Stewart Milne are developers and employed Halliday Fraser Munro as architects in relation to the construction of a new office, workshop and leisure facility in Aberdeen. Practical Completion of the Works was achieved in September 2008. By December of that year water ingress had become apparent in the subfloor of the south wing of the office. Investigations and remedial works were carried out but further, more extensive, water ingress into the subfloor occurred in late October/early November 2009. It transpired that the tanking was defective.
An action was raised in September 2014 and defended on a number of bases, one of which was that the right to claim had prescribed as the defects complained of were or ought reasonably to have been known of more than five years prior to the raising of the action.
When did the clock start running?
It is patently obvious that the loss, that is the defect complained of, must have been existence, although not necessarily apparent, at the date of Practical Completion, 26 September 2008. The court action was not raised until September 2014. So any claim would have prescribed unless Stewart Milne were able to persuade the court that it was not aware and could not with reasonable diligence have become aware of the loss having been suffered until a date less than five years prior to the raising of the action.
At the time of the water ingress in 2008 should Stewart Milne have been aware of the loss or importantly a material loss having been suffered? The 2008 water ingress led to some remedial works, referred to as "snagging." The cost was borne by the contractor and appeared to be successful. It is not narrated in the judgement but presumably this water ingress (and remedial work) occurred during the Defects Liability Period under the Contract. The remedial works apparently fixed the problem. In those circumstances the court held that Stewart Milne was not actually aware that it had suffered loss and damage at that time.
The relevant date, for the purposes of prescription would have been around the date of the second, more extensive, water ingress and the investigations/remedial works which followed.
In the particular facts and circumstances of this case the court held that the claim had not prescribed or timebarred as Stewart Milne was not aware and ought not with reasonable diligence to have been aware that it had suffered a loss more than five years prior to the raising of the action. However, in order to get to that point several days of evidence and legal argument was required. Our recommendation is that it is better to be safe than sorry and to ensure that actions are raised within five years of the earliest point when a loss might have been apparent, whether that is PC, Making Good Defects or the first sign of defect (in this case the water ingress).
Should you wish to discuss further please do not hesitate to contact Lisa Dromgoole