Time and Tide wait for no man

When it comes to enforcing rights and obligations in Scotland, time and tide wait for no man.  Rights and obligations in Scotland are subject to statutory rules on time bar as set out in the Prescription and Limitation (Scotland) Act 1973.

What is prescription?

Prescription is the term used in Scots Law (equivalent to limitation in England and Wales) which relates to a specified period of time over which certain rights and obligations can be created or extinguished.

The extinction of rights and obligations is called negative prescription.  Where a right or obligation has subsisted for a certain period of time and no steps have been taken to exercise or enforce such right or obligation, then the right or obligation no longer exists and is said to have “prescribed”.

Unlike the position in England and Wales, most obligations which are governed by Scots Law prescribe after 5 years.  The types of obligations which prescribe after 5 years include breach of contract, delict (tort), non-payment, unjustified enrichment and professional negligence.  Certain claims must be commenced within 3 years (death or personal injury, defamation and harassment). All other rights prescribe after 20 years.

From when does the 5 year period commence?

The 5 year time period commences when a party suffers loss, injury or damage.  However, section 11(3) of the 1973 Act provides that the commencement of the 5 years can be delayed where the party was not aware or could not, with reasonable diligence, have become aware, that loss, injury or damage had occurred.

In the case of non-payment or certain types of breach of contract claims, the start of the prescriptive period is relatively clear. However, where loss is suffered through the fault of another party, the decision of the Supreme Court in David T Morrison & Co Limited v ICL Plastics Limited & Ors([2014] UKSC 48) has resulted in a more restrictive interpretation of s11(3). Prior to the Morrison case, it was understood that the 5 year period commenced when the claimant knew that the actions of the defendant had caused loss or damage.  In the Morrison case, the claimant and defendant were neighbours.  An explosion in the defendant’s plastics factory resulted in damage to the claimant’s property.  It was more than 5 years after the explosion that it became known that the cause of the explosion lay at the defendant’s door. The claimant raised proceedings to recover its losses.   By that time however, more than five years had elapsed since the explosion.

The Supreme Court (by a majority of 3:2) held that the claimant first became aware of its loss immediately upon the explosion.  Accordingly, the 5 year prescription clock had started to run from that moment.  Although the claimant was not aware who was at fault, it knew that it had suffered loss through an explosion.  It was therefore under an obligation to investigate matters and bring relevant court proceedings within the 5 year prescriptive period.  Morrison has since been followed in the case of Gordon v Campbell Riddell Breeze Paterson (March 2016).

How do you stop the prescriptive clock?

There are two main ways in which the prescriptive clock can be stopped or interrupted:

1. The raising of relevant court proceedings will stop prescription.

2. Prescription can also be halted where a relevant acknowledgment has been made.  A relevant acknowledgement can be demonstrated in two ways:

a. performance by or on behalf of the debtor towards implement of the obligation which clearly indicates that the obligation still subsists (eg part-payment of a debt); or

b. where there has been made by or on behalf of the debtor to the creditor or his agent an unequivocal written admission clearly acknowledging that the obligation still subsists.

The quickest and surest way of stopping prescription is therefore to bring relevant court proceedings. Under Scottish procedure, however, an action is not “raised” until court papers have been served on all defendants.  In other words, it is not sufficient for the court to simply issue proceeding (or for the initial court papers to be received by the court).  In Scotland, we must also serve the court papers on the defendants so that they have notice of the claim against them.  Accordingly, care must be taken to ensure there is sufficient time to do so.

Practical considerations

The passage of time without appropriate action can be fatal if a claim is left too long before being acted upon.   Where rights or obligations appear to be governed by Scots Law,  the affected party should seek Scottish legal advice as a matter of urgency, especially if it appears that the end of the prescriptive period may be approaching.

Get in touch

For any advice regarding the above, do not hesitate to get in contact with a member of our Dispute Resolution team.

• E-Ming Fong   |   0131 247 2508