Time for Change: The Extinction of Scottish Claims

The much-anticipated Prescription (Scotland) Act 2018 will usher in significant changes to Scots law on the time limits for bringing certain claims, as discussed in our article on time limits in August 2020.

This article considers draft commencement regulations for the new law published by the Scottish Government in its consultation paper; and the implications for parties bringing or responding to any claims subject to a five year time limit (known as "5 year negative prescription").

This is a wide category of claims, including those seeking for damages for breach of contract and professional negligence.

The Government has invited comment on the draft regulations and consultation paper and will consider all responses received before finalising the regulations.

The Complexity of Change

It can be tricky to determine when and how to make changes to the law on time limits. The key risks are that (1) an otherwise viable claim might prescribe immediately, or retrospectively, as a result of the new provisions, or (2) an expired claim is suddenly revived by changes to the law.

Potential parties therefore need clarity on how their rights may differ as against the current law. With this in mind, the Government's consultation paper insists that, "commencement of the 2018 Act must not create legal uncertainty."

The Proposed Solutions

The draft regulations are commendably concise. In fact, they propose just three substantive provisions aimed at avoiding these key risks as follows:

A three year lead-in period	The relevant provisions of the 2018 Act will come into force three years to the day after the regulations are passed (known as the "appointed day") to allow parties time to "arrange their affairs and protect their position in anticipation of the potential for an earlier (or later) date of prescription".
No resurrection of expired claims	The new Act will have "no effect in relation to any right or obligation which was extinguished" before the "appointed day". In other words, the Act will have no retrospective effect on claims which have already expired.
An extension for newly extinguished claims	The time limit for any claims which will be deemed to have expired under the new rules alone will be extended to the day preceding the "appointed day". The result is that, while the threat of retrospective prescription is reduced, there remains a risk of immediate prescription when the 2018 Act comes into force in certain cases.

What are the practical implications?

There are many, but the key points to consider for potential parties to litigation are as follows:

1. A lengthy period of uncertainty will remain

The proposed three year lead-in period means that the uncertainties of the current law will remain for many more years to come, including beyond the appointed day because (a) it seems unlikely that the new Act could come into force any sooner than early 2024; and (b) the new provisions are not intended to resurrect claims lost under the current provisions, or to apply to court actions that are already underway.

2. Some claims will be lost due to the changes

As under the current provisions, potential claimants may not always know that they have, or had, a relevant claim, particularly where they have not sought legal advice. Those claims may well expire the day before the new law comes into force.

This might appear unfair but this outcome is probably inevitable in the event of any changes in the law on time limits. This is balanced against the proposed three year lead-in period to allow potential claimants to order their affairs; and that the proposed rules under the 2018 Act will generally allow claimants greater opportunity to extend the time limit for bringing claims.

3. There is probably little benefit in waiting for the new law

The new rules will not operate to improve a claimant's chances of bringing a historic claim that would prescribe under the current law due to the explicit disapplication of the new law to claims which prescribed prior to commencement. The question of whether claims have prescribed under the current law is, however, not always clear, per point one above.

Summary and Action Points

It remains to be seen whether any changes will be made to the draft regulations once the Scottish Government has considered the responses to its consultation paper. It is, however, difficult to envisage how the regulations could be made more effective at achieving the specific goals of avoiding the accidental extinction or resurrection of claims. The wider aim of avoiding legal uncertainty is challenging where such significant changes to the law are concerned.

Parties who are regularly involved in litigation before the Scottish courts should be careful to familiarise themselves with the new provisions and identify whether the resulting changes to the law under the draft regulations and the 2018 Act might affect their rights.

NOTE: Specialist legal advice should always be sought on the specific circumstances of a claim and whilst this article is representative of the law as at October 2020, it does not constitute such advice.