COUNSEL: Barbara Dohmann Q.C. and Tom Beazley for the plaintiffs.

Ian Hunter Q.C., Jeffrey Gruder and Colin Edelman for the defendants.

 

SOLICITORS: Norton Rose; Denton Hall; Lovell White Durrant.

 

JUDGE: Saville J.

 

DATES: 1993 Oct. 18; 20

 

Cur. adv. vult.

 

20 October. SAVILLE J. read the following judgment. The plaintiff Lloyd’s names in these proceedings were underwriting members of Syndicates 317 and 661, whose central allegation is that the managers of those syndicates failed properly to perform their responsibilities in regard to the writing and reinsuring of a number of “run off” contracts in 1981 and 1982. The writ was issed in April 1992 and the points of claim served later that year. In addition to joining issue on the substantive allegations in this pleading, the defendants have raised a plea of limitation. In points of reply the plaintiffs seek to rely upon the “deliberate concealment” provisions of section 32 of the Limitation Act 1980 as an answer to the plea of limitation. The defendants now seek to strike out the relevant paragraphs of the points of reply on the grounds that the facts and matters pleaded do not bring the matter within section 32 of the Act.

 

The submission made by the defendants is that section 32 of the Act only applies to a deliberate concealment that occurs at the time when the claimant’s cause of action arises and not to any later concealment. In the present case it is common ground that some at least of the plaintiffs’ pleaded rights of action arose before the end of 1982, whereas the facts and matters alleged by the plaintiffs to amount to deliberate concealment all occurred after the beginning of 1984.

 

Section 32 of the Act of 1980, as amended by section 2(2) of the Latent Damage Act 1986 and section 6(6) and Schedule 1, paragraph 5 of the Consumer Protection Act 1987 provides:

 

“(1) Subject to subsections (3) and (4A) below, 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 [*756] 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. References in this subsection to the defendant include references to the defendant’s agent and to any person through whom the defendant claims and his agent. (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. (3) Nothing in this section shall enable any action - (a) to recover, or recover the value of, any property; or (b) to enforce any charge against, or set aside any transaction affecting, any property; to be brought against the purchaser of the property or any person claiming through him in any case where the property has been purchased for valuable consideration by an innocent third party since the fraud or concealment or (as the case may be) the transaction in which the mistake was made took place. (4) A purchaser is an innocent third party for the purposes of this section - (a) in the case of fraud or concealment of any fact relevant to the plaintiff’s right of action, if he was not a party to the fraud or (as the case may be) to the concealment of that fact and did not at the time of the purchase know or have reason to believe that the fraud or concealment had taken place; and (b) in the case of mistake, if he did not at the time of the purchase know or have reason to believe that the mistake had been made. (4A) Subsection (1) above shall not apply in relation to the time limit prescribed by section 11A(3) of this Act or in relation to that time limit as applied by virtue of section 12(1) of this Act. (5) Sections 14A and 14B of this Act shall not apply to any action to which subsection (1)(b) above applies (and accordingly the period of limitation referred to in that subsection, in any case to which either of those sections would otherwise apply, is the period applicable under section 2 of this Act).”

 

In support of the defendant’s submission, Mr. Hunter relied upon the fact that the section is expressed to deal with “postponement” of the limitation period, the fact that the section provides that the limitation period “shall not begin to run” until the concealment is discovered or should have been discovered, and the fact that as a matter of general principle once a limitation period has begun to run, then it continues without interruption. In these circumstances Mr. Hunter submitted that the words of the section were wholly inapt to cover a case where a right of action had arisen with a later deliberate concealment. In such a case the limitation period would start to run under the provisions of Part I of the Act of 1980. If it had been intended to cover such a case, the legislature would not only have used words such as “suspension” or “interruption” instead of or in addition to “postponement” but would also have hardly confined itself to stipulating that the limitation period would not begin to run, since ex hypothesi the case to be covered would be one where on any view the period had begun to run. Furthermore, Mr. Hunter submitted that his construction fitted much better with the other two cases dealt with in the section, namely fraud and mistake, where it is clear that the matters preventing time from beginning to run had to be contemporaneous with (as well as part of) the right of action. [*757]

 

I am not persuaded by this argument for the following reasons. In the first place it is, as I understand it, common ground that the expression “deliberately concealed” in section 32 was used in place of the expression “concealed by the fraud” found in section 26 of the Limitation Act 1939, because the case law had made clear that “fraud” in fact encompassed any conduct which could be categorised as unconscionable and which had the effect of concealing the right of action of the plaintiff. In those cases, for example Beaman v. A.R.T.S. Ltd. [1949] 1 K.B. 550, Kitchen v. Royal Air Force Association [1958] 1 W.L.R. 563 and King v. Victor Parsons & Co. [1973] 1 W.L.R. 29, it is clear that the Court of Appeal were proceeding at least upon the assumption that unconscionable conduct after the wrongdoing giving rise to the right of action could fall within the “concealed by the fraud” provisions of the Act of 1939. Indeed the debate was rather the other way round, namely whether in addition the nature of the wrongdoing giving rise to the cause of action itself or the circumstances in which the wrongdoing took place could also amount (without proof of actual deceit or the like) to concealment within the meaning of the then statutory provision. Furthermore, it seems to me that the Kitchen decision [1958] 1 W.L.R. 563 is an example of a case where subsequent concealment was actually held to preclude reliance on limitation. Mr. Hunter submitted that this was because (apparently) the point was not argued, but even if this is so, it seems to me that these authorities contain authoritative guidance on the point. The “concealed by the fraud” provisions were designed (albeit perhaps not very well) to reflect the pre-existing principles of equity which in turn, as it seems to me, did apply to cases where subsequent conduct concealed the plaintiff’s rights: see, for example, Bulli Coal Mining v. Osborne [1899] A.C. 351, 363-364. Thus it is perhaps hardly surprising that in these cases no one put forward the present argument.

 

In the second place, there is nothing to suggest that the Act of 1980 was designed to cut down, as opposed to clarify, the previous width of what is now described as deliberate concealment, nor indeed did Mr. Hunter suggest that this was the case, though of course his submission was that the previous law was that which he contended section 32 carried into effect.

 

In the third place, I do not accept Mr. Hunter’s analysis of the words used in section 32. Part I of the Act of 1980 sets out what it describes as the “ordinary” time limits but makes them subject to extension or exclusion in accordance with Part II, where section 32 is to be found. If there is a wrongdoing followed by deliberate concealment, then the ordinary time limit is extended or excluded so that the period runs from the date when the concealment is or ought to have been discovered. Mr. Hunter submitted that this would involve the proposition that at any time (or at least up to the expiry of the ordinary period running from the date of the wrongdoing) a deliberate concealment would mean that the time would start again and run for the full period from when the concealment was or ought to have been discovered. This is so, but I do not find it surprising or unacceptable. It seems to me that deliberate concealment can only operate in cases where the plaintiff is unaware of the fact or facts in question relevant to the right of action, for otherwise, ex hypothesi, there could be no concealment. In such cases, at any time up to the expiry of the ordinary period, unconscionable behaviour concealing those facts will have the effect of precluding or at least discouraging the plaintiff from pursuing an existing right of action. In [*758] other words, as time goes by the mischief which equity and now the statute seeks to remedy does not reduce. As to a case where the concealment occurs after the ordinary period has expired, my view is that deliberate concealment could not be called in aid, at least so as to enable the plaintiff to mount an effective action, since by that stage the plaintiff has already lost the remedy of the right to sue, so that the concealment has no deleterious effect and is thus hardly unconscionable.

 

Finally, I am not persuaded that the so-called general principle that once time starts to run it runs without interruption is of any assistance. To my mind reliance upon such a principle comes close to begging the question, which is simply whether section 32 does exclude or extend the ordinary time limits when there has been deliberate concealment after the right of action has arisen. In addition I should record that I did not find any assistance in comparing section 32 with other sections of the Act of 1980.

 

For these reason I must refuse the defendants’ application. It remains to say that for these same reasons I must respectfully disagree with the contrary view on subsequent unconscionable behaviour expressed obiter by Sir Robert Megarry V.-C. in Tito v. Waddell (No. 2) [1977] Ch. 106, 245.

 

In conclusion I should make clear that nothing in this judgment goes to the question whether or not any of the facts and matters relied upon by the plaintiffs would, if established, amount to deliberate concealment within the meaning of section 32 of the Act of 1980.

 

Application refused.