Canada Square Operations Ltd v Potter

Under section 32(1)(b) of the Limitation Act 1980, a claimant must establish a fact relevant to the asserted right of action, its concealment by the defendant, and an intention to conceal it. Concealment may occur through positive action or the conscious withholding of information.

No legal, moral or social duty to disclose is required. Nor must the defendant know that the concealed fact is legally relevant. “Deliberate” means conscious and intentional; recklessness is insufficient. Under section 32(2), a breach is deliberately committed only when the defendant knows that the conduct is a breach of duty. Awareness of a risk of wrongdoing or exposure to a possible claim does not suffice.

In 2006 Mrs Potter entered into a loan agreement with Canada Square Operations Ltd and purchased payment protection insurance. More than 95% of the premium represented commission retained by the lender, but neither the existence nor the amount of that commission was disclosed. After receiving legal advice in 2018, she claimed relief for an unfair credit relationship under section 140A of the Consumer Credit Act 1974.

The County Court entered judgment for Mrs Potter, holding that section 32 of the Limitation Act 1980 postponed limitation. The High Court dismissed the lender’s appeal: [2020] EWHC 672; [2020] 4 All ER 1114. The Court of Appeal also dismissed its appeal: [2021] EWCA Civ 339; [2022] QB 1.

The Supreme Court had to determine whether concealment under section 32(1)(b) required a duty to disclose, whether recklessness amounted to deliberate concealment, and whether a breach was deliberately committed under section 32(2) when the defendant knew only of a risk that its conduct was wrongful.

1. Appeal dismissed unanimously. Lord Reed, with whom Lord Hodge, Lord Kitchin, Lord Sales and Lord Lloyd-Jones agreed, held that the claim was not time-barred. Section 32(1)(b) of the Limitation Act 1980 postponed the limitation period, although section 32(2) did not.

2. Section 32(1)(b) requires: (i) a fact relevant to the claimant’s asserted right of action; (ii) concealment of that fact by the defendant; and (iii) an intention to conceal it. A fact is relevant when the claimant cannot plead the cause of action without knowing it. Concealment may consist either of a positive act or of consciously withholding information.

3. Concealment does not require breach of a legal duty to disclose, still less an obligation derived from utility and morality. A disclosure duty may have evidential significance when deciding whether concealment was intentional, but it is not a statutory element. The defendant also need not know that the concealed fact is relevant to an existing or potential right of action. The contrary reasoning in Williams v Fanshaw Porter & Hazelhurst [2004] EWCA Civ 157 and AIC Ltd v ITS Testing Services (UK) Ltd (The Kriti Palm) [2006] EWCA Civ 1601 was disapproved.

4. “Deliberate” bears its ordinary meaning of conscious and intentional conduct. It does not encompass recklessness. For section 32(1)(b), the intended result must be concealment of the relevant fact. The authoritative explanation given by Lord Scott in Cave v Robinson Jarvis & Rolf [2002] UKHL 18 was applied.

5. The existence and amount of the commission were facts without which Mrs Potter could not plead her claim under section 140A of the Consumer Credit Act 1974. Canada Square consciously decided not to disclose them and continued withholding them after section 140A became applicable to the agreement. Mrs Potter discovered the concealment only in November 2018, and no earlier discovery through reasonable diligence was suggested. Section 32(1)(b) therefore applied.

6. Under section 32(2), deliberate commission of a breach requires knowledge that the conduct is a breach of duty, or an intention to commit the breach. Awareness of a risk that conduct is wrongful, objective unreasonableness in taking that risk, or knowledge of exposure to a possible claim is insufficient. Canada Square had not been shown to know or intend that non-disclosure made the relationship unfair. Section 32(2) therefore did not apply.

1. United Kingdom Supreme Court: In Canada Square Operations Ltd v Potter [2023] UKSC 41, the court unanimously dismissed Canada Square’s appeal. It upheld the conclusion that the claim was not time-barred under section 32(1)(b) of the Limitation Act 1980, but rejected the lower courts’ reasoning under section 32(2).
2. Court of Appeal: The court dismissed Canada Square’s appeal: [2021] EWCA Civ 339; [2022] QB 1. It held that sections 32(1)(b) and 32(2) applied because recklessness could satisfy the requirement of deliberateness.
3. High Court: Jay J dismissed Canada Square’s appeal: [2020] EWHC 672; [2020] 4 All ER 1114. He held that section 32(1)(b) did not apply but that section 32(2) did.
4. County Court: Recorder Rosen KC held that section 32 applied and entered judgment for Mrs Potter.