Concealment stops time-bar running

LAW REPORT: 9 MAY 1995

Sheldon and others v RHM Outhwaite (Underwriting Agencies) Ltd and others.

House of Lords (Lord Keith of Kinkel, Lord Browne-Wilkinson, Lord Mustill, Lord Lloyd of Berwick and Lord Nicholls of Birkenhead).

4 May 1995.

The deliberate concealment of a cause of action which occurred after accrual of the cause of action postponed the running of the limitation period for the action within section 32(1)(b) of the Limitation Act 1980.

The House of Lords (Lord Mustill and Lord Lloyd dissenting) allowed an appeal by the plaintiffs and restored Mr Justice Saville's preliminary ruling that the plaintiffs could rely on section 32(1)(b) of the Limitation Act 1980 to overcome a statutory time bar.

Section 32(1)(b) of the Limitation Act 1980 provides: "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 plaintiffs, Lloyd's names, issued a writ in April 1992 against the defendants relating to acts done in 1982.

The plaintiffs claimed that the action was not defeated by the six-year limitation period prescribed by the 1980 Act as they could show acts of deliberate concealment which occurred after 1982 and which prevented the limitation period from running within section 32(1)(b).

The defendants argued that the deliberate concealment could not operate to postpone the running of a limitation period which had already begun and the deliberate concealment had to occur at the outset when the cause of action would have accrued.

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

LORD KEITH said that the ordinary time limit of six years given in section 2 of the 1980 was in Part I of the Act was subject to Part II, which included section 32. It was clear that the time limit was excluded in the situation where the concealment did not take place until after the accrual of the cause of action. The objection that a concealment taking place more than six years after accrual of the cause of action would bring section 32(1) into play was not realistic. It was not conceivable that a potential defendant would set out to conceal facts relevant to a cause of action when more than six years had elapsed since its accrual.

LORD BROWN-WILKINSON said that section 32 was not ambiguous. On the plain meaning of the words any deliberate concealment of relevant facts fell within section 32(1)(b) with the consequence that time did not start to run until the concealment was discovered. The onus lay on the defendants to show a compelling reason to limit the generality of the words used. Far from there being any such compelling reason, the defendants' construction would lead to an unfair result that the defendants would be entitled to benefit from their own alleged unconscionable behaviour by concealing the facts relevant to the plaintiffs' cause of action.

LORD NICHOLLS said that a distinction between initial concealment and subsequent concealment lacked all rhyme and reason. If initial concealment should stop time running, so equally should subsequent concealment. It was also absurd that in the case of subsequent concealment, the clock was turned back to zero even if the defendant had already acquired a limitation defence before the concealment took place. Forced to choose between two unattractive alternatives, the views of Lord Keith and Lord Browne-Wilkinson were preferred.

LORD LLOYD, dissenting, said if Parliament had intended to cover subsequent concealment, there were obvious ways in which it could have been done. Looking at the words of section 32(1)(b), it seemed clear that Parliament did not have subsequent concealment in mind.

LORD MUSTILL, dissenting, agreed with Lord Lloyd.

Ying Hui Tan, Barrister