Out-Law News 3 min. read
16 Nov 2018, 10:27 am
The Prescription (Scotland) Bill implements recommendations made by law reform body the Scottish Law Commission, intended to provide greater certainty and clarity in relation to 'negative prescription'. An 'as passed' version of the bill will be published shortly, followed by a four-week period in which it may be challenged on certain grounds. At the end of this period, if there is no challenge, the bill will be submitted to the Queen for Royal Assent.
The question of when the prescription time limit begins to run has caused controversy - especially since the Supreme Court's 2014 decision in the Morrison v ICL Plastics case, in which it held that the time might start to run before it was known who had caused the loss. It was argued by some that this case, and the later Supreme Court decision in Gordon's Trustees v Campbell Riddell, could produce harsh and potentially unintended results. While that was a matter of debate it is this argument, amongst other things, that the new legislation is intended to address.
There are a number of changes introduced by the bill of varying significance:
Probably of most importance to day to day practice, with obligations to pay damages, the five-year prescriptive period will only begin to run when the creditor is aware, as a matter of fact:
Although the bill passed through the Scottish parliament largely unnoticed, some parts caused concern. The general idea that the long-stop 20 year prescription should not be interrupted was well received, although some felt that the provisions relating to a possible extension of the 20 year period would not work well for property rights, such as servitudes. This concern was addressed by way of an amendment at stage 2 of the bill.
Sometimes, when a court grants an order at the end of a successful court action such as one ordering someone to pay a sum of money, this court order takes the place of the original source of the obligation to pay the money – with its own 20 year prescriptive period which starts to run from the date of the order. This is not the case with other types of court orders, including those recognising the existence of a servitude. It emerged during the parliamentary process that this meant that a court could declare that a servitude existed, only for that right to be extinguished by prescription at the end of the court action. The amendment means that a property right will be treated as having been exercised or enforced when the claim was made in court, with the result that a new 20 year prescriptive period will run from this point.
As in all things, balance is the key. The effect on time and how the law treats that can be viewed form different perspectives. While the changes to the five year rule favour claimants there are other changes – particularly over very old claims, which go in a different direction. Whether balance has been achieved will await practical experience of the amended provisions.
Craig Connal is a commercial litigation expert at Pinsent Masons, the law firm behind Out-Law.com.