Claimants in PPI litigation cannot rely on extended periods under the Limitation Act 1980 to excuse them from responsibility to read and understand the relevant documents that they then go on to sign.

There is more welcome news emerging from the Courts for banks facing payment protection insurance mis-selling litigation.  

The hotly debated issue of the application of the Limitation Act 1980 (the “1980 Act”) to PPI claims has finally been decided in the bank’s favour by the Sunderland County Court in the recent case of Paul Holyoak –v- Lloyds TSB Bank plc.  

The Court held that Lloyds had not mis-sold Mr Holyoak any of the three PPI policies that he had entered into. But more importantly, the Court also held that his claims in respect of the first loan agreement and policy, entered into in January 2004, were time barred by reason of the provisions of the1980 Act as he had brought this claim more than 6 years after the date upon which his cause of action had accrued.  

Mr Holyoak brought proceedings against Lloyds alleging that they had mis-sold him three PPI policies. The first of these had been taken out in January 2004, i.e. more than 6 years before Mr Holyoak issued his claim. He relied upon the usual causes of action in PPI claims: misrepresentation by the bank (that he had been told that he had to purchase the PPI) and negligence.  

Lloyds argued that claims relating to the January 2004 agreement and policy were time barred under the 1980 Act. In response Mr Holyoak relied on sections14A and 32(1)(c) of the 1980 Act. He argued that as a matter of fact he had not gained sufficient knowledge of the facts about his loss until the PPI issue became widely publicised sometime in 2010.  

Therefore, Mr Holyoak said that he should be allowed to take advantage of the extended limitation periods for (a) negligence claims afforded by section 14 (A) of the 1980 Act (3 years from the date when the claimant knew or ought to have known material facts about the loss suffered) or (b) claims in respect of relief from the consequences of mistake under section 32 of the 1980 Act (the limitation period not beginning to run until the claimant discovered the mistake).  

District Judge Loomba, sitting in Sunderland County Court, considered Lloyds’ submission that section 14A of the 1980 Act only applied to actions founded on negligence and did not apply so as to save the misrepresentation claim. He agreed and held that Mr Holyoak’s claims arising under in relation to the 2004 agreement and the policy were “statute barred”.  

The Judge found as a matter of fact that the documentation completed by Lloyds and provided to Mr Holyoak at the time of entering into the PPI policy in 2004 was very clear as to the optional nature of the PPI. He commented that “there is nothing more plain than that document”. Moreover, he highlighted Mr Holyoak’s right to cancel the insurance and noted that this right was set out in the policy documentation. The Judge accordingly found that Mr Holyoak could easily have discovered the alleged wrongdoing by Lloyds through reasonable due-diligence but had failed to do; indeed to do so, Mr Holyoak had only been required to read the documents that had been provided to him by Lloyds. Therefore neither sections14 A nor 32 (1) (c ) of 1980 Act assisted him and the claims were time barred.