COUNSEL: Ian Hunter Q.C. and Colin Edelman for the first defendants.

Ian Hunter Q.C. and Jeffrey Gruder for other defendants.

Barbara Dohmann Q.C. and T. A. G. Beazley for the plaintiffs.

 

SOLICITORS: Denton Hall; Oswald Hickson, Collier & Co.; Norton Rose.

 

JUDGES: Sir Thomas Bingham M.R., Staughton and Kennedy L.JJ.

 

 

DATES: 1994 June 13, 14; 30

 

Interlocutory appeal from Saville J.

 

Suit for damages and/or equitable compensation for breach of the terms of underwriting agreements

 

Cur. adv. vult. [*1002]

 

30 June. The following judgments were handed down.

 

SIR THOMAS BINGHAM M.R. This appeal is against a preliminary ruling on an issue of law made by Saville J. [1994] 1 W.L.R. 754 in the Commercial Court on 20 October 1993. The issue he had to decide was whether the plaintiffs could rely on section 32(1)(b) of the Limitation Act 1980 to overcome a statutory bar otherwise applicable to their claim where the deliberate concealment which they allege occurred after their causes of action had arisen. The judge held that they could. The defendants challenge that ruling.

 

The plaintiffs were all Lloyd’s Names on syndicates 317/661 for the year 1982. Those syndicates were managed by the named defendant, R. H. M. Outhwaite (Underwriting Agencies) Ltd. The other defendants in the action were the plaintiffs’ members’ agents. The plaintiffs complain of acts done or not done on or before 1982. Their writ was not issued until April 1992. Thus their claim is defeated by the six-year limitation period prescribed by the Limitation Act 1980 on which the defendants rely, unless the plaintiffs can show that the running of the limitation period has been postponed under section 32(1)(b) of the Act.

 

There has been no investigation of the facts. The judge made clear that his judgment did not bear on the question whether any of the facts and matters pleaded by the plaintiffs would, if established, amount to deliberate concealment within the meaning of section 32. Like the judge, this court must approach the legal issue without regard to that question. What matters is that the earliest acts and omissions said to constitute deliberate concealment for purposes of section 32(1)(b) occurred over a year after the breach of contract or duty on which the plaintiffs’ claims are founded, and unless such deliberate concealment has the effect of preventing the limitation period beginning to run or suspending or postponing its running the plaintiffs’ actions are barred by sections 2 and 5 of the Act of 1980.

 

Section 32 of the Act of 1980

 

As amended in 1986 and 1987, section 32 of the Act now 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 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 purpose 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 [*1003] 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).”

 

It is subsection (1)(b) on which the plaintiffs rely. But the defendants argue that the language of subsection (1), in providing that the period of limitation shall not in the prescribed circumstances “begin to run,” contradicts the plaintiffs’ argument. In the case of an action based on fraud (subsection (1)(a)) or for relief from the consequences of a mistake (subsection (1)(c)) the limitation period will not begin to run at all until the fraud or mistake is or should be discovered. But in the case of a breach of contract or a damage-causing breach of duty, not accompanied by contemporaneous deliberate concealment of the cause of action from the plaintiff by the defendant, the limitation period will in the ordinary way begin to run. The defendants accordingly argue that deliberate concealment cannot, on the wording of the statute, operate to postpone the running of the limitation period in a case where it has already begun to run. Deliberate concealment will, they say, either occur at the outset, when the cause of action would otherwise accrue, in which event it will postpone the running of the limitation period until discovery (or imputed discovery) of the concealment, or it will have no effect at all, because the limitation period will already have begun to run and the subsection imports no notion of interruption or recommencement of the limitation period which has already begun to run. The defendants point to sections 29(5) and 34(5) of the Act of 1980 and to the Limitation (Enemies and War Prisoners) Act 1945 as examples of drafting techniques used where it was intended to suspend or interrupt the limitation period or cause time to start running again. No such technique, the defendants rightly contend, is to be found in section 32.

 

These are persuasive and compelling arguments. But the Act of 1980 followed 350 years during which questions of limitation have been intermittently addressed, and I do not think one can safely construe section 32(1)(b) in isolation from the developments which preceded it.

 

Previous history

 

The Limitation Act 1623 (21 Jac. 1, c. 16) laid down limitation periods for a wide range of civil claims. It admitted no exceptions, save in the case of minors, married women, persons of unsound mind, prisoners and those beyond the seas. The common law courts applied the statute, as they were [*1004] bound to do, even though it led to what might seem hard decisions: Prideaux v. Webber (1661) 1 Lev. 31; Rhodes v. Smethurst (1838) 4 M. & W. 42; Homfray v. Scroope (1849) 13 Q.B. 509. In the second of these cases Alderson B. expressly rejected the view, 4 M. & W. 42, 63, that the limitation period, once it had begun to run, could be interrupted:

 

“and unless that were so, great inconvenience would follow; for it would be very difficult, in almost every case, to ascertain whether the statute had or had not run, and we should be obliged to take a great many documents and statements, a great many beginnings and endings, and should have to add up those precise periods of time, out of which the six years would have to be made out; so that great inconvenience would result: and therefore it is better to apply the law as it as present stands; it being far better that a particular injury should be inflicted on one individual, than that great inconvenience should be applied to all the community.”

 

The severity and inflexibility of this statutory rule were mitigated by courts of equity to permit actions to proceed after expiry of the statutory limitation period where the plaintiffs’ cause of action was founded on or concealed by the fraud of the defendant. Booth v. Earl of Warrington (1714) 4 Bro. P.C. 163 is a case in which this rule was applied and it was held that the statute should not avail the dishonest defendant. It was felt to be against conscience that a defendant who had deceived the plaintiff should be able to rely on the statute to defeat the plaintiff’s claim: see Hovenden v. Lord Annesley (1806) 2 Sch. & Lef. 607, 634, per Lord Redesdale, Lord Chancellor of Ireland. The rule was also applied in cases such as Blair v. Bromley (1847) 2 Ph. 354 and Gibbs v. Guild (1881) 8 Q.B.D. 296; (1882) 9 Q.B.D. 59, but in the absence of fraudulent concealment the statutory bar applied, as in Armstrong v. Milburn (1885) 54 L.T. 247; (1886) 54 L.T. 723.

 

This equitable rule received some partial recognition in section 26 of the Real Property Limitation Act 1833 (3 & 4 Will. 4, c. 27), which enacted

 

“That in every case of a concealed fraud the right of any person to bring a suit in equity for the recovery of any land or rent of which he, or any person through whom he claims, may have been deprived by such fraud, shall be deemed to have first accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered; . . .”

 

The plaintiff relied on this provision in Willis v. Earl Howe [1893] 2 Ch. 545, but unsuccessfully. The defendant’s predecessor in title had entered into possession of the land in 1798. The court held that that entry, whether or not it was wrongful, was not fraudulent and had not been concealed. Time therefore started to run against the plaintiff and those through whom he claimed in 1798. Certain later acts of alleged deception were treated as irrelevant, since they did not deprive the plaintiff and those through whom he claimed of their interest. The decision turned on the construction of the section. In Thorne v. Heard [1894] 1 Ch. 599, 605 Lindley L.J. described section 26 as “legislative recognition and expression of previously well-settled principles in equity,” adding that “those principles were and are applicable to all kinds of property, and not to real property only,” but it may be doubted whether this is entirely correct (as [*1005] Lindley L.J. himself appears to have acknowledged in Betjemann v. Betjemann [1895] 2 Ch. 474, 479).

 

In Thorne v. Heard [1894] 1 Ch. 599 a trustee committed an innocent breach of trust in paying money to a solicitor who converted it and concealed his act from the plaintiff. It was plain that the solicitor could not enjoy the benefit of the statute in any claim against him, but the action was against the trustee and the question was whether the trustee could rely on the limitation defence given to him by section 8 of the Trustee Act 1888 (51 & 52 Vict. c. 59). It was argued on the trustee’s behalf that he was not party or privy to the solicitor’s fraud, and so was entitled to the benefit of the statute, and this argument prevailed. It is, however, apparent from observations of Lindley L.J., at pp. 603 and 605, and A. L. Smith L.J., at pp. 614-615, that they attached significance to the fact that the solicitor’s fraud and concealment took place after the cause of action against the trustee had already accrued. But this point does not seem to have been addressed in argument, and the authority of the case must in my view be limited.

 

In Bulli Coal Mining Co. v. Osborne [1899] A.C. 351 the appellants had fraudulently and furtively mined the respondents’ coal, to which (as they knew) they were not entitled. It was argued on their behalf that the equitable rule gave the respondents no protection, since the appellants had taken no steps to conceal their deliberate wrongdoing. The Judicial Committee of the Privy Council rejected this argument, declining to draw any distinction between furtiveness and deliberate concealment. The present question did not arise. In Lynn v. Bamber [1930] 2 K.B. 72 the plaintiff alleged both fraudulent misrepresentaton and fraudulent concealment, both of which pleas were held to be in principle good to defeat the statutory bar, and the acts relied on to defeat the statute may well have postdated the accrual of the original cause of action. The report of the case does not, however, throw much light on the alleged acts of concealment and in the event there was held to have been no fraud and no concealment, so the authority of this case also for present purposes is limited.

 

In 1934 the Law Revision Committee under the chairmanship of Lord Wright (and with a notably strong membership) was invited to consider various aspects of the law of limitation, including the scope of the rules on concealed fraud. The committee reported in 1936 (Cmd. 5334) and found that considerable doubt existed, in particular on the interrelationship of the equitable and common law rules. The committee concluded (on this aspect) (paragraph 22):

 

“We think that it is undesirable that this state of obscurity and uncertainty should continue particularly because the actions which are chiefly affected fall within the important category of actions to recover unliquidated damages for a breach of contract or a tort. We are of opinion that a defendant should not be permitted to set up lapse of time which is due to his fraudulent conduct. We desire, accordingly, to make the following recommendation: - (a) that in all cases to which the statutes of limitation apply or are applied by analogy, where a cause of action is founded on fraud, committed by the defendant or his agent, or some person through whom he claims, or where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent, or someone through whom he claims, the right of the plaintiff to sue shall be [*1006] deemed to have first accrued at the time when he discovered such fraud or could with reasonable diligence have discovered it: (b) that the above recommendation shall not apply to any bona fide purchaser for valuable consideration who has not assisted in the commission or concealment of such fraud and who, at the time that he made the purchase, did not know and had no reason to believe that any such fraud had been committed or any such fraudulent concealment had taken place.”

 

The committee did not address in any more specific way the present problem of fraudulent concealment postdating the breach of contract or duty relied on.

 

The committee’s recommendation was reflected in section 26 of the Limitation Act 1939 which began:

 

“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 his agent or of any person through whom he claims or his agent, or (b) the right of action is concealed by the fraud of any such person as aforesaid, 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 or the mistake, as the case may be, or could with reasonable diligence have discovered it: . . .”

 

There followed a proviso broadly to the same effect as section 32(3) of the Act of 1980.

 

The Court of Appeal had occasion to consider this section in Beaman v. A.R.T.S. Ltd. [1949] 1 K.B. 550. On the facts, the plaintiff’s cause of action in conversion arose and the defendant’s fraudulent concealment of that cause of action took place at the same time. The present issue did not therefore fall for decision. It is, however, evident from the judgment of Lord Greene M.R., particularly at p. 559, that he regarded “subsequent active concealment of a fraudulent nature” as enough to give the plaintiff the benefit of the statutory postponement. He seems to have regarded that as the paradigm case and to have asked himself whether contemporaneous fraudulent concealment had the same effect, concluding that it did.

 

The question arose more squarely in Kitchen v. Royal Air Force Association [1958] 1 W.L.R. 563. The plaintiff’s solicitors failed to issue a writ within the limitation period applicable to fatal accidents claims. Her cause of action against them accrued in May 1946. In October 1946 the alleged tortfeasor told the plaintiff’s solicitors it was willing to make (and in fact made) a payment for the benefit of the plaintiff, but the making of the payment was effectively concealed from her by the solicitors. The real issue in the case was whether what happened in October amounted to fraudulent concealment within the meaning of the section, and it was held that it did. But it seems that the court treated the concealment in October as ground for denying the solicitors’ claim to rely on the statute to bar the plaintiff’s claim based on her cause of action which had accrued in May. This is perhaps most explicit in the judgment of Parker L.J. who, agreeing with Lord Evershed M.R., said, at p. 576:

 

“That the solicitors were negligent towards the plaintiff in May of 1946 I have no doubt and for the reasons given by my Lord. Whether, however, by fraud they concealed the cause of action from the plaintiff is a matter upon which I have had considerable doubt. If [*1007] there was such a concealment it is to be found and to be found only, in my view, in the events of October 1946. On the whole, though with considerable hesitation, I have come to the same conclusion as my Lord and I would accept his judgment on this point.”

 

This plainly supports the plaintiffs’ argument. But the support is limited, since it does not appear that argument was directed to the point. This may have been because the non-disclosure in October, if properly regarded as concealment, was a further actionable breach of duty, and the damages recoverable for both breaches of duty were in principle the same. Counsel may well have thought it best to direct his argument to showing that there was no wrongful concealment in October, since if he lost on that it could not help him to succeed on the present point.

 

Applegate v. Moss [1971] 1 Q.B. 406 and King v. Victor Parsons & Co. [1973] 1 W.L.R. 29 both concerned defective building work knowingly carried out and covered up to prevent the defects being discovered for a long time. In each case there was held to have been concealment by fraud within the meaning of section 36.

 

In 1971 the Law Reform Committee were invited to reconsider the law relating to limitation. Their final report was published in 1977 (Cmnd. 6923). The committee were agreed that the postponement conferred by section 26 of the Act of 1939 should be retained, but advised that the section should be redrafted so as to eliminate the reference to fraud and so give effect to the thrust of the more recent cases. The majority of the committee were content to accept that there would be hard cases, not involving personal injuries, in which a plaintiff would be unable, through no fault of his own, to ascertain before the expiry of the limitation period that he had suffered damage (paragraph 2.35). A defendant who had not acted unconscionably was thought to be entitled to rely on the statutory defence of limitation, in the interest of certainty. The committee did not consider whether later concealment would prevent time beginning or continuing to run against an earlier cause of action, and made no mention of the observation of Sir Robert Megarry V.-C. in Tito v. Waddell (No. 2) [1977] Ch. 106, 245, 246 that if time had already begun to run, he did not think that a supervening fraudulent concealment would start time running again. This expression of opinion, obiter though it was, must of course command very considerable respect.

 

Section 32 of the Act of 1980, quoted above, gave effect to the spirit, although not the letter, of the Law Reform Committee’s recommendation: see paragraph 2.24 of the report. There, for the purposes of construing section 32, the relevant materials end. But it is perhaps relevant to record (irrelevantly for the purpose of construing section 32) how the law now stands.

 

In its Twenty-Fourth Report on Latent Damage (Cmnd. 9390) published in November 1984, the Law Reform Committee considered the law of limitation as it affected negligence cases involving latent defects outside the personal injury field. The committee were concerned about cases involving defective building or unsound professional advice in cases where there was no deliberate concealment but where the injured party might be unaware of the defective work or the unsound advice or the resulting damage for many years. The committee recommended (among other things) that in such cases the existing six-year limitation period should be subject to an extension which would allow a plaintiff three years from the date of discovery, or reasonable discoverability, of significant [*1008] damage (paragraph 4.9). There was to be a long-stop of 15 years (paragraph 4.13), but this was not to apply in cases of fraud, deliberate concealment or mistake (paragraph 4.20). Effect was given to these recommendations by the Latent Damage Act 1986, which inserted sections 14A and 14B into the Act of 1980. It is common ground between the parties to these appeals that section 14A, even if applicable to the plaintiffs’ claims, will not enable them to defeat the statutory bar pleaded by the defendants. To defeat the statutory bar they must show, as a matter of law, that they are entitled to rely on section 32(1)(b) of the Act of 1980.

 

The present appeal

 

I do not think the materials reviewed above yield a very clear answer to the problem raised by this case. Nor do I think that the issue can safely be decided on considerations of practical justice. If, in the seventy-first month following breach of a simple contract, the contract breaker conceals the breach from the potential claimant who is unaware of it, it can fairly be said to be absurd if the claimant then has another six years to sue from the date when he discovers or reasonably should discover the concealment. But if, in the second month after a breach of a simple contract, the contract breaker conceals the breach from the potential claimant who is unaware of it, it would seem unjust that the claimant should in effect be deprived, by the contract breaker, of his opportunity to seek redress. Arguments of this kind, as it seems to me, cancel each other out.

 

The strongest arguments advanced on behalf of the plaintiffs are, in my judgment, these. (1) The equitable exception to the old and unqualified statutory limitation rule 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 to defeat the plaintiff’s claim provided the claim were brought timeously once the plaintiff learned or should have learned of it. Given that a defendant cannot be said to conceal that of which the plaintiff is already aware, the plaintiffs’ construction better reflects this old and salutary equitable principle. The defendants’ construction, by contrast, would allow a defendant, to a greater or lesser extent, to reap the fruits of his own unconscionable conduct. (2) It seems clear that deliberate breaches of the Applegate v. Moss [1971] 1 Q.B. 406 and King v. Victor Parsons & Co. [1973] 1 W.L.R. 29 variety are now squarely covered by section 32(2) of the Act of 1980. That means that many, perhaps most, claims covered by section 32(1)(b) will be claims in negligence. But negligent breaches, not being deliberate, will almost always be breaches of which the defendant is, at the time, unaware. If, therefore, he takes steps to conceal the breach from the plaintiff, such concealment will almost always occur, in such a case, some time after the breach, when the defendant comes to appreciate his error and takes steps to cover it up. To hold that such later concealment has no effect on the running of time may be said to deprive the subsection of much practical substance.

 

With considerable hesitation, and after more than one change of opinion, I conclude (differing from the judge) that these arguments should not prevail. My reasons are these. (1) The basic rule is, and has since 1623 been, that after a period prescribed by statute (or applied by courts of equity following the statute) a plaintiff’s claim is barred. If these plaintiffs are to defeat the bar pleaded by the defendants they must bring themselves [*1009] within an exception to the basic rule. (2) Nothing in the language of section 32 of the Act of 1980 suggests that the draftsman intended to create the exception for which the plaintiffs contend. Had he 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 running of the limitation period should (notwithstanding any earlier running of time) begin again following discovery or reasonable discovery of any concealment, he could easily have done so, and legislative models were to hand. The inference must be that this was not an end he wished to achieve. (3) The plaintiffs’ construction of section 32 gains no support from consideration of its lineal statutory ancestors, section 26 of the Act of 1939 and section 26 of the Act of 1833. (4) A purposive construction is of course appropriate where the draftsman’s purpose can be discerned, but the pretext of purposive construction is not a warrant for the judge to give the statute an effect which, with the benefit of hindsight, he feels the draftsman would have been well advised to give it. Neither the Law Revision Committee in 1936 nor the Law Reform Committee alluded to this problem in their reports or made any recommendation concerning it. The Acts of 1939 and 1980 followed and were in part based on these reports. There is nothing to suggest the respective draftsmen had this target in their sights at all, and every reason to suppose that they did not. (5) In no reported case has it been held, following argument on the point, that supervening concealment entitles a plaintiff to rely on the statutory exception. In Thorne v. Heard [1894] 1 Ch. 599 the Court of Appeal appears to have thought, and perhaps held, that supervening concealment did not avail him. In Beaman’s case [1949] 1 K.B. 550 the Court of Appeal seems to have assumed, and in Kitchen’s case [1958] 1 W.L.R. 563 its decision may have rested on the view, that supervening concealment did avail him. That was not, however, the obiter opinion of Sir Robert Meggary V.-C. in Tito v. Waddell (No. 2) [1977] Ch. 106 and his was the most recent expression of opinon when the Act of 1980 was enacted. It cannot in my view be said that authority establishes the exception for which the plaintiffs contend, or even that the Act of 1980 was enacted against a settled background of law of which the draftsman must be taken to have been cognisant. (6) There was, in my opinion, an unjust lacuna in the law up to 1986, which allowed non-personal injury plaintiffs who could not rely on section 26 of the Act of 1939 or section 32 of the Act of 1980 to lose their cause of action before they knew they had it. That was a source of concern to some members of the Law Reform Committee in 1977 (see paragraph 2.36 of their report) and may well explain why, just before the Act of 1980 was passed, the committee was invited to consider further the limitation aspects of negligence claims arising from latent damage. The amendments made following the committee’s further report were plainly intended to fill this unjust lacuna by giving unwitting recipients of negligent and unsound advice an extended period in which to sue from the time of discovery (or reasonable discovery) that the advice was unsound. These later developments do in my view show that it would be unsafe to prefer the plaintiffs’ construction on the basis that the alternative would have involved a risk of unfairness. It did; and to some extent at least that was remedied. It would seem at least arguable that these plaintiffs could have relied on that statutory extension.

 

I would allow this appeal. [*1010]

 

STAUGHTON L.J. Either solution to the problem in this appeal can give rise to absurdity. Deliberate concealment might start in one case on the day after the cause of action and last for six years; in another, it might start only on the day before the action would have become time-barred, and then last for one day. If the argument for the underwriting agencies is right, the plaintiffs in the first case would get no extension; if the argument for the Names is right, the plaintiffs in the second would enjoy a total limitation period of 12 years. So it is not possible to assert with conviction that Parliament must have intended one solution rather than the other.

 

Against that background I turn first to the language of the section and other legislative material. Section 32(1) provides that “the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake . . .” That is not at first sight designed to cover the case where there has been no concealment until some time after the cause of action has arisen, so that the period of limitation has begun to run. It would have been more appropriate to use the language of section 29(5): “the right shall be treated as having accrued on and not before the date of the acknowledgement or payment.”

 

Nevertheless I do not regard the language of the section as an insuperable obstacle. It can, for example, be treated as providing that the period of limitation which the law regards as appropriate will be one beginning to run after discovery etc. In the Fifth Interim Report of the Law Revision Committee (1936)(Cmd. 5334), paragraph 13, it is said:

 

“in applying equitable remedies to cases of fraud or mistake, the period of limitation is not reckoned until the fraud or mistake is or could, with reasonable diligence, have been discovered.” (Emphasis added.)

 

Is that, in point of language, so different from the wording of section 32(1)?

 

In fact the Law Revision Committee recommended a solution which accords entirely with the argument for the Names in this case. They recommended, in paragraph 22, that

 

“in all cases to which the statutes of limitation apply or are applied by analogy, where a cause of action is founded on fraud, committed by the defendant or his agent, or some person through whom he claims, or where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent, or someone through whom he claims, the right of the plaintiff to sue shall be deemed to have first accrued at the time when he discovered such fraud or could with reasonable diligence have discovered it.”

 

Did Parliament intend to depart from that recommendation and produce a different result? Or was the wording of section 26 of the Limitation Act 1939, repeated (in this respect) in the Act of 1980, intended to give effect to that recommendation?

 

Turning to the numerous cases that were cited, I find only three of direct assistance. The first is Thorne v. Heard [1894] 1 Ch. 599. That case was concerned with a claim to recover the proceeds of sale of property subject to a second mortgage; the money had been misappropriated by the solicitor for the defendants, who were the first mortgagees. In answer to a plea that the claim was barred by lapse of time, the plaintiff relied on the equitable effect of fraud. This was held not to avail him for two reasons: [*1011] first, the fraud and its concealment occurred after the plaintiff’s cause of action had accrued; secondly, it was the fraud and concealment of the solicitor, and not of the defendants. That the first ground formed part of the reasoning for the decision is to my mind plain from the judgment of Lindley L.J., at p. 605, and also to some extent from that of A. L. Smith L.J., at p. 614.

 

It follows in my opinion that Saville J. was wrong to conclude [1994] 1 W.L.R. 754, 757, “pre-existing principles of equity . . . did apply to cases where subsequent conduct concealed the plaintiff’s rights” at all events if some interval of time occurred between the accrual of the cause of action and the subsequent conduct.

 

The second case which favours the underwriting agencies is the decision of Sir Robert Megarry V.-C. in Tito v. Waddell (No. 2) [1977] Ch. 106.

 

To a different effect is Kitchen v. Royal Air Force Association [1958] 1 W.L.R. 563. There the plaintiff claimed damages from her solicitors for negligence in the formulation and prosecution of a claim against an electricity company. The solicitors said that the action was time-barred, and the plaintiff in turn relied on fraudulent concealment.

 

It was held that the solicitors had been in breach of their duty to their client during the period from November or December 1945 to June or July 1946. Lord Evershed M.R. held, at p. 569, that there was no fraudulent concealment at that stage. But there was fraudulent concealment in October and November 1946, after the cause of action against the solicitors had arisen. According to Lord Evershed M.R., at p. 572, it was a concealment “of their having thrown away - and I use that word deliberately - any case which she might have possessed under the Fatal Accidents Acts in the previous May.” Parker L.J. said, at p. 576:

 

“That the solicitors were negligent towards the plaintiff in May of 1946 I have no doubt and for the reasons given by my Lord. Whether, however, by fraud they concealed the cause of action from the plaintiff is a matter upon which I have had considerable doubt. If there was such a concealment it is to be found and to be found only, in my view, in the events of October 1946. On the whole, though with considerable hesitation, I have come to the same conclusion as my Lord and I would accept his judgment on this point.”

 

That decision is plainly inconsistent with the view that concealed fraud, or deliberate concealment, is only relevant if it exists at the moment when the cause of action accrues. But it is said by Sir Robert Megarry V.-C. in Tito’s case [1977] Ch. 106, 245 that the point was not argued, and was decided sub silentio. It is true that it does not feature with any degree of clarity in what Lord Evershed M.R. described [1958] 1 W.L.R. 563, 567 as “three distinct points for our determination.” And if sub silentio means that the court did not say that it was deciding the point, then the description applies. But at the very least it can be said that the contrary view never occurred to, or at any rate seemed at all plausible to, Lord Evershed M.R., Parker and Sellers L.JJ., Mr. Patrick O’Connor or his junior.

 

I return to section 32(1) of the Limitation Act 1980. The purpose of the provision in question, as was said for example by Lord Coleridge C.J. in Gibbs v. Guild (1882) 9 Q.B.D. 59, 65, is that a man should not be allowed to take advantage of his own wrong. In my view it is permissible to apply a purposive construction to the section, without doing any great violence to its wording, rather than the “narrowly semantic approach” [*1012] criticised by Lord Diplock [See Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251, 280D.]. I would read the section as providing that the period of limitation shall not be treated as beginning to rununtil after discovery of the fraud etc. It is true that this does not exactly equate the plaintiff’s remedy with the extent of the wrong; he may well obtain a longer extension than he deserves. But Parliament, which used such a nice adjustment for arbitration proceedings in section 34(5), evidently thought it inappropriate in section 32(1) - perhaps because there might be uncertainty as to the date when deliberate concealment began.

 

Mr. Hunter for the underwriting agencies had a point on section 32(3). I am not sure that I fully understood it. But in any event it does not persuade me to adopt his interpretation of section 32(1). I would dismiss this appeal.

 

KENNEDY L.J

 

1. The issue which Saville J. had to consider in this case was whether reliance can be placed upon section 32(1)(b) of the Limitation Act 1980 where the alleged deliberate concealment relied upon occurred an appreciable time after the plaintiffs’ alleged causes of action arose.

 

2. The Act of 1980

 

Section 2 of the Act of 1980 provides that “an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued,” but by virtue of section 1(2) that ordinary time limit is subject to extension or exclusion in accordance with the provisions of Part II of the Act, and in Part II is to be found section 32(1) which, so far as relevant, provides:

 

“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 plaintiffs’ right of action has been 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 . . .”

 

Mr. Hunter, for the defendants, invited us to consider with care the words “the period of limitation shall not begin to run” because, he submits, they show that it is only concealment that takes place before in the normal course of events the period of limitation has begun to run which causes a postponement. Miss Dohmann, for the plaintiffs, submits that the wording of section 32(1) should not be so constrained. If after the cause of action has accrued and the period of limitation has begun to run a fact relevant to the plaintiff’s right of action is deliberately concealed from him by the defendant then not only does time cease to run against the plaintiff but the clock returns to zero, and time does not start to run again until the plaintiff has discovered the concealment or could with reasonable diligence have discovered it. And that is the position, she submits, even if at the time of concealment the statutory period of limitation had almost expired, and whether or not the plaintiff was in fact influenced by the act of concealment on the part of the defendant. So although if there is deliberate concealment by a defendant whenever it occurs a plaintiff will usually need the benefit of the statutory provision, the construction for which [*1013] Miss Dohmann contends can produce a strange result. A more equitable solution, as it seems to me, would be if the act of concealment were to stop the clock running until the plaintiff discovered it or could with reasonable diligence have done so, but as both sides concede that is not an interpretation which can possibly be given to the words of the statute. In my judgment if section 32(1) had to be considered in isolation this court should adopt the interpretation for which Mr. Hunter contends, because the words which he emphasises do postulate the period of limitation beginning to run for the first time. Other sections of the Act of 1980 do, as it seems to me, lend some support to Mr. Hunter’s main submission, because they show that where Parliament wished to exclude a period from computation of time it said so in terms (see section 34(5)) and where it wished to postpone the running of time to a date after the accrual of the cause of action it was able to find a suitable formula by means of which to do so (see section 29(5)).

 

3. The early history

 

But this statute, like any other, does not have to be considered in isolation. We are entitled to look at the legislative history and the parliamentary purpose, and both sides contend that if we do so we will find support for the positions that they adopt.

 

In Prideaux v. Webber (1661) 1 Lev. 31 the Statute of Limitation was held to be a good bar despite the fact that the King’s courts were not available when time was running. In Hovenden v. Lord Annesley (1806) 2 Sch. & Lef. 607, 634 the Lord Chancellor of Ireland, Lord Redesdale, said of Booth v. Earl of Warrington (1714) 4 Bro. P.C. 163 that in that case the House of Lords had held:

 

“the discovery of the fraud, being alleged to be at a subsequent period, and arising out of circumstances collateral, and it being established that such was the fact, a court of equity was well warranted in avoiding the transaction, notwithstanding the statute of limitations: for, pending the concealment of the fraud, the statute of limitations ought not in conscience to run; the conscience of the party being so affected, that he ought not to be allowed to avail himself of the length of time: but after the discovery of the fact, imputed as fraud, the party has a right to avail himself of the statute.”

 

That shows the willingness of equity to ameliorate the consequences of the strict application of the Statute of Limitations, but it seems to me to leave in doubt the way in which equity would operate in the circumstances of the present case.

 

In 1833 Parliament enacted the Real Property Limitation Act, which provided a 20-year limitation period for persons claiming land or rent in equity, but the rigour of that provision was to some extent ameliorated by section 26 which, so far as material, provided:

 

“in every case of a concealed fraud the right of any person to bring a suit in equity for the recovery of any land or rent of which he, or any person through whom he claims, may have been deprived by such fraud, shall be deemed to have first accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered; . . .”

 

Chronologically the next case to which our attention has been invited, Rhodes v. Smethurst (1838) 4 M. & W. 42, was not a case involving the [*1014] Act of 1833. It was an action on a promissory note. After the cause of action accrued the debtor died, and no action was commenced for more than six years from the date of the accrual of the cause of action. The Statute of Limitation was invoked. Lord Abinger C.B. found, at p. 62:

 

“both authority and reason for concluding that the period of time from which the computation is to begin, is when the action accrued; and that when the statute has once begun to run, any portion of time in which the parties are under disabilities must nevertheless form part of the six years.”

 

Baron Alderson, whilst recognising the effect of equity said, at p. 63, that “if the statute begins to run it must continue to run.” Although that case did not involve fraud it does, as it seems to me, suggest that the proposition for which Mr. Hunter contends, represented the law as it stood in 1838.

 

In Homfray v. Scroope (1849) 13 Q.B. 509, an action under the Tithe Act 1836, Lord Denman C.J. followed Rhodes’s case, saying, at p. 512, of the statute with which he was concerned that it

 

“bears the closest analogy to the general statute of limitations: and, with regard to them, it is a well known and settled rule, that, where time has once begun to run, no subsequent disability, however involuntary, will suspend their operation.”

 

In Gibbs v. Guild (1882) 9 Q.B.D. 59 the plaintiff sought damages for fraudulent misrepresentation, and when the Statute of Limitations was raised asserted that he did not discover and had no reasonable means of discovering the fraud until within the six years before the action was commenced. That being accepted he was in equity entitled to relief. Brett L.J. said, at p. 69:

 

“It seems to me that there is some little confusion in the expressions used in some cases as to the origin of the cause of action being a fraud. That is not the fraud which raised the equity; but if there was a cause of action, and if its existence was fraudulently concealed from the plaintiff by the defendant who had given that cause of action, it was then that the plaintiff’s equity arose notwithstanding that his cause of action had arisen more than six years before.”

 

Miss Dohmann places reliance upon that passage, which is slightly differently reported in less authoritative reports but I do not find the passage to be of particular assistance in the present case. In Armstrong v. Milburn, 54 L.T. 247; 54 L.T. 723 the plaintiff in a solicitor’s negligence action, in which the issue of limitation was raised, said that as a result of concealment by the defendant she did not discover and did not have the means of discovering the defendant’s negligence until within the six year period prior to the commencement of the action. In fact no negligence was proved, but Lord Esher M.R. said, at p. 723:

 

“even if there had been negligence, the plaintiff would still fail, for the statute of limitations had run as against her claim, and it is clear that she could have no answer to the defence of the statute unless fraudulent concealment on the part of the defendant were proved; . . .”

 

Miss Dohmann relies on the final qualification as suggesting that if fraudulent concealment were proved at whatever date the plaintiff would be able to overcome the limitation defence. In my judgment that is reading [*1015] too much into a remark which was obiter in a case which did not raise the issue which we have to consider.

 

In Willis v. Earl Howe [1893] 2 Ch. 545, an action of ejectment, the plaintiff claimed to be the heir to an estate, and the court had to consider section 26 of the Act of 1833. Lindley L.J., citing Lord Herschell in Lawrance v. Lord Norreys (1890) 15 App.Cas. 210, 214, said, at pp. 549-550, that to prove a concealed fraud

 

“the person bringing the suit must show that he or some person through whom he claims has been by such fraud deprived of the land which he seeks to recover, and that the fraud could not with reasonable diligence have been known or discovered more than the statutory period before the action was brought.”

 

In the instant case there was found to be no fraud, and no concealment, so the claim failed.

 

In 1893 there was published a Treatise on the Statutes of Limitationsby Dr. E.P. Hewitt in which, at p. 206, it is said of section 26 of the Act of 1833 that it “was framed in accordance with the recommendations of the Real Property Commissioners, and was intended to confirm (in the case of suits to recover land or rent) the existing rules of equity as to the effect of fraud upon the operation of the statutes of limitations.” The author said, at p. 211:

 

“The rule of equity as to the effect of fraud upon the statutes of limitations is sometimes stated to be that time will not run against a person entitled to a cause of action so long as the existence of the cause of action is fraudulently concealed. But the true rule would seem to be that fraud only affects the operation of the statutes of limitations where the original cause of action is based upon fraud, whereby the plaintiff has been deprived of property or has otherwise suffered loss. If the right of action was wholly unconnected with fraud, the fact that the defendant subsequently concealed the cause of action would not prevent time from running; and it is submitted that if fraudulent means were adopted in order to effect the concealment, although such fraud might itself give rise to a right of action, it would not keep alive the original cause of action.” (Emphasis added.)

 

Armstrong v. Milburn (1886) 54 L.T. 723 was cited in support of the passage which I have identified.

 

In Thorne v. Heard [1894] 1 Ch. 599 a solicitor acting for a first mortgagee failed properly to account for monies received on the sale of the property, to the detriment of the plaintiff who was the second mortgagee. When the solicitor became bankrupt the facts emerged, and the plaintiff sued the first mortgagee, but was held to be statute-barred because the cause of action accrued when the first mortgagee committed an irrevocable breach of trust by allowing the solicitor to receive the surplus sales monies instead of handing them over to the plaintiff. The fraud of the solicitor was not perpetrated or concealed by the defendant. When acting fraudulently the solicitor was acting in his own interests. At pp. 604-605, Lindley L.J. said that Willis v. Earl Howe decided

 

“that a fraud committed and concealed, even by the defendant or one of his predecessors in title, would not avail the plaintiff if the fraud and its concealment were subsequent to the wrongful entry which gave the plaintiff or his predecessors the right to bring ejectment.” [*1016]

 

He also said, at p. 605, that the Act of 1833

 

“is a legislative recognition and expression of previously well-settled principles in equity, and those principles were and are applicable to all kinds of property, and not to real property only.”

 

However Lindley L.J. qualified that observation in Betjemann v. Betjemann [1895] 2 Ch. 474, where the Statute of Limitations was relied on in a partnership dispute.

 

The final 19th century authority to which our attention was invited is Bulli Coal Mining Co. v. Osborne [1899] A.C. 351, where the appellants had furtively for years taken the respondents’ coal by underground trespass. The Statute of Limitation was held to have no application. Lord James of Hereford, giving the opinion of the Privy Council, having pointed out that equity follows the law, said, at p. 363:

 

“Now it has always been a principle of equity that no length of time is a bar to relief in the case of fraud, in the absence of laches on the part of the person defrauded. There is, therefore, no room for the application of the statute in the case of concealed fraud, so long as the party defrauded remains in ignorance without any fault of his own”.

 

Of course once again that does not deal with the situation where time has begun to run before any concealment occurs.

 

In In re McCallum [1901] 1 Ch. 143 the plaintiff claimed title to a freehold property and relied on a conveyance of which the plaintiff’s father and the defendant, who was the beneficiary of her father’s estate, were unaware. The defendant was able to rely on the Act of 1833 because although there had been concealment it was by the plaintiff’s mother and not by the defendant or the father from whom she derived title. The case is therefore not directly in point, but there are useful observations about the general nature of the equitable jurisdiction, and the extent to which it was reflected in the Act of 1833. Lord Alverstone C.J. said, at p. 150:

 

“As I understand it, the old jurisdiction exercised by the courts of equity rested upon the fact that the conscience of the party who was setting up possession as against the title of the true owner was affected, so that he ought not to be allowed to avail himself of the lapse of time.”

 

And Vaughan Williams L.J. said, at pp. 158-159:

 

“It seems to me that the words of section 26 sufficiently indicate that the intention of the legislature, at the time when it enacted a legislative rule respecting the period within which relief might be granted to those seeking to recover any land or rent of which they might have been deprived, was to reserve to courts of equity that jurisdiction which those courts had always exercised to relieve against ‘concealed fraud,’ when discovered.”

 

In the Yorke Prize Essay for the University of Cambridge for 1929, Mr. John Brunyate of Trinity College, Cambridge and the Chancery Bar said in a chapter on fraud:

 

“From the earliest times the courts of equity have been chary of applying the Statutes of Limitations in cases of fraud. Sometimes it was thought that length of time would never bar a suit based upon fraud, but the courts eventually decided that the statutory period, [*1017] although it would not run while the fraud was undiscovered, would begin to run as soon as the fraud was discovered. This rule was applied both where the cause of action sprang from the fraudulent acts and where the defendant had by later fraudulent acts concealed from the plaintiff an existing cause of action. The rule was developed in applying the Act of 1623, and it is still in force in suits which are still subject to that Act. A similar but not identical rule applicable to suits to recover land or rent was embodied in section 26 of the Real Property Limitation Act of 1833.”

 

Miss Dohmann understandably places some reliance on that passage, but it is to be noted that the assertion that the equitable rule applied where the defendant had by later fraudulent acts concealed from the plaintiff an existing cause of action is unsupported by authority, and the researches of counsel have not produced any authority to support it, other than those to which I have referred.

 

In 1934 the Law Revision Committee was asked to consider, inter alia, “the circumstances affecting defendants which prevent the periods of limitation from beginning to run, and the scope of the rules as to concealed fraud.” The committee’s report was published in 1936 (Cmd. 5334), and having looked at various statutory periods of limitation it states in paragraph 7 that

 

“it has to be remembered that the purpose of the statutes goes further than the prevention of dilatoriness; they aim at putting a certain end to litigation and at preventing the resurrection of old claims, whether there has been delay or not.”

 

In paragraph 13 of the report it is recognised that

 

“in applying equitable remedies to cases of fraud or mistake, the period of limitation is not reckoned until the fraud or mistake is or could, with reasonable diligence, have been discovered.”

 

In paragraph 16 the report states:

 

“At present the only disabilities which operate to suspend the statutory periods of limitation are those which are in existence at the time when the cause of action first comes into being. Any event constituting a disability which arises subsequently is of no effect (Garner v. Wingrove [1905] 2 Ch. 233). It is, perhaps, conceivable that this rule may cause hardship in certain cases; e.g., where a cause of action accrues to A and he becomes insane before he has had a reasonable time within which to institute proceedings. But such cases must be of very rare occurrence. On the other hand, a rule which would lead to the suspension of a cause of action, if the claimant became subject to a disability at any time whilst the statutory period is running, would in some instances impose grave hardship on defendants. For this reason it seems preferable to leave the present rule as it stands.”

 

Garner v. Wingrove [1905] 2 Ch. 233 was a case in which a defendant in possession of land was able to take advantage of statutory provisions as to limitation against the owner even though after the time began to run the owner died and title passed to an infant. In dealing with acknowledgement and part payment the 1936 report recognised in paragraph 19 that in some cases time can be made to start afresh, but paragraph 22 does not suggest any such possibility where a cause of action [*1018] is subsequently concealed by fraud. Indeed rather the contrary; what it says is:

 

“As a general rule it is no answer to a plea of the statutes of limitation to say that the plaintiff was unaware of the existence of his cause of action until after the expiration of the statutory period. But cases may occur in which ignorance on the part of the plaintiff is brought about by the fraudulent conduct of the defendant. Either the cause of action may spring from the fraud of the defendant or else the existence of a cause of action untainted in its origin by fraud may have been concealed from the plaintiff by the fraudulent conduct of the defendant. It is obviously unjust that a defendant should be permitted to rely upon a lapse of time created by his own misconduct, but the present state of the law is so obscure and pregnant with difficulties that it must be regarded as uncertain whether a fraudulent defendant can in all cases be prevented from setting up the plea that the action has been brought out of time. Up to a point the law is reasonably clear.”

 

The report then refers to section 26 of the Act of 1833 and observes, at p. 30:

 

“fraudulent statements or fraudulent destruction of evidence after possession has once been obtained have been held not to be sufficient to prevent the statute from running . . .”

 

Mr. Hunter places some reliance upon that observation. The report continues:

 

“Much of the ground is also covered by the equitable doctrine that a plaintiff is not to be affected by the lapse of time where his ignorance is due to the fraud of the defendant, and he has had no reasonable opportunity of discovering such fraud before bringing his action. The extent, however, of the area within which the equitable doctrine is operative is still a matter of doubt and controversy.”

 

There is then a discussion of the position before and after the Judicature Act 1873, with particular reference to the effect of equity upon the common law. The committee concluded that it was “undesirable that this state of obscurity and uncertainty should continue.” They said, at p. 31: “We are of opinion that a defendant should not be permitted to set up lapse of time which is due to his fraudulent conduct.” Miss Dohmann invites our attention to that, and to the recommendation in the report which followed it:

 

“that in all cases to which the statutes of limitation apply or are applied by analogy, where a cause of action is founded on fraud, committed by the defendant or his agent, or some person through whom he claims, or where a cause of action unconnected with fraud is fraudulently concealed from the plaintiff by the defendant or his agent, or someone through whom he claims, the right of the plaintiff to sue shall be deemed to have first accrued at the time when he discovered such fraud or could with reasonable diligence have discovered it.”

 

For my part I would accept that if we were considering a statutory provision which enacted that recommendation Miss Dohmann would be in a much stronger position, but the statutory provision with which we are concerned does not say that the right of the plaintiff to sue shall be [*1019] deemed to have first accrued at the time when he discovered the defendant’s fraud or could with reasonable diligence have discovered it. Furthermore, the Law Revision Committee’s report seems to me to make it abundantly clear that Miss Dohmann cannot really maintain the argument which apparently commended itself to Saville J., namely that prior to the intervention of statute those in the position of her clients enjoyed equitable rights which the statutes should not be interpreted as having taken away. The fact is that prior to the intervention of statute the position may not have been entirely clear, but generally the rule seems to have been that once time began to run later concealment of the cause of action by the defendant would not interrupt it.

 

4. The Limitation Act 1939

 

Instead of following the recommendations of the committee section 26 of the Limitation Act 1939, provided:

 

“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 his agent or of any person through whom he claims or his agent, or (b) the right of action is concealed by the fraud of any such person as aforesaid, 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 or the mistake, as the case may be, or could with reasonable diligence have discovered it: . . .”

 

There is then a proviso which for present purposes is not relevant. In Preston and Newsom on Limitation of Actions, 1st ed. (1940), the comment is made, at p. 361, in relation to section 26 of the Act of 1939 that

 

“where a fraudulent concealment supervenes, a right of action having already accrued, there is nothing in the new provision to stop time running. It deals only with the time when the period of limitation shall ‘begin to run.’ If time is running already, the Limitation Act 1939, section 26 does not apply.”

 

Mr. Hunter submits that is correct, but Miss Dohmann invites our attention to Beaman v. A.R.T.S. Ltd. [1949] 1 K.B. 550. That case concerned a bailee who during the Second World War whilst the plaintiff was abroad disposed of her goods and more than six years later she commenced proceedings for conversion. It was held in relation to section 26 that the cause of action was not based on fraud, but the Court of Appeal held that the conduct of the defendant did amount to a fraudulent concealment of the cause of action for the purposes of section 26(b). The court regarded as relevant the bailee’s failure to tell the plaintiff what they had done but there was also concealment coterminous with the conversion, so, as I read the judgments, they proceed upon the basis that until the plaintiff learnt what had happened time had not started to run. For example, Lord Greene M.R. said, at p. 566:

 

“This failure to make a proper record was the cause of delay in tracing what had been done with the goods when the plaintiff came to claim them. I am of opinion that the conduct of the defendants, by the very manner in which they converted the plaintiff’s chattels in breach of the confidence reposed in them, and in circumstances calculated to keep her in ignorance of the wrong that they had [*1020] committed amounted to a fraudulent concealment of the cause of action.”

 

Similarly Singleton L.J. said, at p. 571:

 

“The disposal of the goods in this way was a fraud upon the owner. The reason they did not tell her what they had done with the goods was that they did not wish her to know. There was a chance that she might not come back to this country for many years. By concealing from her what they had done they concealed from her the right of action which arose upon the conversion of the goods.”

 

In Kitchen v. Royal Air Force Association [1958] 1 W.L.R. 563 the plaintiff succeeded against her former solicitor who, following the death of her husband, had failed to advise her of her potential claim under the Fatal Accidents Acts and of an offer made in October 1946 by the electricity company involved. The concealment of the offer was held to amount to both a breach of duty and a fraudulent concealment for the purposes of section 26(b) of the Act of 1939, so the claim was not statute-barred. The position taken by the Court of Appeal in relation to the failure to advise in relation to the potential claim is far less clear, and in the circumstances was not critical, so I cannot accept Miss Dohmann’s submission that Kitchen’s case is authority for the proposition that where there is concealment by a defendant sometime after the cause of action has accrued section 26(b) applies. As Sir Thomas Bingham M.R. has pointed out in his judgment in this case, at p. 1007B ante, in Kitchen’s case that issue did not have to be argued.

 

In Cartledge v. E. Jopling & Sons Ltd. [1963] A.C. 758 the House of Lords considered an appeal by plaintiffs who developed pneumoconiosis. The plaintiffs submitted that time should be held only to have run against them from when they knew or could have reasonably be expected to have known of their condition, but Lord Pearce said, at p. 782:

 

“Past cases have been decided on the basis that the time runs from the accrual of the cause of action, whether known or unknown, and no case has been cited in which the plaintiff’s lack of knowledge has prevented the time from running where that lack of knowledge has not been induced by the defendant.”

 

Turning to section 26 of the Act of 1939 he said, at p. 783, that it created “a special exception,” and continued:

 

“even in such cases the legislature apparently considered that the right of action accrued in spite of the plaintiff’s ignorance, since the Act provides that ‘the period of limitation shall not begin to run until the plaintiff has discovered the fraud.’ Moreover, the Act of 1939 was passed in the light of the earlier cases to which I have referred and had the legislature intended to secure a different result it would have said so.”

 

The clear implication, as it seems to me, is that in the context of the present case time did run from the date of accrual of the cause of action.

 

Applegate v. Moss [1971] 1 Q.B. 406 was a case concerning houses built on unsatisfactory foundations which were then covered. Lord Denning M.R. said, at p. 413, that section 26(b) applied

 

“whenever the conduct of the defendant or his agent has been such as to hide from the plaintiff the existence of his right of action, in [*1021] such circumstances that it would be inequitable to allow the defendant to rely on the lapse of time as a bar to the claim.”

 

As a general proposition that is no doubt correct, but it does not deal directly with the problem we have to resolve. That brings me to what was said obiter by Sir Robert Megarry V.-C. when giving judgment in Tito v. Waddell (No. 2) [1977] Ch. 106, 245:

 

“Under section 26 of the Act of 1939 the effect of fraudulent concealment is that ‘the period of limitation shall not begin to run until the plaintiff has discovered the fraud . . . or could with reasonable diligence have discovered it.’ If time has already begun to run, I do not think that a supervening fraudulent concealment will start time running again.”

 

Miss Dohmann submits that Sir Robert Megarry V.-C.’s observations did not and do not represent the law, but if so it is surprising that when Parliament enacted section 26 of the Act of 1939 with some modifications as section 32 of the Limitation Act 1980 it did not clarify the position.

 

5. Since the Act of 1980

 

In August 1980 another Law Reform Committee was asked

 

“to consider the law relating to - (i) the accrual of the cause of action and (ii) limitation, in negligence cases involving latent defects (other than latent disease or injury to the person) and to make recommendations.”

 

It reported in 1984 (Cmnd. 9390) and Parliament then enacted the Latent Damage Act 1986, which introduced into the Act of 1980 section 14A and section 14B. The result is that in an action for damages for negligence other than for personal injuries the starting date for reckoning the period of limitation is the earliest date on which the plaintiff or any person in whom the cause of action vested before him had both the knowledge required for bringing the action and the right to bring it. If, as I believe, the law still is as Sir Robert Megarry V.-C. found it to be then some deserving plaintiffs who cannot take advantage of section 32(1)(b) will be able to take advantage of section 14A.

 

The last two authorities on which Miss Dohmann relied were UBAF Ltd. v. European American Banking Corporation [1984] Q.B. 713 and Westlake v. Bracknell District Council (1987) 19 H.L.R. 375. In the UBAF case the Court of Appeal said, at p. 728, that if it was within the plaintiffs’ knowledge whilst they were carrying out their fiduciary duties that the security was inadequate the failure to say so “would constitute a continuing breach of their fiduciary duty.” If the breach of fiduciary duty continued the problem which we have to consider could not arise. In the Westlake case the deputy High Court judge held amongst other things that when a negligent surveyor later sought to reassure house purchasers his conduct amounted to deliberate concealment of facts relevant to the plaintiffs’ right of action such as to enable the plaintiffs to invoke section 32 of the Act of 1980. Clearly that part of the decision, if correct, is of considerable assistance to Miss Dohmann, but in my judgment it is not correct, and it is right to point out that there is nothing in the report to suggest that the issue was explored in the way that it has been explored before us. [*1022]

        

 

6. Conclusion

 

Having now considered in addition to the wording of the Act of 1980 the history of the legislation and most of the authorities to which we were referred, I am satisfied that Mr. Hunter is right in his submission that reliance cannot be placed on section 32(1)(b) of the Act of 1980 where the deliberate concealment relied upon occurred an appreciable time after the cause of action arose. In other words if time has already begun to run the supervening fraudulent concealment will not start it running again. I would therefore, like Sir Thomas Bingham M.R., allow this appeal.

 

Appeal allowed with costs in Court of Appeal and below.

 

Leave to appeal.