Mrs Potter sued her lender more than six years after her loan ended, seeking recovery of a large undisclosed PPI commission on the ground that the credit relationship was unfair. The Supreme Court held that the lender’s conscious decision not to tell her about the commission was deliberate concealment of a relevant fact under section 32(1)(b) of the Limitation Act 1980, so the claim was not time-barred. Recklessness was not enough to make the conduct a “deliberate” breach of duty under section 32(2), which therefore did not apply.
The loan and the commission
On 26 July 2006 Mrs Potter entered a credit agreement with Canada Square Operations Ltd, then known as Egg Banking plc. The stated credit was £20,787.24, comprising £16,953 in cash and a payment protection premium of £3,834.24. Over 95 per cent of that premium was commission retained by the lender; only £182.50 was paid to the insurer. The lender did not tell her that it would receive or retain commission. She completed the payments early and the agreement ended on 8 March 2010.
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In Plevin v Paragon Personal Finance Ltd the Supreme Court held that non-disclosure of a very high commission could make the relationship between creditor and borrower unfair under section 140A of the Consumer Credit Act 1974, so that the borrower could seek a remedial order under section 140B. Section 140A does not impose a legal duty of disclosure. It asks whether the relationship was unfair because of something done or not done by the creditor, including a failure to take steps which it would have been reasonable to expect in the interests of fairness. Mrs Potter later received compensation under the Financial Conduct Authority’s PPI redress scheme. In November 2018 solicitors advised her that substantial commission was likely to have been included in the amounts she had paid. On 14 December 2018 she issued a County Court claim for the sums paid in respect of the policy, less that compensation, with interest.
Why limitation was in issue
Section 9(1) of the Limitation Act 1980 provides that an action to recover a sum recoverable under an enactment must be brought within six years of accrual of the cause of action. The lender said the claim was time-barred. Mrs Potter relied on section 32. Section 32(1)(b) postpones the start of the limitation period where any fact relevant to the claimant’s right of action has been deliberately concealed by the defendant. Section 32(2) deems the deliberate commission of a breach of duty, in circumstances in which it is unlikely to be discovered for some time, to be deliberate concealment of the facts involved in that breach.
By trial the only issue was whether section 32 applied. The lender called no evidence and did not challenge Mrs Potter’s evidence. Recorder Rosen QC held that section 32 applied and entered judgment for her. He accepted that she learned of the commission only when she received legal advice in about November 2018, and treated the non-disclosure as deliberate and as intentional or at least reckless. Jay J dismissed the lender’s appeal. He held that section 32(1)(b) did not apply, because there was no free-standing duty of disclosure, but that section 32(2) did apply to the continuing non-disclosure between April 2007, when section 140A came into force, and March 2010. The Court of Appeal also dismissed the appeal. It held that both provisions could be engaged and that “deliberate” included recklessness in the sense of awareness of a risk which it was objectively unreasonable to take.
Deliberate concealment under section 32(1)(b)
Lord Reed, with whom Lord Hodge, Lord Kitchin, Lord Sales and Lord Lloyd-Jones agreed, rejected that elaboration. Section 32(1)(b) is to be read in its ordinary language. Concealment may be a positive act of hiding or a withholding of information. It does not require a legal duty to disclose, or an obligation said to arise from utility and morality. The defendant need not have known that the concealed fact was relevant to a right of action, and recklessness is not enough. The claimant must show a fact relevant to the right of action asserted in the proceedings, concealment of that fact by act or by withholding, and an intention to conceal it. A fact is relevant, on the interpretation not challenged in the appeal, if the claim cannot be pleaded without it.
The existence and amount of the commission were facts of that kind. The recorder had found that the lender consciously decided not to disclose them. Section 140A was not in force when that decision was first taken, so the facts were not then relevant to a right of action. The lender nevertheless continued to withhold the information after section 140A applied to pre-existing agreements, while the credit agreement remained in force and the commission continued to be paid. Mrs Potter did not discover the concealment until November 2018, and it was not suggested that she could with reasonable diligence have discovered it earlier. Section 32(1)(b) was therefore satisfied.
Deliberate breach under section 32(2)
The court also held that “deliberate” in section 32(2) does not include recklessness. In ordinary usage, and as explained in Cave v Robinson Jarvis & Rolf, deliberate commission of a breach of duty means that the defendant knows he is committing a breach of duty or intends to commit it. Awareness of a risk is not enough. The pre-1980 law of concealed fraud, and statements made during the passage of the Limitation Amendment Act 1980, could not widen that clear meaning. The practical difficulty that wrongdoing may be certain only after a court has decided the point did not justify a different reading. A test based merely on knowing that conduct exposed the defendant to a claim would leave many professionals open to stale claims indefinitely.
It was conceded that this test was not met. The lender deliberately decided not to disclose the commission and must have been aware of a risk that non-disclosure would make the relationship unfair under section 140A, but it had not been shown that the lender knew or intended that the non-disclosure would have that effect. The lender did not challenge the conclusion that creation of an unfair relationship can amount to a breach of duty for the purposes of section 32(2). The mental element was nevertheless missing, so section 32(2) did not remove the limitation defence.
Verdict: The Supreme Court unanimously dismissed Canada Square’s appeal. Its intentional concealment of the commission postponed time under section 32(1)(b) until November 2018, and Mrs Potter’s claim was in time. Section 32(2) did not apply. The lender had not been shown to know or intend that its conduct would make the relationship unfair.
Source: Canada Square Operations Ltd v Potter [2023] UKSC 41
