Time Bar Tension – HIAL’s £14m Action Against Shetland Islands Council

I fully appreciate it is a lawyer thing, but as regular readers of the blog know there is little that makes a solicitor’s blood run more cold than mention of time bar. That is because usually that phrase suggests that a time limit has been missed and a case can no longer be brought before the court because the case has “prescribed” or been “extinguished”!

The higher the value of the claim, the bigger the worry this is!

Lawyers for Highlands and Islands Airport Ltd (“HIAL”) must have had nerves of steel in this regard, and they have recently been vindicated by the first decision of the Inner House of the Court of Session (the Scottish equivalent to the Court of Appeal) over a large damages claim..

In 2005, HIAL contracted with Shetland Islands Council (“SIC”) for SIC to extend the runway at Sumburgh Airport.

It is alleged by HIAL that the work was not carried out properly and that SIC were responsible for remedying defects.

HIAL raised court proceedings against Shetland Islands Council in 2011. They likely did so because in terms of the Prescription and Limitation (Scotland) Act 1973 someone generally only has five years from the date they suffer a breach of contract (or in certain cases the later date of five years from when they could possibly have known they had suffered some loss) to make a “relevant claim”. This means more than just writing to the other party. Generally it will involve raising court proceedings and serving it on the other party before the time period expires. It is important to note that the time period in personal injury cases is much shorter; usually three years from when an accident or negligence was suffered.

Going back to the Sumburgh case, the difficulty for HIAL was that it was impossible for them to quantify, they said, how much they were due, by the time they had to raise court proceedings. They therefore asked for no money in the original court pleadings but simply asked for a declaration (usually called a declarator) by the court that SIC were in breach of contract and that damages were due.

When HIAL were finally in a position to calculate the exact amount they said they were due, they introduced an amendment to their written pleadings asking for payment for a particular amount of money. SIC’s lawyers objected to the amendment. They said “no relevant claim” had been made within the five year period. It was not enough that declarator had been sought within the five year period. The Minute of Amendment therefore should not be allowed in and SIC should not suffer the damages action.

The claim is for more than loose change: HIAL want to sue SIC for £14.2 million.

In the Outer House of the Court of Session, the judge (Lady Scott) sided with HIAL. She said that the 2011 court action with the claims for declarator was enough to be a relevant claim within the 1973 legislation.

On the 21st April 2015 the Lord President (Lord Gill) delivered the leading opinion in the Appeal Court. He described the case run by SIC on timebar as “contrived”. He also sided with HIAL (for which their lawyers with nerves of steel must have been delighted!). The Lord President pointed out that the declarator sought had practically given notice of the fact that damages would be sought from SIC. It had been responsible for HIAL’s lawyers not to plead for an amount they could not specify or substantiate at that stage.

It is unclear whether SIC will attempt to appeal the decision further to the Supreme Court. Otherwise, unless the case settles, it is likely to go back to the Outer House of the Court of Session (the first instance court) for a full hearing in due course.

Eric Baijal is BBM’s Head of Litigation.

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