Inner House affirms strict latent damage time bar rule

A cause of action against architects whose plans misstated the boundary of a property arose when the plans were supplied even though it was not until later that boundary issues were raised by neighbouring proprietors, with the result that an action against the architects was time barred, the Inner House has held.

Lord President Carloway, Lord Malcolm and Lord Pentland gave the decision in allowing an appeal by Young & Gault Ltd (in liquidation) against a sheriff's decision to allow proof before answer in an action by WPH Developments Ltd alleging negligence by the defenders in providing construction drawings for a development in Newton Mearns. The Sheriff Appeal Court remitted the appeal to the Court of Session due to continuing uncertainty over the effect of decisions of the UK Supreme Court on the application of the Prescription and Limitation (Scotland) Act 1973.

The defenders were instructed in October 2012 for services including plotting the precise location of the boundaries of the development. Drawings were provided between then and autumn 2013 which were alleged to be erroneous in this respect, with the result that walls were built that encroached on neighbouring properties. This was raised with the pursuers in February 2014. The action was raised in November 2018.

Following a debate on the defenders' plea that the action was raised more than five years after the cause of action arose, the sheriff held that the pursuers were not aware, and could not with reasonable diligence have become aware, of their detriment (in terms of s 11(3) of the 1973 Act) until after November 2013: the defenders' position required the pursuers' knowledge to be assessed with the benefit of hindsight, which would deprive s 11(3) of effect. The Supreme Court decisions in Morrison (2014) and Gordon's Trustees (2017) requires detriment that was manifest, notwithstanding certain dicta in the judgments.

Lord Carloway, delivering the opinion of the court, said it was clear that Gordon's Trustees had decided that time would run where the creditor of the obligation was aware that they had spent money, but did not know that that expenditure would be ineffective. They did not have to know that they had a head of loss. Hindsight knowledge did not in fact form part of the court's analysis: contemporaneous knowledge of the objective facts which caused the loss or detriment was sufficient to preclude reliance on the provision.

He added: "the fact that an accurate calculation of all consequential loss could not be made until later does not alter that position. We see no basis for interpreting the recent decisions as giving some special status to heads of loss quantified by reference to subsequent events occurring at a time when it was clear that the creditor was out of pocket. As the Lord President, Lord Carloway, said in Kennedy [2018] at para 20: 'where loss is inevitable, as a matter of law, in almost all cases, loss will have already occurred'."

As respects the present case, "In particular it was known that the walls had been built and that houses had been sold. There is no scope for a postponement of the start of the five year prescriptive period until the pursuers were told of the problem."

The defenders were therefore entitle to decree of absolvitor.

Click here to view the opinion of the court.