Scott NodderIn Canada Square Operations Ltd v Mrs Beverley Potter [2020] EWHC 672 (QB) , the High Court heard an appeal by the creditor against the decision of Mr Recorder Rosen QC. In the decision it was found that the creditor was deprived of a limitation defence due to its inaction in notifying the debtor of the PPI commission rate. This in-acton amounted to a deliberate concealment for the purpose of section 32 of the Limitation Act 1980 (“LA“) and resulted in the limitation period not beginning to run until the debtor discovered or could have discovered the concealment. The creditor appealed.
The relevant statute is:
(i) Section 32(1)(b) LA provides “…where…any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant….., the period of limitation shall not begin to run until the plaintiff has discovered the…concealment….or could have.
(ii) Section 32(2) LA provides “…deliberate commission of a breach of duty….amounts to deliberate concealment…”
The creditor’s counsel argued that the creditor could not have “deliberately concealed” unless there was a duty to disclose, and the decision in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 was authority that unfair relationship claims under sections 140A-D of the Consumer Credit Act 1974 (“CCA“) are not predicated on there being any legal duty to disclose. It was argued it must follow that there can be no question of any “deliberate commission of a breach of duty“.
The debtor’s counsel responded to argue that if the creditor was under no duty to disclose, a fact relevant to the debtor’s “right of action” was nevertheless intentionally withheld from her. It was argued that the expression “breach of duty” in section 32(2) LA must be seen as the obverse of “right of action” defined in section 32(1)(b) of LA. It is the legal wrongdoing which founds that right to relief which is the “breach of duty” for the purpose of section 32(2) LA, even if section 140A CCA is not predicated on any concept of underlying legal duty.
On the issue of concealment, Mr Justice Jay held there was binding Court of Appeal authority in The Kritti Palm [2006] EWCA Civ 1601 that, in the absence of any active concealment (which was the case here), section 32(1)(b) operates only were a duty to disclose arises under general law. This duty to disclose must be envisaged as a legal duty. Therefore, the destiny of the appeal before him had to turn on the true construction of section 32(2) LA and, in particular, the meaning of the term “breach of duty“.
Mr Justice Jay found support in the decision in Giles v Rhind (No 2) [2008] EWCA Civ 118 where the Court of Appeal held that a disposition that put assets beyond the reach of creditors amounted to a breach of duty for the purposes of section 32(2) LA. It was found in that case that section 32(2) should be interpreted to cover legal wrongdoing of any kind. Mr Justice Jay found that the exact same reasoning applied in this case. The creditor’s non-disclosure of commission was unfair and amounted to a legal wrongdoing for the purposes of the statutory “right of action” conferred in sections 140A-D CCA. Therefore, the creditor committed a “breach of duty” for the purposes of section 32(2) LA.
Mr Justice Jay then had to consider whether there had been a deliberate commission of a breach of duty. He noted that the Recorder at first instance drew an adverse inference from the creditor’s failure to call any evidence. Therefore, Mr Justice Jay’s view was that the creditor acted deliberately in taking the conscious decision not to disclose. The appeal was dismissed.
