Supreme Court confirms postponement of limitation period for deliberate concealment of PPI commission payment

The Supreme Court judgment in Canada Square Operations Ltd v Potter supported the decisions of the County Court, High Court and Court of Appeal to hold that s32 Limitation Act 1980 applied to postpone the start of the ordinary limitation period where a defendant had “deliberately concealed” a fact relevant to the claimant’s course of action.

Mrs Potter had taken out a  54 month loan with Canada Square (then called Egg Banking) in 2006, and agreed with its suggestion that she also take out a PPI policy. Canada Square did not tell her that it kept over 95% of the policy premium as commission on its sale of the policy. The credit agreement stated that the total amount of credit comprised a cash amount of around £17,000 and a PPI premium of around £3,800.  In fact, only £182.50 of the PPI premium went to the insurer, but Canada Square did not tell Mrs Potter that it would get commission on the policy.

Mrs Potter repaid the loan early, in 2010.  In 2018, she complained that the PPI policy had been mis-sold and was compensated in line with the FCA’s redress scheme. She was then advised that the amounts she had paid were likely to have included substantial commission. As a result, she then claimed recovery of the sums she had paid under the policy, plus interest. She claims, following the Plevin judgment, that the relationship between her and Canada Square was unfair under s140A CCA. Canada Square admitted it had not disclosed that it was receiving commission but said the claim was time barred since significantly more than 6 years had passed since the cause of action accrued.  Mrs Potter argued, relying on s32 of the Limitation Act, that the 6 year limitation period which would have time-barred her claim did not start until 2018, when she found out about the commission. The County Court agreed and ordered payment of nearly £8,000. Canada Square appealed the decision all the way up to the Supreme Court, asking for clarification of what “deliberate concealment” and “deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time” meant in the context of s32.

The County Court accepted that Mrs Potter did not know about the commission until 2018.  It then said that it was “obvious” that the “sophisticated” creditor must have considered at a light level what commission to charge and not disclose and therefore the non-disclosure was deliberate, and implied that he considered “deliberate” to include things done either intentionally or recklessly.  It rejected Canada Square’s argument that it could not have known of the unfairness or that it was breaching its duties, because of industry practice at the time, the absence of regulatory requirements to disclose and the case of Harrison v Black Horse Ltd in 2011-2012, which was later overruled by Plevin. The court said that at the very least, the defendant should have disclosed when s140A-D CCA came into force, and all the more so with the Plevin judgment settling the law. The High Court dismissed appeals that the Recorder had been wrong in law to find there was a relevant duty for the purposes of s32 and to infer that Canada Square must have known that its failure to disclose would breach s32. The Court of Appeal was then asked to consider whether an unfair relationship within s140A was a “breach of duty” for the purposes of s32, whether failure to disclose amounted to “concealment” and whether any concealment was “deliberate”. The Court of Appeal said it was a “breach of duty”, that “concealment” could be by a positive act of concealment or just withholding relevant information, and that the question of “deliberate” would include recklessness. Since the defendant must, subjectively, have been aware of the risk that non-disclosure would make the parties’ relationship unfair, and that it was not objectively reasonable for it to  have taken that risk, both relevant limbs of the Limitation Act would be met.

In the Supreme Court, Canada Square did not appeal against the finding of recklessness, but said that the Court of Appeal had erred in law in (a) finding that a duty of disclosure “in Limitation Act terms” was enough to make a finding of concealment under s32(1)(b) and (b) that it was enough, for finding “deliberate concealment” that the defendant was reckless as to whether it was under a duty to disclose the commission and whether the commission was relevant to a cause of action against it. Canada Square argued that actual knowledge of both whether there was a duty to disclose the commission and whether the commission was relevant to a cause of action against it, or actual knowledge or wilful blindness, should have been the test.  While the Supreme Court disagreed with the Court of Appeal and said that “deliberate” in s32(2) did not include “reckless”, it held that the existence and amount of the commission were facts relevant to Mrs Potter’s right of action under s140A CCA, since she could not plead her claim without knowing them. Canada Square did deliberately withhold those facts by consciously deciding not to disclose the commission to her. It continued to withhold these facts once s140A came into force in respect of pre-existing agreements. Mrs Potter discovered the concealment in 2018 and there was nothing to suggest she could reasonably have done so any earlier.  As a result, the requirements of s32(1)b) Limitation Act were met.  However, the Supreme Court found that although Canada Square made the deliberate decision not to disclose the commission, it had not been shown that it knew or intended this to have the effect of breaching a duty. So, on the basis of s32(2) alone, the claim was time barred. But it had already succeeded on the basis of s32(1)(b).

The case has been used as a test case. There are believed to be around 26,000 active similar claims.


Emma Radmore