Prescription/Limitation: Beware the time-bar on claims

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Whether you’re North or South of the border, the message from case law is clear: calculating the time-bar for bringing claims is complex, and claimants prevaricate at their peril. Banking Litigation partner Louise Power highlights key prescription/limitation case law from Scotland and England and Wales, and offers his practical advice.

Calculating claim deadlines

The point at which losses are discovered and assessed in a claim brought by a mortgage lender can be crucial to the determination of when the limitation period begins to run, and therefore the point at which a claim becomes time-barred.

In an earlier Walker Morris briefing, we explained how, in accordance with the leading Nykredit case [1], the courts of England and Wales take into account both the true value of the charged property and the borrower’s covenant strength to ascertain when a lender claimant suffered loss and, therefore, when the limitation period [2] for bringing a claim began to run.

In Scotland, the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) specifies a five year prescription period from the date on which loss, injury or damage occurred, unless (in accordance with section 11 (3) of the 1973 Act) the potential pursuer [claimant] is not aware, or could not with reasonable diligence have been aware, that loss injury or damage has been caused, in which case the period starts to run on the date when it first became so aware.

Uncertainty and unfairness

Both North and South of the border, the calculation of claim deadlines is highly fact-sensitive, often difficult and can give rise to significant uncertainty. As a recent Scottish case [3] demonstrates, these difficulties and uncertainties with the calculation of claim deadlines can bring about some seemingly unjust results.

For example, in the Gordon case, the pursuers had instructed solicitors to serve notices to evict tenants.  Notices were served requiring vacant possession to be delivered by 10 November 2005, but the tenants did not vacate.  A Land Court action followed (for which the pursuers had incurred expense by 17 February 2006), which concluded, on 24 July 2008, that the notices were defective.  The Supreme Court was asked to determine on which of the three possible dates the pursuer had the requisite knowledge under section 11 (3) of the 1973, such that the prescriptive period had started to run.

The court held that the 1973 Act does not postpone the start of the prescriptive period until a potential pursuer is aware that it has suffered a detriment in the sense that something has gone awry which renders it poorer or otherwise at a disadvantage. As such, what mattered in this case was the objective assessment, with the benefit of hindsight, that the pursuers had suffered loss on 10 November 2005, immediately they did not obtain vacant possession – it did not matter that the pursuer did not know until much later that the loss may have resulted from another’s acts/omissions/negligence.

WM Comment

The Supreme Court in Gordon acknowledged that its strict interpretation of section 11 (3) of the 1973 Act may be hard on potential pursuers/claimants, and even that it may lead to hard results being common.  However the court stated that, to find otherwise, would be to increase uncertainty in this already tricky area, and potentially to contradict earlier case law [4].  The Scottish Law Commission has, however, published a draft bill which proposes to amend section 11 (3) to provide that the time period for bringing a claim will start to run when a pursuer/claimant becomes aware that (a) loss/damage/injury has occurred; (b) the loss/damage/injury was caused by a person’s act or omission; and (c) the identity of that person.  That proposal, if enacted, would bring the law of Scotland more in line with that of England and Wales.  Walker Morris will monitor and report on any developments.

In the meantime, the best advice remains that whenever any potential lender claimant – whether North or South of the border – gets any inkling at all that it may have suffered loss, specialist local legal advice should be sought at the earliest possible time. It may be safer and more cost-effective in the long-run to issue protective proceedings and guard against litigation time-bars, than to delay and miss out on a recovery or other remedy altogether.


[1] Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305
[2] The limitation period in England and Wales is generally six years (or, in the case of claims in tort where facts relevant to the cause of action are not known at the date of accrual of the cause of action, there is a time limit of three years from the date of knowledge of such facts – section 14 A Limitation Act 1980).
[3] Gordon & Ors v Campbell Riddell Breeze Paterson LLP [2017] UKSC 75
[4] The Supreme Court commented that allowing a requirement for awareness of a head of loss would involve knowledge of the factual cause of loss, which was an interpretation that had been rejected in the case of Morrison v ICL [2014] UKSC 48.