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The Court of Session has reconsidered the law of prescription (the Scottish equivalent of limitation) in the recent case of Tilbury Douglas Construction Limited v Ove Arup & Partners Scotland Limited [16.08.23] (Tilbury).
The background
Tilbury concerned the development of a former railway yard. The site sits above two railway tunnels. Enabling works were required to ensure the site could be unloaded safely without damaging the tunnels. The claimant was engaged by Edinburgh Haymarket Developments Limited (EHDL), being the developer in the project, to carry out the enabling works. The defendant was appointed to provide engineering services, including a Network Rail-approved design.
The claimant alleged that the defendant’s original design was based on wrong assumptions about the strength and stiffness of the tunnel brickwork; and that the defendant failed to conduct sufficient investigations into the presence of voids within and behind the tunnel lining. Consequently, the defendant’s design had to be reworked and resubmitted, resulting in significant additional expense.
The arguments
The parties agreed that the claimant’s loss occurred on 27 November 2013, the date on which it entered into the contract with EHDL, relying on the defendant’s design for the enabling works.
Ordinarily, any claim would have to be brought within five years of that date, being 26 November 2018. However, a summons was not served on the defendant until 30 July 2019. So the claimant argued that the prescriptive period was extended by sections 11(3) or 6(4) of the Prescription & Limitation (Scotland) Act 1973.
Section 11(3) of the Act allows for the start of the five year prescriptive period to be postponed until the claimant could, with reasonable diligence, have become aware it had suffered a loss.
Under section 6(4) of the 1973 Act, any time period when the claimant was induced by the advice or conduct of the defendant to refrain from making a claim is excluded from the calculation of the prescriptive period.
The claimant argued that it only became aware of its loss in late November 2014 when the defendant advised that full grouting of one of the tunnels would be required. Prior to that, the claimant had relied upon the defendant’s reassurances about the adequacy of their design and refrained from making a claim.
The defendant argued that their advice had foreshadowed the problems that later came to light and that, as early as January 2014, the claimant knew that additional brickwork repairs would be required. They also maintained that, if their reassurances about their design were a sufficient basis for s.6(4) to apply, the act of denying liability would suspend the prescriptive period in every case. On that basis, the ordinary prescription period should apply without interruption.
The decision
The court held that s. 6(4) applied and that the claimant had been induced to refrain from making a claim by the words and conduct of the defendant. The defendant had advised the claimant of potential issues but assured them that the design remained valid despite those risks. The court found nothing in the defendant’s advice to alert the claimant to the true nature of the problem or its implications for the design.
The court also found that if the defendant had apprised the claimant of the issue at an earlier stage, as it did on 28 November 2014, then the claimant would have promptly held the defendant responsible for the additional costs, as it did in December 2014.
The court therefore held that the claim had not prescribed and allowed a trial on all aspects other than prescription.
Comment
Tilbury demonstrates how difficult and uncertain the law of prescription continues to be, even following the introduction of the Prescription (Scotland) Act 2018. It is also the latest in a series of decisions which suggest that the Scottish courts will be hesitant to make a ruling on prescription at a preliminary proof (or trial) or without having considered the parties’ evidence in full.
This reflects the fact that the question of whether or not a claim has prescribed is fact-specific and almost always closely interlinked with issues of liability and causation. What follows from this is the costs incurred in testing whether a claim might be prescribed may not be that dissimilar from the costs of a trial on all issues, or at least prescription and liability.
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Construction and engineering
Insurance and reinsurance
United Kingdom