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Supreme Court affirms solicitors' prescription plea to defective notices claim

15 November 2017

A claim against a firm of solicitors which issued defective notices to quit agricultural subjects has been held time barred by the UK Supreme Court.

Five Justices unanimously dismissed an appeal by the trustees of the late William Strathdee Gordon in their action against Campbell Riddell Breeze Paterson, arising from two notices that failed to set out accurately the tenant or the leases to which they related, with the result that the tenants could not be removed or the land sold for development.

The action was raised in May 2012. The solicitors pleaded that the five year prescriptive period had begun to run on service of the notices in November 2004, or at latest when the tenant failed to quit in November 2005. The trustees averred that they were first aware of their loss when the Scottish Land Court refused to give effect to the notices in July 2008. The Court of Session, following the Supreme Court decision in David Morrison (Plastics) v ICL (2014), held the action time barred, on the basis that the effect of s11(3) of the Prescription and Limitation (Scotland) Act 1973 Act was that the prescriptive period ran from the time the trustees incurred liability for legal fees notwithstanding that they did not then know that their application to the Scottish Land Court would fail.

Lord Hodge, with whom Lord Neuberger, Lord Mance, Lord Sumption and Lord Reed agreed, said that the phrase “loss, injury or damage” had to be interpreted consistently throughout s 11 of the 1973 Act. It followed that s 11(3) did not postpone the start of the prescriptive period until a creditor of an obligation was aware, actually or constructively, that he or she had suffered a detriment in the sense that something had gone awry which rendered the creditor poorer or otherwise at a disadvantage. This approach might be harsh to a creditor who was aware of incurred expenditure but not that it entailed the loss. However, the alternative approach suggested by the trustees would create uncertainty and a requirement for awareness of a head of loss would involve knowledge of the factual cause of the loss, which was an interpretation rejected in Morrison.

Any understanding on the part of the trustees that the expenditure they incurred in the Scottish Land Court would ultimately be recovered from the tenant when their claim was successful was irrelevant. On an objective assessment, they suffered loss on 10 November 2005 when they did not obtain vacant possession. At that moment, the prescriptive period began to run under s 11(1) unless it could be postponed by s 11(3). There was no postponement under s 11(3) because the trustees were aware that they had suffered detriment when they did not obtain vacant possession on 10 November 2005. In any event, they were actually or constructively aware that they had incurred legal expenses to obtain such possession by 17 February 2006, and their claim had prescribed by the time the action was raised.

He added that while that conclusion "may suggest that hard cases may be more common than it was previously thought", there are live proposals for law reform in a Scottish Law Commission report and the Scottish Government had announced its intention to bring forward a bill. It would be for the Scottish Parliament to decide whether the Commission’s proposals for reform of the discoverability test in s 11(3) of the 1973 Act should be adopted.

Click here to access the judgment.


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