Over the last few decades, the law of prescription in Scotland has suffered from considerable uncertainty. This principally arose from a line of authority holding that, in certain circumstances, a claim could prescribe before the wronged party realised anything was amiss. Parliament enacted the Prescription (Scotland) Act 2018, which introduced amendments to the Prescription and Limitation (Scotland) Act 1973, in what was presumed to be an attempt to rectify that perceived unfairness.
As we recently discussed, the old regime has reached a settled, if not entirely satisfactory, state in which knowledge of a wrong is irrelevant to the commencement of the 'prescriptive clock' and where Pursuers generally face an uphill task to extend the initial five year prescriptive period.
The 'new' regime under the 2018 Act came into force on 1 June 2022. This introduced a knowledge requirement, whereby the prescriptive clock did not start to run until the Pursuer was (or should have been) aware of: 1) the occurrence of loss, injury or damage; 2) that such was caused by a person's act or omission; and 3) the identity of that person.
Notwithstanding the presumed intent of the Act, there had been some academic commentary that, on a proper interpretation, the 'new regime' was not substantively different to the old, in particular because the definition of "loss, injury or damage" (i.e. not requiring knowledge of a wrong) has not been changed.
Judgment has recently been handed down in the cases above; this is the first consideration of the effect of the 2018 amendments (the 'new' regime). The decision does not reduce the uncertainty.
Discussion
The Pursuer constructed a hotel in Glasgow. In 2017, during construction and post-Grenfell, amendments were made to the cladding design and a remedial scheme was implemented.
In 23 May 2023, after completion, the Pursuer was informed that the remedial scheme was not compliant. A claim to recover the costs of that was introduced shortly after (via an amendment to existing proceedings).
The commencement of the prescriptive clock was complicated by the nature of the losses sought (as it concerned the costs of remedial works, it was not a traditional 'practical completion' scenario); however, in short (and absent any saving provisions which were not established in this case), the claim would be time barred if the knowledge requirements were triggered when the Pursuer incurred the cost of the remedial works (as would be the case under the old regime) but would be 'in time' if the requirements triggered upon the May 2023 notice of a defect.
The Judge analysed the wording of the 2018 Act and found that all three knowledge requirements had been met when the Pursuer incurred the cost of the works, even though it did not know they had been incurred because of a wrong.
The central point to the argument is that the 'new regime' continues to use the existing "loss, injury or damage" wording which, in effect, the Supreme Court has held to be constituted by, for example, elements of fruitless cost, without any requirement for it be known that such 'loss' was caused by a wrong. Without amendment to that, the knowledge requirement has little effect: the Pursuer knew it had incurred such a cost because of a person's conduct and the person (the architect) responsible for it.
In reaching such a decision, the Judge expressly concluded that it cannot be assumed that the 'new regime' was introduced to address the need for knowledge of a wrong. A passage from the Law Commission, suggesting that was the case, was discounted by the Judge, on the basis it pre-dated the Supreme Court's decision establishing the meaning of "loss, injury or damage".
Interestingly, it was also held that the Pursuer's implementation of the remedial works did not constitute an acknowledgement of a claim from the employer, so as to otherwise interrupt the prescriptive clock.
All of the claims were found to be time barred.
Takeaways
The Court's decision is legally cogent, unsatisfactory from a practical point of view and is likely to lead to considerable consternation from parties seeking certainty as to the application of the law.
Whilst the decision will almost certainly be challenged, either on appeal or by subsequent proceedings, the points are such that the (further) involvement of the Supreme Court and/or parliament is likely to be required. Until then, parties continue to live in uncertain times with regard to time bar.
