Potter v Canada Square Operations Ltd

The Court of Appeal dismissed the creditor's appeal and held that the claimant's claim under section 140A of the Consumer Credit Act 1974 was not time-barred because the defendant had deliberately concealed a fact relevant to the cause of action within the meaning of section 32(1)(b) of the Limitation Act 1980 and, alternatively, had deliberately committed a breach of duty within the meaning of section 32(2). The court ruled that the creation of an unfair relationship under section 140A could amount to a "breach of duty" for the purposes of section 32(2), and that section 32(1)(b) is not confined to cases of active concealment nor to failures to disclose only where there is a pre-existing freestanding legal duty to speak.

The court construed "deliberate" in section 32 to include recklessness of the kind described in R v G (awareness of a risk which it was unreasonable to take). The court applied that test to the facts and concluded that Canada Square must have appreciated the risk that non-disclosure of the size of the PPI commission could render the creditor–debtor relationship unfair and that it was not reasonable to take that risk. Time was therefore postponed until the claimant discovered the concealment in November 2018.

Background and parties. The respondent Mrs Beverley Potter bought a loan with linked single-premium PPI from Canada Square in July 2006. The documentation showed a PPI premium of £3,834, but Mrs Potter was not told that the insurer's premium was only £182.50 and that the large remainder was commission retained by Canada Square. The loan ended in March 2010. Mrs Potter issued a County Court claim in December 2018 under section 140A CCA seeking repayment of sums attributable to the undisclosed commission; Canada Square pleaded the claim was statute-barred under the Limitation Act 1980.

Procedural history. The small-claims hearing before Recorder Murray Rosen QC (Aug 2019) found for Mrs Potter on limitation grounds. Canada Square appealed to the High Court (Jay J) who dismissed the appeal ([2020] EWHC 672 (QB)). Canada Square appealed to the Court of Appeal.

Nature of claim and relief sought. Mrs Potter sought monetary relief under section 140B CCA by relying on an unfair debtor–creditor relationship under section 140A, alleging non-disclosure and excessive commission. The central preliminary issue on limitation was whether the claimant could rely on section 32(1)(b) (deliberate concealment) or section 32(2) (deliberate commission of a breach of duty amounting to concealment) of the Limitation Act 1980 to postpone the start of the limitation period.

Issues framed by the court. (i) Whether an unfair relationship under section 140A could constitute a "breach of duty" for the purposes of section 32(2); (ii) whether failure to disclose the existence and amount of commission amounted to "concealment" under section 32(1)(b) and whether that requires an independent legal duty to disclose; and (iii) what mental element the word "deliberate" requires under section 32(1)(b) and (2) (i.e. whether recklessness suffices or whether actual subjective knowledge of wrongdoing is required), and whether the facts met that standard.

Reasoning. The court held that (a) the creation of an unfair relationship under section 140A could amount to a "breach of duty" for section 32(2), drawing on Giles v Rhind and the purpose of section 32; (b) section 32(1)(b) is not limited to active concealment or to cases where there is a freestanding contractual or tortious duty to disclose — a duty for Limitation Act purposes may arise from the context and common sense (the court relied on The Kriti Palm and Williams); (c) Parliament, and the pre‑1980 case law, support a mental element that embraces recklessness: the court adopted a working test of "deliberate" comparable to Lord Bingham's test of recklessness in R v G (awareness of a risk and unreasonable to take it), having regard to the Law Reform Committee materials and the legislative history; and (d) applying that test to the contemporaneous regulatory and market warnings about PPI (FSA material, OFT/Competition Commission activity and the subsequent development of the law in Plevin), Canada Square must have appreciated the risk that nondisclosure could render the relationship unfair and it was unreasonable to take that risk. Hence the concealment was deliberate and time was postponed until discovery in November 2018.

Wider context. The judgment emphasises that section 32 is an exception to limitation designed to prevent defendants benefiting from their own concealment and that the statutory language should be given effect in a way that achieves that balance.

The appeal is dismissed. The Court of Appeal held that Mrs Potter could rely on section 32(1)(b) and, alternatively, section 32(2) of the Limitation Act 1980 to postpone the limitation period. The creation of an unfair relationship under section 140A CCA could amount to a "breach of duty" for section 32(2); section 32(1)(b) is not confined to active concealment or to failures to disclose only where there is an independent legal duty; and the statutory word "deliberate" includes recklessness (awareness of a risk which it was unreasonable to run). Applying that test, Canada Square deliberately concealed the existence and scale of its commission and time was postponed until discovery (November 2018).

County Court (Recorder Murray Rosen QC) found for claimant on limitation (Aug 2019); appeal to Queen's Bench Division (Jay J) dismissed ([2020] EWHC 672 (QB), 20 March 2020); permission to appeal to Court of Appeal granted (Lewison LJ, 5 June 2020); Court of Appeal ([2021] EWCA Civ 339) dismissed the appeal on 11 March 2021.