At the time of writing, the UK Supreme Court judgment in Canada Square Operations Ltd v Potter 2021/0139 (‘Potter’) is awaited; the appeal was heard in June 2022.
In the same month, the Court of Appeal handed down judgment in Gemalto Holding BV & Ors v Infineon Technologies Ag & Ors [2022] EWCA Civ 782 (‘Gemalto’). Both cases concern the application of section 32 of the Limitation Act 1980. Section 32(1) has the effect of postponing the start of the limitation period until the claimant has discovered, or could with reasonable diligence have discovered, the fraud on which the claim is based, the deliberate concealment of a fact relevant to their right of action, or a mistake, where the claim is for relief from the consequences thereof.
The Supreme Court in Potter is being asked to decide the meaning of 'deliberate' under s32 - is recklessness sufficient to be deliberate, or is actual knowledge required? The Court is also deciding what 'conceal' means in this provision - does it require the defendant to have breached a legal duty to disclose?
The Court of Appeal in Gemalto considered what the correct formulation of the test under this section was. The Court further considered whether the test for fraud, deliberate concealment and mistake - contained within ss32(1)(a)-(c) respectively - was the same or not.
The first part of this two-part write-up will consider the ratio in the Gemalto case and the appropriate test to be applied in cases involving s32(1)(b).
The second instalment will provide focused analysis of the particular significance of the decision to claims in which an unfair relationship under the Consumer Credit Act 1974 is alleged. Those claims often arise from Payment Protection Insurance (PPI) and undisclosed commission paid to the creditor out of the insurance premium payments. A common argument by claimants in such cases is that they can avail themselves of the postponing provision in s32(1)(b) which means they have brought their case in time.
THE FII TEST
The Court in Gemalto followed the reasoning of the UK Supreme Court in Test Claimants in the Franked Investment Income Group Litigation v Revenue and Customs Commissioners [2020] UKSC 47, from which emerged the ‘FII test’. The Court was on that occasion considering s32(1)(c) in the context of a mistake of law. Gemalto is authority that the ‘FII test’ is applicable to cases involving deliberate concealment under s32(1)(b), not just to mistake under s32(1)(c).
The FII test is that time begins to run from when the claimant(s) knew, or could with reasonable diligence have known, that they had a "worthwhile" claim. The claimants had to have sufficient knowledge to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. To formulate the test in another way, time starts to run "when the claimant discovers or could with reasonable diligence discover the [fraud, concealment or mistake] in the sense of recognising that a worthwhile claim arises".
STATEMENT OF CLAIM TESTThe rival test to the FII test was the ‘statement of claim’ test. Under this test, time begins to run from when the claimants obtained, or could with reasonable diligence have obtained, knowledge allowing them to plead a claim that was not liable to be struck out as unarguable or lacking a sufficient evidential basis.
The defendants had partaken in a cartel relating to the supply of smart card chips and an infringement decision to this effect had been adopted by the European Commission in September 2014. The claimants manufactured smart cards and had bought these chips, or otherwise had a derivative claim resulting from such purchases. In April 2013 the Commission had issued a press release announcing it had sent a ‘statement of objections’ to the suspected participants in the cartel. The claim had been issued in July 2019, more than 6 years after the statement of objections, but within 6 years of the infringement decision.
At first instance in Gemalto, the Judge had applied the statement of claim test. She acknowledged that the Statement of Clam test might in some cases allow time to start to run later than the FII test. Whilst it was common ground between the parties that there had been deliberate concealment within the meaning of s32(1)(b), one of the issues was the date from which time began to run. The Judge had held that time began to run from when the press release announcing the statement of objections was published in April 2013 and therefore held the claim to be time-barred.
THE COURT OF APPEAL DECISION
The Court of Appeal agreed with the result, dismissing the appeal, but held that the correct test to apply in cases of deliberate concealment under s32(1)(b) was the FII test. The Court noted that often the result would not differ whichever test was applied. Sir Geoffrey Vos MR, delivering the judgment, held that a proper account had to be taken of the reasoning of the Supreme Court in FII, particularly at paragraphs [192-193] of the FII judgment.
The Court of Appeal held that the FII test applies to all three scenarios under s32(1) and that the proviso to s32(1) had to be construed consistently across all of them. The test of a ‘worthwhile claim’ must be applied with common sense. In a deliberate concealment case therefore, time begins to run from when the claimant recognised that they had a worthwhile claim (or could with reasonable diligence have done so). The reasoning of the Supreme Court regarding the rationale of the postponement provision was endorsed, namely that its purpose was to ensure a claimant was not disadvantaged by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake.
Paragraph 50 of the judgment includes the following: "It makes no sense to say that the test for whether the limitation period has begun to run is when the claimant recognises that it has a worthwhile claim, and then to say that it does not have a worthwhile claim when it knows there may have been a cartel, but did not know, for example, the period during which the cartel operated. The formulation for the necessary knowledge is "knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ".
Applying the FII test, the Court held that a worthwhile claim arose ‘when a reasonable person could have a reasonable belief that there had been a cartel. The claimants had a worthwhile claim at the end of April 2013, for which they could plead a cartel ‘in or around 2003-2006’.' Such a claim would not have been susceptible to being struck out. It was not necessary to know either the precise period during which the cartel operated, nor was it necessary to know that the claim was likely to succeed for time to begin running.
In the next part of this write-up, the application of the decision to ‘unfair relationship’ claims will be considered.