Faculty backs Law Commission’s prescription proposals

It suggests that two options for reform put forward by the Scottish Law Commission (SLC) both have merits and would “represent an improvement on the current state of the law”.

The Faculty believes, however, that change will not prevent disputes about the starting point of the prescriptive period, although the disputes will be of a different character from those at present.

One of the main issues in an SLC discussion paper on prescription is how the five-year time-limit is applied to claims relating to latent damage.

The issue was brought into focus when the Supreme Court held by a split decision in David T Morrison & Co Ltd v ICL Plastics Ltd that a creditor had to be aware only of the occurrence of loss for the prescriptive period to start running.

In possible options for change, the SLC says the start of the period could begin when the creditor knows of the loss and the act or omission which caused it (option 2), or when the creditor knows of the loss, the act or omission which caused it and the identity of the person who caused it (option 3).

In a response, the Faculty said: “Our view is that there are merits to both option 2 and option 3, each of which represents an improvement on the state of the law following Morrison.

“Option 2 has the advantage that it was widely understood to represent the law prior to the Supreme Court’s decision in that appeal…

“There is considerable logic to the reformulation proposed in option 3…The addition of a third fact which the pursuer must be aware of inevitably raises the prospect of the date from which prescription commences being delayed further, however.

“While our view is that either option 2 or option 3 will represent an improvement on the current state of the law, disputes on the commencement of the prescriptive period are likely to be of a different character than under the current interpretation of section 11(3) of the Prescription and Limitation (Scotland) Act 1973. In particular, we have reservations regarding how option 3 would interact with the test of reasonable diligence.”

In a separate response to draft proposals on Multi-Party Actions, the Faculty said it was in agreement with the broad objectives outlined in the paper and was “keen to be involved in the consultation process on the detailed rules and looks forward to contributing to their development.”