The headliners in the recent Court of Appeal Potter judgment (a win for PPI2 claimants and the Plevin litigators and CMCs representing them) are powerful and many. The judgment is also expected to impact other credit product claims

Justice for thousands of individuals with an unfair relationship claim, for example, those who have been ‘Plevined’[1]  and relying on Section 32 of the Limitation Act are more secure after a claimant win in the recent judgment on the Canada Square Operations Limited v Beverley Potter[2] appeal (handed down on 11 March 2021).

The judgement was a unanimous one between the Court of Appeal judges (Sir Julian Flaux, Chancellor of the High Court, Lord Justice Males and Lady Justice Rose DBE), with significant and powerful statements from Lord Justice Males and Lady Justice Rose DBE – the latter of whom will become a Supreme Court judge later this year, offering additional weight and potency to the decision.

The recent decision extends access to justice for individuals who may have a PPI 2 / claim through Plevin – even if the original credit agreement ended beyond the standard six-year limitation period.

Matthew Gwynne, SpectraLegal Finance, a pioneer of Plevin Litigation funding, said:

“This is fantastic news, with judgment coming much sooner than we thought – and with incredible clarity and conviction from the judges.”

Males LJ was powerfully clear to the point, saying that in Potter’s case, the decision of the bank – at a senior level – to hide the inflated commission levels was ‘plainly deliberate’. He said:

“It is obvious that a decision was made at a senior level within the bank that the extraordinary level of commission should not be disclosed to customers’ that salesmen and account managers were instructed accordingly; that documentation was prepared in a way which ensured that there was no mention of commission, let alone its amount; that the bank knew that disclosure of the commission would cause enormous customer dissatisfaction (and, in the case of new business, would mean that the customer would be unlikely to proceed); and that the bank’s decision not to disclose was made in order to safeguard this very lucrative business. Any other view defies common sense.”

LJ Rose DBE, said:

“The obligations to act fairly imposed on Canada Square by section 140A were sufficient to mean that their failure to disclose the commission amounted to a concealment of that commission within the meaning of section 32(1)(b).”

She explained that there were ‘plenty of warning signs’ that this would be unfair:

“There were plenty of warning signs that lead inevitably to the inference that Canada Square must have appreciated that if they decided not to tell Mrs Potter that the PPI policy for which they were charging her £3,834 was in fact valued by the insurer at £182.50, there was a risk at least after April 2008 that the credit relationship between them would be regarded as unfair.  Similarly, they must have realised that there was a risk that they ought to disclose the commission to her because to do otherwise would conceal from her a fact that was relevant to her right of action against them under section 140A.”

‘Because everyone else was doing it’, is not an excuse

Rose LJ stated at para 159 that failing to disclose the level of commission fees ‘because everyone was doing it represents a massive failure from the point of view of consumers’. She said:

“In my judgment, any comfort that Canada Square might have drawn from the fact that other creditors were doing the same must have been dispelled at the latest on the publication of the Competition Commission Report, even if not by the FSA 2007 Review and the reference by the OFT of the market to the CC for investigation.  It was precisely because the practices criticised were so ubiquitous that the CC found that there had been a serious market failure from the point of view of consumers.”

“I can see no reason why a reasonable person, apprehending the risk that Canada Square must have apprehended, would have decided not to disclose the commission to Mrs Potter.”

Males LJ added:

“The answer to the question whether there was deliberate concealment is then obvious.”

Clear directions to county courts

Males LJ added even more emphasis, offering powerful direction and a clear message to the county courts, when he said:

“This simple approach ought to be sufficient to enable us to decide that the appeal should be dismissed by reason of the Respondent’s Notice and (even more importantly) to enable judges in the county court to apply section 32 in this kind of case without undue complexity.”

On Section 32

On the use of Section 32, Males LJ noted the complexity of the use of S32 in unfair commission claims, and stated:

“In my view the law concerning section 32(1)(b) has got itself into a rather unsatisfactory state. The cases have increasingly moved away from a focus on the language of the subsection.”

“The bank went to considerable lengths to ensure that the claimant would not know about the commission… we are bound by (at least) The Kriti Palm and must do the best we can with the subsection as it has been interpreted in the cases which are binding upon us. It is on that basis that I agree with the judgment of Rose LJ.’

Matthew Gwynne said:

“The Potter decision has the potential to reach into other credit product markets and will therefore have a far reaching impact for banks. It may well be this and the lack of clarity concerning S32 that sends Potter to the Supreme Court.”

Impact on other credit product claims

As the industry expected, the judgement will impact other credit product claims. An acknowledgement of this came from LJ Males, who said:

“Henderson LJ held there that new contractual documents should be admitted in evidence in part because the case before the court was a lead case in wider litigation so that “it is of particular importance that the facts should be investigated as fully as possible in relation to the sample transactions on which the [tribunal] was asked to rule”: [42].  I consider that the same reason applies here, since it is unlikely that Canada Square are pursuing this appeal for the sake of the £7,953 they may owe to Mrs Potter.”

We’ll soon find out if the case heads to the Supreme Court but for now, Plevin litigators and CMCs hope the clarity and powerful statements within the Potter judgment will help county courts decide make confident and quick decisions on many thousands of PPI 2 cases across the UK.

Gwynne added:

“Our advice remains for CMCs and Plevin Litigators to continue the momentum with their PPI 2 claims and talk to us about funding these cases and to access the insight and tactics shared in our Plevin Forum network.”

To view the full judgment, handed down on 11 March 2021, click here.

[1] In Potter v Canada Square, the Lender [Canada Square Operations Ltd, formerly Egg Banking plc] accepted that the non-disclosure of commission caused unfairness in the relationship; however, it defended the claim on the basis that it was issued outside the widely accepted six-year limitation period.

Mrs Potter’s legal team invoked Section 32 of the Limitation Act 1980, which extends the limitation period due to the deliberate concealment of commission levels by the lender.

[2] Canada Square Operations Limited v Beverley Potter [2020] EWHC 672 (QB)