zedra amount to “equitable relief” under section 36(1) of the Limitation Act (with the result that no limitation period applied)?

Is an unfair prejudice petition an “action upon a speciality”?

A majority of the Supreme Court justices found that an action upon a speciality is, in essence, an action to enforce an obligation created by a deed or statute. It does not extend to all proceedings merely based upon a statute.

Sections 994-996 of the CA 2006 neither contain nor enforce any substantive obligations. Rather, they exist to provide relief in respect of a state of affairs (i.e. where a company’s affairs are being, or have been, conducted in a manner that is unfairly prejudicial to the interests of all or some of its members).

Whilst directors are subject to fiduciary duties and any breach of these obligations may give rise to an unfair prejudice petition, sections 994-996 do not themselves impose any obligations on a person. Accordingly, an unfair prejudice petition under these sections is not an “action upon a speciality”.

In reaching this decision, the majority rejected what it referred to as the “wider Collin view” – the proposition, derived from Collin v Duke of Westminster [1985] QB 581, that section 8 of the Limitation Act applies to any claim that can be brought only under a statutory provision.

The majority considered that the true basis for the reasoning in Collin was that the relevant statute in question was the source of the rights and obligations which the action was brought to enforce. Other notable cases, such as Re Priory Garage (Walthamstow) Ltd [2001] BPIR 144 and Rahman v Sterling Credit Ltd [2001] 1 WLR 496, were wrongly decided insofar as they relied on the wider Collin view.

Is an unfair prejudice petition an action to recover a sum recoverable by virtue of any enactment?

A majority also held that section 9 of the Limitation Act does not apply to unfair prejudice petitions, even where the relief being sought is monetary in nature.

Under sections 994-996 of the CA 2006, the court has the widest possible discretion as to what order to make. Although a petitioner can request a specific form of relief, they have no entitlement to receive that or any other particular type of relief.

As such, if the court does order a person to make a payment, that order arises from the court’s exercise of its discretion, not “by virtue of” sections 994-996 themselves. 

The majority further rejected the “look and see” approach historically adopted by the courts – an evaluative process by which the court examines the substance of the relief being sought to determine whether section 8 or section 9 of the Limitation Act applies. They held that, taking into account the time and resources of the parties and the court, no sensible regime would require the court to wait until the end of a trial to determine whether the action was time-barred.

The dissent

Lord Burrows, dissenting, concluded that both sections 8 and 9 of the Limitation Act applied to unfair prejudice petitions. He saw no reason to depart from the well-established and workable “look and see” approach and considered that, where there is any doubt as to the correct interpretation of statute, a purposive interpretation should be applied. This favoured the imposition of a limitation period, due to the advantages of limitation periods in discouraging the raising of stale claims.

Lord Burrows found that the six-year limitation period under section 9 should apply where the unfair prejudice petition specifically seeks a monetary order, and the 12-year period under section 8 should apply to cases where non-monetary orders can be made. He would therefore have dismissed the appeal.

Key takeaways

The Supreme Court has restored the previously understood position that there is no statutory time limit for bringing an unfair prejudice petition. It also emphasised that delay remains relevant. In exercising its discretion to grant or refuse any remedy, the court may (and often does) take account of an unjustified delay by the petitioner to bring or pursue its petition that has an adverse effect on a respondent or third party. Somewhat paradoxically, the Court of Appeal’s (now overturned) decision had given rise to concerns that the application of Limitation Act would in practice make it much harder for the courts at an interlocutory stage to exercise their case management powers to limit the number of issues in dispute if the conduct complained of was within the limitation period, and would lead to more stale cases being prosecuted.

Shareholders seeking relief from unfairly prejudicial conduct should therefore not delay in issuing a petition under sections 994-996 of the CA 2006 once they become aware of the facts giving rise to the petition, despite the absence of a statutory limitation period for bringing such a petition. The absence of a statutory limitation period should not give petitioners any comfort that they will be able to rely on historic conduct to pursue their claims.

The Supreme Court observed that judges in other jurisdictions have drawn attention to the difficulties in interpreting provisions which have the same or substantially the same wording as sections 8 and 9 of the Limitation Act. It suggested that Parliament bring forward legislation to reform the rules of limitation to address these issues.

Lord Burrows also commended the Law Commission’s recommendation for a core limitation regime of three years from discoverability, with a longstop of ten years from the point at which the cause of action accrues or the relevant duty is breached, and noted that the Law Commission had specifically recommended that petitions under sections 994-996 should be subject to that regime. We may therefore see legislative reform in this area in the coming years.