Prescription reform report seeks to make the law fairer

A report seeking to achieve greater fairness in the law on when legal claims are barred by the lapse of time has been published today by the Scottish Law Commission.

The law of prescription aims to define when justice between the parties to a court action means that after a certain period it is fairer to deprive a pursuer of a claim than to allow it to be pursued against a defender. This is related to concerns about stale or missing evidence and the difficulties facing a court in trying to administer justice in those circumstances. It also recognises the wider public interest in court proceedings being raised promptly if they are to be raised at all. 

However difficulties are caused in practice if a potential claimant is not aware at the outset that they have suffered loss or damage, or if they have, that it was due to someone else's fault, or the identity of that person – the "latent damage" problem.

The report focuses in particular on the discoverability test, that is the knowledge which a pursuer must have before the prescriptive period begins to run in such cases; as well as the starting date of the 20-year prescriptive period which operates as a final cut-off point for claims; whether it should be possible to contract out from the statutory periods; and the burden of proof, along with some miscellaneous issues. It does not deal with claims arising from personal injuries, to which separate rules apply.

It aims to bring increased certainty, clarity and fairness to the law, resulting in a reduction in the need to resort to court action; and to promote a more efficient use of resources.

In relation to discoverability, the report recommends a test with three strands: before the five-year prescriptive period begins to run, the creditor must be aware, as a matter of fact, that loss, injury or damage has occurred, that the loss, injury or damage was caused by a person’s act or omission, and of the identity of that person. Whether the creditor is aware that the act or omission that caused the loss, injury or damage is actionable in law should be irrelevant.

This would overturn the effect of the 2014 UK Supreme Court decision in David T Morrison & Co v ICL Plastics, which held that time ran against the owners of a building damaged by the Stockwell Street explosion in Glasgow even before they knew that a breach of duty by another person had caused the explosion.

Counting 20 years

Regarding the 20 year rule, this has been criticised as it is possible for a long period to pass without the period even starting to run, if no loss has yet followed from the wrongful act in question. The report therefore recommends that for obligations to pay damages in respect of loss, injury or damage caused by an act or omission, the 20-year prescriptive period should begin on the date of the act or omission giving rise to the claim.

Further, in order to achieve the result that the 20-year period genuinely operates as a long stop, it should not be possible to interrupt it either by relevant claim or by relevant acknowledgment. However, where a claim has been made during the prescriptive period, that period should be extended until such time as it is finally disposed of or the proceedings otherwise come to an end.

As for contracting out, the report recommends that it should be competent to extend the short two-year and five-year prescriptive periods, but only for a limited period and subject to certain conditions, to enable parties to seek to negotiate an end to their dispute without the need to raise proceedings to preserve their rights. Agreements to disapply or in any way alter the operation of any of the prescriptive periods, for example by shortening them, should not otherwise be permitted.

Among matters of clarification, the report proposes that it is specified that the burden of proof should be on the claimant to show that an obligation has not prescribed; that it is put beyond doubt that the principal Act of 1973 does not apply where other primary or secondary legislation makes its own provision for prescription or limitation; that the five-year prescription should extend to all statutory obligations to make payment unless specifically excluded, such as obligations to pay taxes, council tax and non-domestic rates, sums recoverable under social security and tax credit legislation, and child maintenance support; and that it should extend to any obligation arising from delict.

It also recommends that the definition of “relevant claim” should include the submission of a claim in an administration or receivership and the acts which give rise to administration or receivership.

Click here to view the report and related documents.