On 15 November 2023, the Supreme Court delivered its long-awaited judgment in Canada Square Operations Ltd v Potter  UKSC 41 on the correct approach to postponement of limitation periods in cases of deliberate concealment under section 32(1)(b) of the Limitation Act 1980 (‘the 1980 Act’). In this article, 4 New Square’s David Halpern KC and Anthony Jones discuss the decision which is welcome for the clarity it returns to the interpretation of a statutory provision which has been the subject of somewhat unwieldy and counter-intuitive gloss over recent years.
The underlying case related to excessive commissions earned on payment protection insurance (‘PPI’). Mrs Potter entered into a loan agreement with a lender in July 2006 for around £17,000, with an additional fee of around £4,000 for a PPI policy, for a total amount of credit of almost £21,000. Unknown to Mrs Potter at the time of entering into the loan, more than 95% of the £4,000 sum was taken by the lender as commission for procuring the PPI policy, with only £182.50 actually paid to the insurer. Mrs Potter repaid the loan in March 2010.
In 2014, the Supreme Court gave its judgment in Plevin v Paragon Personal Finance Ltd  1 WLR 4222, concluding that the non-disclosure of a very high commission charged to a borrower constituted an unfair relationship contrary to section 140A of the Consumer Credit Act 1974, allowing borrowers to sue for remedies. Such claims are subject to a six-year limitation period under section 9 of the 1980 Act, with time starting once the credit relationship has ended (itself a point established by the Supreme Court recently in Smith and anor v Royal Bank of Scotland  UKSC 34).
In April 2018, Mrs Potter brought a complaint and received compensation from a Financial Conduct Authority redress scheme. Then in December 2018, she brought proceedings to recover the undisclosed commission received by the lender. The only dispute between the parties regarded limitation: was the case time-barred in 2016 six years after the credit relationship ended, or was the running of time postponed by virtue of section 32 of the 1980 Act?
Section 32(1) of the 1980 Act provides, inter alia, that ‘where in the case of any action for which a period of limitation is prescribed by this Act, either –
- the action is based upon the fraud of the defendant; or
- any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or
- the action is for relief from the consequences of a mistake;
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.
Section 32(2) provides 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.’
Supreme Court’s Decision
Mrs Potter succeeded before the County Court, High Court and Court of Appeal. Significantly, the Court of Appeal addressed three issues. First, whether the creation of an unfair relationship contrary to the Consumer Credit Act 1974 qualified as the sort of ‘breach of duty’ which could come within the scope of section 32(2). The Court of Appeal said it could. Second, was the lender’s non-disclosure of the commission ‘deliberate concealment’ of the unfair relationship for the purposes of section 32(1)(b)? The Court of Appeal held that ‘deliberate concealment’ was made out (and indeed only made out) when a defendant had failed to discharge a ‘duty’ to disclose a fact, that such a ‘duty’ did not need to be a formal tortious or fiduciary duty, and that the ‘duty to act fairly’ which lies behind the prohibition on unfair relationships in the Consumer Credit Act 1974 would suffice. The third issue was what is meant by the word ‘deliberate:’ The Court of Appeal said it was sufficient to show that the defendant realized that there was a risk it had a duty to tell Mrs Potter about the commission, but recklessly failed to do so.
On appeal to the Supreme Court, there were two, closely related, issues: first, the meaning of deliberate concealment’ in section 32(1)(b) and in particular (a) whether this postulated a duty of disclosure and (b) whether a reckless failure to make disclosure was sufficient; and second, whether recklessness was enough to satisfy the ‘deliberate commission’ of a relevant breach of duty under section 32(2).
Lord Reed, giving judgment on behalf of the unanimous Supreme Court, provided a chronology of the development of the case law on the concept of deliberate concealment under section 32, and sharply criticized the accretion of conditions and complexities absent from the bare language of the provision. He observed at  that the effect of various lower authorities has been to embellish the language of section 32(1)(b) to read (with the embellishments underlined):
‘any fact which was to the knowledge of the defendant relevant to the plaintiff’s right of action or to a potential right of action, or as to the relevance of which to the plaintiff’s right of action or potential right of action the defendant was reckless, has been deliberately concealed from him by the defendant knowingly or recklessly in breach of a duty, either imposed by law or arising from a combination of utility and morality, to disclose it.’
The Court of Appeal’s tortuous analysis had involved giving with one hand and taking with the other. On the one hand, it had made it harder to rely on s. 32(1)(b) by introducing a duty of disclosure, but on the other hand it made it easier by saying that it was sufficient to show that the breach of that duty had been reckless; it need not be intentional.
First, the Supreme Court disposed of the suggestion (present in the Court of Appeal decision and other appellate authority) that ‘concealment’ always entails the identification of some form of obligation of disclosure. It simply means, as in ordinary language, the hiding of information (regardless of whether or not that information is due to the claimant) and irrespective of motive.
Second, ‘deliberately’ means deliberately – that is intentionally – and recklessness (whatever the precise test) is insufficient. To a degree, this follows from the abandonment of any precondition of a duty to speak, and the removal therefore of the slightly tortured jurisprudence about where on the spectrum of breaches of duty – from intentional to culpably ‘reckless’ to ignorantly accidental – the section should bite.
It is worth emphasising that Lord Reed at  uses the term “recklessly” to mean that the defendant has actual knowledge of the risk and acts unreasonably in running that risk. This is to be contrasted with wilful blindness (sometimes called Nelsonian knowledge) which he treats as acting “deliberately”.
As well as grounding the conclusion in the language of the provision, the Supreme Court took account of the policy balance between preventing defendants cynically taking advantage of inequalities of information and ensuring that limitation defences are not rendered pointless. As Lord Reed put it, the concept of deliberate concealment ‘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. If he does not do so, but chooses to keep the claimant in ignorance of a fact which she requires to know in order to plead her claim, then it is just that the defendant should be deprived of a limitation defence’ (). This language of ‘balance’ as underlying the rationale for limitation recalls the language of Lord Scott in Haward v Fawcetts  1 WLR 682 at  that the 1980 Act ‘represents Parliament’s attempt to strike a balance’ between the interests of claimants in being able to seek compensation for their losses and the interests of defendants in finality. As Lord Scott said, ‘[i]t is the task of the judiciary to identify from the statutory language … the balance that enactment has endeavoured to strike and to apply the enactment accordingly. It is emphatically not the function of judged to try to strike their own balance, whether as a response to the apparent merits of a particular case or otherwise.’
As to the term ‘deliberate commission’ in section 32(2), Lord Reed again returned to the natural meaning of the words of the statute, concluding that a deliberate breach of duty does not embrace a reckless breach. In doing so, Lord Reed affirmed the approach taken by the House of Lords in the solicitors’ case Cave v Robinson, Jarvis & Rolf  1 AC 384 that a deliberate breach of duty requires knowledge that what was done was in breach of duty, and aligned the Supreme Court’s jurisprudence with the Privy Council’s decision (released the same day) in Primeo Fund v Bank of Bermuda (Cayman) Ltd  UKPC 40.
In this regard, the decision allows professionals to breathe a sigh of relief. If the Court of Appeal’s position were taken to its logical conclusion, that would mean that any breach of duty, even inadvertent, may be termed deliberate and thus capable via section 32(2) of postponing the running of time. What about where the liability of the defendant itself comprises inadvertent breach of duty, as in professional negligence? If the fact of such a breach postpones the running of time, that would mean that a professional may never have a limitation claim to a negligence action. Lord Reed made clear the practical absurdity of such a position. We might add, of course, that such a situation would seem to imply that the whole bespoke architecture of ‘latent damage’ limitation periods in negligence under sections 14 and 14A of the 1980 Act would be irrelevant, and claimants should always have been relying upon section 32 instead. The Supreme Court’s decision to cut off arguments in that direction provides welcome clarity and finality.
The result of the appeal was that the defendant was deprived of limitation as a defence, but only because it deliberately concealed the existence and amount of the commission from Mrs Potter.
The decision of the Supreme Court has, at one stroke, replaced a complex line of jurisprudence on section 32 of the 1980 Act which held substantial risks of irrational outcomes with a refreshingly straightforward approach grounded in the language of the provision but alive to its practical implications. While some claimants may consider the strictness of the conditions for the postponement of limitation unfair, their quarrel, as the Supreme Court has made clear, should be with Parliament.
Disclaimer: This article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
© David Halpern KC and Anthony Jones of 4 New Square Chambers, November 2023
David Halpern KC has a broad Chancery and commercial practice and sits part-time as a deputy High Court judge. He is listed in the Directories as a leading silk in the fields of professional liability and property litigation.
Anthony Jones is a leading junior in the field of professional liability, alongside his practice in commercial law, insurance, international law, and human rights. He is a co-author of the leading practitioner’s text, Jackson & Powell on Professional Liability (9th edition).