THG v Zedra – limitation revisited

The claimant was a minority shareholder in a company. It issued an unfair prejudice petition pursuant to section 994 of the Companies Act 2006 against the company and its directors.

The claimant applied for permission to amend to permit it to claim equitable compensation for having been wrongly excluded from a bonus share issue some six and a half years prior. The respondents opposed the permission application arguing that the claim was time barred under the Limitation Act 1980. 

Key to the case was section 8 and 9 of the Limitation Act. Section 8 is to the effect that an “action upon a specialty” is subject to a 12-year limitation period unless a shorter period of limitation is prescribed by any other provision of the Limitation Act. Section 9 is to the effect that an “action to recover any sum recoverable by virtue of an enactment” is subject to a six-year limitation period.

At first instance the judge gave permission to amend; the Court of Appeal reversed that decision, and its judgment was appealed to the Supreme Court by the claimant.

The Supreme Court held by a majority (4:1) that the claims were not statute barred.
The majority reasoned as follows.

Section 8

The first issue was whether the claim was an “action upon a specialty” falling within section 8. The Supreme Court judges referred to the judgment of the Court of Appeal in Collin v Duke of Westminster which was a claim for leasehold enfranchisement under the Leasehold Reform Act 1967. The majority reasoned that this case had given rise to a narrow interpretation to the effect that a specialty included the enforcement of obligations created by statute and a wide interpretation that section 8 applied to any claim that could only be brought under a statutory provision. [Reference was also made to, inter alia, three insolvency cases: (i) Farmizer (a wrongful trading section 214 case); (ii) Priory Garage (a transaction at an undervalue (TUV) section 238 case); and (iii) Nurkowski (a transaction defrauding creditors section 423 case).]

The Court of Appeal in the instant case had been wrong to hold that the wider Collin View had formed the basis of the judgment in Collin: the narrow Collin view was the basis of the decision in that case, ie, that a specialty was an action to enforce an obligation created by a statute. Insofar as Priory Garage and perhaps Nurkowski relied on the wider Collin view, they were wrong to do so. [But this seemingly leaves open the possibility of its being argued that section 238 and section 423 may be an action on a specialty for reasons other than the wider Collin interpretation. Contrast the Supreme Court’s stronger holding as to the wrongness of these cases as regards section 9 below.]

The unfair prejudice provisions in the Companies Act 2006 did not create or enforce any substantive obligations; rather they provided relief in respect of a “state of affairs”, being commonly sought where there is no breach of an enforceable obligation but where a state of affairs exists as regards a company that results in unfair prejudice, eg as a result of the breach of a legitimate expectation. As such, section 8 did not apply to such petitions. 

The four majority judges then split 2:2, two judges (Hodge and Richards) holding (obiter) that an action upon a specialty was limited to monetary obligations such that Collin had been wrongly decided in holding that section 8 could apply to a leasehold enfranchisement claim; two judges (Lloyd-Jones and Briggs) holding (obiter) that section 8 could apply to non-monetary obligations.

Section 9

The next question was whether, notwithstanding that an unfair prejudice petition was not an action upon a specialty, a six-year limitation period could apply to it on the basis of section 9, ie, on the basis that it was an action to recover a sum by virtue of an enactment. 

The prior English caselaw had been correct in holding that section 9 was capable of applying not only to claims under statutes for ascertained sums but also for unascertained sums and for monetary claims which were subject to the court’s discretion.  

However, an unfair prejudice claim was not a claim to enforce a liquidated or unliquidated obligation arising under statute but was instead a claim that the court should make such order as it thinks fit for giving relief in respect of the matters complained of.

• Here the majority judges rejected the “look and see” approach preferred by the Court of Appeal below to the effect that the limitation period under a statutory provision could vary depending on the claim that was being made and whether it was a monetary (section 9 applying) or non-monetary (section 9 not applying). The majority judges held that it would be arbitrary to apply a six-year limitation period to some claims under a statutory provision but not others.
• The majority judges also reasoned that while the court “may” provide for payment of a sum by way of compensation as relief on an unfair prejudice petition the respondent’s obligation to pay arose only by virtue of the court’s very wide discretion.

Claims under statutory provisions which conferred a wide discretion were not claims as to which section 9 applied and for that reason Priory Garage and Nurkowski were wrongly decided. 

The court therefore held that the claim sought to be added by the claimant was not statute barred and the claimant was thus granted permission to amend.

Commentary - effect on Insolvency Act claims

A six-year limitation period is very unlikely to apply to a section 238 (TUV), section 239 (preference), or section 423 (transaction defrauding creditors) claim even where the only remedy claimed is monetary relief given:

• The Supreme Court’s rejection of the “look and see” approach
• Its determination that claims under statutory provisions conferring a wide discretion do not fall within section 9
• Its holding that as regards the application of section 9 Priory Garage and Nurkowski were wrongly decided.

Importantly however the Supreme Court was not asked and did not overrule Priory Garage or Nurkowski (the WLR report confirms that they were disapproved not overruled) so in theory at least an argument could be made at first instance that section 9 applies to these claims. It would, however, be a bold argument.

A six-year limitation period likely does apply to section 214 wrongful trading claims however given:

• The only remedy available under section 214 is monetary so the “look and see” approach is not relevant to it and it is not a section that confers a very wide discretion on the court
• The Supreme Court did not state that Farmizer had been wrongly decided (distinguished not disapproved as per the WLR report).

As regards whether a 12-year limitation period is imposed on section 238 (TUV), section 239 (preference), or section 423 (transaction defrauding creditors) claims, this depends:

• Firstly on whether the statutory provision creates an obligation or confers a wide jurisdiction on the court to grant relief in respect of a state of affairs. In this regard Catherine Addy KC and Rebecca Page KC suggest there may be a distinction between relief under section 423 and relief under section 238 and 239 on the ground that section 423 is on terms that the court “may” grant relief whereas section 238 and 239 are on terms that the court “shall” make an order where the requirements for the section are satisfied – the mandatory character of section 238 and 239 may distinguish them from section 994 and section 423: see their illuminating case note on the Maitland Chambers website.
• Secondly, even if it is the case that the mandatory wording of the statutory provision has the effect of creating an obligation for this purpose, to establish that the claim is subject to a 12 year limitation period under section 8 the respondent will additionally need to establish that the view of Lloyd-Jones and Briggs is to be preferred to the view of Hodge and Richards (see (4) above), sc. that the section 8 12 year limitation bar can still apply notwithstanding that these sections permit the court to order non-monetary relief.  

THG v Zedra [2026] UKSC 6

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