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

The Supreme Court considered the meaning of section 11(3) of the Prescription and Limitation (Scotland) Act 1973 and when the five-year short prescriptive period begins to run for obligations to make reparation. The majority held that section 11(3) is concerned with the creditor's awareness of the occurrence of loss (damnum) and, when applicable, its discoverability (latent damage), rather than requiring awareness that the loss was caused by an actionable breach of duty. In consequence the maxim res ipsa loquitur has no direct role in determining when time begins to run under section 11(3). The court allowed the appeal because the established approach, which had required awareness of causation or actionability, was wrong in law.

This case arose from a major explosion at ICL's factory in Glasgow on 11 May 2004 which caused extensive damage to neighbouring property owned by Morrison. Morrison sued for damages in August 2009 for loss to its shop, alleging negligence, nuisance and breach of statutory duty. ICL defended on prescription, relying on the five-year short prescriptive period in section 6(1) of the Prescription and Limitation (Scotland) Act 1973. The key issue was the correct construction of section 11(3) of that Act and whether the prescriptive period is postponed until the creditor is aware, or could with reasonable diligence have become aware, not only of the occurrence of loss but also that the loss was caused by an actionable breach (that is, awareness of causation/actionability).

The case came to the Supreme Court after interlocutory rulings at first instance: Lord Woolman (Outer House) held res ipsa loquitur applied and found prescription had run; the Inner House allowed a proof before answer and took a different view on the application of res ipsa loquitur. The Supreme Court permitted ICL to argue the broader interpretive point.

The Court framed the issues as: (i) the natural meaning of the words "loss, injury or damage caused as aforesaid" in section 11(3); (ii) whether the subsection requires awareness of the cause of the loss and of its actionability or only awareness of the occurrence of loss (including latent loss); and (iii) the relevance of the evidential doctrine res ipsa loquitur. The majority (Lord Reed, Lord Neuberger and Lord Sumption) concluded that the ordinary meaning of section 11(3) is that it postpones prescription where the creditor is unaware, actually or constructively, that loss has occurred (eg latent damage) and that the words "caused as aforesaid" merely connect the loss to the category of loss described in section 11(1) (loss caused by an act, neglect or default). They relied on textual analysis and comparison with other statutory provisions (notably section 17 and earlier section 18(3)), policy considerations favouring legal certainty, and the oddities that would follow if awareness of actionability were required. They held res ipsa loquitur is an evidential rule and irrelevant to the statutory discoverability test. Lord Hodge (with Lord Toulson) dissented, preferring an interpretation that the creditor must have actual or constructive awareness of (i) the fact of loss and (ii) its factual cause by an act or omission before the prescriptive period begins; he considered this to be the best reading of the statutory language and consistent with prior Scottish authority.

Outcome sought: damages for property loss and lost profits. Issues decided: commencement of prescriptive period under section 11(3), scope of creditor's required awareness, and the role of res ipsa loquitur. Reasoning: majority gave primacy to textual reading and statutory context, limiting section 11(3) to discoverability of loss rather than discoverability of actionable causation; minority preferred a wider factual discoverability test including knowledge of factual cause.

Appeal allowed. The majority held that section 11(3) of the Prescription and Limitation (Scotland) Act 1973 postpones prescription where the creditor was not, and could not with reasonable diligence have been, aware that loss had occurred (eg latent damage), but does not require awareness that the loss was caused by an actionable breach of duty. The court therefore rejected the interpretation that awareness of actionability or causation is necessary and treated res ipsa loquitur as irrelevant to the statutory discoverability test.

Lord Woolman, Outer House, Court of Session: ICL succeeded on application of res ipsa loquitur ([2012] CSOH 44); Inner House, Court of Session: Morrison succeeded and proof before answer allowed ([2013] CSIH 19); appeal to the Supreme Court allowed ([2014] UKSC 48).