The Supreme Court decision in the Scottish case of Gordon v Campbell Riddell reinforces that in many cases of economic loss arising from negligent professional advice, the "time bar" clock is likely to be ticking even when the claimant is entirely unaware, and has no reason to be aware, that its loss is attributable to the fault of another.
Accordingly once a loss is identified it is imperative for potential claimants to investigate and raise court proceedings as quickly as possible.
The law provides that the ability of a person to sue for losses caused by the fault of another can be lost through the passage of time by the operation of "time bar". It is therefore imperative for potential claimants to know when the time bar clock starts to run and how long it has left to run before the ability to sue is lost.
Whilst the law is not particularly straightforward, the normal period for breach of contract or professional negligence claims is 5 years from the date the claimant has suffered a loss. However, the start date can be postponed in certain circumstances. For many years the courts postponed the start date until the claimant was aware, or with reasonable diligence ought to have been aware, it had suffered loss and that the loss had been caused by the fault or negligence of another.
However, in 2014 the Supreme Court in the case of ICL v Morrison (a case involving damage to property following an explosion) held for the first time that for the clock to start ticking the claimant had to be aware only of the occurrence of loss. There was no requirement to be aware the cause of the loss was due to fault or negligence. So, for the first time, the Morrison case introduced the possibility that a claimant who had suffered loss as a result of the fault of another finding their ability to seek compensation had been time barred even where they were unaware of the existence of any fault or negligence.
The Supreme Court has applied the law in the same way in the Gordon case. The case relates to an allegation of professional negligence by the landlords of agricultural land against a firm of solicitors. The solicitors served notices to quit requiring the tenant to remove from the land by 10 November 2005. When the tenant failed to do that a court action was raised to have the tenant evicted. On 24 July 2008 the court held that the notices were defective and the tenant was not evicted. On 17 May 2012 the landlords raised a professional negligence action against the solicitors. The landlords' claim for loss included legal costs paid to the solicitors for service of the defective notices which were incurred by 17 February 2006. The landlords' position was that they did not suffer a loss until the date the court ruled the notices were defective so their claim was not time barred until 24 July 2013. The solicitors did not dispute they were negligent but argued that, as the legal fees were paid more than 5 years before the action was raised, the landlord's claim was time barred. The Supreme Court has agreed with the solicitors and found that the clock started ticking when the legal costs were incurred as the landlords were aware that they had not obtained what they should have obtained from the incurred expenditure (i.e. the eviction of their tenant).
The result of the Gordon and Morrison decisions will likely produce extremely unjust results for many potential claimants, particularly in situations where they have suffered economic loss (where the loss is not obvious such as an explosion causing damage to property).
There is some light at the end of the tunnel with a new Bill currently being debated in the Scottish Parliament. If passed into law, claimants will require the occurrence of loss, knowledge of the cause of loss and knowledge of the identity of the party having caused the loss before the clock starts to tick. This will result in a far clearer, transparent and arguably fairer application of the law.
*The above article does not constitute legal advice.