Tom v Candey – Summary Judgment of an Unfair Prejudice Petition for Limitation and Delay

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

In 2009 Candey LLP was formed, candey being the driving force with Tom as a member on informally agreed terms. The agreement was that Tom would get a share of fees he personally billed, a smaller commission on introduced business, and an equity stake starting at 2% and rising over time. In 2011 that stake was agreed to have increased to 4%, with a disputed further increase to 7% by 2016. 

In 2012 the LLP’s business was incorporated as Candey Limited, with Tom, Candey, and two others becoming both directors and shareholders. By 2014 the firm had undergone a restructuring in which Candey Limited acquired the members’ interests in the LLP in exchange for credits to individual directors’ loan accounts. Tom’s account was credited with just over £464,000, though the correct figure was disputed.  

Tom’s relationship with the firm deteriorated around the end of 2012. 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. 

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

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. 

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. 

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