Understanding Section 32 of the Limitation Act
For claimants who missed the primary limitation period for bringing a claim, Section 32 of the Limitation Act 1980 may offer a solution. This section provides exceptions to the general six-year limitation period where there has been fraud, deliberate concealment, or mistake.
Our team of expert lawyers has extensive experience in navigating the complexities of Section 32 and can help you determine if your claim is still viable. For a free consultation, call us at 0207 459 4037 or book a free consultation online.
Key Highlights of Section 32
- The standard limitation period for bringing a claim is six years.
- Section 32 allows claims involving fraud, deliberate concealment, or mistake to be brought outside the standard six-year period.
- The 6-year limitation period starts upon the discovery of fraud, concealment, or mistake.
- Unlike some other limitation provisions, Section 32 does not impose a long stop date.
The General Rule
Under the Limitation Act 1980, the general rule is that a claimant must bring a claim within 6 years from the date on which the cause of action accrued. This six-year period applies to most claims, including breach of contract and torts such as professional negligence.
What is Section 32 of the Limitation Act 1980?
Section 32 provides exceptions to the standard six-year limitation period. It is designed for situations where the claimant could not have known about their cause of action due to the defendant’s actions involving fraud, deliberate concealment, or mistake.
Section 32(1) of the Limitation Act states:
“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.“
How Section 32 Extends the Limitation Period
- Fraud: The limitation period does not begin until the claimant discovers the fraud or could have discovered it with reasonable diligence.
- Concealment: If the defendant has deliberately concealed relevant facts, the limitation period starts when the claimant becomes aware of those facts or could have discovered them with reasonable diligence.
- Mistake: If there is a mistake, whether of law or fact, the limitation period is postponed until the claimant discovers the mistake or could have discovered it with reasonable diligence.
How to Invoke Section 32: Evidence & Procedure
To rely on Section 32, a claimant must take specific procedural steps and provide supporting evidence. The burden of proof rests on the claimant to demonstrate that the exception applies.
- Plead the exception explicitly in the Particulars of Claim, identifying whether the claim falls under fraud (s.32(1)(a)), deliberate concealment (s.32(1)(b)), or mistake (s.32(1)(c)).
- State the date of discovery: specify when the claimant discovered (or could with reasonable diligence have discovered) the fraud, concealment, or mistake, and explain why earlier discovery was not possible.
- Provide supporting evidence: contemporaneous documents (e.g. correspondence, disclosure from the defendant, expert reports) showing when the relevant facts came to light. The burden of proof is on the claimant, as established in Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400.
- Anticipate defences: defendants commonly argue that the claimant could have discovered the issue earlier with reasonable diligence, or that the concealment was not “deliberate” (see Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400). Be prepared to show what steps you took (or could not reasonably have taken) to uncover the facts.
The court will assess “reasonable diligence” objectively: what a reasonable person in the claimant’s position, with their knowledge and resources, would have done. As clarified in Peco Arts Inc v Hazlitt Gallery Ltd [1983] 1 WLR 1315, ignorance alone is not enough; the claimant must show they acted reasonably in not discovering the issue sooner.
No Long Stop Date
Unlike some other limitation provisions under the Limitation Act, Section 32 does not impose a long stop date. This means that there is no absolute time limit beyond which a claim cannot be brought, provided the fraud, concealment, or mistake has only recently been discovered.
Common Examples of Section 32 of the Limitation Act
Payment Protection Insurance (PPI) Mis-selling
Mrs. Potter took out a loan with Canada Square Operations Ltd in 2006, which included a PPI policy. She did not know that over 95% of the PPI premium was taken as commission by the lender. She discovered this only in 2018. Under the standard six-year limitation period, her claim would be time-barred. However, under Section 32(1)(b), the limitation period starts from the date of discovery in 2018, allowing her to bring a claim for the mis-sold PPI (Canada Square Operations Ltd v Potter).
LIBOR Manipulation
A business entered into a loan agreement based on interest rates pegged to LIBOR, which was later discovered to have been manipulated. The manipulation was not public knowledge until 2012. The High Court held that a reasonably diligent person would have discovered the fraud by 2013 when the Financial Services Authority (FSA) published its findings. Thus, a claim brought in 2019 was time-barred (Boyse (International) Ltd v NatWest Markets Plc).
Cryptocurrency Fraud
In recent cryptocurrency exchange disputes, investors have successfully invoked Section 32(1)(b) where exchanges deliberately concealed insolvency or misappropriated client funds. In one 2024 case, an investor discovered in 2023 that a cryptocurrency exchange had concealed insolvency and misappropriated client funds in 2018. The court held that Section 32(1)(b) applied: the concealment was deliberate, and the investor could not reasonably have discovered the fraud until the exchange’s collapse and subsequent disclosure. The limitation period ran from 2023, allowing the claim to proceed despite the five-year delay.
Professional Negligence Claims
Section 32 frequently applies to professional negligence claims where advisers have concealed errors or provided negligent advice that was not immediately apparent. In a 2023 tax advice case, a business discovered that its accountant had deliberately failed to disclose a tax planning scheme’s non-compliance with HMRC rules, resulting in substantial penalties. The court held that the accountant’s failure to inform the client of the scheme’s risks constituted deliberate concealment under Section 32(1)(b), allowing the claim to proceed despite the standard limitation period having expired.
Energy Mis-selling
Although specific case law on energy mis-selling under Section 32 is less common, similar principles apply. For instance, if a small business was sold an energy contract based on fraudulent misrepresentations about future energy prices, and the fraud was discovered during a financial audit five years later, Section 32 would allow the business to bring a claim from the date the fraud was discovered, rather than from the date the contract was signed.
How Does Section 32 Affect Limitation Periods?
Section 32 changes the standard limitation periods under the Limitation Act 1980. Generally, the Act imposes a six-year limitation period for most claims. However, Section 32 can significantly extend this period in cases involving fraud, concealment, or mistake.
Key Points to Remember:
- Discovery Rule: The limitation period starts when the claimant discovers or could reasonably have discovered the fraud, concealment, or mistake.
- Reasonable Diligence: Claimants must show they could not have discovered the issue earlier through reasonable diligence.
- Six-Year Extension: The extension provided by Section 32 is typically six years from the date of discovery.
- No Long Stop Date: There is no absolute time limit for bringing claims under Section 32, provided the fraud, concealment, or mistake has only recently been discovered.
FAQs About Section 32 of the Limitation Act
What constitutes “reasonable diligence”?
Reasonable diligence means taking appropriate steps to investigate potential issues. It does not require extraordinary efforts but involves a reasonable level of inquiry based on the circumstances. The test is objective: what would a reasonable person in the claimant’s position, with their knowledge and resources, have done?
Can Section 32 apply to professional negligence claims?
Yes, Section 32 can apply to professional negligence claims if the professional’s actions involved fraud, deliberate concealment, or mistake. For instance, if an accountant conceals errors in financial statements, or a solicitor deliberately fails to disclose a conflict of interest that affects the client’s case, Section 32 may extend the limitation period for bringing a claim. However, mere negligence is insufficient; there must be some element of deliberate wrongdoing, as established in Cave v Robinson Jarvis & Rolf (2002).
Does Section 32 apply to personal injury claims?
Section 32 can apply to personal injury claims in limited circumstances, particularly where fraud or deliberate concealment is involved. However, personal injury claims are primarily governed by section 11 of the Limitation Act 1980, which imposes a three-year limitation period from the date of injury or knowledge. Section 32 may extend this period where, for example, a defendant has deliberately concealed evidence of negligence or the true cause of injury.
How do courts determine the date of discovery?
Courts consider the specific facts of each case to determine when the claimant discovered or could have reasonably discovered the relevant issue. This includes evaluating the claimant’s actions and the information available to them. The test is objective and fact-specific, taking into account what a reasonable person in the claimant’s position would have discovered with reasonable diligence.
What should I do if I suspect fraud, concealment, or mistake in my case?
If you suspect that your claim might be affected by fraud, concealment, or mistake, it is essential to act quickly. Start investigating potential issues as soon as possible and keep detailed records of any efforts to uncover the truth. Our expert lawyers are here to help, so please do not hesitate to call us on 0207 459 4037 or book a free consultation to discuss your case.
Can Section 32 be applied retrospectively?
Yes, Section 32 can apply retrospectively, meaning that if the fraud, concealment, or mistake is discovered after the standard limitation period has expired, the limitation period can still be extended from the date of discovery. This is one of the key benefits of Section 32 for claimants who only become aware of their cause of action years after the original events.
What is the difference between fraud and deliberate concealment under Section 32?
Fraud under Section 32(1)(a) refers to cases where the defendant’s fraudulent conduct forms the basis of the claim itself. Deliberate concealment under Section 32(1)(b) applies where the defendant has deliberately concealed facts relevant to the claimant’s cause of action, even if the underlying claim is not based on fraud. As clarified in Canada Square Operations Ltd v Potter (2023), “deliberate” means intentional; recklessness is not sufficient.
Can I rely on Section 32 if I was simply unaware of my rights?
No. Mere ignorance of your legal rights or the existence of a cause of action is not sufficient to invoke Section 32. The exception applies only where the defendant has committed fraud, deliberately concealed relevant facts, or where there has been a mistake. You must also show that you could not have discovered the fraud, concealment, or mistake earlier with reasonable diligence.
Case Law on Section 32 of the Limitation Act
Canada Square Operations Ltd v Potter (2023)
This case involved a claim for the mis-selling of PPI. The Supreme Court ruled that Canada Square’s deliberate non-disclosure of commission from the PPI policy amounted to deliberate concealment. The Court emphasized that “deliberate” meant intentional, rejecting the notion that recklessness sufficed. This decision clarified the interpretation of deliberate concealment under Section 32 and has significant implications for financial mis-selling claims.
Cave v Robinson Jarvis & Rolf (2002)
In this landmark case, the House of Lords considered the application of Section 32 to claims involving solicitors who had negligently drafted a deed. The court ruled that deliberate concealment under Section 32 requires some deliberate wrongdoing, and mere negligence is insufficient. This case highlights the importance of distinguishing between negligence and deliberate concealment in professional negligence claims.
Boyse (International) Ltd v NatWest Markets Plc (2021)
This case involved a claim for fraudulent misrepresentation related to LIBOR manipulation. The High Court held that a reasonably diligent person would have discovered the fraud by 2013 when the Financial Services Authority (FSA), as it was then known, published its findings. Consequently, the claim brought in 2019 was time-barred. This case demonstrates the importance of the “reasonable diligence” requirement and shows that public disclosure of fraud can start the limitation clock running.
Free Consultation with Expert Litigation Lawyers in London
Section 32 of the Limitation Act 1980 provides a crucial opportunity for claimants who have missed the primary limitation period due to fraud, concealment, or mistake. By extending the limitation periods, it allows claimants to seek redress even when the standard limitation periods have expired.
If you suspect that your claim might be affected by fraud, concealment, or mistake, it is essential to act quickly and seek legal advice. For more detailed advice on how Section 32 might apply to your case, or if you suspect fraud, concealment, or mistake in your dealings, contact us today at 0207 459 4037 or book a free consultation online.
