DWF wins landmark Supreme Court case

DWF, a global provider of integrated legal and business services, has secured a major victory in the Supreme Court, successfully representing Zedra Trust Company Ltd in a high-profile shareholder dispute involving Manchester-founded THG Plc. The judgment, handed down by a majority of four to one, ruled that no statutory time limit applies to claims brought under section 994 of the Companies Act 2006. This decision settles an important legal question and will have wide-reaching implications for shareholders, boards and advisers throughout the UK involved in company disputes.

The appeal concerned Zedra’s application to amend its existing section 994 petition to add a further allegation that it had been unfairly excluded from a July 2016 bonus issue of shares made by THG. By this amendment, Zedra sought monetary relief by way of equitable compensation. THG argued that the new allegation was time-barred under the Limitation Act 1980, contending that a petition seeking solely monetary relief was an “action to recover a sum recoverable by virtue of an enactment”, triggering the six-year limitation period in section 9.

The High Court had held that no limitation period applied to claims under section 994, while the Court of Appeal allowed THG's appeal and ruled that all petitions under section 994 are subject to a 12-year limitation period under section 8 of the Limitation Act, with claims for monetary relief under section 994 subject to a six-year limitation period under section 9. The Supreme Court has now reinstated the longstanding position that section 994 petitions are not subject to a statutory limitation period, whether or not monetary relief is sought.

By a 4–1 majority, the Supreme Court held that a petition under section 994 CA 2006 is not an “action upon a specialty” under section 8 of the Limitation Act 1980. Additionally, a petition seeking monetary compensation is not an “action to recover any sum recoverable by virtue of any enactment” under section 9 of the Limitation Act 1980. The broad remedial discretion in section 996, which allows the court to grant any relief it considers appropriate, is incompatible with applying a fixed limitation period tied to the form of relief sought. As a result, no statutory limitation period applies to unfair prejudice petitions, including those seeking compensation.

The DWF team was led by Joel Heap, managing partner of DWF in Manchester and national head of dispute resolution, alongside senior associate Sam Pringle. They instructed Andrew Thompson KC of Erskine Chambers and George McPherson of 3VB for this case. This landmark judgment provides important clarification for shareholders, companies, and practitioners advising on historical allegations of unfair prejudice, confirming that petitioners are not barred from seeking relief, including monetary compensation, simply because more than six years have passed since the underlying events.

Joel Heap noted, “This is a significant and very practical decision for minority shareholders and their advisors. The Supreme Court has re-affirmed what those specialising in shareholder litigation have understood for over 40 years, that is there is no limitation period in unfair prejudice.” He added, “DWF is proud to have advised Zedra on a case that has clarified the law at the highest level and will have lasting importance for shareholder disputes across the UK.”

This latest ruling follows DWF’s recent success in the Supreme Court in the dispute between Dairy UK and Oatly, further underlining the firm’s strength in complex, high-profile appellate litigation and its growing reputation in market-leading disputes before the UK’s highest court.