Statutory limitation periods do not apply to unfair prejudice claims
- William Kanaan
- 8 hours ago
- 2 min read
The Supreme Court has held that claims in unfair prejudice petitions under section 994 of the Companies Act 2006 (CA 2006) are not subject to limitation periods under the Limitation Act 1980 (LA 1980).
The appellant, a minority shareholder, sought to amend a section 994 petition to include an allegation that it had been wrongly excluded from a bonus share issue made more than six years earlier and claimed compensation for the alleged resulting loss.
The Court of Appeal had held that section 994 petitions fall within sections 8 and 9 of the LA 1980, applying a 12-year limitation period for non-monetary relief or six years where monetary relief is sought.
The Supreme Court held that, as section 994 does not create substantive obligations (but provides relief for unfair prejudice), it cannot be an "action upon a specialty" under section 8 of the LA 1980 and so is not subject to the 12-year limitation period.
To the extent that decisions in certain cases concerning claims under sections 238 to 241 and 423 of the Insolvency Act 1986 that section 8 applied to any claim which could only be brought under a statutory provision, they were wrongly decided. The court was split on whether section 8 could apply to non-monetary obligations created by statute.
Section 9 of the LA 1980 does not apply to a claim for monetary relief in a section 994 petition.
Claims under statutory provisions that confer a wide discretion as to remedy (as under section 996) are not an "action to recover any sum recoverable by virtue of any enactment" and so are not subject to the six-year limitation period under section 9.
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