Supreme Court clarifies deliberate concealment versus recklessness in limitation period cases

Introduction

The Supreme Court’s decision in Canada Square Operations Ltd v Potter [2023] UKSC 41 represents a critical examination of the provisions relating to the postponement of the ordinary limitation period under the Limitation Act 1980 (“the 1980 Act”), specifically sections 32(1)(b) and 32(2). This case law analysis delves into the refinement of legal principles regarding “deliberate concealment” and its differentiation from “recklessness” within the context of the limitation period for bringing actions.

Key Facts

The appellants, Canada Square Operations Ltd, were engaged in a loan agreement with the respondent, Mrs. Potter, which involved payment protection insurance (PPI) with undisclosed commission. Years after the agreement’s conclusion, awareness arose regarding the non-disclosure of such commissions making the creditor-borrower relationship “unfair”. The respondent sought to reclaim paid amounts under sections 140A and 140B of the Consumer Credit Act 1974, invoking sections 32(1)(b) and 32(2) of the 1980 Act to postpone the limitation period. The crux of the matter was whether the appellants had “deliberately concealed” relevant facts from the respondent, precluding a limitation defence.

Legal Principals

The case turns upon the interpretation of the term “deliberately”, as utilized in sections 32(1)(b) and 32(2) of the 1980 Act. The Supreme Court emphasized the clear and natural meaning of legislative language. “Deliberate”, in ordinary English, implies conscious and intentional action, distinct from “reckless”, which denotes a state of mind that disregards or is indifferent to the potentiality of a risk.

In section 32(1)(b), the phrase “deliberately concealed” was scrutinized. For “deliberate”, a higher threshold was set than “recklessness”: it required intentional hiding or withholding information. The concealment must result from a decision not to disclose a relevant fact, contemplating an intention to hide the fact from the claimant.

Regarding section 32(2), the debate centered on whether the “deliberate commission of a breach of duty” encompasses the awareness of risk equivalent to “recklessness”. The Court reaffirmed that Parliament’s language meant that the defendant must have knowledge that its conduct constituted a breach of duty - thus excluding “reckless” breaches.

The Court distanced itself from the precedents that allowed for a liberal interpretation of “deliberate” to include recklessness and addressed the inappropriateness of using historical legal analogies and Parliamentary materials to deduce current statutory meaning unless the legislation is ambiguous or absurd, which was not the case here.

Outcomes

The Supreme Court upheld the Court of Appeal’s decision that the appellants cannot rely on the limitation defence under section 32(1)(b), as it was established that the appellants deliberately concealed particulars of the PPI commission. However, it reversed the Court of Appeal’s decision regarding section 32(2), stating that awareness of a risk of unfairness does not constitute “deliberate commission of a breach of duty”, and hence, is not enough to extend the postponement of the limitation period.

Conclusion

In Canada Square Operations Ltd v Potter, the Supreme Court affirmed the fundamental distinction between deliberate acts and reckless conduct within sections 32(1)(b) and 32(2) of the 1980 Act, reinforcing the traditional legal interpretation of “deliberate” as intentional or knowing conduct. By so doing, the Supreme Court has underscored the threshold required for a defendant to be stripped of a limitation defence under these provisions, providing clearer guidelines for the UK legal community on the approach to be taken in future cases involving the interpretation and application of the Limitation Act 1980.