Imagine you performed work for a client in 2014. If they failed to pay you for it, your client is likely in breach of contract. If you brought an action for breach of contract in 2017, three years after you were left out of pocket, you would have likely been able to claim. However, if you were to try and bring that same action now in 2020, you may find that your right to a claim has disappeared because of prescription.
One of the most frequent concerns with the law of prescription is about when this five-year period actually begins. As a general rule, the clock starts ticking at the point when the loss is incurred.
Let's consider the following example. A developer oversees a project which involves the conversion of a school into residential flats. It is discovered after the defects liability period that roof tiles have become displaced. Reports are carried out to ascertain the cause of the defect and it is discovered that the designer of the roof is to blame.
Previously, it would have been argued that the five-year period started when it became known that the roof designer was at fault. However, now the five-year period runs from the date the tiles became displaced. The reason is that the crucial date is the date on which the fault occurs, not the date on which the cause of the fault is discovered.
It is therefore vitally important to act promptly when raising claims. If you believe you have a claim, you need to always have prescription in mind, because the right to bring a claim does not exist forever.
A recent example of the importance of this prompt action is a case that was decided in 2019, where the clock began to tick far before the claimant was aware there had been any loss. In Midlothian Council v Raeburn Drilling and Geotechnical Limited and another,a set of dwelling houses were mistakenly built on top of former mine workings in 2009. In 2013, residents took ill when toxic gas began to seep through the development, and in 2015 the houses were demolished.
The builder claimed that the surveyors who examined the plot had failed to advise that the site was inappropriate and sought payment of the cost of demolition and rebuilding the development. The surveyors then argued that the claim against them was not actionable as the right had prescribed – in their eyes the ‘loss’ was incurred when the money was first used to build the houses, and not when the builders actually became aware of the loss. Therefore, the clock began ticking far before the builders knew there was any loss. The judge in the case agreed with the surveyors, saying that the loss here was when the site was first built, and was not postponed until actual knowledge of the loss was apparent.
Seeking legal advice early is the best way to ensure you protect your interests in the future. Your legal advisor will be able to assist in identifying the relevant obligation and be able to work out when prescription began to run and whether it has been interrupted. It may even be necessary to raise speculative proceedings in order to defeat any question of time bar.