UK Supreme Court looks at defendant concealment in the limitation context
The UK Supreme Court has recently provided welcome clarifications of the meaning of “deliberate concealment” and “deliberate commission of breach of duty” in s32 of the Limitation Act 1980 (the “Limitation Act”) in Canada Square Operations Ltd v Potter  UKSC 41. In their judgment the Supreme Court departed from the “embellishments” created in previous case law, giving the relevant words their ordinary meaning.
The Claimant took out a loan from the Defendant together with a payment protection insurance policy (the “PPI Policy”) in 2006. The Claimant was not told that over 95% of the premium for the PPI Policy was paid to the Defendant as its commission. The Claimant issued the claim in 2018 against the Defendant to recover her premiums plus interest in relation to the mis-sold PPI Policy, on the basis that the Defendant’s failure to disclose the substantial commission rendered the relationship unfair under s140A of the Consumer Credit Act (the “CCA”). The Defendant argued that the claim was time barred under s9 of the Limitation Act, as the six-year limitation period had long since expired.
The Claimant argued that the clock had not started to run until she found out about the commission after taking legal advice in 2018, relying on the following exceptions in s32 of the Limitation Act:
- S32(1)(b) deals with what happens to limitation where there is concealment. As a matter of fairness, the limitation clock will not start where the defendant has "deliberately concealed" from the claimant any fact relevant to the claimant's right of action.
- S32(2) provides that for the purposes of s32(1)(b), “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 Claimant argued that both exceptions applied and won in the County Court, High Court and Court of Appeal. The Defendant appealed to the Supreme Court.
The Supreme Court unanimously dismissed the Defendant’s appeal and ruled that the claim was not time barred. It held that s32(1)(b) of the Limitation Act postponed the commencement of the six-year limitation period until 2018, when the Claimant was advised about the commission. The Court, however, also held that the Defendant’s failure to disclose the commission was not a deliberate breach of duty for the purposes of s32(2).
The judgment clarifies the meaning of the terms “concealed”, “deliberately” and “deliberate commission of breach of duty” in the above provisions.
- Meaning of “concealed” under s32(1)(b): there is no need to prove the existence of a high-level and sophisticated conspiracy to meet this test. A fact will have been concealed if the defendant has kept it secret from the claimant. This may either be by taking active steps to hide it, or by failing to disclose it.
Also, there is no need for a claimant to establish that the defendant was under a legal, moral or social duty to disclose the fact, nor to show that the defendant knew the fact was relevant to the claimant’s right of action. All that is required is that the defendant deliberately ensures that the claimant does not know about the fact in question and so cannot bring proceedings within the ordinary time limit.
In this case, the Claimant had not been told about the commission and could not have found out earlier with reasonable diligence.
- Meaning of “deliberately” under s32(1)(b): the defendant has to have intended to conceal the fact in question. Recklessness is not sufficient.
In this case, the Defendant had made conscious decision not to tell the Claimant about the commission.
- Meaning of “deliberate commission of breach of duty” under s32(2): to rely on s32(2), a claimant must show that the defendant knew it was committing a breach of duty or intended to commit a breach of duty.
As noted above, a deliberate act is not the same as a reckless one and recklessness is therefore not sufficient to meet the test. For example, a defendant could not be said to commit a breach of duty deliberately only if it realised that there was a risk that what it was doing might be a breach of duty and took that risk in circumstances where it was objectively unreasonable for it to do so.
In this case, it had not been established that the Defendant knew or intended that its failure to disclose the commission to the Claimant would render their relationship unfair within the meaning of section 140A of the CCA. The breach of duty was therefore not deliberate. The Claimant could not therefore rely on s32(2) of the Limitation Act to stop the clock on that basis, but as she had already won on her primary argument under s32(1)(b) nothing turned on this point in her case.
Apart from its huge implications for PPI claims, where around 26,000 similar PPI cases should now be able to proceed, this decision helpfully confirms more generally the low bar for claimants to show that relevant facts were concealed from them. It is likely to have far-reaching consequences in cases involving deliberate concealment by a defendant seeking to raise a limitation defence, for example in the context of mis-selling/publication of misleading information, including s90/90A FSMA claims.
The impact of this judgment is more limited in the rapidly growing area of cartel damages claims, where defendants routinely raise limitation defences and claimants just as routinely rely on s32(1)(b). This is because in such claims both the concealment and its deliberate nature are clear from the context of the anticompetitive arrangement - if an entity is colluding with competitors to inflate a customer’s prices, for obvious reasons that party will consciously keep this to themselves and co-conspirators. The customer will not be told. In the context of such claims, it is rather the reasonable diligence standard which claimants are held to that has caused the most controversy in recent years. In a series of judgments claimants have been considered time-barred due to their “constructive” rather than actual knowledge of a cartel. Further guidance from the Supreme Court on this point would therefore be welcome, to ensure there is a level playing field across all sections of the Limitation Act. Nevertheless, this judgment is a reassuring one for prospective claimants and perhaps the start of a broader reinterpretation of the Limitation Act through a more claimant-friendly lens.
With special thanks to Sally Ngan for their invaluable assistance in drafting this article.