For financial institutions hoping PPI mis-selling claims were behind them, the Supreme Court's ruling in Canada Square Operations Ltd v Potter may come as an unwelcome re-opening of old wounds.
The UK's highest court delivered its unanimous ruling1 on the meaning of relevant parts of the Limitation Act 1980 (LA 1980) that could permit around 26,000 more PPI claims to proceed.
But the case contains some good news for defendants as well. The Supreme Court has overruled previous authorities on the interpretation of “deliberate” for limitation purposes. The judgment finds that the meaning of “deliberate” is narrower than previously suggested and cannot include “reckless” conduct.
There's also good news for beleaguered lawyers: the Supreme Court's incisive judgment brings welcome clarity (and common sense) to these limitation rules.
In this article, we discuss the Supreme Court's analysis of the meaning of “deliberately concealed” and “deliberate commission of a breach of duty” in the LA 1980. Beyond the immediate context of PPI, this is important guidance on limitation periods in general where a key fact only comes to light years after the event.
The underlying case was typical of payment protection insurance mis-selling claims.
Mrs Potter took out a loan with the defendant, Canada Square, in 2006. As part of the transaction, she also took out PPI. The PPI premium was £3,834.24. But unbeknownst to Mrs Potter, over 95% of that sum was Canada Square's commission as an insurance broker. The premium itself was only £182.50.
The loan was fully repaid by March 2010, but Mrs Potter did not find out about the commission until 2018. There was no suggestion that she could or should have found out any earlier.
Following Plevin v Paragon Personal Finance Ltd2, non-disclosure of very high commission charged to a borrower makes the relationship between creditor and borrower “unfair” within the meaning of s.140A Consumer Credit Act 1974 (CCA 1974), allowing the borrower to seek a remedial order under s.140B of the same Act.
In 2018, Mrs Potter began County Court proceedings to recover the amounts she had paid to the defendant, with interest (but less the amount of compensation she had obtained from the FCA's redress scheme earlier in 2018). Her case was that the relationship between her and Canada Square was “unfair” within s.140A CCA 1974 and thus she was entitled to apply for a remedial order under s.140B CCA 1974.
Given the time that had passed, Canada Square contested few if any of the underlying facts. Canada Square admitted that it had not disclosed to Mrs Potter that it would receive commission in respect of the PPI policy. But it argued that it was too late for her to bring a claim.
Limitation – the law
Canada Square argued that Mrs Potter's claim was time barred under s.9(1) LA 1980. This provision says that the limitation period for a claim for a sum recoverable under statute is six years. Mrs Potter's claim for remediation under the CCA 1974 would usually be covered by this section.
However, Mrs Potter argued that s.32 LA 1980 was engaged and so limitation did not start to run until she found out about the commission in 2018.
s.32 deals with the limitation period in cases of fraud, concealment or mistake. The provisions in question are as follows.
- 32(1)(b) provides that where any fact relevant to the claimant's right of action has been deliberately concealed from the claimant by the defendant, the limitation period does not start to run until the claimant has discovered the fraud, concealment or mistake, or could have discovered it with reasonable diligence.
- 32(2) provides an additional circumstance in which “deliberate concealment” can be found: “deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty”.
The County Court found that s.32 LA 1980 applied, and gave judgment for Mrs Potter. Canada Square made unsuccessful appeals to the High Court and Court of Appeal. However, given the importance and potential impact of the legal question of limitation in this case, a further appeal proceeded to the Supreme Court.
The Supreme Court's judgment
s.32(1)(b) - “deliberately concealed”
The Supreme Court found that limitation was postponed under s.32(1)(b) and so Mrs Potter's claim was not time-barred. Canada Square had deliberately chosen not to tell Mrs Potter about the very high commission she was paying on her PPI premium. This amounted to the deliberate concealment of a fact relevant to her right of action.
However, although the Supreme Court agreed that s.32(1)(b) in fact applied, it disapproved the Court of Appeal's interpretation of the provision. In Lord Reed's judgment, the line of case law on this statutory provision raised “a number of serious difficulties” which this judgment corrects.
For a defendant to be said to have “concealed” a fact relevant to the claimant's right of action, prior case law incorrectly held there needed to be some duty to disclose the fact.
Lord Reed observed that “concealed” can mean both actively taking steps to withhold information and simply not disclosing it, provided the non-disclosure is intentional. But in either event there is no need for the defendant to be under any duty, whether legal or moral, to disclose it. That would take us beyond the ordinary meaning of “conceal”. This is helpful to claimants, who no longer need to show that there was any obligation to disclose the relevant fact in order to avail themselves of s.32(1)(b).
But the prior case law had also gone wrong regarding the meaning of “deliberately”. It had been thought that this could include recklessness. The meaning of “reckless” was taken from R v G3: a person acts recklessly if they are aware of a risk that some result will occur and it is, in the circumstances known to that person, unreasonable to take that risk. In this case, that meant the defendant being aware of a risk that it was under a duty to disclose the commission to the claimant4, but not telling her about it despite being so aware.
The Supreme Court decided that this was not the natural or correct reading. “Deliberate” concealment means simply intentional non-disclosure. This is less helpful for claimants, who will now need to show that the defendant's concealment of a relevant fact was intentional.
s.32(2) – “deliberate commission of a breach of duty”
The Supreme Court said this sub-section was not applicable on the facts. Again, prior case law had taken a wrong turn by allowing “deliberate” to include “reckless”.
It had previously been held that “deliberate commission of a breach of duty” could include recklessness. On that interpretation, a defendant who knew they were at risk of being in breach of duty and carried on anyway would be caught.
But the Supreme Court stated that “deliberate” and “reckless” do not mean the same thing, either in normal speech or at law. To allow “deliberate” to include “reckless” in this provision of the LA 1980 would defy normal understanding of the word “deliberate” and would unacceptably broaden limitation.
This judgment continues the Supreme Court's recent trend of “back to basics” statutory interpretation. Where statutory language is clear, the Supreme Court will not depart from it or elaborate on it unnecessarily.
The corrected interpretation of s.32 LA 1980 should prove easier to understand and follow. But as noted, it does mean that claimants must now prove the defendant's intention to conceal a relevant fact. This is a high hurdle, not least given the evidential difficulties often posed by bring claims years after the event.
As for the future of PPI claims, it certainly seems that they aren't over yet.
1.  UKSC 41
2.  UKSC 61
3.  UKHL 50
4. As noted, in fact the Supreme Court found that there is no need for there to be a duty on the defendant to disclose, so the possibility of recklessness here becomes superfluous.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.