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The Ticking Prescription Time Bomb - a harsh approach that offers certainty

  • United Kingdom
  • Real estate litigation

11-12-2017

Gordon and others, as the Trustees of the Inter Vivos Trust of the late William Strathdee Gordon v Campbell Riddell Breeze Paterson LLP (Scotland) [2017] UKSC 75.

In Scotland the right to enforce certain obligations is extinguished if a claim is not made within 5 years. Knowing when the clock starts ticking is therefore crucial. The relevant rules are contained in the Prescription and Limitation (Sc) Act 1973 (“1973 Act”). This Supreme Court decision has brought some welcome clarity to the interpretation of an opaque provision.

This case involved a professional negligence action against a firm of solicitors who negligently served notices to quit, seeking to terminate agricultural leases for their clients. The first notices contained the wrong period of notice. The second notices – seeking to terminate the leases in 2005 - contained other inaccuracies. The tenant did not remove on the specified termination date.

In 2006 fresh solicitors acting for the clients raised an action in the Scottish Land Court seeking removal of the tenants. Ultimately, one notice was upheld but two were deemed ineffective and the clients could not obtain possession of two of their fields. In 2012 they raised a damages claim against their original solicitors, who defended it on the basis that it was “time-barred” because it had not been raised within the 5 year period. The Court had to consider at what point the 5 year period began.

The Court decided that the party looking to enforce the obligation must be able to recognise that they have suffered some form of detriment for the prescriptive clock to begin ticking. The Court ruled that this occurred at two points here: (i) when the tenants failed to remove; and (ii) when the clients incurred the costs of instructing new solicitors to raise the action in the Land Court (regardless of the result).

The Court noted that in many circumstances a client will incur expenditure but will not know that there has been negligence. However, they concluded the party need not know that they will have a claim for that loss. It is sufficient that they are aware that they have not obtained something which they had sought, or that they have incurred expense.

The Court acknowledged that this could lead to harsh results however noted that it creates certainty, albeit with the benefit of hindsight.

Key points

  • It is important to act without delay and seek legal advice which takes into account the time limit for bringing a claim. Knowledge of the identity of the "wrongdoer" is not necessary before the prescriptive clock starts to tick.
  • The underlying facts of the case serve as a reminder of the importance of ensuring notices are correctly served. Failure to comply with strict contractual requirements may well render a notice invalid.
  • The relevant timescales for raising actions in Scotland are different (and shorter) to those South of the Border. If you are in any doubt about your position you must seek legal advice quickly.
  • The Court highlighted that the Scottish Law Commission recently reviewed the 1973 Act and the Scottish Government intends to bring forward a Bill to reform this area of law, so it is likely that the position will change in the near future.