Supreme Court Make Clear The Law On Limitation

Canada Square Operations Ltd v Potter [2023] UKSC 41 

In an important judgment on the law of limitation in the above case, the Supreme Court gave useful clarification on the terms “deliberate” and “conceal” under Section 32 of the Limitation Act 1980, which have the consequence of delaying statutory limitation periods, concluding that:

The Supreme Court has possibly expanded the scope for claims to be brought more than six years after the cause of action occurred, although making the task of proving deliberate concealment much more difficult.

Case background

The underlying case associated with commissions received in respect of a payment protection insurance (PPI) policy. In July 2006, Mrs Potter had a regulated fixed-sum loan with Canada Square Operations (CSO) for roughly £17,000 and paid an extra fee of £3,834 for the PPI policy. However, Mrs Potter was not aware that over 95% of the £3,834 fee was taken by CSO as commission for obtaining the PPI policy, with only a sum of £182.50 paid to the insurer.

In March 2010 Mrs Potter paid back the loan and at that point, the agreement came to an end. In 2014 the Supreme Court gave its judgment in Plevin v Paragon Personal Finance Ltd, which concluded that the non-disclosure of a very large commission charged to a borrower formed an “unfair” relationship for the purposes of section 140A of the Consumer Credit Act 1974. Recourse was provided by the judgment for the affected purchasers of PPI, however, such claims are subject to a six-year limitation period, starting once the credit relationship has finished.

In April 2018, Mrs Potter complained to CSO that the PPI policy had been mis-sold to her more than eight years after the loan agreement came to an end, and twelve years after having the loan and purchasing PPI. Mrs Potter gained £3,160 in compensation, however, this did not cover all the loss she had experienced.

Relying on the Consumer Credit Act in December 2018 Mrs Potter issued proceedings to reclaim the balance of the premium and interest. CSO defended the claim on the fact that it had been brought more than six years after the relationship between the parties had finished.

Mrs Potter didn’t dispute that the limitation period was six years, however, relying on section 32 of the Limitation Act meant that the period did not start until November 2018.

Section 32 states:

The County Court decision

The County Court had backed Mrs Potter and held that section 32 was valid. CSO appealed to the High Court and the Court of Appeal which failed, leading them to appeal to the Supreme Court, asking the Court to clarify the meanings of the above.

The Supreme Court’s decision

Section 32 (1)(b)

The Supreme Court criticised the Court of Appeal for accepting a complicated and unclear analysis of section 32(1)(b) and rejected previous jurisprudence that “concealment” required some obligation of disclosure. Documenting that Samuel Pepys “concealed” the information in a diary by referencing it in code, even though Samuel was under no requirement to disclose what he had said, the Court discovered that ‘”to conceal” means to keep information private and not tell anyone, either by taking active steps to hide it or by not disclosing it, whether there is an obligation to disclose or not and “deliberate” is similar to “intentional”, and does not include recklessness.

By purposely neglecting to inform Mrs Potter regarding the commission it had received as part of procuring the PPI policy on her behalf, CSO had “deliberately concealed” information that was applicable to Mrs Potter’s right of action. Mrs Potter’s claim was not time-barred because the effect of the deliberate concealment was that the limitation period started in 2018 when she became aware of the information.

Section 32(2)

The question for the Courts was not whether the relationship was unfair between CSO and Mrs Potter, the issue was whether the breach of duty was deliberate for the purpose of section 32(2). The Supreme Court ruled that section 32(2) is only valid to assist a claimant when a defendant has intentionally or knowingly committed a breach of duty, however, it does not extend to recklessness.

Regarding Mrs Potter’s case, it had not been seen that CSO intended or knew that its failure to reveal the commission to Mrs Poter would render their relationship unfair on the grounds of section 140A of the Consumer Credit Act 1974. Therefore, the breach by CSO was not deliberate meaning Mrs Potter could not rely her claim on that. On the other hand, Mrs Potter already had been successful in extending the time limit by virtue of section 32 (1) (b), meaning the CSO appeal was rejected by the Courts.

Comment

This is a helpful decision for both professionals and their insurers in that the Court will now need to consider the deliberateness of the professional’s actions/thoughts as opposed to recklessly.