Canada Square Operations Ltd v Potter
| Jurisdiction | England & Wales |
| Judge | Sir Julian Flaux C,Males,Rose L JJ. |
| Judgment Date | 11 March 2021 |
| Neutral Citation | [2021] EWCA Civ 339 |
| Year | 2021 |
| Court | Court of Appeal (Civil Division) |
2021 Jan 19, 20, 21; March 11
Limitation of action - Breach of duty - Concealment of facts - Credit relationship between claimant and defendant unfair because of defendant’s failure to disclose fact and extent of commission payment - Claimant becoming aware of commission more than six years after end of credit relationship - Whether claimant’s claim for statutory remedy time-barred - Whether commencement of limitation period postponed on basis facts “deliberately concealed” by defendant - Whether non-disclosure of commission amounting to concealment - Whether defendant deliberately committing “breach of duty” so as to give rise to concealment - Whether recklessness sufficient to establish requisite mental element for deliberateness -
The claimant took out a loan with the defendant and bought a payment protection insurance policy with an insurer to ensure that the loan would be repaid if she became unable to make the payments herself. The claimant was not told that over 95% of the premium for the policy, which was added to the loan, would be paid to the defendant as commission for arranging the policy. More than six years after her credit relationship with the defendant ended, the claimant became aware of the commission. She brought a claim against the defendant under section 140A of the Consumer Credit Act 1974F1, which empowered the court to impose certain remedies if the relationship between a creditor and a debtor arising out of a credit agreement was unfair to the debtor. The defendant contended that the claim was time-barred under section 9(1) of the Limitation Act 1980F2. The claimant argued that the defendant had, for the purposes of section 32(1)(b) of the 1980 Act, “deliberately concealed” from the claimant facts relevant to her right of action, namely the fact and extent of the commission, and that, therefore, the period of limitation had not begun to run until she had discovered the concealment. Section 32(2) provided that deliberate commission of a “breach of duty” in circumstances in which it was unlikely to be discovered for some time amounted to deliberate concealment of the facts involved in that breach of duty. The recorder held that the claimant’s claim was not time-barred, whether applying section 32(1)(b) in isolation or together with section 32(2). The judge dismissed the defendant’s appeal, holding: (i) that section 32(1)(b) on its own could not postpone the limitation period for the claimant because her case was about non-disclosure rather than active concealment, and, absent active concealment, section 32(1)(b) operated only where a duty to disclose arose under the general law; (ii) that, however, the unfair relationship that arose from the defendant’s continued non-disclosure of the commission it had received constituted a “breach of duty” for the purposes of section 32(2); and (iii) that the mental element of deliberateness in section 32, which included recklessness, was satisfied.
On the defendant’s second appeal—
Held, dismissing the appeal, (1) that section 32(1)(b) of the Limitation Act 1980 could apply where, although the defendant had not actively concealed a fact relevant to the right of action, it had failed to disclose such a fact while being under a duty to do so; that the duty to make such disclosure did not have to be a free-standing contractual, tortious or fiduciary duty, but could be one arising from a combination of utility and morality; and that, in the present case, the obligation to act fairly imposed on the defendant by section 140A of the Consumer Credit Act 1974 was sufficient to mean that by failing to disclose the existence and extent of the commission it had “concealed” that commission within the meaning of section 32(1)(b) (post, paras 67, 74–77, 83–84, 162, 199, 201).
(2) That the term “breach of duty” within section 32(2) of the 1980 Act was not restricted to breaches of contractual, tortious or fiduciary duties; and that, in the present case, the creation of an unfair relationship within the meaning of section 140A of the 1974 Act amounted to a breach of duty by the defendant towards the claimant for the purposes of section 32(2) (post, paras 59–63, 162, 199, 201).
(3) That recklessness was sufficient to make the concealment of facts or the commission of a breach of duty “deliberate” for the purposes of section 32(1)(b) and (2) of the 1980 Act; that the test for recklessness had both a subjective element, which required that the defendant had been aware of a risk that a relevant circumstance existed or that a relevant result would occur, and an objective element, which required that it had been unreasonable, in the circumstances known to the defendant, to take that risk; that, thus, in the present case, the claimant would be able to rely on section 32(1)(b) taken on its own if she could show that the defendant had realised that there was a risk that it had a duty to tell her about the commission charge, such that its failure to do so meant that it had “deliberately concealed” that fact from her, and it had not been reasonable for it to take that risk; that, alternatively, she would be able to rely on section 32(1)(b) taken together with section 32(2) if she could show that the defendant had realised that there was a risk that its failure to disclose the fact and extent of the commission had resulted in its relationship with her being unfair within the meaning of section 140A of the 1974 Act, and it had not been reasonable for it to take that risk; that, on the facts, the claimant could rely on section 32(1)(b), either taken on its own or together with section 32(2); and that, accordingly, the claimant could defeat the defendant’s limitation defence by relying on section 32(1)(b), the defendant having “deliberately concealed” from her a fact relevant to her right of action under section 140A, namely the existence and extent of the commission it had received, or, alternatively, by relying on section 32(1)(b) as expanded by section 32(2), the defendant having deliberately committed a “breach of duty” towards her under section 140A in circumstances where that breach was unlikely to be discovered for some time (post, paras 137–138, 157, 160–161, 162, 200, 201).
The following cases are referred to in the judgments:
AIC Ltd v ITS Testing Services (UK) Ltd (The Kriti Palm)
Akhtar v Boland
Applegate v Moss [
Arcadia Group Brands Ltd v Visa Inc
Beaman v ARTS Ltd [
Brett v Solicitors Regulation Authority
Brocklesby v Armitage & Guest (Note) [
Bulli Coal Mining Co v Osborne [
Cave v Robinson Jarvis & Rolf
Clark v Woor [
De Beers UK Ltd v Atos Origin IT Services UK Ltd
Derry v Peek (
Dunlop Haywards (DHL) Ltd v Barbon Insurance Group Ltd
Giles v Rhind (No 2)
Grace v Black Horse Ltd
Harrison v Black Horse Ltd
King v Victor Parsons & Co [
Kitchen v Royal Air Force Association [
Kotonou v Reeves
Ladd v Marshall [
Lowsley v Forbes (trading as LE Design Services) [
Mutual Energy Ltd v Starr Underwriting Agents Ltd
O (A Child) v Rhodes
Patel v Patel
Plevin v Paragon Personal Finance Ltd
Primeo Fund v Bank of Bermuda (Cayman) Ltd
R v G
Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [
Test Claimants in the FII Group Litigation v Revenue and Customs Comrs
Tito v Waddell (No 2) [
Williams v Fanshaw Porter & Hazelhurst
Wisniewski v Central Manchester Health Authority [
Zipvit Ltd v Revenue and Customs Comrs
The following additional cases were cited in argument:
Cannon v Revenue and Customs Comrs
Johnson v Chief Constable of Surrey
R v Godir
Various Claimants v News Group Newspapers Ltd
The following additional cases, although not cited were referred to in the skeleton arguments:
Assicurazioni Generali SpA v Arab Insurance Group (Practice Note)
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Canada Square Operations Ltd v Potter
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