Scottish Equitable Plc V. Miller Construction Ltd
| Jurisdiction | Scotland |
| Judge | Lord Prosser |
| Docket Number | XA65/00 |
| Date | 31 August 2001 |
| Court | Court of Session |
| Published date | 31 August 2001 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Prosser Lord Milligan Lord Kingarth
| XA65/00 OPINION OF THE COURT delivered by LORD PROSSER in APPEAL under Section 3 of the Administration of Justice (Scotland) Act 1972 by SCOTTISH EQUITABLE plc Appellants; against MILLER CONSTRUCTION LIMITED Respondents: _______ |
Act: J.E. Drummond-Young, Q.C., Wolffe; MacRoberts (Appellants)
Alt: Reed, Q.C.; Dundas & Wilson (Respondents)
31 August 2001
[1]The appellants, Scottish Equitable plc (formerly Scottish Equitable Life Assurance Society), and the respondents, Miller Construction Limited, concluded a contract in May 1988, which was formally executed in March 1989, for the demolition of premises at 12 Blenheim Place, Edinburgh and construction of a new office block there. Certain disputes and differences arose between the parties in connection with or arising out of the works, and these resulted in Miller Construction making claims upon Scottish Equitable which they wished to have resolved by arbitration. By a Joint Deed of Submission dated 9 and 16 May 1997, they recorded their agreement to the appointment of Mr. David Pirie as arbiter to resolve these matters, all as referred to in a prior Notice to Concur dated 7 May 1996.
[2]Mr. Pirie accepted office in July 1997, and appointed a Clerk and a Legal Assessor. Miller Construction lodged a Statement of Claim which was answered by Scottish Equitable, and in due course a closed record was lodged with the arbiter in May 1999.
[3]Certain issues arose in relation to prescription, and oral and written submissions were made by the parties in that regard. These related in part to the long negative prescription, but the parties came to agree that the arbiter should deal in the first place with their respective positions on the hypothesis that the relevant prescriptive period was the short negative prescription of five years, as provided for in section 6 and Schedule 1 of the Prescription and Limitation (Scotland) Act 1973. In August 1999, Proposed Findings were intimated to the parties. Representations led to revisal of these Findings, and on 11 January 2000 the arbiter heard further representations. On that same date, he issued an interlocutor disposing of various pleas in law. In addition, on the same day but prior to the hearing, Miller Construction had lodged a Minute, requesting the arbiter in terms of section 3 of the Administration of Justice (Scotland) Act 1972 to state a case for the Opinion of the Court of Session on certain specified questions. Intimation of this Minute to Scottish Equitable was made, and accepted. The proposed findings were issued in their final form on 18 January 2000, but contained no further additions or revisals to the form in which they had been issued in December 1999. In view of the request for a stated case, the arbiter left his findings in a "proposed" form. A subsequent request that a case be stated on additional questions was refused.
[4]The contract into which the parties entered was a Scottish Building Contract (with Quantities) January 1988, with Scottish Supplement incorporating the Conditions of the Standard Form of Building Contract 1980 edition (Private with Quantities) and the Supplemental Provisions known as the VAT Agreement. J.C.T. Amendments 1, 2, 4 and 5 applied, except that the references to Articles 5.2.2 and 5.2.3, and to the appendix in J.C.T. Amendment 2, were deemed to be deleted. Both the Scottish Supplement forming Appendix I and the Abstract of Conditions forming Appendix II were incorporated in the contract.
[5]In their Claim in the arbitration, Miller Construction seek five declarators, and in addition have three craves for payment. Put shortly, the declarators sought are (1) that the architect should have instructed as variations, or sanctioned in writing, various matters; (2) that certain specified matters constituted "relevant events" in terms of Clause 25 of the contract; (3) that the Claimants' works were delayed beyond the completion date because of "relevant events"; (4) that the Claimants have incurred direct loss and/or expense in the execution of the contract within the meaning of Clause 26.1, because the regular progress of the works, or part of the works, was materially affected by the specified alleged variations and relevant events, and "that the amount of such loss and/or expense ought to have been included in an interim certificate No. 29 issued by the architect on 18 June 1992, and that the said certificate falls to be opened up, reviewed, revised and amended accordingly"; and finally (5) that for ascertainment under Clause 26.1 of the loss and/or expense that ought to have been included in interim certificate 29, the architect should have stated in writing to the Claimants that an extension of time had been given, with a new completion date of 6 August 1990, and that "the architect's failure so to do is a decision that falls to be opened up, reviewed and revised accordingly" with other certificates and the like which are contrary to the terms of the crave. Of the craves for payment, the first was not insisted in before the arbiter. The second (crave 6) is for the sum of £230,000. The third (crave 7) is for £2,080,307.44. This last-mentioned sum relates to alleged direct loss and expense due to progress of the works being materially affected.
[6]In relation to the issue of prescription it is appropriate to set out the relevant statutory provisions. Section 6(1) of the Prescription and Limitation (Scotland) Act 1973 provides as follows:
"If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years -
(a)without any relevant claim having been made in relation to the
obligation, and
(b)without the subsistence of the obligation having been relevantly
acknowledged, then as from the expiration of that period the obligation shall be extinguished."
Subparagraph (1)(g) of Schedule 1 of the Act provides that subject to paragraph 2, section 6 of the Act applies "to any obligation arising from, or by reason of any breach of, a contract or promise, not being an obligation falling within any other provision of this paragraph".
[7]Section 6(2) of the Act provides that in subsection (1), the reference to the appropriate date, in relation to an obligation of the kind here in question, is a reference to the date when the obligation "became enforceable". Whether the obligations in question have been extinguished depends upon whether any "relevant claim" was made which in terms of section 9 of the Act means a claim made in appropriate proceedings in a court of competent jurisdiction or in arbitration proceedings. In terms of section 15(2) of the Act, a reference to an obligation includes a reference to the right correlative thereto.
[8]In these circumstances, the arbiter says that in his judgment, the principal question for him is "When did the right to claim these sums become enforceable in law, and has five years elapsed from those rights becoming so enforceable without any relevant claim being made, so as to preclude, by reason of the operation of the five year prescriptive period, recovery of the sums in question?"
[9]By his interlocutor of 11 January 2000, the arbiter repelled and sustained a number of pleas in law for each of the parties, in whole or in part, and it was not and is not disputed that his disposal of pleas in that interlocutor would be appropriate on the basis of his Proposed Findings. The Proposed Findings are incorporated in the stated case. The questions posed in the stated case, for the Opinion of this court are as follows:
"1.Was I correct in law to find that under the contract between the parties, time would only begin to run for the purposes of section 6 of the Prescription and Limitation (Scotland) Act 1973 on the claims reflected in crave 7 and its supporting averments, craves and pleas, upon the issuance of a Final Certificate, or in any event that said claims only became enforceable on the issue of interim certificate 29?
2.If I was not correct so to find, upon what legal principles should I determine when time began to run for the purposes of section 6 of the Prescription and Limitation (Scotland) Act 1973 on said claims?
3.Was I correct in law in holding that the claims reflected in crave 7, and its supporting averments, craves and pleas, have not prescribed by the operation of section 6 of the Prescription and Limitation (Scotland) Act 1973?
4.Should I have:
(a)held that the said claims have prescribed by virtue of section 6 of the
Prescription and Limitation (Scotland) Act 1973; or
(b)allowed a proof before answer on the question of whether or not the
said claims have prescribed by virtue of section 6 of the Prescription and Limitation (Scotland) Act 1973?"
[10]On behalf of the appellants, it was submitted that questions 1 and 3 should be answered in the negative, question 4(a) should be answered in the affirmative, which failing question 4(b) should be answered in the affirmative. Question 2 should be answered as follows: "In relation to each relevant matter, time began to run when the contractor was first able to enforce his right to have the correct amount of direct loss and expense arising from that matter ascertained and added to the contract sum."
[11]On behalf of Miller Construction, it was submitted that question 1 should be answered affirmatively, in a manner to which we shall return when considering the significance of the final certificate and interim certificate 29. Upon that basis, question 2 was superseded, but it was submitted that the answer proposed by the appellants was too vague to be of assistance to the arbiter. Question 3 should be answered in the affirmative, as raising no issues separate from those raised in question 1. Finally, question 4(a) should be answered in the negative, as should question 4(b), there being no need for proof, whatever the legal...
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