Reed Smith In-depth

Key takeaways

  • Under Section 32 (1) (b) of the Limitation Act 1980, if any fact relevant to a claimant’s right of action has been “deliberately concealed” from him or her by the defendant, the limitation period will be postponed until the claimant has discovered the concealment, or could with reasonable diligence have discovered it. Under section 32 (2), a “deliberate commission of a breach of duty” where it is unlikely to be discovered for some time amounts to “deliberate concealment” of the facts involved in that breach of duty. In Canada Square Operations v. Potter, the Supreme Court considered the meaning of these specific phrases. 
  • In earlier decisions (see Sheldon v Outhwaite and Cave v Robinson), the House of Lords (as it was) had  firmly emphasised the ordinary meaning of the language used in section 32.. Notwithstanding this, in Canada Square Operations v. Potter,  the Court of Appeal moved away from the clear language of the provision, deciding that inherent in the idea of concealment was some obligation to disclose the fact and that “deliberately” or “deliberate” also included in its meaning recklessness. 
  • The Court of Appeal’s decision has been overturned, and the Supreme Court held that the word “deliberately” or “deliberate” for the purpose of sections 32(1)(b) and 32(2) of the Limitation Act does not also mean “recklessly”. Adopting an ordinary interpretation of the word, the Court held that a deliberate act is an act that is done consciously and intentionally. Contrast was drawn with a reckless act, which is an act carried out without thought or care as to its consequence. 
  • According to the Supreme Court, concealment for the purpose of section 32(1)(b) simply requires a defendant to withhold or hide a relevant fact. It does not require the defendant to owe a legal or other duty to disclose the relevant fact to the claimant.

The facts

1. On 26 July 2006, the claimant, Mrs Potter, entered into a loan agreement with the defendant, Canada Square Operations Ltd. The loan agreement was a credit agreement within the meaning of the Consumer Credit Act 1974 (the “CCA”). At the same time, the claimant had taken out a payment protection insurance policy (“PPI”). The total amount due under the loan was £20,787.24, which comprised a cash payment of £16,953 and a premium payment of £3,834.24. Of the premium payment, the sum paid to the insurer only amounted to £182.50. The defendant did not inform the claimant that it would receive commission for the sale of the PPI policy.

2. In April 2018, the claimant complained to the defendant that the PPI policy had been mis-sold to her. The claimant received compensation in line with the redress scheme established by the Financial Conduct Authority for the mis-selling of  PPI policies. In November 2018, the claimant was made aware by her solicitors that the premium payments that she had made would likely have included substantial commission, which had not been disclosed to her.

3. In December 2018, the claimant commenced proceedings in the County Court in which she sought to recover the amounts paid to the defendant in respect of the PPI policy, less the compensation that had already been received. The claim was brought on the basis that the relationship between the claimant and the defendant was unfair within the meaning of section 140A of the CCA, it having been established in Plevin v. Paragon Personal Finance Ltd [2014] UKSC 61 that the nondisclosure of a very high commission charged to a borrower made the relationship between the creditor and the borrower unfair within the meaning of section 140A of the CCA.

4. It was conceded by the defendant that it had not disclosed the commission it would receive but took the position that the claim was time-barred under section 9(1) of the Limitation Act, which provides that “any action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued”. The only issue in dispute by the time of trial was whether the limitation period for the claim in question should be extended under section 32(1)(b) and/or section 32(2) of the Limitation Act.