Law Report: Bar unaffected by concealment: Sheldon and others v RHM Outhwaite (Underwriting Agencies) Ltd and others; Court of Appeal (Sir Thomas Bingham, Master of the Rolls, Lord Justice Staughton and Lord Justice Kennedy), 30 June 1994.

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If deliberate concealment of a cause of action occurred after the cause of action had arisen, section 32(1)(b) of the Limitation Act 1980 does not suspend or postpone the running of the limitation period until the discovery of the concealment because the words of the subsection do not operate to interrupt a limitation period which has already begun to run.

The Court of Appeal (Lord Justice Staughton dissenting) allowed an appeal by the defendants from Mr Justice Saville's preliminary ruling that the plaintiffs could rely on section 32(1)9b) of the Limitation Act 1980 to overcome a statutory time bar.

The plaintiffs, Lloyd's names on syndicates 317/661 managed by the first defendant, complained about acts done or not done in 1982 by the first defendant and other defendants who were members' agents. The plaintiffs' writ was not issued until April 1992.

Their claim would be defeated by the six year limitation period prescribed by the Limitation Act 1980 unless the plaintiffs could show that deliberate concealment within section 32(1)(b) occurred preventing the limitation period from running.

The acts of concealment were alleged to have occurred over a year after the acts complained of. On the wording of section 32(1)(b), which provides that 'where . . . any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant . . . the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment . . .', the defendants argued that the deliberate concealment could not operate to postpone the running of the limitation period where it had already begun to run because the subsection imported no notion of interruption or re-commencement of the limitation period and that the deliberate concealment had to occur at the outset when the cause of action would otherwise have accrued.

The plaintiffs argued that if later concealment had no effect on the running of time, the subsection would be deprived of much practical substance, since, in cases of negligent breaches, concealment would almost always occur some time after the breach when the error was appreciated and relied on the equitable exception to the old statutory limitation rule which rested on the principle that a defendant whose unconscionable conduct had denied the plaintiff the opportunity to sue in time should not in conscience be permitted to plead the statute.

Ian Hunter QC and Colin Edelman (Denton Hall) for the first defendant; Ian Hunter QC and Jeffrey Gruder (Oswald Hickson Collier & Co) for the other defendants; Barbara Dohmann QC and Thomas Beazley (Norton Rose) for the plaintiffs.

SIR THOMAS BINGHAM MR said that the issue could not safely be decided on considerations of practical justice. If, in the seventy-first month following breach of a simple contract, the contract breaker concealed the breach from the potential claimant who was unaware of it, it could fairly be said to be absurd if the claimant then had another six years to sue from the date when he discovered the concealment.

But if, in the second month after a breach, the contract breaker concealed the breach, it would seem unjust that the claimant should be deprived of his opportunity to seek redress. Arguments of that kind cancelled each other out.

With considerable hesitation, his Lordship concluded that the plaintiffs' arguments should not prevail. The plaintiffs must bring themselves within an exception to the basic rule that after a period prescribed by statute, a plaintiff's claim was barred.

Had the draftsman of section 32 intended to provide that time elapsed between accrual of the cause of action and the defendant's concealment should be treated as if it had not elapsed, or that the limitation period should begin to run again following discovery of any concealment, he could have easily done so, and legislative models were to hand.

The plaintiff's construction of section 32 gained no support from consideration of its lineal statutory ancestors. A purposive construction was appropriate where the draftsman's purpose could be discerned, but was not a warrant for the judge to give the statute an effect which he felt the draftsman would have been well advised to give.

The Law Reform Committee 1977 did not allude to the problem of whether later concealment would prevent time beginning. The 1980 Act was in part based on its report.

Amendments to the 1980 Act, inserted by the Latent Damage Act 1986 and extending the limitation period, were intended to fill the unjust lacuna in the law in non-personal injury negligent advice claims arising from latent defects.

It would seem at least arguable that the plaintiffs could have relied on that statutory extension. The appeal would be allowed.

LORD JUSTICE STAUGHTON, dissenting, said that either solution to the problem in this appeal could give rise to absurdity. So it was not possible to assert with conviction that Parliament must have intended one solution rather than the other.

The purpose of the provision was that a man should not be allowed to take advantage of his own wrong. It was permissible to apply a purposive construction to the section, without doing any great violence to its wording.

His Lordship would read the section as providing that the period of limitation should not be treated as beginning to run until after the discovery of the fraud etc.

LORD JUSTICE KENNEDY concurred with Sir Thomas Bingham MR.