Prescription/limitation for professional negligence claims in Scotland

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Last year we published an article which explained why calculating the time-bar for bringing professional negligence claims is complex – whether you are operating within England and Wales or in Scotland.  Partner Louise Power now provides an essential update on changes to the law of prescription in Scotland, and offers practical advice for lenders considering pursuing professional negligence claims.

The story so far

The primary prescription period for bringing a professional negligence claim in Scotland is five years from the date the claimant suffered loss.  In a typical lender claim, in accordance with the Nykredit case [1], loss occurs (and the time period for bringing a claim starts running) at the moment the amount outstanding under the loan exceeds the value of the security.  The value of the security is calculated by taking into account both the true value of the charged property and the borrower’s covenant strength.  Under section 11 (3) of the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act), the time at which the clock starts to run can be delayed until the potential pursuer becomes aware, or could with reasonable diligence have been aware, that loss injury or damage has been caused.  What is often referred to as the secondary prescription period then starts to run on the date when it first became so aware.

As we explained in our earlier article, however, section 11 (3) of the 1973 Act prompted much litigation and gave rise to significant uncertainty – culminating in the Supreme Court’s decision in Gordon & Ors v Campbell Riddell Breeze Paterson LLP  [2] in 2017.  In that case, 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 and that what matters is the objective assessment that the pursuer has suffered loss on a certain date – it does not matter that the pursuer may not know until much later that the loss may have resulted from another’s acts/omissions/negligence.  As the Supreme Court itself acknowledged, that decision, whilst providing clarity and certainty, produced a harsh result which made it more difficult for lenders to raise claims.

Law reform and looking ahead

The Scottish Law Commission agreed that the Gordon decision had hard consequences.  It therefore  published proposals 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.  Those proposals were enacted in the Prescription (Scotland) Act 2018, albeit the relevant section, section 5, has not yet been implemented and its commencement date is, as yet, unknown.

When section 5 Prescription (Scotland) Act 2018 comes into force, lenders should once again find it easier to pursue claims.  Walker Morris will monitor and report on the in-force date when it is decided.

In the meantime, the best advice remains that whenever a lender gets any inkling that it may have suffered loss, specialist local legal advice should be sought at the earliest possible time. In many cases it will be safer and more cost-effective to issue protective proceedings than to prevaricate and risk falling foul of a prescription time-bar and missing out on the ability to pursue proceedings altogether.


[1] Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305
[2] [2017] UKSC 75