WPH Developments Ltd v Young and Gault LLP
| Jurisdiction | Scotland |
| Judgment Date | 29 July 2021 |
| Docket Number | No 3 |
| Court | Court of Session (Inner House) |
First Division
Sheriff Court
Dunlop v McGowans 1980 SC (HL) 73; 1980 SLT 129
Glasgow City Council v VFS Financial Services Ltd [2020] CSOH 92; 2020 SLT 1227
Gordon v Campbell Riddle Breeze Paterson LLP [2016] CSIH 16; 2016 SC 548; 2016 SLT 580
Gordon's Trs v Campbell Riddell Breeze Paterson LLP [2017] UKSC 75; 2017 SLT 1287; 2018 SCLR 129
Kennedy v Royal Bank of Scotland plc [2018] CSIH 70; 2019 SC 168; 2018 SLT 1261; 2018 Hous LR 120
Midlothian Council v Raeburn Drilling and Geotechnical Ltd [2019] CSOH 29; 2019 SLT 1327
Morrison (David T) & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd [2014] UKSC 48; 2014 SC (UKSC) 222; 2014 SLT 791; 2014 SCLR 711; [2014] CILL 3561
Prescription — Quinquennial prescription — Creditor's awareness of loss — Residential development — Whether pursuers aware of loss when walls built on neighbouring land — Prescription and Limitation (Scotland) Act 1973 (cap 52), sec 11(3)
WPH Developments ltd raised an action against Young and Gault LLP (in liquidation) in the sheriffdom of Glasgow and Strathkelvin at Glasgow. The initial writ was served on 21 November 2018. On 28 October 2019, the cause called for debate before the sheriff (S Reid). On 8 April 2020, the sheriff allowed a proof before answer ([2020] SC GLA 27; 2020 SLT (Sh Ct) 185). The defenders appealed to the Sheriff Appeal Court.
On 4 August 2020, on the defenders' unopposed motion, the Sheriff Appeal Court (Sheriff Principal CD Turnbull, Sheriff AM Cubie and Sheriff N McFadyen) remitted the appeal to the Court of Session in terms of sec 112 of the Courts Reform (Scotland) Act 2014 (asp 18) ([2021] SAC (Civ) 7; 2020 GWD 29-376).
Section 6(1) of the Prescription and Limitation (Scotland) Act 1973 (cap 52) (‘the 1973 Act’) provides, so far as material, “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”. Section 6(3) provides, “In subsection (1) … the reference to the appropriate date, in relation to an obligation of any kind specified in Schedule 2 to this Act is a reference to the date specified in that Schedule in relation to obligations of that kind, and in relation to an obligation of any other kind is a reference to the date when the obligation became enforceable.” Schedule 1 provides, inter alia, that sec 6 applies to obligations arising from liability to make reparation. Section 11(1) provides, so far as material, “any obligation … to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred.” Section 11(3) provides, so far as material, “In relation to a case where on the date referred to in subsection (1) … the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware.”
In October 2012, the pursuers engaged the defenders to provide architectural services in relation to a residential development at Newton Mearns. The defenders' task included plotting the boundaries of the development. The pursuers averred that, as a result of the defenders' incorrect plotting of boundaries, walls were built on neighbouring land. In autumn 2013, the defenders provided drawings to be used in the conveyance of individual plots. The pursuers averred that these drawings did not depict the true boundary of the pursuers' title and that, as a result, when plots were sold, the disponees did not acquire title to all of the land disponed to them. On 20 February 2014, the neighbouring landowner raised issues as to the boundary of the pursuers' title. Later that month, the pursuers were asked to remove the encroaching walls. The pursuers raised an action for damages against the defenders. The action commenced on 21 November 2018.
The defenders averred that any obligation on their part to make reparation had been extinguished. They averred that the pursuers had incurred wasted expenditure more than five years before commencement of the action. Injuria and damnum had concurred before 21 November 2013.
The pursuers averred, in response, that no loss had been incurred until 2014, when they required to purchase extra land and relocate the encroaching walls. Had loss been incurred before 21 November 2013, they averred, in reliance on sec 11(3) of the 1973 Act, that they had not been aware, and could not with reasonable diligence have become aware, that loss had occurred before February 2014, when the neighbouring landowner had raised issues as to the boundary of their title.
The sheriff held that loss had occurred before 21 November 2013, when walls were built on neighbouring land. However, the pursuers had made relevant averments that they were not aware, and could not with reasonable diligence have become aware, of loss until they were informed of the encroachment. The sheriff reasoned that, if hindsight was applied, the date of damnum and the date of the creditor's awareness of loss would always coincide, rendering sec 11(3) redundant. He concluded that, if the creditor incurred expenditure, that could constitute latent damage, engaging sec 11(3). Although that analysis was contradicted by passages in Gordon's Trs v Campbell Riddell Breeze Paterson LLP (2017), those passages were erroneous obiter dicta. Midlothian Council v Raeburn Drilling and Geotechnical Ltd had been wrongly decided. Hindsight could not be applied to determine the creditor's awareness of loss.
On appeal, the defenders submitted that the sheriff had failed to understand and to apply binding authority. Had that binding authority been applied, their plea of prescription would have succeeded.
The pursuers supported the sheriff's reasoning, submitting that hindsight had no role to play in the operation of sec 11(3). They had become aware of loss only in February 2014, when they became aware of the encroachment.
Held that: (1) in Gordon's Trs v Campbell Riddell Breeze Paterson LLP the UK Supreme Court held that sec 11(3) of the 1973 Act started the prescriptive clock when the creditor of the obligation was aware that he or she has spent money, but did not know that that expenditure would be ineffective; while it was understandable that the sheriff had difficulty with the notion of hindsight being used to create an awareness on the part of a creditor of a detriment at a point in time when the creditor had no such awareness, hindsight knowledge of the circumstances that rendered the loss detrimental had formed no part of the Supreme Court's analysis of sec 11(3) in Gordon's Trs and contemporaneous knowledge of the objective facts which constituted the loss was sufficient to preclude reliance on sec 11(3) (paras 30, 31); (2) had the sheriff applied the authorities binding upon him, he would have been bound to hold that the pursuers' averments in reliance on sec 11(3) were irrelevant; the pursuers were aware of the objective facts which constituted loss as and when they occurred and the prescriptive clock started then, and the fact that an accurate calculation of all consequential loss could not be made until later did not alter that position (paras 37, 39, 41); and appeal allowed.
Observed that the pursuers' submissions and the sheriff's judgment were, in effect, eloquent pleas for a return to something similar to the understanding of sec 11(3) of the 1973 Act before David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd and Gordon's Trs v Campbell Riddell Breeze Paterson LLP (2017); it was, however, a lower court's task to apply authoritative expositions of the law, not to evaluate them (para 42).
Glasgow City Council v VFS Financial Services Ltd 2020 SLT 1227 approved and Gordon v Campbell Riddell Breeze Paterson LLP2016 SC 548, Gordon's Trs v Campbell Riddell Breeze Paterson LLP2017 SLT 1287 and Kennedy v Royal Bank of Scotland plc2019 SC 168applied.
The cause called before the First Division, comprising the Lord President (Carloway), Lord Malcolm and Lord Pentland, for a hearing on the summar roll, on 2 June 2021.
At advising, on 29 July 2021, the opinion of the Court was delivered by Lord Malcolm—
Opinion of the Court—
[1] This action concerns a claim for damages based on allegedly negligent architectural services which caused the pursuers to build on land they did not own. The sheriff heard a debate limited to the question of whether any claim had been extinguished by the operation of the five-year short negative prescription. It was submitted that the alleged breach of duty (injuria) and resulting loss (damnum) had occurred more than five years before the commencement of the action. The sheriff held that this was correct. However the pursuers had made relevant averments to the effect that they were not aware, and could not with reasonable diligence have become aware, of the occurrence of damnum until they were informed of the encroachment, all in terms of sec 11(3) of the Prescription and Limitation (Scotland) Act 1973 (cap 52). This was said to have happened within the five years preceding the raising of the action on 21 November 2018. The sheriff ordered a proof before answer, which, since the pursuers' averments as to awareness of boundary problems were not admitted, would include determination of the prescription issue ([2020] SC GLA 27).
[2] The...
To continue reading
Request your trial
-
The Firm Of C&l Mair Against Mike Dewis Farm Systems Limited
...inevitable were Midlothian Council v Raeburn Drilling and Geotechnical Limited 2019 SLT 1327; WPH Developments Limited v Young & Gault LLP 2022 SC 28 (in which the First Division upheld the correctness of Midlothian Council and Kennedy); Beard v Beveridge Herd and Sandilands WS 1990 SLT 609......