PPI claims ‘deliberate concealment’ will extend the limitation period

A case law update on the Court of Appeal decision in Canada Square Operations Ltd v Potter [2021] EWCA Civ 339.

Background

On 26 July 2006, Mrs Potter took out a loan for £16,953 with Egg Banking (Egg later became Canada Square Operations Ltd).

The paperwork given to Mrs Potter by the bank said that the ‘payment protection premium lent’ was £3,834. This was added to the loan and was repayable at the same interest rate over 54 months, making the total payment for the insurance policy £4,545.

Mrs Potter repaid the loan early in March 2010.

Mrs Potter found out later that the premium for the insurance policy was only £182.50 so that the bank’s commission was a whopping 95%.

In the landmark case of Plevin v Paragon Personal Finance Limited [2014] UKSC 61 [2014] 1 WLR 4222 the Supreme Court decided that non-disclosure of a very high level of commission created an ‘unfair relationship’ under section 140A of the Consumer Credit Act (CCA) 1974. The facts of Mrs Potter’s case are very like the facts in the Plevin case.

In April 2018 after getting advice, Mrs Potter made a complaint to Canada Square saying they had missold the PPI policy to her. The bank accepted her complaint in part and agreed to pay her some compensation but not the whole amount that she’d lost.

In 2019, after getting advice, Mrs Potter took Canada Square to court for the balance. She claimed that because the bank didn’t tell her about the commission and because the commission was excessive this created an unfair relationship under section 140A CCA.

The bank defended the case saying that her claim was time-barred, as it was more than six years after the loan was repaid.

Section 32 of the Limitation Act 1980 extends the limitation period if there has been deliberate concealment. Mrs Potter claimed that she could not have gone to court earlier because the amount of the commission had been deliberately concealed from her. Mrs Potter won her case and the bank appealed.

What the court decided

The court dismissed the bank’s appeal. There had been deliberate concealment under s32 and so Mrs Potter’s claim was not out of time.

s32 provides:

“(1) … where in the case of any action for which a period of limitation is prescribed by this Act, either

(a) the action is based upon the fraud of the defendant; or

(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or

(c ) the action is for relief from the consequences of a mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

…

(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.”

The court looked in detail at the meaning of s32 and decided that:

• The term ‘breach of duty’ should be given its wider meaning and includes ‘any legal wrongdoing’. So the unfair relationship created by the bank by not disclosing the commision qualified as a breach of duty.
• The relationship had been unfair, but that there had been no ‘active concealment’ by Canada Square. The court decided that S32(1)(b) does not require active concealment, only deliberate concealment.
• For the concealment to be deliberate Mrs Potter only had to prove that Canada Square realised either:

i. that there was a risk that the non-disclosure of the commision caused an unfair relationship and that taking that risk had been unreasonable; or

ii. that there was a risk it was under a duty to disclose the level of commission

• The court rejected the bank’s argument that it was only after the Plevin judgment that it realised it had been under a duty to disclose or that it’s failure to disclose could create an unfair relationship. The court said the bank’s suggestion that the judgment in Plevin came as a ‘bolt of lightning out of a clear blue sky’ was ‘very far from a fair portrayal of what took place’

What this means for advisers

Guidance from the FCA after Plevin was that banks should refund undisclosed commission for amounts above 50% if they received a complaint. The deadline for complaints was August 2019. However clients might still be able to make a claim through the courts if they missed the deadline or want to claim more than just the amount above 50%.

Borrowers wanting to take action about an unfair relationship have12 years from the date the relationship with the lender ended if they are not trying to recover money paid under the agreement. If they are trying to recover money paid under the agreement, they’ll have 6 years to bring a claim. This decision means that where there’s undisclosed commission the limitation period will start from the date that the client discovered the amount of commission charged or could have reasonably discovered it.

This case might also be helpful for affordability complaints — time should start to run from the date that the client first became aware that they had a complaint not from the date that the affordability decision was made. Have a look at our article on affordability complaints for more information.

Lorraine Charlton works as a Debt expert in the Expert Advice team at Citizens Advice.

The information in this article is correct as of the date of publication.

Unfortunately, we are unable to respond to comments left on the medium site — please contact expertadvicesupport@citizensadvice.org.uk if you wish to give feedback on an article.