Canada Square Operations Ltd v Potter [2023] UKSC 41

Mrs Potter took out a loan with payment protection insurance. The lender retained over 95% of the PPI premium as undisclosed commission. She brought a claim under the Consumer Credit Act 1974 for an unfair relationship. The Supreme Court held the claim was not time-barred as the commission had been deliberately concealed under section 32(1)(b) of the Limitation Act 1980.

Facts

In July 2006, Mrs Potter entered into a loan agreement with Canada Square Operations Ltd (formerly Egg Banking plc). The agreement included payment protection insurance (PPI) with a premium of £3,834.24. Over 95% of this premium constituted the defendant’s commission, with only £182.50 paid to the insurer. The defendant did not disclose this commission to Mrs Potter. The loan was completed early in March 2010.

Following the Supreme Court’s decision in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61, which established that non-disclosure of high commission could render a credit relationship unfair under section 140A of the Consumer Credit Act 1974, Mrs Potter discovered the undisclosed commission in November 2018 and commenced proceedings in December 2018.

Issues

Section 32(1)(b) of the Limitation Act 1980

Whether the non-disclosure of commission constituted deliberate concealment of a fact relevant to the claimant’s right of action, thereby postponing the limitation period.

Section 32(2) of the Limitation Act 1980

Whether the deliberate commission of a breach of duty in circumstances unlikely to be discovered for some time amounts to deliberate concealment, and specifically whether ‘deliberate’ includes ‘reckless’ conduct.

Judgment

Section 32(1)(b)

The Supreme Court held that the Court of Appeal’s elaborate interpretation of section 32(1)(b) was wrong. Lord Reed stated:

“A claimant who proposes to invoke section 32(1)(b) in order to defeat a Limitation Act defence must prove the facts necessary to bring the case within the paragraph. He can do so if he can show that some fact relevant to his right of action has been concealed from him either by a positive act of concealment or by a withholding of relevant information, but, in either case, with the intention of concealing the fact or facts in question.”

The Court rejected the requirement for a duty of disclosure to be established, stating:

“I respectfully disagree. As a matter of ordinary English, the verb ‘to conceal’ means to keep something secret, either by taking active steps to hide it, or by failing to disclose it.”

The Court found that the defendant deliberately concealed the commission by consciously deciding not to disclose it, and the claimant could not have discovered this with reasonable diligence before November 2018.

Section 32(2)

The Court held that ‘deliberate’ does not include ‘reckless’. Lord Reed stated:

“As a matter of the ordinary use of language, the adjectives ‘deliberate’ and ‘reckless’ have different meanings.”

Following Cave v Robinson Jarvis & Rolf [2002] UKHL 18, the Court confirmed that deliberate commission of a breach of duty requires knowledge that what was done was in breach of duty. Since the defendant was only aware of a risk that non-disclosure would make the relationship unfair, but did not know or intend this, section 32(2) was not satisfied.

Implications

This judgment clarifies and simplifies the law on section 32 of the Limitation Act 1980. It disapproves the elaborate requirements developed in Williams v Fanshaw Porter & Hazelhurst and The Kriti Palm, which had required proof of a duty of disclosure and knowledge of that duty. The decision confirms that ‘deliberate’ means intentional and does not extend to recklessness. This has significant implications for limitation defences in professional negligence and financial services claims, particularly the approximately 26,000 similar PPI commission claims.

Verdict: Appeal dismissed. The defendant was deprived of a limitation defence by the operation of section 32(1)(b) of the Limitation Act 1980. The claim was not time-barred as the commission had been deliberately concealed from the claimant. However, section 32(2) did not apply as it was not established that the defendant knew it was committing a breach of duty.

Source: Canada Square Operations Ltd v Potter [2023] UKSC 41