Tom v Candey – Summary Judgment of an Unfair Prejudice Petition for Limitation Fails and Share Dilution

Matthew Tom and Ashkhan Candey were both solicitors. They worked together, became friends, and then went into business together.

In 2009 Candey LLP was formed and Candey was the driving force. Tom joined as a member on informally agreed terms. He would get a share of fees he personally billed, a smaller commission on introduced business, and an equity stake starting at 2%, rising over time. In 2011 that stake rose to 4%. Tom claimed it was meant to rise further, to 7% by 2016. The firm disputed this.

In 2012 the LLP’s business was incorporated as Candey Limited. Tom, Candey, and two others became directors and shareholders. Tom was allotted 5% of the shares.

For more information, please read the full case on Tom v Candey & Ors (Re Candey Ltd and Companies Act 2006) [2024] EWHC 1398 (Ch)

This Case from a Limitation Fail Point of View

Matters came to a head at board meetings in September and October 2015, in which, he claimed, he was told of a proposed accounting exercise that would sharply depress the value of his shares. Accounts were approved by the other directors that Tom said understated what was owed to him. He resigned as a director on 15 October 2015 and had no further part in running the business.

Tom’s grievances multiplied after his departure in relation to the following actions of the firm:

Failing to buy back his shares,
disputing the size of his shareholding,
failing to pay commission owed on a settled case and
in November 2016 diluting his stake to a mere 0.055% by issuing 99,000 new shares to the other members at par.

Tom issued an unfair prejudice petition under section 994 of the Companies Act 2006, but not until 28 October 2022, more than seven years after he left.

The Application

Candey and the other individual respondents applied to strike out the petition, or obtain summary judgment against it, arguing essentially three things: that specific elements of the claim (the loan account and unpaid commission) were time-barred under the Limitation Act 1980; that even where no formal limitation period applied, allowing the claim to proceed would improperly let Tom sidestep limitation rules that would have barred an equivalent contractual claim; and that Tom had acquiesced in the alleged misconduct or had deliberately delayed litigating for tactical reasons, so should be treated as having elected not to pursue relief.

The timing was significant. Three months before the application was heard, the Court of Appeal had handed down THG plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158, upending decades of assumed practice by ruling that unfair prejudice petitions were in fact subject to statutory limitation periods..

This judgment therefore became one of the first opportunities for the High Court to work through what Zedra actually meant in practice.

This Case from a Share Dilution Point of View

Restructuring of the business was complete by 2014. Candey Limited acquired the members’ interests in the LLP. The total price paid was £11,606,864. Each of the LLP’s members received a credit to a personal director’s loan account within the company, reflecting the size of his equity share.

Tom’s account was originally credited with £464,274 as part of the 2014 Restructure. By the time of a board meeting in October 2015, the accounts showed a lower balance: £259,454. Tom said the true figure should have been £332,498. That gap, roughly £73,000, became one of the central financial disputes in the case.

The Loan Amount

Everyone agreed the loan account was not repayable on demand. However, the parties also disagreed sharply on exactly when it was repayable.

The company stated that the loan could only be repaid through the “skill and labour” of each director, by billing clients. Since Tom stopped working for the firm, they argued, he forfeited any right to repayment at all.

Tom’s claim was that the loan was repayable “if and when” the company had the funds, based on its profits. He said this happened at various points after his departure, when Candey chose to service other directors’ loans instead of his.

Tom’s letters at the time told a different story again. In October 2015, he told Candey the loan was “repayable immediately.” In August 2016 he repeated the claim, saying no fixed repayment terms had ever been agreed, so under ordinary contract law the debt fell due at once.

The company called this inconsistency “disingenuous,” but the judge disagreed. He said a claimant’s case is allowed to change and sharpen before formal proceedings begin. It would be tested at trial, not decided on paper.

Unfair Prejudice Petition for Limitation

What the Judge Decided

On the loan account, the judge found no limitation problem at all. Tom’s petition sought a share purchase order, non-monetary relief governed by the twelve-year period, and every relevant event fell comfortably within that window. Importantly, Tom was not separately suing for repayment of the loan account as a debt; he relied on its existence and disputed value only as background supporting his unfair prejudice case and as a factor the court might weigh when fixing a fair price for his shares. Since he was not pursuing an independent contractual claim, the respondents’ plea that a six-year debt limitation period applied to the loan simply had no target to bite on.

The judge also declined to strike out the loan account claim on the “parallel action” argument. The idea that because Tom could theoretically have brought a time-barred contractual claim for the same money, allowing the statutory route was itself an abuse designed to dodge the Limitation Act. He held that litigants were entitled to frame their case as they saw fit, and that a section 994 petition was a fundamentally different claim from a contractual one. Different defendants, different legal tests, and a different, more flexible remedy that a court could shape however it saw fit rather than simply ordering payment of a fixed debt.

The commission claim was different in kind, since Tom was seeking payment of a specific sum, squarely within the six-year period under section 9 of the Limitation Act. But the respondents had never actually pleaded a limitation defence to it, and the judge was not persuaded it was so obviously time-barred that amending the defence would be a mere formality. Nobody had established precisely when the obligation to pay commission had actually fallen due.

On delay, acquiescence and tactical election, the judge accepted the now-settled principle from Zedra that a petition brought within time cannot be struck out merely for taking a long time to arrive, though in an appropriate case the court might still refuse relief for stale historic misconduct if no reasonable judge could think it fair to grant a remedy at trial. He found the evidence of acquiescence thin but Tom disputed key allegations, and his explanation for the delay (uncertainty about whether litigation would be worthwhile, disruption from the pandemic, and what he described as an unequal financial footing against a well-resourced opponent given to using litigation and costs threats) could not fairly be dismissed without cross-examination.

Nor was the judge willing to infer, on the evidence available at that stage, that Tom had made a tactical decision to wait and see whether the company’s rising value would make a claim more lucrative.

Finally, the judge rejected the argument that Candey’s various past offers to buy Tom’s shares made the petition an abuse of process. Some offers pre-dated the most serious complaint (the 2016 dilution), none matched what Tom ultimately claimed was owed, and by the time the petition was issued no offer remained on the table at all. Meaning that striking out the claim on this basis would have left Tom with no remedy whatsoever.

The application was dismissed in its entirety, and the unfair prejudice petition was allowed to proceed toward trial.

The Dilution

In November 2016, Candey allotted 99,000 new shares to the other director/shareholders. The price was par value by a nominal, below-market price, but Tom did not buy in.

Tom’s shareholding, once 5%, collapsed to 0.055% of the company.

Two days after the dilution, Candey offered to buy what remained of Tom’s stake for £1,000. A month later, he told Tom the shares had only “nominal value,” and that further disclosure to Tom would be disproportionate given how little his stake was now worth.

Tom argued the dilution was designed to strip his interest down to almost nothing, without ever having to negotiate a fair buy-out. The judge treated this as a serious and continuing allegation. One that fell well within any relevant limitation period, unlike some of the earlier conduct complained of.

The Commission Claim

Tom also had a separate claim for unpaid commission. (referred to in the judgment as “Matter A.”)

From a case that settled in around May 2014 with fees billed of approximately £500,000, Tom claimed under his agreement he was owed 10% of that, around £50,000.

The company admitted that no commission had ever been paid but argued Tom lost the right to it by leaving the company, in breach of contract. It also said the cost assessment needed to actually calculate the sum owed was never completed.

As this was a claim for a specific sum, not for a share purchase order, the six-year limitation period applied. But the firm had never formally pleaded limitation as a defence to this part of the claim. The judge declined to let them fix that omissaion at this stage and the claim survived.

What the Judge Decided

The application to strike out failed on every front.

The loan account claim survived: Tom wasn’t suing for the debt itself, he was using it as evidence to support his unfair prejudice claim. This is one factor a trial judge might weigh when fixing a fair price for his shares. A claim for a share purchase order carries a twelve-year limitation period, not six, so nothing here was time-barred.
The commission claim survived: No limitation defence had been properly pleaded against it, and it wasn’t obvious the claim was actually out of time.
The delay argument failed: Seven years passed between Tom’s resignation and his petition. The firm argued this was tactical, that Tom waited to see if the company’s value would rise before cashing in. The judge wasn’t persuaded. Tom’s own evidence pointed to other explanations like uncertainty over whether litigation was worth the cost, the pandemic, and what he called a serious imbalance of financial firepower against a well-resourced opponent.
The “past offers” argument failed: Candey pointed to offers made back in 2016 as proof Tom had already been given a fair chance to exit. The judge disagreed. Those offers pre-dated the dilution. None of them matched what Tom said he was actually owed. And by the time the petition was filed, no offer was even on the table anymore.

The petition was allowed to proceed to trial in full.

The Case Proceeded – To Settlement Without a Trial

This case turned almost entirely on numbers that didn’t add up cleanly, followed by an offer of just £1,000 to buy him out entirely.

None of those figures were tested at trial. The case appears to have settled before the eight-day hearing listed for November 2024 ever took place, and a related appeal was itself withdrawn by September 2024. Whatever number the parties eventually agreed on for Tom’s shares was never made public, but the judgment leaves behind a detailed paper trail of exactly how a shareholder’s stake can be quietly squeezed to almost nothing through loan account disputes, delayed cost assessments, and a single, deliberately timed share allotment.