Changes to prescription clock not before time

Shirley Wyles is a partner in the Edinburgh office of law firm BLM.
Shirley Wyles is a partner in the Edinburgh office of law firm BLM.
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TIMING is everything, as any actor will tell you. The same is true when it comes to the law. Whether it’s personal injury claims being time-barred by a three-year period of limitation or criminal convictions being “spent” under the Rehabilitation of Offenders Act, it’s crucial to understand the importance of timing.

That sense of timing is at the very heart of the Prescription (Scotland) Bill, which Justice Secretary Michael Matheson introduced to the Scottish Parliament on 8 February. The proposed legislation is designed to amend the law relating to “the extinction of rights and obligations by the passage of time”.

At present, a non-personal injury claim becomes “stale” under negative prescription if no legal action has been taken within five years of a creditor finding out that they have suffered a loss, regardless of their state of knowledge on the cause of the loss. The Supreme Court clarified this “discoverability test” in 2014 in an appeal successfully brought by lawyers from BLM – in a previous guise as HBM Sayers – that related to property damage from an explosion at a chemicals factory in Maryhill in Glasgow in 2004.

Following a recommendation from the Scottish Law Commission, the Scottish Government wants to change the point at which the clock starts running on the discoverability test to take into account three factors instead of one. Rather than beginning when a creditor simply discovers they have suffered a loss, the five-year prescriptive period will only start when a creditor discovers: 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.

Commenting on the proposals, Legal Affairs Minister Annabelle Ewing said the new bill was needed to “remove grey areas in the existing law, such as contention regarding the date the prescription clock starts ticking” and to ensure claims are raised promptly. She added: “The changes in this bill will increase clarity, certainty and fairness, and benefit persons or bodies in resolving disputes.”

At the moment, the law is very clear – the 2014 Supreme Court ruling made plain the moment at which the clock starts ticking – and the introduction of three factors rather than one for the discoverability test means that cases will not necessarily be raised more promptly. Further, questions over who knew what and when – or who should have known what and when – could create more grounds for disagreements and legal wrangles, prolonging the time it takes for cases to be resolved.

Yet Annabelle Ewing’s comment on fairness, to creditors at least, will undoubtedly be addressed by the new bill. A recent case before the Supreme Court has highlighted how the current set-up could be seen to be unfair.

Last July, the Supreme Court in London heard an appeal against a decision taken in the Court of Session in Edinburgh in the case of Gordon v Campbell Riddell Breeze Paterson LLP. The Court of Session, bound by the 2014 Supreme Court decision, had ruled that the five-year prescriptive clock had begun ticking in 2005 when the solicitors had served defective notices to quit on agricultural tenants and not in 2008 when the Scottish Land Court ruled that the notices had been defective.

That decision meant that the professional negligence action raised against the solicitors in 2012 was dismissed because it had been started too late. Last November, the Supreme Court unanimously dismissed the appeal against that decision, upholding the Court of Session’s original judgment.

Lord Hodge, delivering the Supreme Court’s judgment in Gordon, recognised that the present “discoverability formula” may indeed give rise to “hard cases”, with arguably “harsh” outcomes. But, as the Supreme Court pointed out, “it offers certainty, at least with the benefit of hindsight”.

Shirley Wyles is a partner in the Edinburgh office of law firm BLM