Damian Carter provides an overview of a recent decision of the Supreme Court impacting the procedure when bringing claims for unfair prejudice shareholder petitions, and how litigation funding can be used effectively in such disputes.
Limitation periods
A limitation period is the time period in which a claim has to be issued by a party who has suffered damages or loss as a result of another party’s conduct. What that period is depends upon the type of claim. For example, a claim for a simple breach of contract must be issued within six years from the date the cause of action accrued. All of this is governed by the Limitation Act 1980 (“the Act”).
Prior to the case of THG Plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 128, it was accepted that “there is no statutory limitation period applicable to unfair prejudice petitions”, as held by Lord Justice Andrews in a case called Re Cherry Hill Skip Hire Ltd [2022] EWCA Civ 531. If there had been a delay in the issuing of the petition, the overarching principle was that “if, in view of the delay, and the reasons for the delay it is unfair or inappropriate in all the circumstances for the petitioners to obtain the relief that they seek, the Court will exercise its discretion to refuse it” (Re Edwardian Group Ltd [2018] EWHC 1715).
However, the Court of Appeal in the Zedra case considered whether claims brought under s.994 are subject to the Act, and determined that they are, with the length of the limitation period depending on the relief sought.
Zedra concerned a bonus share issued in 2016 to a group of shareholders with shares in the same class, and with the same dividend rights. One of the members was excluded from the share issue and sought “equitable compensation” against the directors alleging that they had acted in bad faith.
The Supreme Court (THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 8) has now overturned the Court of Appeal’s decision and determined that unfair prejudice petitions brought under s.994 are not subject to statutory limitation periods under the Act.
Practical impact
The judgment provides clarity and restores the position that issues of delay in bringing s.994 petitions are governed by general equitable principles under the Court’s discretion and not the Act. This means that it may be possible to bring claims many years after the conduct complained about particularly if there is a good reason for the delay in bringing the claim. Despite the clarification by the Supreme Court, it is still important to seek early advice to ensure that any claim does not become barred by undue delay.
How can funding help?
If a lack of funding is preventing you from exploring a potential unfair prejudice claim, third party litigation funding is a way to finance litigation with funds provided by a third party litigation funder. It is non-recourse financing — the funder only gets repaid (and is paid a multiple of its investment amount) if the claim is successful.
“Enable” is a bespoke all-in-one litigation funding product developed by Weightmans in conjunction with a broker, funder and insurer which mitigates the cost risks of litigation for commercial claims requiring litigation funding and adverse costs cover.
To find out whether a dispute qualifies for Enable or if you would like to learn more about it, please contact Damian Carter.
