Section 32 provides, exceptionally, that in cases of fraud, deliberate concealment or mistake, the normal limitation period, for claims in negligence 6 years, does not begin to run until either:

(a)  the claimant has discovered the fraud, concealment or mistake (as the case may be); or

(b)  could with reasonable diligence have discovered it.

This regime is intended to be claimant-friendly. Time begins to run on discovery or discoverability (as the case may be) of the relevant facts, and the claimant will then have six years in which to bring a claim.

As to whether there is a relevant fact which has been deliberately concealed, ‘relevant facts' for these purposes are those facts without which the cause of action is incomplete.

The decision marks a return to giving the words used in s32 of Limitation Act 1980 their ordinary meaning. The clarification that deliberate does not mean recklessness but done "consciously and intentionally", will be welcomed by professionals advisors and their insurers. In tax negligence claims in particular, there are frequently arguments over when knowledge of relevant facts pertaining to a claim arose and thus when limitation periods begin to run. Following Canada Square, a claimant would need to establish that the tax adviser deliberately (consciously and intentionally) concealed facts relevant to that breach of duty to take advantage of the s32 provisions.

The facts

The dispute centred on a payment protection insurance (PPI) policy arranged by Canada Square for Mrs Potter in 2006 and for which Canada Square received an undisclosed commission of over 95% of the premium.   In 2018, outside the normal six-year limitation period, Mrs Potter issued proceedings to recover the amounts she had paid after being advised that her payments were likely to have included substantial commission.  She relied on s32 of the Limitation Act 1980 to postpone the commencement of the limitation period and alleged deliberate concealment by Canada Square of facts relevant to the cause of action, and/or deliberate commission of breach of duty in circumstances in which it was unlikely to be discovered for some time.

Was a fact relevant to the right of action "deliberately concealed" for the purposes of s32(1)(b)?

The Supreme Court unanimously held that Canada Square had "deliberately concealed" the receipt and amount of the commission - facts relevant to Mrs Potter's right of action -  so the limitation period did not begin to run until discovery of the concealment.  Accordingly, the proceedings issued by Mrs Potter were brought in time.

Analysing the language used in s32(1)(b), the Supreme Court held that "concealed" meant to keep something secret by taking active steps to hide it or by failing to disclose it. Conscious withholding would suffice; there was no requirement that the concealment must be in breach of a legal, moral or social obligation.  Further, the defendant did not need to know that the fact was relevant to the cause of action.  It was sufficient that the defendant deliberately ensured that the claimant did not know about the facts and therefore could not bring the proceedings within the ordinary time limit.

Was there a "deliberate" commission of a breach of duty for the purposes of s32(2)?

While Mrs Potter successfully extended time under section 32(1)9(b), the Supreme Court considered her alternative argument under s32(2) and it concluded Canada Square's conduct did not amount to a deliberate commission of a breach of duty.   It held that "deliberate" in s32(2) did not include "reckless"; the words had different meanings and were different legal concepts.  Nor did it include awareness that the defendant was exposed to a claim.  It simply meant that the defendant knew it was committing a breach of duty or intended to commit the breach of duty. 

This test was not met.  Although Canada Square deliberately decided not to disclose the commission, and must have been aware that there was a risk that by doing so it was making its relationship with the claimant "unfair", it had not been shown that Canada Square knew or intended that the nondisclosure would have that effect. 

Accordingly, although the failure to disclose the commission gave rise to Mrs Potter’s right of action, and could therefore be regarded as a breach of duty for the purposes of s32(2), it could not be shown that Canada Square knew that it was committing a breach of duty or intended to do so.  Canada Square's breach of duty was not "deliberate" and Mrs Potter could not rely on s32(2) to extend the limitation period.

Comment

The decision marks a return to the ordinary and natural meaning of the words used in s32, stripping back the nuances and embellishments introduced by case law.  By removing the need for there to be a legal duty to disclose the facts, or a duty arising from "a combination of utility and morality" (an uncertain and difficult test to apply in practice), the Supreme Court has widened the scope for the application of s32(1)(b) and therefore the potential scope for claimants to argue deliberate concealment. This may not have much impact in practice in professional negligence cases as a court would likely have found that there was some sort of duty on the professional to disclose in any event.  The existence of a duty to disclose may nevertheless still have evidential significance in determining whether the concealment was deliberate.

In contrast, by confirming that a reckless breach of duty will not suffice to meet the requirements of s32(2), the Supreme Court has narrowed the potential application of this section.  The Supreme Court relied on the ordinary meaning of the words.  "Deliberate" means "done consciously and intentionally", whereas "reckless" means "without thought or care for the consequences of an action". 

Professionals (and other kinds of business who are often defendants to claims) will welcome the Supreme Court's rejection of Mrs Potter's argument that it would suffice for the purposes on s32(2) if the defendant engaged in conduct which it knew would leave it exposed to a claim.  Professionals will often know that they are exposed to claims because their work necessarily involves the taking of risks. Allowing this argument would have resulted in indefinite exposure to stale claims. 

As some claims will inevitably continue to be made late, it is important for those facing them that there is no easy workaround of the limitation rules and that the right balance is struck between the interests of the claimant and those of the defendant.  There is a certain irony that it took the Supreme Court 17 months to issue judgment on whether a stale claim should be allowed to stand.  Professionals and their insurers should nevertheless welcome the clarification of the test, and the clear indication that demonstrating recklessness will not suffice.