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Midlothian Council -v- Raeburn Drilling and Geotechnical Limited and Blyth & Blyth Consulting Engineers [2019] CSOH 29 (20 March 2019)

This case follows on from an earlier action for damages by Midlothian Council ("Council").  [See, Midlothian Council -v- Bracewell Stirling Architects and Others [2017] CSOH 87 (21 June 2017)]. The dispute arose when, in September 2013, residents at a recently built social housing development started feeling unwell. The multi million pound development had been completed in June 2013 without the installation of protective gas membranes at the homes. After evacuating residents, the Council decided in 2014 to demolish the houses and rebuild the properties with protective gas membranes. The local authority also decided to sue the companies involved in the construction of the homes for £12,077,080 - the cost of the reconstruction.

Background

This action was only against Blyth & Blyth, the structural engineers. The Council argued that they had failed to advise that a gas defence system was required to prevent noxious gas seeping up from the coal strata and mine workings below. At debate, Blyth and Blyth maintained that any right to claim damages had been extinguished by the operation of the short negative prescription pursuant to s.6 of the Prescription and Limitation (Scotland) Act 1973.  The defender argued that the Council knew from December 2007 to June 2009 that it was incurring expenditure on construction of the development in reliance on the defender's advice.  The Council argued that while that loss occurred in June 2009 – at practical completion of the development - it was not aware of having suffered any loss until 7 September 2013, when the first complaint of gas fumes was made by a tenant.

Lord Doherty granted decree of dismissal.  The Court held for the defender on the grounds that, following David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL PlasticsLtd (2014 SC (UKSC) 222) and Gordon’s Trustees v Campbell Riddell Breeze Paterson LLP (2017 SLT 1287), it was agreed that the breach of contract in 2006 was the date of injuria and, the Court found, as soon as the Council accepted the defender's advice and acted upon it to proceed to construction, there was damnum. The Court said that since both parties accepted that loss, injury or damage had occurred by June 2009, the Council's claim for reparation extinguished in June 2014, more than four years before it raised this action against Blyth & Blyth on 4 September 2018.

Comment

This decision robustly confirms the current position of the law of prescription in the wake of Morrison and Gordon's Trustees.  It is worth noting that while Midlothian Council discovered the defect on 7 September 2013 and raised proceedings against some defenders earlier, it waited until 4 September 2018, just days before it perceived its claim would lapse, to raise proceedings against Blyth and Blyth. All defenders must take good advice on the role prescription might play in a dispute even though they are not a named party in proceedings.

Prescription (Scotland) Act 2018

The Prescription (Scotland) Act 2018 ("Act") is principally intended to clarify the period from which time starts to run where a person seeking damages is not fully aware of the circumstances of their loss or who caused it. However it also amends the law around the 20 year period when an obligation is finally extinguished, the law on relevant claims, including in situations of insolvency, the ability to contract out of the Act, and shifts the burden of proof onto the claimant.

The Act was given Royal Assent on 18 December 2018, however it has not yet come into effect. The Scottish Government is currently in the process of drafting the subordinate legislation necessary to give effect to the Act. It is anticipated that the Act will come into force later in 2019.

Contact

For more information please contact Saamir Nizam, Solicitor  Saamir.Nizam@dwf.law

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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