Commission discussion paper proposes new prescription rules

The running of time against a legal claim when the claimant may be lacking in knowledge of some essential aspect of the claim, is one of the topics covered in a new discussion paper published by the Scottish Law Commission today.

The latent damage issue, as it is known, came to prominence following the decision of the UK Supreme Court in the case of David T Morrison & Co Ltd v ICL Plastics Ltd in 2014, which arose out of the explosion at the Stockline factory in Glasgow in May 2004. After a public inquiry into the blast reported in July 2009, the owners of a nearby shop damaged by the explosion raised an action in August 2009. By three judges to two, the Supreme Court ruled that the party suffering the loss merely had to be aware of the occurrence of that loss and not also of the cause of the loss, for the five year time period to begin running, and that the shop owners’ action had been raised too late.

Today's discussion paper examines the law relating to latent damage, asks whether the law as decided by the Morrison case is fair, and explores options for reform. The Commission's preliminary view is that time should not begin to run until the creditor knows of the facts (a) of the loss and (b) of the act or omission which caused it and (c) the identity of the person who caused it. Claimants might otherwise have to raise a number of actions against different parties just to protect their position.

Other topics examined in the paper include:

• the scope of the five year prescription – for example, should it be extended to apply to statutory obligations?;
• the structure of the 20 year "long stop" prescription, including whether the time from which it runs should be changed, whether it should be capable of being interrupted or extended, and whether 20 years is the appropriate period;
• whether it should be possible to contract out from the statutory prescriptive periods;
• the burden of proof, in cases where the pursuer does not aver special facts;
• and the operation of prescription in relation to unjust enrichment.

David Johnston QC, leading the project, said: "The law of prescription plays an important role in balancing the interests of the parties to a litigation. There is also a wider public interest in requiring litigation to be initiated promptly if it is to be initiated at all. The law has remained largely unchanged for 40 years. As part of our current programme of law reform we were encouraged to review the main areas in which change might be considered. This paper is the result."

Click here to access the discussion paper. The consultation exercise runs until 23 May.