Anm Group Ltd v Gilcomston North Ltd & Ors

Factual and Procedural Background

The Plaintiff owns and operates an agricultural centre and auction mart known as the Thainstone Centre, comprising interconnected spaces including a concourse, lairage, and a former general purposes hall (demolished in 2003 and excluded from the present claim). The Defendants, involved in the design and construction of the Centre in the late 1980s and early 1990s, include architects (third Defendants), consulting engineers (fourth Defenders), and contractors (second Defenders and first Defenders as subcontractors). The Plaintiff claims substantial damages relating to widespread roofing failures affecting the concourse and lairage. The Defendants deny liability and assert that the claim is barred by the five-year prescription under the Prescription and Limitation (Scotland) Act 1973. A preliminary proof on prescription has been conducted in two stages, with evidence heard in 2006 and 2008.

Legal Issues Presented

1. Whether the requirements of section 11(1) of the Prescription and Limitation (Scotland) Act 1973 were satisfied to commence the running of prescription more than five years before the action's initiation in 2002, considering the cause and progression of the roofing problems.
2. If prescription began to run earlier, whether its running was delayed under section 11(3) due to the Plaintiff's lack of awareness, despite reasonable diligence, of the loss or damage caused by the Defendants' acts or defaults.
3. Whether the running of prescription was delayed or interrupted under section 6(4) due to error on the Plaintiff's part induced by the third Defendants as professional advisers after roofing problems emerged.

Arguments of the Parties

Defenders' Arguments

• Material roofing problems were known to the Plaintiff by late 1996/early 1997, starting the running of prescription at that time, which was more than five years before the action.
• The nature and cause of these problems were substantially identical throughout the Centre.
• The Plaintiff was, or could have been with reasonable diligence, aware of all relevant matters by April 1997.
• The Plaintiff was never under error regarding these matters, nor was any error induced by the third Defendants.
• The roofing problems were serious and progressive, with evidence of cracking and failure from as early as 1992 and 1996.
• The roofing of the Centre should be considered as a single entity (unum quid) for prescription purposes.
• Prescription should not be fragmented by minor differences or separate areas of the roof.

Pursuers' Arguments

• Although aware of roofing problems in the general purposes hall from late 1996, the Plaintiff did not appreciate a cause of action until later dates between late 1997 and 1999 for the concourse and lairage.
• The present claim excludes the general purposes hall and focuses only on the concourse and lairage.
• The Plaintiff was not aware, and could not with reasonable diligence have been aware, of the loss and damage caused by the Defendants within the five-year period before raising the action.
• Any error in awareness was induced by the third Defendants, preventing prescription from running.
• Each area of the roof should be treated separately for prescription purposes due to differences in construction and problems.
• The Plaintiff acted reasonably and responsibly by placing matters in the hands of the third Defendants for investigation and advice.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the onus of proof, confirming that the Defenders bore the burden to establish prima facie prescription under section 11(1), while the Plaintiff bore the burden for exceptions under sections 11(3) and 6(4). The court rejected arguments that the Plaintiff's pleadings constituted judicial admission of prescription.

Regarding the statutory framework, the court analyzed the meaning of "loss, injury or damage caused by an act, neglect or default" under section 11, emphasizing that prescription runs from the date when such loss occurs and is actionable. The court accepted established case law that multiple distinct defaults causing separate damage may have independent prescriptive periods, but minor differences or developments of the same defect do not warrant separate treatment.

The court considered the evidence of roofing defects, noting expert testimony that serious, progressive damage was evident by 1992 and 1996, including widespread cracking and water ingress, particularly in the general purposes hall. The court held that the roofing of the Centre should be treated as a single entity (unum quid) for prescription purposes, rejecting the Plaintiff's argument for separate treatment of different roof areas.

On awareness under section 11(3), the court found that the Plaintiff was aware of serious roofing problems affecting the Centre by late 1996, particularly the general purposes hall, which triggers prescription for the entire roof. However, the Plaintiff was not aware, and could not with reasonable diligence have been aware, that the damage was caused by an actionable default before the critical dates. The court accepted that the Plaintiff reasonably relied on the third Defenders for investigation and advice and that the Defenders’ failure to provide timely advice induced error, delaying the Plaintiff's awareness.

The court rejected the Defenders' contention that the Plaintiff had sufficient knowledge to start prescription, emphasizing the lack of concrete knowledge of legal responsibility and the ongoing investigation during the relevant period. The court found the third Defenders’ conduct, including delay and advice suggesting no legal obligation, contributed to the Plaintiff’s error and delayed action.

Consequently, the court concluded that the Plaintiff's claims had not prescribed under the Act due to the exceptions under sections 11(3) and 6(4), with the Defenders failing to prove otherwise.

Holding and Implications

The court repelled the pleas of prescription raised by the Defenders and allowed a proof before answer to proceed.

This decision means that the Plaintiff’s claims are not barred by the five-year prescription period due to the Plaintiff’s lack of awareness and induced error caused by the third Defenders. The case will proceed to further examination of the merits. No new legal precedent was established; rather, the court applied and clarified existing principles regarding prescription, awareness, and induced error in the context of complex construction defects.