Deliberate Concealment: Section 32(1)(b) Limitation Act 1980

In Canada Square Operations Ltd v Potter [2021] EWCA Civ 339 an Appeal was heard from the Defendants in the Court of Appeal, before Sir Julian Flaux, Lord Justice Males, and Lady Justice Rose DBE, which involved the court considering the meaning of ‘deliberate concealment’ as set out in in 32(1)(b) of the Limitation Act 1980 and postponement of the limitation as a result of deliberate concealment.

Ms Potter obtained a loan from lender Canada Square Operations (“Canada Square”) in 2006 for £16,953. Canada Square suggested that Ms Potter obtain insurance which would satisfy the loan should Ms Potter in future become unable to pay. Insurance was obtained for £3,824.00 by Canada Square on the instruction of Ms Potter, which was added to the loan, interest being charged at the same rate.

The agreement between Ms Potter and Canada Square was discharged in March 2010 once all payments had been made by Ms Potter. A claim was brought by Ms Potter in April 2018 for breach of Section 140A of the Consumer Credit Act by Canada Square for non-disclosure of the high commission paid on an insurance premium.

Only in or around November 2018, after proceedings had been issued, did Ms Potter come to know that of the £3,824.00, approximately £182.59 was the premium, and the remainder was commission of Canada Square for the sale of the insurance policy, which Ms Potter paid interest on.

Canada Square argued the claim was statute barred. Ms Potter was successful at first instance in relying on the following in order to postpone the limitation period:

  • Section 32(1)(b) of the Limitation Act 1980; in that Canada Square deliberately concealed a fact relevant to her right of action; and
  • Section 32(2) of the Limitation Act 1980; in that Canada Square deliberately commissioned a breach of duty where it was unlikely to be discovered for some time.

Canada Square appealed on three issues:

  • Issue 1: ‘Did the creation of an unfair relationship within the meaning of section 140A amount to a breach of duty by Canada Square towards Mrs Potter for the purposes of section 32(2)?’

  • Issue 2: ‘Was Canada Square’s failure to disclose the existence and size of the commission a ‘concealment’ of that fact by Canada Square?’

  • Issue 3: ‘If there was a breach of duty for the purposes of section 32(2) and/or a concealment for the purposes of section 32(1)(b), was Canada Square’s conduct ‘deliberate’ within the meaning of those provisions?’

In respect of Issue 1, the Court of Appeal decided that Canada Square’s creation of unfair relationship within the meaning of S140A amounted to a breach of duty. Issue 1 was dismissed. The case of Giles v Rhind and another (No 2) [2008] EWCA Civ 118, [2009] Ch 191 was referred to with reference to s32(2), which stated that breach of duty applied to any legal wrongdoing.

In respect of Issue 2, the Court determined that there need not be active steps of concealment. The Court determined that there was a duty upon Canada Square to disclose the commission and failing to disclose such information the Court decided it amounted to concealment as per s32(1)(b). The duty to disclose does not have to be a free-standing contractual, tortious or fiduciary duty.

In respect of Issue 3, the court used the following two-stage test:

  • 1.       Subjective stage: that Canada Square appreciated that there was a risk; and
  • 2.       Objective stage: that it was unreasonable for Canada Square to take that risk.

In applying this test, as to 32(1)(b), the Court decided that Canada Square appreciated there was a risk it deliberately failed to provide and disclose to Ms Potter details of the commission both its existence and its extent, which was relevant to Ms Potter’s action under 140A of Consumer Credit Act.

As to s 32 of the Act, the Court decided that in respect of 32(2) of the Limitation Act 1980, Canada Square appreciated there was a risk that failure to disclose details of the commission to Ms Potter would render the relationship unfair (subjective element) and it was unreasonable to take that risk (objective element).

The Respondent, Ms Potter, succeeded in dismissing the Appeal, with the Court deciding there was deliberate concealment by Canada Square. The limitation period therefore ran from the discovery of the concealment (November 2018), as such Ms Potter’s claim was not statute barred.

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