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When does the clock start ticking? Prescription in Scotland

In Scotland, the law regulating the period within which parties can pursue claims (known as the prescriptive period in Scotland rather than the limitation period in England) is laid down in the Prescription and Limitation (Scotland) Act 1973 (“the Act”).

Prescription has always been a topic which has come under great judicial scrutiny where parties attempt to escape liability on the basis that an obligation has prescribed under the Act.

Under section 6(1) of the Act, an obligation to make reparation is extinguished through the operation of prescription if a claim has not been made or the existence of the obligation not acknowledged within five years of the relevant obligation having become enforceable (note that the period for a personal injury is three years).

Section 11(1) provides that an obligation “to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6… as having become enforceable on the date when the loss injury or damage occurred.”

For at least the last 30 years the Scottish Courts have interpreted the Act as meaning that the pursuer must have knowledge (or could have knowledge with reasonable diligence) that (1) they have suffered loss and (2) the loss was caused by an act or omission.

However, a recent appeal to the Supreme Court in the case of David T Morrison & Co Limited t/a Gael Home Interiors v ICL Plastics Limited and Others (Scotland) [2014] UKSC 48 has significantly impacted on the commencement of the five year prescriptive period.

Background

On 11 May 2004 there was a fatal explosion at ICL’s factory in Glasgow. Morrison’s shop was damaged in the explosion and Morrison raised proceedings on 13 August 2009 seeking damages from ICL as a result of ICL’s negligence, nuisance and breach of duty.

Interpretation of the Act

ICL accepted that they would have had an obligation to make reparation to Morrison but made a technical argument that any obligation had prescribed given that proceedings had not been raised within five years from 11 May 2004 (being the date of the explosion).

Based on the historic interpretation of the Act, Morrison disputed this position relying on section 11(3) of the Act which postponed the date from which the prescriptive period begins to run where “the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred” until a later date. Morrison argued that by the time they investigated the cause of the explosion and established fault, it was impossible to raise proceedings before 13 August 2009.

In a 3:2 decision the Supreme Court held that the claim had prescribed and departed from the approach previously taken by the Scottish courts to the interpretation of section 11(3). Lord Reed, who gave the leading judgement, recognised that section 11(3) could be read in two different ways but in his opinion, the correct interpretation was that the creditor had only to be aware of the occurrence of loss for the prescriptive period to start running. In this case, Morrison were obviously aware that they had sustained loss on the day of the explosion, and the claim had therefore prescribed.

Comment

This is an important decision which alters the historic implementation of the law of prescription in Scotland and will no doubt be a hot topic in current and future litigation. It is clear that legislative change will be required in the future.

For further information please contact Philip Knight

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Philip Knight

Associate

I work within the Commercial Litigation and Real Estate litigation teams and cover both our Edinburgh and Glasgow offices. I have cases in the Sheriff Court, the Court of Session and the Supreme Court.