There are strict time limits in which to bring claims, set out in the Limitation Act 1980 (the Act).
If a deadline is missed, the defendant will have a complete “time-bar” defence to the claim. However there are some exceptions in the Act to these time limits, including:
- Where any fact relevant to the claimant’s right of action has been “deliberately concealed” from them by the defendant (section 32(1)(b) of the Act) and
- Where a defendant deliberately commits a breach of duty in circumstances in which it is unlikely to be discovered for some time – this amounts to “deliberate concealment” of the facts involved in that breach of duty (section 32(2) of the Act)
Is a defendant deciding not to tell a claimant a fact which is relevant to their claim, even if they did not have a duty to disclose it, ‘deliberately concealing’ that fact for limitation purposes? This was the issue for the Supreme Court in Canada Square Operations Ltd v Potter [2023] UKSC 41.
Factual background
In 2006, Mrs Potter entered into a credit agreement with Canada Square for £20,787.24. This sum included a £3,834.24 premium for a payment protection insurance policy, over 95% of which was kept by Canada Square as commission. There was no duty on Canada Square to tell Mrs Potter about the commission, and it decided not to do so. However the agreement was regulated under the Consumer Credit Act 1974 (the 1974 Act), and the courts have held that non-disclosure of a high commission charged to a borrower makes the relationship between the creditor and borrower “unfair” within the meaning of section 140A of the 1974 Act, meaning Mrs Potter was entitled to claim the commission and interest. Mrs Potter did not find out about the commission until November 2018 when she took legal advice, so more than 12 years later. The ordinary limitation period for her claim was six years – could she rely on section 32 to postpone the limitation period?
Although this claim only involved a small sum, 26,000 similar claims had been issued, and so the matter went to the Supreme Court as a test case. All the lower courts had held that Mrs Potter had been able to rely on section 32 to postpone the limitation period.
Deliberately concealed
The first question was whether Mrs Potter could rely on section 32(1)(b) of the Act, i.e. had Canada Square “deliberately concealed” any fact relevant to Mrs Potter’s claim?
The Court of Appeal had held that for concealment by non-disclosure, as was the case here, there had to be a positive duty to disclose, although to save Mrs Potter’s claim they said that there was a “Limitation Act duty” on a defendant to disclose material in its possession to a claimant. It also held that Canada Square had “deliberately concealed” the commission, since it must have known that there was a risk that non-disclosure of the commission would make the parties’ relationship unfair within the meaning of section 140A of the 1974 Act, and it was not objectively reasonable for it to have taken that risk.
The Supreme Court held that the Court of Appeal’s approach was an unnecessary elaboration of the meaning of “deliberately concealed”. Section 32 did not require there to be any duty to disclose a relevant fact, it only required that fact to have been deliberately concealed. “Conceal” simply meant to keep something secret, either by taking active steps to hide it, or by failing to disclose it. This meant Canada Square just needed to have deliberately not told Mrs Potter about the fact and amount of its commission.
It also held that there was no need for the bank to have known or been reckless as to whether the commission was relevant to a claim by Mrs Potter. It was sufficient that it deliberately ensured that the claimant did not know about the facts in question.
This meant that Mrs Potter could rely on section 32(1)(b) of the Act to postpone the start of the ordinary six-year limitation period for bringing her claim until November 2018.
Deliberate breach of duty
Although Mrs Potter was able to rely on section 32(1)(b) to extend the time for issuing her claim, the Supreme Court went on to consider whether she could have relied on section 32(2), which extends the limitation period where there has been a deliberate breach of duty in circumstances in which it is unlikely to be discovered for some time.
The creation of an unfair relationship within the meaning of section 140A of the 1974 Act was a breach of duty, so the question was whether that breach of duty was deliberate.
The Court of Appeal had said that a defendant could be said to commit a breach of duty deliberately 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.
The Supreme Court said that this was not correct – for a breach of duty to be deliberate, the defendant must know it was committing a breach of duty or intended to commit a breach of duty. Mrs Potter could not show that Canada Square knew or intended that its failure to disclose the commission to her would make the relationship unfair within the meaning of section 140A of the 1974 Act, and so the breach of duty was not deliberate. This meant that Mrs Potter would not have been able to rely on section 32(2) of the Act to extend the time for bringing her claim.
Conclusion
The clarification that a claimant does not have to show that the defendant had a duty to disclose a fact relevant to a right of action which it had deliberately concealed is welcome and will make it easier for claimants to rely on section 32(1)(b) of the Act. However, it will now be harder for claimants who have a claim involving a breach of duty to rely on section 32(2) of the Act, as they will have to show that the defendant deliberately breached that duty – recklessness as to whether they were breaching it will not be enough.
Catherine Penny
Laura Beagrie