The Five-Year Time Limit for Negligence Claims

In a case recently heard on appeal before the Inner House of the Court of Session, the Court reiterated the rigid approach to be taken as to when the clock starts ticking before claims are time barred.

The Rules of Prescription

Time bar is governed by the Scots law of prescription, which is set out in the Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”).

Most claims are time barred after five years. The question that many claimants fall foul of is “when does the five-year period commence”?

The general rule is that an obligation to make reparation shall become enforceable “on the date when the loss, injury or damage occurred”. If court proceedings are not raised by the fifth anniversary of that date, the claim will “prescribe” and will effectively cease to exist.

However, if the claimant was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage had occurred, the legislation states that the clock will start ticking when when the claimant first became aware, or could with reasonable diligence have become aware of the loss.

WPH Developments Limited v Young & Gault LLP is the latest in a line of judgments since 2012 to apply a strict, perhaps even harsh, interpretation of when the claimant could have been aware of the loss.

WPH Developments Limited v Young & Gault LLP [2021]CSIH 39

WPH Developments Limited (“the Developer”) developed a residential project and claimed that Young & Gault LLP (“the Architect”) had provided negligent advice and plans which caused the Developer to build on land that they did not own.

The Developer had instructed the Architect in October 2012 to provide services, including plotting the precise location of the development’s boundaries. When the properties were subsequently sold in the autumn of 2013, drawings of the individual plots were provided by the Architect for the purpose of the dispositions granted by the Developer.

On 20 February 2014, boundary issues were raised by the agents of the neighbouring landowner. Later that month, under reference to a surveyor’s opinion, the Developer was asked to remove the boundary walls it had erected that were found to be encroaching on the neighbouring property. In May 2014 it emerged that the Keeper of the Land Registers of Scotland was rejecting the dispositions granted by the Developer on the basis of boundary discrepancies.

A court action was served on behalf of the Developer on 21 November 2018, the key question being when “loss” had occurred.

The Developer submitted that they did not become aware of the loss until the boundary issues were first raised in 2014 and so the obligation had not been extinguished by prescription when the action was raised in November 2018, being within the five-year prescriptive period.

The Decision

The Sheriff at first instance made a valiant effort to find in favour of the pursuer on the basis that they could not have known of the fault which gave rise to a claim.

The Court of Session disagreed. The Court considered that the loss had occurred when the Developer had sold the houses in the autumn of 2013 and as a result the obligation had in fact prescribed. The Court considered that the Developer had been aware of the objective facts which amounted to “loss, injury or damage” in terms of the 1973 Act as and when they occurred, in particular, when the boundary walls had been erected and the plots had been sold.

This decision goes to show that potential claimants should be aware of the strict manner in which such time limits will be interpreted by the courts. It may be said that this is another example of legal certainty being achieved at the expense of fairness.

It reinforces the importance of taking legal advice at the earliest opportunity even if you are not aware of having suffered any loss. It would seem that in claims involving the operation of prescription time marches on now irrespective of other circumstances.

For any advice in relation to any particular aspects of the above, please contact a member of the Wright, Johnston & Mackenzie Conflict Resolution Group here.