The Supreme Court has today issued their decision in the case David T Morrison & Co Limited v ICL Plastics Limited & others [2014] UKSC 48. A fuller summary of the decision can be found here.
Background
In May 2004 a serious explosion occurred at the factory premises of the appellants ("ICL") in Glasgow, causing the substantial collapse of the building. Nine people were killed and others were seriously injured. The shop owned by the respondent ("Morrison"), which was adjacent to ICL's premises, suffered extensive damage.
In August 2009 Morrison raised an action for damages in the Court of Session. ICL admitted that it had had a liability to Morrison but argued that its obligation to do so was extinguished as it was raised more than five years after the date when it could have raised its claim. The case has ended up in the Supreme Court.
Decision
The Supreme Court has allowed ICL's appeal on a 3/2 majority. Lord Reed, Lord Neuberger and Lord Sumption allowed the appeal, while Lord Hodge and Lord Toulson dissented.
The Prescription and Limitation (Scotland) Act 1973 provides that certain obligations are extinguished after a five year period where no relevant claim is made.
For almost 30 years there has been a consistent line of Scottish case law which has treated section 11(3) of the 1973 Act as imposing a requirement of knowledge of causation. The Supreme Court rejects this approach, stating that the correct interpretation is that the creditor has only to be aware of the occurrence of loss, injury or damage.
Comment
This is a groundbreaking decision that alters the law of prescription as it has been understood for the last 30 years. This judgment will no doubt be widely discussed and may create further litigations.
All three of the judges that gave detailed opinions note that the Scottish Law Commission made recommendations for reform in this area of law in 1989. However, those recommendations have not been implemented by Parliament. We will have to wait and see whether Parliament deems it appropriate to legislate in this matter.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
