Canada Square Operations Ltd v Potter

This case started with a consumer loan sold with payment protection insurance, or PPI. Mrs Potter signed a standard-form credit agreement with Canada Square Operations Ltd on 26 July 2006. The agreement showed a cash loan and a separate PPI premium rolled into the total amount of credit.

The striking commercial fact was what sat behind that premium. The agreement described a PPI premium of £3,834.24. The Supreme Court said that over 95% of that amount was commission retained by the lender, while only £182.50 was paid to the insurer. Mrs Potter was not told that the lender would receive or keep that commission.

The loan ended on 8 March 2010 after early repayment. Years later, after the Supreme Court’s decision in Plevin, Mrs Potter complained about the PPI and received compensation under the FCA redress scheme for mis-selling. She then obtained legal advice and was told that substantial commission was likely to have been included in what she had paid.

She issued proceedings on 14 December 2018 under the unfair relationship provisions of the Consumer Credit Act 1974. The lender did not dispute that it had failed to disclose the commission. Instead, it argued that the claim had been brought too late. That made limitation the central issue in the case.

The main question was whether Mrs Potter’s claim was time-barred. The lender relied on the ordinary six-year limitation rule. Mrs Potter relied on section 32 of the Limitation Act 1980, which can postpone the start of the limitation period in certain situations.

Two parts of section 32 mattered. Section 32(1)(b) applies where a fact relevant to the claimant’s right of action has been deliberately concealed by the defendant. Section 32(2) says that 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.

That raised several legal questions. Can a business conceal something simply by deciding not to tell the customer? Does concealment require a separate legal duty to disclose? What does deliberate mean in these provisions? Does it include recklessness, or does it require actual knowledge or intention?

The court also had to consider how those limitation rules fit with an unfair relationship claim under section 140A of the Consumer Credit Act 1974. The judgment explains that section 140A is concerned with whether the creditor-debtor relationship was unfair. It does not itself impose a legal duty on creditors, and unfairness can exist even where there is no separate breach of duty.

That mattered because the lender’s argument tried to narrow section 32. It said non-disclosure should only count as concealment if there was a legal duty to disclose and if the lender actually knew enough about that duty and the legal consequences. Mrs Potter argued for a more ordinary reading of the words. If the lender consciously kept a relevant fact from her, that should be enough for section 32(1)(b).

The claim began in the County Court as a small claim, but it became a test case because there were said to be about 26,000 active similar claims. By trial, the only live issue was limitation. The lender called no evidence and did not challenge Mrs Potter’s evidence.

Recorder Rosen QC held that section 32 applied and entered judgment for Mrs Potter. He accepted her evidence that she did not become aware of the commission until about November 2018. He considered it obvious that the lender’s non-disclosure was deliberate.

The High Court dismissed the lender’s appeal, but on different reasoning. Jay J accepted that section 32(1)(b) did not apply on the approach he considered binding. He instead held that section 32(2) applied because the non-disclosure gave rise to the statutory right of action and the breach continued after section 140A came into force.

The Court of Appeal also dismissed the lender’s appeal. It held that Mrs Potter could rely on both section 32(1)(b) and section 32(2). On its reasoning, recklessness was enough for the mental element in both provisions.

When the case reached the Supreme Court, the lender challenged those conclusions. The Supreme Court agreed with the overall result but not all of the reasoning below. It held that Mrs Potter succeeded under section 32(1)(b), but not under section 32(2).

The Supreme Court dismissed the lender’s appeal. It held that section 32(1)(b) applied because the existence and amount of the commission were facts relevant to Mrs Potter’s right of action. She could not plead her unfair relationship claim without knowing them.

The court said the lender had deliberately concealed those facts by consciously deciding not to disclose the commission. That was enough. The court returned to the ordinary meaning of the statutory words and rejected attempts to add extra requirements that do not appear in the legislation.

One of the most important points is that section 32(1)(b) did not require Mrs Potter to prove a separate legal duty to disclose the commission. The Supreme Court said concealment can occur by intentionally keeping something secret, including by withholding information. A business cannot assume that silence is harmless just because no standalone disclosure duty is identified elsewhere.

The court also dealt with timing. Section 140A was not in force when the original decision not to disclose was first taken. But the lender continued to withhold the information after section 140A was brought into force for pre-existing agreements, while the credit agreement remained in force and the commission continued to be paid. That meant the concealed facts became relevant to a right of action during the life of the agreement.

Mrs Potter did not discover the concealment until November 2018, shortly before issuing proceedings, and it was not suggested that she could with reasonable diligence have discovered it earlier. Because section 32(1)(b) applied, the limitation period was postponed and the claim was not out of time.

The Supreme Court disagreed with the Court of Appeal on section 32(2). It held that deliberate in the phrase deliberate commission of a breach of duty does not include recklessness. For section 32(2), the defendant must know it is committing a breach of duty or intend to do so.

That stricter test was not met here. The lender had deliberately chosen not to disclose the commission and may have appreciated there was a risk in doing so. But that did not prove it knew it was committing a breach of duty or intended to commit one.

The court rejected the idea that awareness of exposure to a possible claim should be enough. It said that approach would create serious practical problems and could leave businesses and professionals exposed to stale claims for an indefinite period whenever they knowingly took commercial or professional risks.

This part of the judgment matters because it limits how far section 32(2) can be stretched. So while section 32(1)(b) was interpreted in a straightforward way, section 32(2) was kept narrower. Businesses should not read the case as abolishing limitation defences whenever there was risk-taking or uncertainty about the law.

This case is about PPI and consumer credit, but the practical lesson is wider. Many businesses assume that once six years have passed, an old customer issue is effectively over. This decision shows that assumption can fail where the business deliberately kept back a fact that the customer needed in order to bring a claim.

The court was not saying every omission counts as concealment. The hidden fact must be relevant to the customer’s right of action. In this case, the existence and amount of the commission were central because Mrs Potter could not plead the unfair relationship claim without them.

The judgment is especially relevant where a business uses commissions, referral payments, retained margins, add-on products or layered pricing. If the business has consciously decided not to tell customers about a commercially important feature, that may affect limitation years later.

It also matters that the court separated two ideas that businesses often run together. One is whether there was a legal duty to disclose. The other is whether the business deliberately concealed a relevant fact. Under section 32(1)(b), those are not the same question.

For owners and managers, the practical risk is often created long before any complaint arrives. Product design, pricing decisions, standard forms, sales scripts and complaint responses can all show whether non-disclosure was accidental or built into the model. If it was built in, that may become powerful evidence later.

For business owners, the practical question is not only what the contract says. It is also what the overall sales process leaves unsaid. Courts can look at standard forms, scripts, online journeys, staff instructions and complaint responses when deciding whether non-disclosure was a conscious business choice.

If a pricing feature, commission structure or incentive was discussed internally and intentionally left out of customer communications, that may become important evidence. The Supreme Court’s reasoning shows why. Deliberate concealment can be established by a conscious decision not to disclose a relevant fact.

Good records also matter. If a complaint arrives years later, the business may need to show what was disclosed, when it was disclosed and whether the customer could reasonably have discovered the issue earlier. Weak records make that harder.

This is particularly important for legacy products. A business may no longer sell the product, the staff may have moved on and the systems may have changed. But if the original sales model depended on keeping a central commercial fact from customers, the risk may survive long after the product line has closed.

The dates help explain why limitation was so important. The original agreement was made in 2006 and ended in 2010, but proceedings were not issued until late 2018. Without section 32, the lender’s limitation defence would have been a major obstacle.

The Supreme Court gave judgment on 15 November 2023. It dismissed the appeal and confirmed that section 32(1)(b) postponed the limitation period on these facts.

The case does not mean every old complaint can avoid limitation. The concealed fact must be relevant to the claim, and the concealment must be deliberate. The court’s reasoning was tied to a very large undisclosed commission that Mrs Potter needed to know about before she could properly plead her unfair relationship claim.

It also does not mean that recklessness is enough across the board. The Supreme Court drew a clear distinction between section 32(1)(b) and section 32(2). Businesses should therefore be careful not to over-read the judgment in either direction. It strengthens claimants on deliberate concealment, but it also keeps a tighter boundary around deliberate breach of duty.

For many businesses, the most useful response is operational. Ask what important facts your business knows, whether customers are clearly told about them, and whether your records would let you prove that later. That is often where limitation disputes are won or lost.