David T Morrison & Co Limited t/a Gael Home Interiors v ICL Plastics Limited and others

Under section 11(3) of the Prescription and Limitation (Scotland) Act 1973, the five-year prescriptive period for an obligation to make reparation is postponed only until the creditor knows, or could with reasonable diligence know, that loss, injury or damage has occurred. The creditor need not know that the loss was caused by an act or omission, that the conduct was actionable, or that a stateable claim exists.

The words “caused as aforesaid” identify the loss to which the obligation relates. They do not enlarge the matters of which the creditor must be aware. Accordingly, res ipsa loquitur, as an evidential principle supporting an inference of negligence, is irrelevant to the commencement of prescription under section 11(3).

An explosion at ICL’s Glasgow factory caused deaths, injuries and extensive damage to neighbouring premises owned by Morrison. Morrison commenced proceedings more than five years later, claiming damages for negligence, nuisance and breach of statutory duty. ICL maintained that any obligation to make reparation had been extinguished by the five-year prescription imposed by section 6(1) of the Prescription and Limitation (Scotland) Act 1973.

The Lord Ordinary upheld the plea of prescription, applying res ipsa loquitur: [2012] CSOH 44; 2012 SLT 813. The Inner House recalled that decision and allowed a proof before answer, holding that the maxim did not establish the awareness required by section 11(3): [2013] CSIH 19; 2013 SC 391.

The central issue in the Supreme Court was whether section 11(3) required awareness only that loss had occurred, or also awareness of its factual cause or actionable character.

1. Appeal allowed by a majority of three to two. Lord Reed, with whom Lord Neuberger and Lord Sumption agreed, held that Morrison’s obligation had prescribed. Morrison knew of the damage when the explosion occurred, but did not commence proceedings until more than five years later. Section 11(3) did not postpone the commencement of prescription until Morrison knew the cause of the explosion or that a breach of duty had occurred.

2. Section 11(1) of the Prescription and Limitation (Scotland) Act 1973 establishes the general rule that an obligation to make reparation becomes enforceable when loss caused by an act, neglect or default occurs. Section 11(2) modifies that rule for continuing defaults. Section 11(3) addresses latent damage by substituting the date when the creditor first knew, or could with reasonable diligence have known, of the occurrence of the loss.

3. The words “caused as aforesaid” in section 11(3) are adjectival. They connect the relevant loss with the default founding the obligation, but do not require awareness of causation or actionability. If Parliament had intended awareness of those additional matters, it would have specified them expressly, as it did in the personal injury limitation provisions. A contrary interpretation would make prescription depend upon the creditor’s legal advice and would undermine legal certainty.

4. The court rejected the established approach derived from Greater Glasgow Health Board v Baxter Clark & Paul, Kirk Care Housing Association Ltd v Crerar & Partners and Glasper v Rodger. It also rejected the later gloss that the creditor must know enough to advance a stateable prima facie claim. That gloss lacked sufficient support in the statutory language and introduced uncertainty into a regime intended to provide a definite prescriptive period.

5. Since section 11(3) concerns awareness of the occurrence of loss, res ipsa loquitur is irrelevant. The maxim is an evidential principle permitting an inference of negligence and shifting the evidential burden. It is not a rule for establishing a creditor’s actual or constructive awareness.

6. Lord Hodge, with whom Lord Toulson agreed, dissented. He would have required actual or constructive awareness both of more than minimal loss and of the act or omission which factually caused it, but not awareness of actionability or the defender’s identity. He would have dismissed the appeal and permitted a proof before answer on Morrison’s knowledge.

1. United Kingdom Supreme Court: Allowed ICL’s appeal by a majority of three to two and held that Morrison’s obligation had prescribed: [2014] UKSC 48.

2. Inner House of the Court of Session: Recalled the Lord Ordinary’s interlocutor and allowed a proof before answer on prescription and section 11(3): [2013] CSIH 19; 2013 SC 391.

3. Outer House of the Court of Session: The Lord Ordinary upheld ICL’s plea of prescription on the basis of res ipsa loquitur: [2012] CSOH 44; 2012 SLT 813.