A Cautionary Tale
“Time-bar” is a doctrine lawyers, and perhaps even the public, associate with personal injury cases, where very often claims that have existed for more than three years cannot then be brought to court if the action has not been raised before the third anniversary.
What is often forgotten is that time bar also operates in commercial cases. In very general terms, and there are exceptions and intricacies, an obligation arising out of a breach of contract will be extinguished after five years by virtue of the doctrine of “prescription”.
The recent judgement of Lord Tyre in the case of John G Sibbald & Son Limited v Johnston and Another is a good example of this.
In this case, the Defenders had designed a bridge. The Pursuers alleged that there were various defects with the bridge. Correspondence identifying those difficulties had been sent by the Pursuers to the Defenders in 2004. The Pursuers then raised court proceedings in 2013.
It was very simply said for the Defenders that the obligation had prescribed. The Pursuers argued that the obligation had not prescribed because the breach had continued since the design. Section 11 (2) of the Prescription and Limitation (Scotland) Act 1973 provides:
“Where as a result of a continuing act, neglect or default, loss, injury or damage has occurred before the cessation of the act, neglect or default, loss, injury or damage shall be deemed for the purposes of subsection (1) above to have occurred on the date when the act, neglect or default ceased.”
Lord Tyre rejected that argument.
He concluded: “These are all completed acts or defaults which are averred to have occurred in the course of designing (and possibly constructing) the bridge, i.e. at best for the Pursuer, some time prior to June 2004; it is unnecessary for present purposes to be more precise. There is, in my opinion, no causal link between, on the one hand, any breach of duty to review the design which may continue to subsist, and, on the other hand, the occurrence of any of the losses claimed in this action.”
It is important to note that the situation may well have been different if the Pursuers could not reasonably have ascertained that there had been some alleged breach until a much later date – in this case, Lord Tyre was satisfied that they had been aware in 2004.
The case is another salutary lesson for lawyers and clients as to the importance of ensuring that proceedings are raised timeously before the court.
Eric Baijal is BBM Solicitors, Head of Litigation: emb [AT] bbmsolicitors [DOT] co [DOT] uk