The Scots law of prescription in relation to latent damage needs reform, and both options put forward by the Scottish Law Commission would represent an improvement, according to the Faculty of Advocates.

The issue was brought into focus in 2014 when the UK Supreme Court held by a split decision in David T Morrison & Co Ltd v ICL Plastics Ltd that a claimant only has to be aware of the occurrence of loss for the five year period to bring an action to start running, and not also how and by whom it was caused.

In possible options for change, the Commission says the start of the period could begin when the creditor knows of the loss and the act or omission which caused it (option 2), or when the creditor knows of the loss, the act or omission which caused it and the identity of the person who caused it (option 3).

In a response, the Faculty said: “Our view is that there are merits to both option 2 and option 3, each of which represents an improvement on the state of the law following Morrison.

“Option 2 has the advantage that it was widely understood to represent the law prior to the Supreme Court’s decision in that appeal…

“There is considerable logic to the reformulation proposed in option 3…The addition of a third fact which the pursuer must be aware of inevitably raises the prospect of the date from which prescription commences being delayed further, however.

“While our view is that either option 2 or option 3 will represent an improvement on the current state of the law, disputes on the commencement of the prescriptive period are likely to be of a different character than under the current interpretation of s 11(3) of the Prescription and Limitation (Scotland) Act 1973. In particular, we have reservations regarding how option 3 would interact with the test of reasonable diligence.”

The Faculty believes that change will not prevent disputes about the starting point of the prescriptive period, although the disputes will be of a different character from those at present.

Click here to view the full response.

  • In a separate brief response to draft proposals on Multi-Party Actions, the Faculty says it is in agreement with the broad objectives outlined in the paper and is “keen to be involved in the consultation process on the detailed rules and looks forward to contributing to their development.”