PPI and Limitation Case
Canada Square Operations Limited v Potter
Summary of outcome:
- Deliberate concealment extends the time to bring a claim.
- ‘Deliberate’ does not just mean a breach of a regulatory duty.
- Extension of time for claims until such time as it could, with ‘reasonable diligence’, have been discovered.
- Awaiting the further decision of the Supreme Court.
A Court of Appeal judgement has extended the length of time between the end of a credit relationship and issuing a claim for PPI redress.
It’s worth noting here that the case has been subject to an appeal to the Supreme Court and we await the judgment. It is therefore possible that the legal landscape may change.
The case:
In 2006 Mrs Potter took out a loan for £16,953.00 with Egg Banking PLC (later becoming Canada Square Operations Limited). She also took out a PPI policy of £3,834.24 which was added to the loan. She was not told that around 95% of the policy premium was made up of commission; Mrs Potter redeemed her loan in 2010.
In 2018 Mrs Potter complained to Canada Square regarding the PPI and received compensation of £3,160.00. However, as this did not fully compensate her, she issued a claim in January 2019 for the remainder of the redress claimed as owed under the ‘unfair relationship’ provisions of the Consumer Credit Act 1974 (CCA).
The key question was whether there was a time-bar on the claim, as it had been issued more than six years after the redemption of the loan (and therefore more than six years after the credit relationship had ended).
In response, Mrs Potter claimed that the commission had been deliberately concealed in accordance with section 32 of the Limitation Act 1980 (the LA). Specifically:
- That under s32(1)(b) of the LA, where the defendant has “deliberately concealed” the existence/amount of commission, time does not begin to run until she could, with reasonable diligence, have discovered it; and
- That under s32(2) of the LA, for the purposes of (1)(b), “deliberate” commission of a “breach of duty” in circumstances where it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.
The outcome:
Initially, it was determined that the claim was not time-barred because the commission had been deliberately concealed from Mrs Potter. Canada Square unsuccessfully appealed that decision and proceeded with a further appeal to the Court of Appeal, but this was dismissed: Mrs Potter could rely upon s.32 of the LA that her claim had been brought in time.
At the time that the loan had been taken out, the ‘unfair relationship’ provisions of the CCA did not exist (they came into force in April 2007). However, because Mrs Potter’s loan was still live in April 2008, at that point it came within scope.
Regardless, Canada Square argued that it had not been under any legal duty to disclose commission, and therefore there was no deliberate concealment for the purposes of limitation. This was rejected.
The Court found that ‘breach of duty’ should be construed widely to encompass ‘legal wrongdoing of any kind’. In addition, in terms of limitation, an obligation would stem from a “combination of utility and morality”, rather than a strict legal duty. As such, there should have been a disclosure made ‘at the latest’ when the CCA’s unfair relationship test took effect in 2008, and it did not matter that there had not been any breach of a regulatory duty to disclose commission.
The Court addressed the issue of the meaning of ‘deliberate’. It had to be satisfied that there was a knowledge that the commission should have been disclosed, and a deliberate decision not to disclose it. Canada Square claimed that because there was no legal duty to disclose their commission arrangements, they did not know that they should have disclosed them until the Supreme Court handed down its decision in Plevin v Paragon Personal Finance Limited in November 2014 (in which it was found that non-disclosure of commission was sufficient to establish an unfair relationship under the CCA).
The Court rejected that argument. It went into the history of the various regulatory enquiries into PPI, which had concluded that as far back as 2007 there was a very real risk of consumer detriment in the way it was sold. The Court therefore disagreed that the Plevin decision could have been in any way a surprise to Canada Square; and found that they must have been well aware of the issues around failing to disclose commission prior to that.
Summary:
Canada Square was adjudged to have deliberately concealed the fact of commission from Mrs Potter, and that this gave her a right to bring an unfair relationship claim under s.140 of the CCA; the limitation period did not begin until she had discovered that concealment in 2018 (some 12 years after she entered into the loan agreement and eight years after the loan’s redemption).
The decision is good news for consumers as it extends the time period during which such claims can be brought. However, given that PPI mis-selling has been in the headlines for over a decade, and it is now over six years since the Plevin decision, we will have to wait and see how limitation arguments based on date of knowledge of commission will play out for any new claims in the months to come.
