05/02/2024
In Canada Square Operations Limited (“Canada Square”) v Potter [2023] UKSC 41, the Supreme Court provided clarity in relation to the interpretation of the words “conceal” and “deliberately” as it relates to section 32 of the Limitation Act 1980.
Introduction
Section 32(1) (b) of the Limitation Act 1980 postpones the commencement of the limitation period where “any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant”. Section 32(2) states that “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”.
Background
On 26 July 2006, the Claimant, Mrs Potter, took out a fixed loan with the Defendant, Canada Square. When Canada Square offered her the loan, they suggested to Mrs Potter that she take out insurance under a payment protection insurance ('PPI') policy with an insurer in order for the loan to be repaid if she became unable to make the payments herself. However, Mrs Potter was not informed of the fact that over 95% of the premium of the PPI Policy was paid to Canada Square as commission on the sale of the Policy.
In 2018, Mrs Potter complained to Canada Square that the PPI policy had been mis-sold to her. Following this, Mrs Potter brought proceedings in the County Court pleading that had Canada Square told her about the commission, she would not have allowed the policy to be linked with the loan.
Mrs Potter alleged that the relationship arising out of the loan was unfair within the meaning of section 140A of the Consumer Credit Act 1974 because Canada Square had failed to disclose the commission. Canada Square admitted that it had not disclosed the fact that it would receive commission in respect of the policy but argued that the claim was time-barred under the Limitation Act 1980 because it had been brought more than six years after the relationship between the parties had ended.
Mrs Potter relied on s32 of the Limitation Act 1980, on the basis that Canada Square had deliberately concealed receipt of the commission from the insurer, and on that basis time did not being to run until she found about the commission in 2018.
Both the High Court and the Court of Appeal found that Mrs Potter could rely on both limbs of section 32 of the Limitation Act 1980. The Court of Appeal, on reviewing earlier case law, concluded that it was enough to be reckless with regard to the duty to disclose information to fall within the scope of section 32.
Decision
The Supreme Court noted that the case law to date and the Court of Appeal had, in effect, interpreted “concealment” for the purposes of section 32 as, in cases of non-disclosure rather than active concealment, failing to disclose where there is a duty to disclose, either from a legal or moral obligation, and where the concealing party either knows that the fact is relevant to the Claimant, or reckless as to its relevance.
The Supreme Court concluded that this interpretation read far more into the provision than the wording itself, and did not give section 32 its clear and ordinary meaning.
The Supreme Court considered the meaning of the word “conceal”:
“The word 'conceal' means to keep something secret, either by taking active steps to hide it, or by failing to disclose it. A person who hides something can properly be described as concealing it, whether there is an obligation to disclose it or not."
In terms of the word “deliberately”, the Court confirmed that:
“...the defendant must have considered whether to inform the claimant of the relevant fact and decided not to. So construed, section 32(1) (b) strikes a balance between the interests of the claimant and the defendant, as Parliament intended. If the defendant has concealed a fact from the claimant, and has done so deliberately, that is to say knowingly, then he has the means to start the limitation period running by disclosing the fact."
Therefore, for a concealment to be deliberate, the defendant must have considered whether to disclose the fact and then decided against it. The Supreme Court was satisfied that recklessness was not a sufficient state of mind to find that a breach had been made deliberately.
Mrs Potter could show that the commission had been deliberately concealed. It was not necessary for her to show that Canada Square was under any moral or social duty to disclose. Mrs Potter could therefore rely on section 32(1) (b).
The Supreme Court found a deliberate breach of duty pursuant to section 32(2) could not be established as against Canada Square as it had not been shown that Canada Square knew or intended non-disclosure to have the effect of making the relationship unfair pursuant to section 140A of the Consumer Credit Act.
Comment
The case arose in the context of a test case relating to PPI claims. However, it clearly has potentially wider implications, not only for commission claims more generally, but also in construction cases if a Claimant can show that a Defendant has deliberately concealed latent defects, for example. This may be particularly relevant in cases involving building safety.
Claimants will need to be able to show that a fact or evidence was deliberately concealed that was relevant to the Claimants’ claim.
Potential Defendants to building safety claims should be aware that limitation will be extended if claims fall within the scope of section 32. This was evidenced in the case of RG Securities (No 2) Ltd v Allianz Global Corporate and Speciality CE [2020] EWHC 1646 (TCC), which related to defective cladding. In that case, it was argued that there had been a deliberate concealment of a lack of building regulations approval and the Court found that the limitation period did not commence until the same was discovered.
