Canada Square Operations Ltd (Appellant) v Potter (Respondent)

The sole issue of this case was whether Mrs Potter could rely on Section 32(1)(b) and Section 32(2) of the
Limitation Act 1980 in order to claim the sums she paid under the PPI Policy, plus interest, from Canada Square.
Another issue for the Supreme Court to clarify was the meanings of the phrases ‘deliberately concealed’ and
‘deliberate commission of a breach of duty.’

Background

The purpose of the Limitation Act 1980 is to outline the period within which a party to a contract may bring proceedings that have suffered damages due to another party’s conduct. However, whilst it ensures claimant’s
do not bring cases to the court which occurred a substantial time ago, they may be used incorrectly as a defence for
defendants to avoid facing the consequences of their actions.

Throughout the proceedings the courts found for Mrs Potter and Canada Square’s appeals to both appeal courts were unsuccessful. In all proceedings, it was held that Mrs Potter’s claim was not time-barred. Now, Canada Square
appeals to the Supreme court. The Supreme Court (Lord Reed, President Lord Hodge, Deputy President Lord Kitchin, Lord Sales and Lord Lloyd-Jones) gave the judgement on the 15th November 2023. The case is now closed.

Facts

On the 26th of July 2006 Mrs Potter entered into a loan agreement with Canada Square Operations Ltd (Canada
Square). Canada Square did not inform Mrs Potter that they would receive or retain commission on the policy. Mrs
Potter completed the payments under the agreement early and the agreement came to an end on the 8th of March
2010. Over 95% of the premium was paid to Canada Square as commission on the sale of the PPI policy, with the
insurer only receiving £182.50. On 14 December 2018, Mrs Potter issued a claim against Canada Square, seeking to
recover the amounts she had paid to Canada Square in respect of the PPI Policy, plus interest. Mrs Potter claimed
that Canada Square’s failure to disclose the substantial commission charged on the PPI Policy rendered the
relationship between them “unfair” within the meaning of section 140A of the 1974 Act. She was therefore entitled
to apply for the remedial orders set out in section 140B. However Canada Square claimed it was too late to claim
because section 9 of the Limitation Act imposes a six-year limitation period. Mrs Potter contended that her claim
was not time barred because the limitation period did not start to run until she found out about the commission after
taking legal advice in November 2018.

Proceedings

On the 14th of December 2018, Mrs Potter began proceedings in the County Court in which she sought to recover
the amounts she had paid to Canada Square in respect of the PPI policy under deduction of the compensation she
had received, together with interest.

Mrs Potter was successful in her claim, receiving £7,953. Canada Square then applied to both the High Court and
the Court of Appeal however were unsuccessful in both appeals. Canada Square now appeals to the Supreme Court.

The appeal to the Supreme Court is based on the following grounds:

1. The Court of Appeal erred in law in finding that a duty of disclosure “in Limitation Act terms” was
sufficient for the purpose of making a finding of concealment under section 32(1)(b)
2. The Court of Appeal erred in law in finding that it was sufficient, for the purpose of finding “deliberate
concealment”, that the defendant was reckless as to
a. whether it was under a duty to disclose the commission and;
b. whether the commission was relevant to a cause of action against it

Mrs Potter relied on Sections 32(1)(b) and 32(2) of the Limitation Act 1980 which are as follows:
– Section 32(1)(b)
– Where in the case of any action for which a period of limitation is prescribed by this Act, any fact
relevant to the plaintiff’s right of action has been deliberately concealed from him by the
defendant 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)
– For the purposes of subsection (1) above, 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.

For the purposes of relying on Section 32(2) of the 1980 Act the Court also applied the facts to Section 140A of the
Consumer Credit Act 1974.
– The Court may make an order under Section 140B in connection with a credit agreement if it determines
that the relationship between the creditor and the debtor arising out of the agreement (or the agreement
taken with any related agreement) is unfair to the debtor.

Judgement

The focus of Canada Square’s appeal was that there was no ‘deliberate concealment’ and that the Court of Appeal
should have found that “concealment” required a legal duty to make disclosure, and that they were under no such
duty.

They also submit that the Court should have found that it was necessary to show actual knowledge of both elements,
or alternatively actual knowledge or wilful blindness, in order to establish “deliberate concealment” in this context.
Recklessness should not be sufficient for the purpose of showing the “deliberate commission” of a breach of duty
within the meaning of Section 32(2).

The Supreme Court, nonetheless, dismissed Canada Square’s arguments through confirming the definition of the
words ‘deliberately’ and ‘concealed’ for the purpose of Section 32 of the Limitation Act 1980.

Definitions
– “Concealed”
– A fact is concealed if it is withheld and kept secret from the claimant, either by taking active steps
or failing to disclose it, whether there is an obligation to disclose it or not.

– “Deliberately”
– A concealment is deliberate if the defendant intended to conceal the fact in question.

Conclusions from the Supreme court

1) The Supreme Court rejected the argument that Section 32(1)(b) should be read as containing a requirement
that the concealment must be in breach of either a legal duty or a duty arising from a combination of utility
and morality.
2) The Supreme Court rejected the Court of Appeal’s contention that “deliberately”, in this context, can mean
recklessly.
3) Purposes may be brought about by an act or omission, but in either case “the result of the act or omission,
i.e the concealment from the claimant, must be an intended result.”
4) What is required under section 32(1)(b) is
a) a fact relevant to the claimant’s right of action
b) the concealment of that fact from her by the defendant, either by a positive act of concealment or
by a withholding of the relevant information
c) an intention on the part of the defendant to conceal the fact or facts in question.

Held
Did Canada Square deliberately conceal a fact relevant to Mrs Potter’s right of action so that Section 32(1)(b) of the
1980 Act postponed the commencement of the ordinary six-year limitation period for bringing her claim?

The claimant did not discover the concealment until November 2018, shortly before commencing these proceedings.
It is not suggested that she could with reasonable diligence have discovered the concealment any earlier.
The defendant deliberately concealed those facts from her, as the recorder held, by consciously deciding not to
disclose the commission to her.

The requirements of section 32(1)(b) are accordingly met.
Although there was some disagreement with the reasoning of the Court of Appeal, the Supreme Court concluded
that it was correct to hold that Canada Square was deprived of a limitation defence by the operation of Section
32(1)(b) of the 1980 Act.

Did Canada Square’s conduct amount to a deliberate commission of a breach of duty for the purposes of Section
32(2) of the 1980 Act?

The Supreme Court held that a claimant who wishes to rely on Section 32(2) must show that the defendant knew it
was committing a breach of duty or intended to commit a breach of duty.
It was wrongly held that Canada Square was also deprived of such a defence by the operation of Section 32(2).
Canada Square’s failure to disclose the commission was not a deliberate breach of duty for the purposes of section
32(2). This is because it has not been shown that Canada Square knew or intended that its failure to disclose the
commission to Mrs Potter would render their relationship unfair within the meaning of Section 140A of the 1974
Act.

Yet it follows that the claim is not time-barred and that the appellant’s appeal should be dismissed, due to Section
32(1)(b) of the 1980 Act.

Commentary

I agree with the Supreme Court’s decision that Mrs Potter’s case was not time-barred due to Section 32(1)(b) of the
Limitation Act 1980. Section 32(1)(b) strikes a balance between the interests of a claimant and defendant as
Parliament intended. If a defendant has deliberately concealed facts relevant to a claimant’s right to bring a claim
then the limitation period should not begin until this concealment is revealed.

A defendant should not be able to benefit from a limitation defence by choosing to keep the claimant in ignorance of
a fact they are required to know in order to plead their claim.

Written by Zahra Navarro