Canada Square Operations Ltd v Potter

For limitation purposes, a breach of duty under section 32(2) of the Limitation Act 1980 includes any legal wrongdoing giving rise to a right of action. It is not confined to breach of a contractual, tortious, fiduciary or equitable duty.

Non-disclosure may constitute concealment under section 32(1)(b) without a free-standing legal duty to disclose. A sufficient obligation to disclose may arise in Limitation Act terms from the circumstances and the purpose of the provision.

“Deliberate” includes recklessness. The defendant must appreciate a risk that its conduct constitutes the relevant wrong or concealment, and it must be unreasonable to take that risk. The same conduct may create the right of action and conceal a fact essential to it.

The respondent entered into a regulated loan and payment protection insurance arrangement with Canada Square. More than 95% of the stated insurance cost represented commission retained by Canada Square, but neither the existence nor the amount of that commission was disclosed. The credit relationship ended in March 2010.

After obtaining partial compensation, the respondent commenced proceedings under section 140A of the Consumer Credit Act 1974. Canada Square accepted that the relationship was unfair but contended that the claim was barred by the six-year limitation period. The Recorder found the claim timely. Jay J dismissed Canada Square’s first appeal in [2020] EWHC 672 (QB), holding that section 32(2), but not section 32(1)(b), of the Limitation Act 1980 applied.

The issues were whether creation of the unfair relationship was a breach of duty under section 32(2), whether non-disclosure amounted to concealment under section 32(1)(b), and whether Canada Square’s conduct was deliberate.

1. Appeal dismissed. The respondent could rely on both section 32(1)(b) and, alternatively, section 32(2) of the Limitation Act 1980. Rose LJ gave the leading judgment. Males LJ agreed, subject to observations about the development of section 32(1)(b), and the Chancellor agreed with both judgments.

2. The expression “breach of duty” in section 32(2) has a wide meaning. It includes legal wrongdoing of any kind which gives rise to a right of action. It is not restricted to breach of a contractual, tortious, fiduciary or equitable duty. Creation of an unfair credit relationship under section 140A of the Consumer Credit Act 1974 therefore qualified, even though section 140A did not itself impose a conventional duty to disclose commission.

3. Section 32(1)(b) is not confined to active concealment. Withholding relevant information may amount to concealment. In a non-disclosure case, the obligation to disclose need not be a free-standing duty under contract, tort or fiduciary law. It is enough that the circumstances impose a sufficient obligation “in Limitation Act terms” for silence properly to be characterised as concealment. The obligation to act fairly under section 140A met that standard.

4. The same non-disclosure may both contribute to the existence of the cause of action and conceal a fact relevant to it. Section 32(2) supplies an additional route; it does not exclude section 32(1)(b). The concealment continued while the respondent remained liable to pay principal and interest attributable to the undisclosed commission.

5. “Deliberate” in sections 32(1)(b) and 32(2) includes recklessness as defined in R v G [2003] UKHL 50. The defendant must appreciate a risk that its conduct constitutes the relevant breach or that it ought to disclose the relevant fact, and taking that risk must be unreasonable in the circumstances known to it. Actual knowledge and wilful blindness are not essential.

6. The extensive regulatory warning signs, the extraordinary commission, and the deliberate commercial decision not to disclose supported the inference that Canada Square appreciated the relevant risks. Taking those risks was unreasonable. Disclosure would have involved no material difficulty, expense or countervailing harm.

7. The limitation period consequently did not begin until the respondent discovered the concealment in November 2018. Her proceedings commenced in December 2018 were in time.

1. Court of Appeal (Civil Division): Dismissed Canada Square’s appeal and upheld the judgment for the respondent, while allowing the respondent’s contention that section 32(1)(b) also applied: [2021] EWCA Civ 339 .
2. High Court, Queen’s Bench Division: Jay J dismissed Canada Square’s appeal from the Recorder. He held that section 32(2), but not section 32(1)(b), of the Limitation Act 1980 applied: [2020] EWHC 672 (QB) .
3. County Court: Recorder Murray Rosen QC held that the claim was not time-barred and entered judgment for the respondent in the agreed sum.