A fundamental issue that all litigants will be well served to consider when bringing, or defending, any legal proceeding is the question of whether the claim has been brought in time. The inadvertent failure to bring a claim in time has served to fatally undermine several disputes that otherwise may have been successful.
The Limitation Act 1980 sets out the relevant time limits (known as 'limitation periods') in which different kinds of legal claims must be brought – and the time from which those limitation periods begin to run. Many aspects of the act are uncontroversial, but there was some lingering uncertainty concerning the interpretation of Section 32, which extends the normally applicable limitation periods in circumstances where facts relevant to the claimant's cause of action have been deliberately concealed by the defendant. Section 32 states:
'(1) [...] where in the case of any action for which a period of limitation is prescribed by this Act [...]
(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant [...]
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
(2) For the purposes of subsection (1) above, 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.'
In Canada Square Operations Ltd. v. Potter1, Canada Square brought an appeal all the way to the Supreme Court arguing that Beverley Potter had advanced a claim against it outside of the applicable limitation periods, and her claim was therefore time barred pursuant to the Limitation Act. The Supreme Court considered the appeal, and it specifically clarified the meaning of the phrases 'deliberately concealed' in Section 32(1)(b) and 'deliberate commission of a breach of duty' in Section 32(2).
Background
Potter entered into a loan agreement with Canada Square in July 2006 on standard terms, which stated that the total amount of credit advanced to Potter was £20,787.24, comprising a cash amount of £16,953 and a payment protection premium of £3,834.24. The premium was payable as part of Potter's purchase of a payment protection insurance (PPI) policy. Canada Square deliberately elected not to inform Potter that almost £3,600 of the premium for the PPI policy was actually paid directly to Canada Square as its commission for the sale of the insurance policy.
The mis-selling of PPI later became a high-profile issue, and Potter became aware that the PPI policy she purchased likely was mis-sold to her by Canada Square. Potter received compensation from Canada Square under the statutory compensation scheme, but she was informed by her solicitors in 2018 that Canada Square also likely charged her a significant commission which she was entitled to recover.
Accordingly, in December 2018, Potter issued a claim against Canada Square to recover the sums that she had paid under the PPI policy. Canada Square defended Potter's claim on the basis that Section 9 of the Limitation Act imposed a six-year limitation period for bringing such claims which had expired in 2012. Potter relied on Section 32 to counter Canada Square's position. Potter argued that Canada Square deliberately concealed the commission payment from her, which was a fact relevant to her cause of action, and therefore the six-year limitation period should not begin to run until she found out about the commission payment in 2018.
The County Court decided that Section 32 applied and ordered Canada Square to pay Potter £7,953 – the commission payment plus interest. Canada Square appealed, unsuccessfully, all the way to the Supreme Court.
Section 32(1)(b): Was the commission payment 'deliberately concealed'?
After a detailed assessment of the case law and legislative history of the Limitation Act, the Supreme Court considered that the law on this issue was all rather confused and considered the complexity introduced to be a 'wrong turning in the law'. The Supreme Court preferred returning to what it considered to be a simpler test for whether Section 31(1)(b) applies in any given case. It held that what a claimant is required to show is all of the following:
- A fact relevant to the claimant's right of action.
- The concealment of that fact from by the defendant, either by a positive act of concealment or by a withholding of the relevant information.
- An intention on the part of the defendant to conceal the fact or facts in question.
Having determined that this was the appropriate test, it was 'relatively straightforward' for the Supreme Court to conclude that Potter has successfully made out these requirements and could therefore rely on the act to extend the limitation period applicable to her claim. Potter claim was not held to be time barred, and Canada Square's appeal was dismissed. Although this finding was determinative of the appeal, the Supreme Court also considered the second limb of Canada Square's argument.
Section 32(2): Did Canada Square engage in a 'deliberate commission of a breach of duty'?
The issue which the Supreme Court grappled with on this limb was the meaning of the word 'deliberate' and, specifically, whether it could include recklessness (as defined by the Supreme Court to mean 'the taking of a risk of which the person is aware in circumstances where it is objectively unreasonable to do so'). Canada Square accepted the Court of Appeal's view that it had been reckless in failing to disclose the commission to Potter, but it contended that recklessness alone was not sufficient to base a finding that it had deliberately breached any duty.
The Supreme Court conducted a deep review of the meaning of 'deliberate' versus 'reckless' by considering how the two words had been dealt with in previous case law, legislation and the Oxford Concise Dictionary. The Supreme Court ultimately favoured the interpretation in Cave v. Robinson Jarvis & Rolf2 that a deliberate breach of duty required knowledge that what was done was in breach of a duty. The Supreme Court held that the logical consequence of this is that recklessness as to whether an act or omission might breach a duty is not sufficient to show that a deliberate breach was committed by Canada Square.
Takeaways
It goes without saying that claimants should issue their claims in good time, and well before the expiry of any limitation period. However, there will of course be situations in which the circumstances make that impossible. For potential claimants in Potter's position, the clarification of the law on this point will be extremely welcome.
Footnotes
1. [2023] UKSC 41
2. [2002] UKHL 18; [2003] 1 AC 384.
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.
