Craig Leigh utilises Section 32 of the Limitation Act 1980 to successfully postpone limitation

Craig was instructed on behalf of a claimant bringing a claim against a defendant, a well-known provider of consumer finance, regarding undisclosed commissions relating to a payment protection insurance policy (“PPI”) taken out by her in conjunction with a credit agreement.

The claimants credit agreement commenced in October 1999 and at the same time she took out PPI. The PPI was cancelled in February 2014 with the credit agreement itself coming to an end in August 2014. Unknown to the claimant the defendant was in receipt of commission payments in relation to the PPI which for the period between January 2000 and May 2010 ranged from 59.99% to 70% of the cost of the PPI, before falling to between 38% and 50% during the period from May 2010 to conclusion of the PPI in February 2014. It was the claimant’s case that she was unaware of the payment of commission until the summer of 2019, shortly before the Financial Conduct Authority’s (“FCA”) PPI deadline.

Proceedings seeking a declaration of unfairness and redress under sections 140A and 140B of the Consumer Credit Act 1974 (“CCA”) were issued by the claimant in November 2021.

Pursuing the case to trial, the primarily alleged that the claimant had brought her claim out of time relying on the recent Court of Appeal judgment in Smith v The Royal Bank of Scotland Plc [2021] EWCA Civ 1832. In doing so, the defendant argued that the payment of commission had not been deliberately concealed and, even if the court found that it had, a reasonably diligent investigation by the claimant would have uncovered the payment of commission long before she took steps to bring her claim given wide-ranging publicity surrounding PPI and commissions. In addition, the defendant alleged that the relationship between the claimant and the defendant was not unfair, and to the extent that the court found to the contrary, the claimant should only be awarded redress in accordance with the FCA’s DISP redress rules.

It was conceded on behalf of the claimant that her claim was statute barred if she was unable to bring herself within section 32 of the Limitation Act 1980. However, Craig was successful in persuading the court that on the evidence available to it the claimant could, in fact, do just that. 

In relation to the issue of deliberate concealment, Craig argued that the defendant had adduced no evidence in relation to its policy making at the time of the commission arrangements being agreed and payments being received. Therefore, it was submitted that the court should follow the decision in Canada Square Operations Ltd v Potter [2021] EWCA Civ 339 and hold that the payment of commission in the claimant’s case was deliberately concealed.

Regarding the issue of reasonable diligence, Craig submitted that a “trigger event” was required to set in motion investigations by a reasonably diligent litigant relying on the judgment of the Court of Appeal in DSG Retail Limited v Mastercard Inc [2020] EWCA Civ 671. On the evidence as provided by the claimant it was submitted on her behalf that the trigger event did not occur until July 2019 when she signed up to money saving tips through moneysavingexpert.com and received an email from it which included content about PPI and commissions paid to financial institutions. 

Finding in favour of the claimant, the court concluded that the commencement of the limitation period in relation to her claim had been postponed until 1 July 2019 as the payment of commission had been deliberately concealed by the defendant and the claimant could not have embarked upon investigations with a view to issuing her claim until, at the earliest, 1 July 2019.

Turning to the remaining issues of unfairness and quantum, Craig was successful in arguing that not only was receipt by the defendant of commission payments ranging from 59.99% to 70% unfair but unfairness persisted during the period when commission payments ranged from 38%-50% of the PPI as the Supreme Court decision in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 was careful not to set the “tipping point” and the FCA’s own assessment of the tipping point being 50% was in no way binding on the court. The court accepted that the mischief in the case was the claimant being kept in ignorance regarding the receipt by the defendant of commissions which, for a large period, made up a substantial proportion of the cost of the PPI.  

Similarly, the court was not persuaded that it was in any way bound to follow, or should follow, the FCA’s DISP redress methodology of awarding just the commission which reflected the payment in excess of its 50% tipping point. Accordingly, the court made an order awarding to the claimant the entirety of the commission payments received by the defendant. The court declined to make an order rescinding the PPI entirely as it concluded that the evidence given by the claimant, whilst credible, was influenced by what she now knew and she had derived some benefit, i.e. peace of mind, as a result of the policies existence. 

In addition to an award of redress under the CCA, the claimant was awarded her fixed costs as the claim had been litigated on the small claims track.