Introduction

In the landmark case of Highlands and Islands Enterprise v Galliford Try Infrastructure Ltd ([2023] CSOH 21), the Scottish Court of Session addressed critical issues surrounding the prescription of claims related to construction defects. This case revolves around the construction and subsequent defects of the Cairngorm Mountain Railway near Aviemore, Scotland. The key parties involved include Highlands and Islands Enterprise as the pursuer and Galliford Try Infrastructure Limited along with A.F. Cruden Associates Limited in liquidation as the defenders.

The central issues in this case pertain to whether the claim for damages exceeding £11.5 million against the defendants had prescribed under the Prescription and Limitation (Scotland) Act 1973, and whether the pursuer could invoke provisions related to error induced by the defendants to extend the limitation period.

Summary of the Judgment

The court, presided over by Lord Sandison, determined that the pursuer's claim against Galliford Try Infrastructure Limited could proceed to a proof before answer, with the prescription plea put aside. The court acknowledged that, prima facie, the claim against the first defender had prescribed by December 2006, five years after the railway's commencement in December 2001. However, the court found that the pursuer invoked sections 6(4) and 11(3) of the 1973 Act effectively enough to allow the case to proceed.

Additionally, the court noted that while the pursuer admitted knowledge of minor cracking in the scarf joints much earlier, the significance and materiality of these defects were insufficiently pleaded to warrant further inquiry, leading to those specific claims being excluded from the proof process.

Analysis

Precedents Cited

The judgment extensively references pivotal cases that have shaped the interpretation of prescription and reasonable diligence under Scottish law:

• David T Morrison & Co Ltd v ICL Plastics Ltd [2014] UKSC 48: Highlighted the commencement of prescription periods upon events making obligations enforceable.
• Rowan Timber Supplies (Scotland) Ltd v Scottish Water Business Streams Ltd [2011] CSIH 26: Emphasized the necessity for claims to involve material loss or damage.
• Huntaven Properties Limited v Hunter Construction (Aberdeen) Limited and Ors [2017] CSOH 57: Discussed the materiality of loss for the commencement of prescription.
• Heather Capital Ltd (In Liquidation) v Levy & McRae [2017] CSIH 19: Addressed the factual nature of reasonable diligence.
• BP Exploration Operating Co Ltd v Chevron Shipping Co [2001] UKHL 50: Delved into the onus of proving reasonable diligence.

These precedents provided a foundational framework for understanding how prescription periods interact with claims of induced error and the role of reasonable diligence in potentially extending limitation periods.

Legal Reasoning

The court's legal reasoning centered on the interpretation of sections 6(4) and 11(3) of the Prescription and Limitation (Scotland) Act 1973. These sections allow for the suspension of prescription periods in cases where the pursuer was under an induced error regarding their rights.

Lord Sandison emphasized the importance of the pursuer averting circumstances that could invoke these sections. The court scrutinized whether Highlands and Islands Enterprise could reasonably argue that it was under an erroneous belief about the absence of defects, influenced by the defendants' conduct, thereby justifying the extension of the limitation period.

The judgment also addressed the quantification of "reasonable diligence," determining that the pursuer could not have discovered the defects with reasonable diligence before 2015, despite regular inspections. The court underscored that the first defender's argument regarding the pursuer's diligence was not sufficiently grounded in the pleadings.

Impact

This judgment sets a significant precedent in Scottish law by clarifying the application of prescription periods in the context of construction defects and inducement by defendants. Key impacts include:

• Reinforcement of the necessity for specificity in alleging induced error to extend limitation periods.
• Clarification on the burden of proof regarding reasonable diligence, placing greater emphasis on the actions taken by the pursuer to uncover defects.
• Potential discouragement for pursuers to delay claims without substantial justification, as the court may require detailed evidence to support extensions of limitation periods.

Future cases involving prescription and construction defects will likely reference this judgment to determine the interplay between induced error and reasonable diligence in assessing whether limitation periods can be extended.

Complex Concepts Simplified

Conclusion

The decision in Highlands and Islands Enterprise v Galliford Try Infrastructure Ltd underscores the stringent requirements that pursuers must meet to successfully argue against prescription under the Prescription and Limitation (Scotland) Act 1973. By emphasizing the necessity for precise pleadings and substantive evidence when invoking sections related to induced error and reasonable diligence, the court ensures that limitation periods serve their intended purpose without being easily circumvented.

This judgment serves as a crucial reference point for legal practitioners dealing with construction defect claims and other scenarios where prescription might be contested. It highlights the delicate balance courts maintain between upholding the sanctity of limitation periods and ensuring justice is served in cases where pursuers have legitimate grounds to extend these periods due to misleading conduct by defendants.

Ultimately, the case reinforces the importance of timely and diligent action by claimants and provides clarity on the application of prescription-related provisions in Scottish civil law.