Unfair prejudice petitions are subject to statutory limitation periods

The Court of Appeal has overturned “over 40 years’ received wisdom” by confirming that unfair prejudice petitions are, in fact, subject to limitation periods.

THG Plc and others v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158, [2024] All ER (D) 169 (Feb)

The respondent to an unfair prejudice (s.994) petition (THG plc) appealed a first instance decision in favour of the petitioner (Zedra Trust Company (Jersey) Ltd) in which the Judge had confirmed no limitation period applied to unfair prejudice petitions. In doing so, the Judge considered himself bound by the Court of Appeal’s decision in Bailey v Cherry Hill Skip Hire Ltd [2022] EWCA Civ 531.

The Court of Appeal was asked to decide, as a matter of principle, whether any limitation period applies to an unfair prejudice petition and, if so, what that period is.

Limitation periods do apply to unfair prejudice petitions

Setting the question in context, the Court of Appeal outlined the public policy considerations leaning against the raising of “stale” claims, which underpin the Limitation Act 1980. There is a clear public policy interest in the timely pursuit of claims, sparing defendants the injustice of having to face a stale claim and giving the parties certainty as to when the right to bring a claim has been lost.

It also considered numerous decisions and textbook excerpts which illustrated the (previously) “received wisdom” that limitation periods did not apply to unfair prejudice petitions, the usual approach being for the Court to address lateness, if appropriate, through the exercise of its very broad discretion to as to the relief (if any) to be granted.

The Court of Appeal held that it was not bound by Cherry Hill and that unfair prejudice petitions are in fact subject to statutory limitation periods.

How long do you have to bring an unfair prejudice petition?

Broadly speaking (and unless a shorter period applies), unfair prejudice petitions will be subject to s.8 of the Limitation Act 1980, which prescribes a limitation period of 12 years from the accrual of the cause of action for claims based upon a specialty (which includes a claim in respect of obligations imposed by statute).

However, where the relief the petitioner seeks is an order for the recovery of money, s.9 of the Act applies a 6 year limitation period. The Court of Appeal considered that an order for the purchase of shares by one party form the other (an order commonly sought by petitioners) would not be caught by this section.

Click here to read the judgment.

If you are a shareholder and you require advice on your rights or potential legal remedies, please get in touch with Tom Holden.