The best of times; the worst of times

Most legal systems impose some form of time limit to restrict the right to bring a civil claim. Legislation will often impose a period before the end of which proceedings must be commenced for a claim or dispute. At first blush the approach taken to time limits in Scotland and England & Wales appears fairly similar, but a closer inspection reveals this is far from the truth.

From a risk management perspective, it is important that practitioners understand the significant differences between the two systems, particularly where a case involves a cross-border element. In many actions for damages or breach of contract, a failure to appreciate that the systems are distinct can lead to missed deadlines and, sometimes, Master Policy claims. This is an area which can, and regularly does, trip up those who deal with cross-border litigation without seeking specialist advice from experts with knowledge of both jurisdictions.

Prescription v limitation: more than semantics

The first point to note is that, in Scotland, with certain notable exceptions such as personal injury claims, time limits are imposed through “prescription”, whereas in England & Wales, time limits are imposed through “limitation” of actions. While it may be easy to dismiss this as two words for the same thing, the distinction is more than mere semantics. As the name suggests, “limitation” limits the right of a party to pursue a claim in the courts, while “prescription” extinguishes the legal cause of action altogether, as if it had never existed.

For practical purposes the most important effect is that parties can agree to extend a limitation period, something commonly done south of the border through a “standstill agreement”. The same arrangement cannot work for a right which no longer exists, so in Scotland the prescriptive time limit cannot currently be extended by agreement, although the Prescription (Scotland) Act 2018, once in force, will introduce some limited opportunity to do so.

Important practical differences

In England & Wales, the basic time period to bring a civil claim, including one for professional negligence, is six years. In Scotland the equivalent period is five years. The apparent simplicity of that difference belies a whole world of subtle but fundamental disparities between the two systems.

In England & Wales, a limitation period is interrupted when the court receives a claim form, notwithstanding that the claim may then not be served on the defendant for another four months. By contrast, in Scotland, service of the writ/summons on the defender will generally be required to interrupt prescription.

For both jurisdictions the time limit for bringing contribution proceedings against a party with joint liability is two years. However, in England & Wales such an action can be brought following settlement of a claim, whereas in Scotland a court judgment is needed. Therefore, if a Scottish claim is to be settled, thought must be given to whether additional steps are needed to preserve any claim against a joint wrongdoer for a contribution.

Latent damage: could your claim be gone?

The most important task is to identify the date from which the relevant time limit will run. Where there is obvious physical damage, the period will normally be triggered whenever that damage occurs, but where the loss, damage or its cause is less obvious, as with economic loss, it can be much harder to identify the relevant start date.

In England & Wales, the six-year limitation period will begin to run when the cause of action arises, irrespective of what the claimant knew about it. However, for the purposes of a claim in negligence (but not breach of contract or other types of civil liability) a secondary three-year period runs from the date when certain specific facts became (or should reasonably have become) known to the claimant. Broadly speaking, those facts are: (1) that the damage suffered is sufficiently serious to justify bringing a claim; (2) the identity of the defendant; and (3) that the damage was caused by the act or omission alleged to constitute the negligence.

In Scotland, the commencement of the five-year prescription period is postponed if the pursuer is unaware, and could not reasonably have become aware of having suffered loss, injury or damage. Following a series of cases starting with the 2014 Supreme Court judgment in David T Morrison & Co v ICL Plastics and including the Outer House decision in Midlothian Council v Blyth & Blyth in March 2019, the courts have clarified that there is no need for a claimant in Scotland to have knowledge of having suffered a wrong, or the identity of the wrongdoer, in order for time to run. The relevant date of loss continues to be judicially scrutinised (see the recent decision in Kirkcaldy Sheriff Court, Ford v W & AS Bruce [2020] SC KIR 9), as will the date on which a claimant could reasonably have been aware that loss had been sustained.

Thus, the Scottish five-year period can commence when a claimant incurs expenditure or costs which only later turn out to be wasted (for example, because it transpires expense was incurred in reliance on negligent advice); or where a claimant did not obtain something they sought (again due to a breach of duty, which might only be identified later). Knowledge of wrongdoing is not required to trigger the time limit. The effect is that some claims in Scotland may have prescribed before the claimant knew that their right to pursue a claim had even existed.

The general feeling that this may be somewhat harsh (as recognised by the Supreme Court in Gordon’s Trustees v Campbell Riddell Breeze Paterson in November 2017) has been addressed by the 2018 Act which will, when it finally comes into force, bring the Scots position on knowledge of latent damage closer to the English position with the introduction of a three-part test for the discoverability of a claim. But the wording of the Act is not the same as the English version, so it will remain important to recognise the potential for the time limits to be applied differently.

It is also worth noting that both systems impose a longstop date to prevent claims for latent damage being pursued after too long a delay, regardless of whether the relevant facts remain hidden. In England, this kicks in at 15 years from the date of the negligence, whilst in Scotland the period is 20 years, currently running from the date that breach of duty and loss coincide.

Where to sue?

As things stand, in England & Wales a claimant might have a better chance of bringing a claim out of time, for example if they have missed the six-year limitation date on account of a lack of knowledge of their rights to bring a claim, but only if the claim is for negligence and only for a further three years from the date of knowledge/constructive knowledge.

Meanwhile in Scotland, a claimant may have five years from date of knowledge, compared to the English three, for causes of action beyond negligence. However, under the current law, the perceived wrongdoer may well argue that a claim against them is out of time because the claimant was fixed with sufficient knowledge to make the clock start ticking at a point more than five years ago, which might be before they knew they had suffered a wrong.

This is important when considering pursuing a claim in either jurisdiction, particularly where there may be a choice about where to raise proceedings. This article highlights only some of the more common differences encountered. Where parties are pursuing or facing a claim for damages, solicitors should think carefully about the application of all of the relevant rules, and careful consideration of the time limits of the relevant system is an absolute must.

Solicitors should always be careful about determining when the time limit starts to run. If there is ever doubt about when the clock started ticking, always err on the side of caution and raise the action in accordance with the earliest date (better to raise and sist than fail to raise). As Benjamin Franklin sagely observed, “You may delay, but time will not.”