Article Loss Prevention

Ground Investigation – Scottish Law Variations

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Note provided by Beale & Co

The case of Midlothian Council v Raeburn Drilling and Geotechnical Ltd, RPS Planning & Developments Ltd, Blyth & Blyth Consulting Engineers Ltd  & Bracewell Stirling Architects [2019] CSOH 29  is a useful reminder that Scotland is a different legal jurisdiction from England & Wales.  Whilst there are areas where Scottish substantive law is very similar to English law, there are also areas of divergence, as well as a different Court system and procedure for claims north of the border.  AGS members should bear this in mind when signing up to contracts governed by Scottish law and when considering bringing or when facing claims in Scotland that will be pursued through the Scottish Courts.

The above-mentioned case concerns the important topic of when claims become time-barred.  In England & Wales, this is called the law of limitation. The law of limitation is covered in LPG 8 of the AGS Loss Prevention Guidance.  In Scotland, it is largely covered by what is called the law of prescription.   There are significant differences between prescription (in Scotland) and limitation (in England & Wales).

In terms of claims for breach of contract, the most obvious difference concerns time periods.  In Scotland, the starting point is that the obligation to make payment for a loss caused by a breach of contract “prescribes” i.e. expires after five years.  In England & Wales, the starting point is that a claim for breach of contract becomes time-barred six years after the breach (if the contract is under hand) or 12 years (if the contract is executed as a deed).

The question of when (under Scottish law) the five year prescription period commences was considered in the above-mentioned case.  In this widely reported decision, the Outer House of the Scottish Court of Session held that the prescription period started on a very early date, thus resulting in a tough decision for the claimant (and a very favourable outcome for the defendant consultant).

The case will be of wider interest to AGS members as it concerns an alleged escape of gas from former mine works beneath a residential housing development at Gorebridge near Edinburgh.  The owner of the site, Midlothian Council, brought a claim against (amongst others) its consulting engineers on the project, Blyth & Blyth, alleging negligence in relation to their site investigation services and advice.

In a decision concerned solely with the issue of prescription, the Scottish Court held that the Council’s prescription period against Blyth & Blyth commenced as soon as the Council incurred expenditure on the construction of the development in reliance on Blyth & Blyth’s advice.  This was despite the fact that, at that stage, the Council had no inkling of either any issues with the development or with Blyth & Blyth’s advice.  However, the Court decided that the expenditure was wasted and thus constituted a loss, and that (as it knew of the expenditure) the Council had the requisite knowledge of the loss for the purposes of starting the prescription period.  The result being that more than five years had passed between the Council’s expenditure and it commencing Court proceedings against Blyth & Blyth.  Therefore, the claim had prescribed and was out of time.  (For the avoidance of any doubt, no fault was attributed to any of the defendants.)

It is important to note that this case may well not be the last word on prescription issues in Scotland in the context of construction disputes, as other cases work their way through the Courts.  There is also the prospect of legislative reform as a new Prescription Act is pending.  However, for now, AGS members should note this case, especially if you face the prospect of a claim in Scotland arising from your professional services, as the Midlothian decision is clearly favourable for consultants.

The information in this article is, of necessity, generic and is not intended to be a complete or comprehensive statement of the law, nor does it constitute legal or specialist advice.  It is intended only to highlight issues that may be of interest to AGS members.  Neither the writer, nor AGS, assumes any responsibility for any loss which may arise from accessing, or reliance on the material and all liability is disclaimed accordingly.  Professional advice should be taken before applying the content of the article to particular circumstances.