November 2018 – Chop & Change for Claim Cut-Off Dates – The Prescription (Scotland) Bill

Author: Mitchells Roberton
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  • The Prescription (Scotland) Bill was passed by the Scottish Parliament on 8th November (by 111 votes with none against and no abstentions). Although the law of “prescription” has existed in Scotland for many years the Bill makes various important adjustments to the law.
  • Something was said about “prescription” in the Bullet Point Update for June 2016 (“the June 2016 BPU”) which can be found here
  • By way of brief recap, the form of prescription with which we’re concerned here (called “negative prescription”)  is the rule that a person who suffers a loss because of some act or omission of another must raise his or her claim in court within a certain time-limit. If the time-limit is missed, the ability to pursue the claim is lost.
  • At first sight this may seem unfair because its effect is that with the passage time a person loses a legal right. But in fact legal systems generally have some sort of cut-off point. The key policy reasons for this are summarised in the June 2016 BPU.
  • The basic period for “prescription” is five years from the date on which the loss arose from the wrongdoer’s act or omission. But, of course, sometimes the person who has suffered a loss may not always know they actually have a claim until quite some time after the loss has happened.
  • In those sorts of cases the law provides that the general rule for the starting date for the running of prescription is modified: in such cases the start date for the running of prescription is postponed until the person who has suffered a loss has a degree of knowledge about the existence of the claim. This is sometimes referred to as “the discoverability test”.
  • For quite some time the general view was that the discoverability test was only satisfied when the person who had suffered such a loss was both:

(1)          aware that he or she had sustained a loss, and

(2)          that the loss had been caused by fault or negligence.

“Prescription” did not start running until both (1) and (2) applied.

  • But a case decided in the Supreme Court in 2014 (Morrison v ICL Plastics Ltd) changed the goalposts for such cases significantly. In outline, on 11 May 2004 there was an explosion at ICL’s factory in Glasgow. Nine people were killed and many others were injured. Extensive damage was caused to neighbouring properties, including a shop owned by Morrison.
  • On 13 August 2009 (over five years after ICL’s factory explosion) Morrison began its court case against ICL on the basis that the damage to its shop was caused by ICL’s negligence.
  • ICL resisted Morrison’s claim on the basis that any obligation owed by ICL to make reparation to Morrison for the shop damage had prescribed before the court case began – because more than five years (“the prescriptive period”) had passed since the explosion.
  • Morrison argued however that the prescriptive period did not begin to run until long after the explosion occurred, since Morrison was not aware, and could not reasonably have been aware, that the damage had been caused by ICL’s negligence until a much later date.
  • But the Supreme Court found (by a bare majority) for ICL. It held that on a proper interpretation of the then statutory rules concerning prescription the start date of the prescriptive period is only postponed until the  person who has suffered the loss knows they have done so: nothing more is required. They do not need to be aware that the loss was caused by fault or negligence.
  • The case was somewhat controversial and one of the Scottish judges of the Supreme Court (Lord Hodge) said (in his dissenting judgment):

“It is 25 years since the Scottish Law Commission produced its 1989 report … on prescription … In the light of the decision in this case, which has changed the law as it was previously understood, I would urge that those recommendations should be given fresh consideration.” 

  • The Scottish Law Commission did then give further consideration to the law of prescription: in particular in relation to cases like Morrison. The Prescription (Scotland) Bill follows on from that review.
  • The Bill makes provision to replace the discoverability test set out in the current (1973) Prescription Act for Scotland  by a new test.
  • In outline, the new and more clear-cut discoverability test is to the effect that, in relation to obligations to pay damages, before the five year prescriptive period begins to run, the person who has suffered the loss must be aware, as a matter of fact:

(1)          that loss, injury or damage has occurred;

(2)          that the loss, injury or damage was caused by a person‘s act or omission; and

(3)          the identity of that person. 

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Paul Neilly: pdn@mitchells-roberton.co.uk

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