In a Views from the Bridge first, this month we are featuring a guest article from the Scottish firm, Anderson Strathern. Often wrongly equated with limitation, the Scottish law principle of prescription has seen significant recent judicial discussion and legislative change. Tom McEntegart and Liam McKay tell us what we need to know.
Prescription has been enormously topical in recent years, so much so that it led to new legislation passed by the Scottish Parliament, which came into effect in 2022. As a legal concept, while prescription does not have a counterpart in English law, it is sometimes wrongly equated with limitation which it shares some similarities with.
In this article, we take a look at two court cases from recent years concerning proceedings for reparation, which demonstrate the challenges that prescription poses. The challenge of working out when the obligation to make reparation first arose, and therefore when that obligation consequently prescribed, is a difficult task which in recent years has given rise to much judicial discussion in Scotland.
What is Prescription?
While prescription, as a legal concept, derives from the civil law tradition, it is now primarily a statutory concept as a result of the Prescription and Limitation (Scotland) Act 1973 (as amended). Prescription is concerned with the acquisition (known as positive prescription) and extinction (known as negative prescription) of rights and obligations owing to the passage of time. Where a right or obligation has been extinguished by prescription, it is said to have “prescribed”. The right or obligation no longer exists and cannot be founded upon. Contrastingly, limitation is a creature of civil procedure whereby the court’s ability to adjudicate upon rights and obligations is circumscribed by the passage of time, despite the fact that those rights and obligations continue to subsist. Limitation allows for a degree of equitable discretion in respect of a litigant being allowed, by the court, to bring an action out of time. Prescription allows for no such discretion.
Calculating the Prescriptive Period
The Prescription and Limitation (Scotland) Act 1973 provides that if, after the date when the loss, injury or damage occurred, the obligation to make reparation therefore has subsisted for a continuous period of five years (a) without any relevant claim having been made in relation to the obligation, and (b) without the subsistence of the obligation having been relevantly acknowledged, then as from the expiration of that period the obligation shall be extinguished. The date when the loss, injury or damage occurred means the date on which there is loss caused by a legal wrong.
Identifying this date has proven challenging, especially because a litigant may not be aware of the fact that loss, injury, or damage has occurred until after the fact. This is demonstrable from two controversial judgments in recent years.
David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd [2014] UKSC 48: In 1994, an explosion at ICL’s factory damaged a shop owned by David T Morrison & Co Ltd (the “Pursuer”). Court proceedings for reparation were brought against ICL in 2009. ICL pleaded that the right of the Pursuer to enforce any obligation of ICL to make reparation had long prescribed. The Pursuer disagreed, pleading that it did not become aware of the fact that the damage was caused by ICL’s negligence until late 2004. Proceedings had therefore been timeously brought within 5 years of the Pursuer becoming aware of that fact. The UK Supreme Court held that loss occurs at the moment in time when, objectively speaking, the party seeking reparation was aware of the loss or could, through the use of reasonable diligence, have been so aware. A party seeking reparation must bring proceedings within 5 years of the date on which he or she, either through actual or constructive knowledge, was aware of having suffered a loss; even though he or she might not have been aware, on the same date, that said loss was caused by an act, by neglect, or by default. In this case, knowledge of the loss objectively occurred when the shop was damaged by the explosion, which occurred in 1994, despite the fact that it was not until many years later that the cause of that damage was known to be due to a wrong committed by ICL. The previous long-standing approach of the Scottish courts, per Greater Glasgow Health Board v Baxter, Clark & Paul 1990 SC 237, was that knowledge of loss and knowledge of the right of action were both required before the prescriptive clock could begin to run.
WPH Developments Ltd -v- Young and Gault LLP [2021] CSIH 39: Young and Gault LLP was a firm of architects. A property developer, WPH Developments Ltd, argued that the architects had provided negligent services in consequence of which building works were undertaken on land that the developer did not own. In 2012, the architects drafted a number of drawings for the developer. Relying upon these drawings, the developer built two houses. However, certain boundary walls of these houses were built on land which the developer did not own. The neighbouring landowner raised this point in February 2014, and the developer incurred a loss in that it had to buy extra land and relocate some of the boundary walls. Court proceedings were brought in 2018, within 5 years of the date on which the developer became aware of the architects’ negligence and consequently had to spend money to fix the problem. The Court of Session held that the loss objectively occurred when the negligent advice was first relied upon, and expenditure was wasted in relying upon it. That happened in 2012 when the erroneous drawings were negligently supplied and relied upon, and expenditure was wasted in building the boundary walls in the wrong place even though that fact was not known until years later.
Thus, the prescriptive clock will start to run from the moment when, objectively speaking, the loss has occurred notwithstanding that subjectively speaking the innocent party may be wholly unaware that he or she has suffered a loss, and that he or she has a corresponding right to reparation.
Statutory Intervention & The Future
The Scottish Parliament passed the Prescription (Scotland) Act 2018 in an effort to resolve the perceived injustice created by the above cases. This legislation amends the 1973 Act in that, from 1 June 2022, a party seeking reparation must objectively be aware of three facts before the prescriptive clock begins to run. These are that loss, injury or damage has occurred; that the loss, injury, or damage was caused by a person’s act or omission; and the identity of that person. It is irrelevant whether the party knows that the act or omission causing the loss, injury or damage is actionable in law. This modification to the law does not apply to any right or obligation which was extinguished through prescription prior to 1 June 2022.
It remains to be seen how the courts will approach the modified legislation. The law of prescription undoubtedly remains complex and its application highly fact specific. The need for specialist, expert advice from Scottish solicitors will remain necessary for clients seeking to pursue claims in the Scottish courts.
Guest article written by Tom McEntegart and Liam McKay from Anderson Strathern for Views from the Bridge - The CDR newsletter.
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