Too little too late – or just in the nick?

This article was co-authored by Cameron Tait, Trainee Solicitor

Prescription (or limitation as it is known south of the border) is an area of Scots law that has been in a state of flux for the last decade. During the consultation period for the Prescription and Limitation (Scotland) Act 2018, one very senior lawyer described it as “every lawyer’s nightmare”. The 2018 Act has introduced a new ‘discoverability test’ which is designed to tackle the perceived defender friendly approach borne out of the authorities over the past few years. However, for obligations which prescribe on or before 15 May 2022, the Prescription and Limitation (Scotland) Act 1973 will still apply and so we find ourselves in the tricky position of having to consider both regimes when thinking about prescription.

The following is a brief review of three fairly recent decisions from the Scottish courts which all either centre around, or touch upon, the question of prescription.

Tick tock…beware of the prescription clock.

Tilbury Douglas Construction Ltd (Tilbury) v Ove Arup and Partners Scotland Ltd (Arup) CSIH 15. [12.06.24]

The case of Tilbury v Ove Arup concerned the development of a former railway yard in Edinburgh which sat upon two railway tunnels. Tilbury were appointed as principal contractors for the enabling works with the engineering services being sub-contracted to Arup. The latter’s role included the preparation of the design for the enabling works. However, when work began in 2014, it became apparent that there were issues with the brickwork in the tunnel. Cue a complete redesign. Unsurprisingly, Tilbury sought damages as a result of the defective design and the question before the court was whether the claim for defective design was out of time.

Tilbury argued that they were unaware of the loss until November 2014, when Arup recommended full grouting of one of the tunnels. They also asserted that Arup’s reassurances about the design’s adequacy delayed their ability to bring the claim within the five year prescriptive period (as set out in the 1973 Act). They therefore sought to extend the prescriptive period under what are now known as the savings or extension provisions contained within sections 11(3) and 6(4) of the 1973 Act.

The judge at first instance held that the case should proceed to trial, but Arup appealed.

Two key issues were discussed in the appeal, namely:

• The starting point of the prescription period and whether that could be said to have been delayed in terms of s.11(3) of the 1973 Act.

The court examined when Tilbury first became aware of the loss. Initially, it was argued that the prescriptive period should start from November 2014 when Arup suggested the further work. However, the appeal court decided that the loss occurred earlier—when Tilbury entered the contract in November 2013, thus starting the prescriptive clock. On that assessment, Tilbury’s claim was time-barred.

• Was Tilbury induced to refrain from making a claim under s.6(4)?

Tilbury claimed that Arup’s reassurances about the adequacy of the design had induced them to delay raising the claim, which should postpone the prescriptive period. However, the appeal court ruled that there was insufficient evidence to prove that Arup’s conduct had caused Tilbury not to raise the claim within the prescriptive period.

The Court’s interpretation of Section 6(4) is potentially helpful to defenders facing professional negligence claims. The comments indicate that a professional’s acceptance of instructions, provision of services and acceptance of payment should not be enough to meet the test of inducing error. Claimants will need to go further to establish that the defender have caused an error which induced them to refrain from making a relevant claim. Continued reliance on a professional’s services and advice may not be enough.

Just in the nick of time.

Leonardo Hotel Management (UK) Ltd (Leonardo) v Galliford Try Building 2014 Ltd (Galliford Try) CSOH 43. [19.04.24]

Leonardo involved a claim by the tenant of the Leonardo Inn Hotel in Aberdeen against Galliford Try, the contractor, and the landlord’s architect. Both defenders granted collateral warranties in 2008, with practical completion certified in 2009. After a 2017 property survey following the Grenfell fire, Leonardo alleged defective cladding and sought repair costs in 2021—12 years after the loss. Galliford Try argued the claim was time-barred under the 1973 Act,  on the following basis:

• The claim originated from a breach of collateral warranty and, as such, must be brought within five years from the date of loss
• The loss occurred when Leonardo entered the lease in 2009
• The action was raised 12 years after the loss.

The court considered whether Leonardo had relevantly averred a case in respect of either or both of the savings sections of 1973 Act, and the court allowed Leonardo to proceed to an evidential hearing. It was held that while on the face of it the claim appeared time barred, Leonardo had to prove it was unaware of the defect and/or it was induced to believe the property was defect-free.

On both points, the court held that there was no lack of fair notice of the claimant’s position and the averments advanced were matters properly for trial.

So, what can we take from this decision? The case highlights the importance of how a case is pled. Where a defender defends a case based on prescription, a claimant will have to provide sufficient detail in their averments to cover why the extension provisions in the 1973 Act should apply.

Assignment – beware!

Tecjet Limited (Tecjet) v Kier Construction Limited (Kier) CSOH 60. [13.06.24]

The case of Tecjet Limited v Kier Construction Ltd revolved around a claim for damages arising from the 2018 fire at the Glasgow School of Art. Many will know that the School of Art was devastated by a fire in 2014 and was undergoing significant reconstruction works when a second, this time catastrophic, fire broke out in 2018. The later fire caused considerable damage to neighbouring properties.

Tecjet, the tenant of the neighbouring building, alleged that Kier, the main contractor working on the Art School at the time, was negligent and responsible for the fire’s spread.

Tecjet sued for its own losses, as well as losses allegedly sustained by two related companies - Academy Music Group and Live Nation. In doing so, Tecjet relied upon two assignments, one which predated the raising of proceedings and the second which was signed after proceedings were served on Kier. 

Kier challenged Tecjet’s title to sue on behalf of the two assignor companies and the basis of that attack was quite simple; the wording of the first assignment did not give Tecjet title to sue.  As such, they had not raised a “relevant claim” for the purposes of interrupting the prescriptive clock.

The court agreed and held that the wording of the first assignment did not convey the property rights to allow Tecjet to bring a claim of this nature on behalf of the assignors.

It went on to confirm that the second assignment did nothing to alter the position, saying:

“If at the date of raising an action the [claimant] has no title to sue, the defect cannot be cured by a subsequent assignment.”

As there was no “relevant claim” for the assignors’ losses, the proceedings served in May 2023 (mere days before the end of the five year prescriptive period) did nothing to interrupt the prescriptive period. Accordingly, the assignors’ claims were dismissed on the basis that Tecjet had no title to sue. Further, and importantly, since it was now five years since the date of the fire, any remedy available to the assignors had prescribed.

In situations where one might be considering assigning losses to another party, and if litigation is contemplated, this case clearly highlights the need to take considerable care when drafting such an assignment. It might also help to make sure this is all done well in advance of the end of the prescriptive period!

Comment

The 2018 Act is seen as an antidote to the perceived harshness of the old regime for claimants, but it remains to be seen whether it will have the intended effect. Loss will surely remain front and centre but ‘loss’ is not defined and that will inevitably create uncertainty, something which courts will have to address, and that’s not likely to be for some time yet.

Read other items in Professions and Financial Lines Brief - October 2024