Introduction

The case of WPH Developments Ltd v Young & Gault LLP (In Liquidation) [2021] CSIH 39 presents a pivotal interpretation of the Prescription and Limitation (Scotland) Act 1973, particularly focusing on Section 11(3). This case involved WPH Developments Ltd (the pursuers) seeking damages from Young & Gault LLP (the defenders) for allegedly negligent architectural services that resulted in the construction of buildings on land not owned by WPH. The core issue revolved around whether the claim was time-barred by the five-year short negative prescription period, considering when the pursuers became aware of the alleged damages.

Summary of the Judgment

Initially, the sheriff determined that the claim was extinguished due to the expiration of the five-year prescriptive period. However, WPH Developments Ltd contended that they were unaware of the encroachment and the resulting damages until being informed in February 2014, which fell within the relevant five-year window starting from November 2018. The defenders appealed this decision, prompting a comprehensive review by the Scottish Court of Session. Lord Malcolm, delivering the judgment, upheld the appeal, concluding that the defenders were correct in asserting that the claim had prescribed. The court emphasized that the prescriptive period began when WPH had actual knowledge of the encroachment, aligning with precedent cases such as Morrison v ICL Plastics Ltd and Gordon's Trustees v Campbell Riddell Breeze Paterson.

Analysis

Precedents Cited

The judgment extensively referenced key legal precedents that shape the interpretation of Section 11(3) of the Prescription and Limitation (Scotland) Act 1973:

• Morrison v ICL Plastics Ltd [2014] SC (UKSC) 222: This UK Supreme Court case established that the prescriptive period commences when the creditor is aware of having suffered a loss, regardless of whether the loss is manifest or latent.
• Gordon's Trustees v Campbell Riddell Breeze Paterson [2017] SLT 1287: Further clarified the commencement of the prescriptive period, emphasizing that knowledge of the detrimental event suffices to start the clock.
• Midlothian Council v Raeburn Drilling and Geotechnical Ltd [2019] SLT 1327: Addressed the application of Section 11(3) in scenarios involving latent damages.

These precedents collectively reinforced the stance that awareness of loss, whether apparent or concealed, triggers the start of the prescriptive period.

Legal Reasoning

Lord Malcolm's legal reasoning centered on the interpretation of Section 11(3). He clarified that:

• Section 11(3) postpones the prescriptive period only if the creditor is unaware, and could not reasonably have been aware, of the loss at the time it occurred.
• The concept of "hindsight" used by the defenders was misapplied. The court should assess awareness based on the information available at the time, not with the benefit of subsequent knowledge.
• Wasted expenditure, in this case, was considered as latent damage since it was not immediately evident as a detriment caused by the alleged negligence.

The court rejected the defenders' reliance on Section 11(3) to extend the prescriptive period, aligning with the Supreme Court's interpretations that objective knowledge of loss suffices to commence the prescriptive clock.

Impact

This judgment reinforces the strict application of prescriptive periods in negligence claims, emphasizing that awareness of loss is sufficient to commence the limitation period. The decision clarifies that:

• Legal practitioners must ensure that claims are filed within the prescriptive period once loss is identified.
• Clients may not benefit from extended timeframes based on delayed recognition of damages, even if such damages are latent.
• The judiciary will continue to adhere to established precedents, limiting the flexibility in interpreting statutory provisions like Section 11(3).

Consequently, parties must exercise diligence in monitoring and identifying potential breaches of duty to avoid claims being barred by prescription.

Complex Concepts Simplified

Section 11(3) of the Prescription and Limitation (Scotland) Act 1973

This section allows for the postponement of the standard five-year limitation period if the claimant was unaware, and could not reasonably have been aware, of the loss at the time it occurred. It recognizes that some damages may not be immediately apparent.

Prescription Period

The prescription period is the time limit within which a legal claim must be filed. In this context, it's five years from when the loss occurred or when it was discovered.

Latent Damage

Latent damage refers to harm or loss that is not immediately obvious or is concealed. In this case, the wasted expenditure was considered latent because it was not clearly recognized as a loss at the time.

Hindsight

Hindsight refers to the understanding of a situation only after it has happened. The court cautioned against using hindsight to determine when the prescriptive period should start.

Conclusion

The WPH Developments Ltd v Young & Gault LLP decision reaffirms the judiciary's commitment to the clear and strict application of the Prescription and Limitation (Scotland) Act 1973. By upholding the defenders' plea that the five-year prescriptive period had expired, the court emphasized that awareness of loss, whether immediate or latent, initiates the limitation period. This outcome underscores the necessity for claimants to remain vigilant in identifying and acting upon potential losses promptly. Furthermore, it aligns future cases with established legal precedents, ensuring consistency and predictability in the application of prescription laws within Scotland's legal framework.