CANADA SQUARE v POTTER [2023] UKSC 41
This case concerned a PPI policy arranged for Mrs Potter as part of a regulated loan in 2006, for which Canada Square received an undisclosed commission of over 95% of the premium. In 2018 – several years outside of the normal six-year time limit for bringing a claim – Mrs Potter issued proceedings after being advised by solicitors that her payments were likely to have included substantial commission. Canada Square sought to argue that the claim was time-barred.
Section 32 of the Limitation Act 1980 postpones commencement of the six-year time period for bringing a claim in cases of fraud, deliberate concealment or mistake. Section 32(1)(b) of the Act refers to concealment and section 32(2) provides that, for the purposes of 32(1)(b), deliberate commission of a breach of duty, in circumstances where it is unlikely to be discovered for some time, amounts to a deliberate concealment of the facts involved in that breach of duty.
Mrs Potter therefore needed to establish that either Canada Square had deliberately concealed facts relevant to the cause of action or that Canada Square had deliberately committed a breach of duty in circumstances where it was unlikely to be discovered for some time. The County Court had found for Mrs Potter, as had the High Court and Court of Appeal – the latter holding that Mrs Potter could rely on both limbs of section 32.
The Supreme Court dismissed the appeal and clarified the meanings of both "deliberately concealed" and "deliberate commission of a breach of duty", finding that:
- Deliberate concealment: the plain, ordinary meaning of concealment is keeping something secret by taking active steps to hide it or by failing to disclose it. A conscious withholding of information would suffice. There is no inherent requirement that the defendant was under a legal duty or moral or social obligation to disclose the facts, nor does the defendant.
- Deliberate commission of a breach of duty: the defendant had to know that it was committing a breach or had to have intended to commit the breach. Canada Square had deliberately decided not to disclose commission – and must have been aware of the risk that this was "unfair" under the Consumer Credit Act 1974 – but this did not mean that Canada Square knew or intended that the non-disclosure actually was unfair. Mrs Potter's section 32(2) argument was rejected.
While the Supreme Court effectively widened the possibility of arguing a deliberate concealment (albeit rejecting Mrs Potter's argument that "deliberately" extended to include "recklessly"), it restricted the possibility of arguing a deliberate commission of breach of duty, providing some comfort to professionals that they can engage in conduct involving a degree of risk without exposing themselves indefinitely to a risk of stale claims.
PRIMEO FUND (IN OFFICIAL LIQUIDATION v BANK OF BERMUDA (CAYMAN) LTD AND ANOTHER [2023] UKPC 40
This was a Privy Council decision (handed down on the same date as the Supreme Court decision in Canada Square) looking at the Cayman Islands Limitation Act, and a parallel provision to that under section 32 of the Limitation Act 1980 concerning deliberate commission of a breach of duty. Given it is a Privy Council case, the decision is not binding on the English Court but will have persuasive value.
The case concerned claims against professional service providers for breach of duties in relation to investments in the Madoff Ponzi scheme. When the Ponzi scheme came to light, Primeo suffered heavy losses and went into liquidation. It then initiated proceedings against its former administrator (Bank of Bermuda) and custodian (HSBC).
On limitation, the Privy Council held similarly to the Supreme Court in Canada Square that reckless commission of a breach of duty did not amount to a deliberate commission of a breach of duty, and the claim against Bank of Bermuda was therefore time-barred. This did not apply, however, to the claim against HSBC, which was a strict liability claim – the Privy Council determined that there had been deliberate concealment by HSBC's agent (Madoff Securities LLC), and this could be attributed to HSBC for limitation purposes.
Riad Tawfiq Al Sadik v Clyde & Co & Ors [2024] EWHC 818 (Comm)
This decision concerned a professional negligence claim by Mr Al Sadik relating to the conduct of underlying litigation by members of his former legal team. Mr Al Sadik claimed that the Defendant had been negligent in pursuing an amendment application too late, such that he had lost the chance to pursue viable claims.
It was accepted by Mr Al Sadik that the primary six-year period for a claim in tort had expired as the claim was brought some ten years after the alleged negligence had occurred. He attempted to rely instead on the three-year period afforded under section 14A of the Limitation Act, and the key question to be determined therefore was when Mr Al Sadik had acquired the “knowledge required for bringing an action for damages in respect of the relevant damage”.
Dismissing the claim, the Court concluded:
- It was clear that Mr Al Sadik knew from December 2011, when his application to amend was dismissed, that a "loss" had been suffered. This was sufficient to satisfy the "knowledge" requirement of section 14A such that the three year limitation period began to run from that date. In any event, even if Mr Al Sadik did not appreciate the significance of the dismissal of the application on his prospects of success, at the least he knew that he had suffered loss in the form of an adverse costs order, which was sufficient "knowledge" for the purposes of section 14A.
- The case was distinguishable from Witcomb v Keith Park Solicitors [2023] EWCA Civ 326 because this was not a scenario in which the claimant had not realised something had gone wrong until further advice was received – Mr Al Sadik knew that he had lost the opportunity to pursue the claims at the point his application was dismissed. The Court rejected Mr Al Sadik's case that he needed to obtain legal advice before he knew that he had suffered a loss.
- While the Defendant may have owed a duty to take reasonable care to identify and advise about their (alleged) negligence, that duty was not a "continuing" one. A continuing retainer did not automatically create a continuing duty.
The analysis of section 14A will be helpful to those defending professional indemnity claims on limitation grounds and the manner in which Witcomb was distinguished serves as a useful illustration of what a defendant needs to prove to circumvent the principle that time will not start to run under section 14A until a claimant has reason to consider that the advice he received may have been wrong. The point at which knowledge is said to have arisen is fact-sensitive and to be dealt with on a case-by-case basis. This decision also buttresses the existing case law on continuing duty and will make it more difficult for claimants to rely on alleged continuing duties to delay the commencement of the limitation period.
In circumstances where limitation points may be dispositive of a claim, without the need to interrogate the merits, it is likely similar issues will continue to arise. The interpretation of certain provisions in the Limitation Act – in the above cases, sections 14A and 32 – continues to be a complex issue and decisions tend to be highly fact-sensitive, without obvious pre-disposition in favour of either claimants or defendants. The above cases provide some comfort to defendants, however, that the Court seems minded to reject arguments which risk open-ended liabilities.
