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£12M Council claim dismissed on prescription plea

22 March 2019

In its recent decision to dismiss a £12M damages claim in the case of Midlothian Council v Bracewell Stirling Architects & Others 2019 CSOH 29, the commercial court looks again at prescription in the context of a construction claim.

In its recent decision to dismiss a £12M damages claim in the case of Midlothian Council v Bracewell Stirling Architects & Others 2019 CSOH 29, the commercial court looks again at prescription in the context of a construction claim.

Jamie Robb
Jamie Robb, Senior Solicitor

The case concerned a social housing development in Gorebridge, which was constructed between 2007 and 2009. The court heard that the development followed advice by the 4th Defenders to the Pursuers between 2004 and 2006. The Council claimed that on the basis of allegedly flawed advice the development was constructed without any ground gas defence system. Practical completion was reached in June 2009 and tenants moved in. On 7 September 2013 one of the tenants fell ill and investigations revealed gas within some of the houses. The tenants were evacuated and the development demolished.  

The Council raised proceedings seeking damages of around £12m arising, in part, from the need to demolish. The case against the 4th Defender was raised on 4 September 2018.

The issue for the court was whether any obligation to make reparation incumbent on the 4th Defender had been extinguished through the operation of short negative prescription.

The Council accepted it was aware of expenditure in constructing the development at the time it was incurred, but argued that its loss was being left with a development which was uninhabitable. The Council argued it was unaware of suffering that loss until September 2013 when the first tenant fell ill.

The court accepted the Council was unaware that anything had gone awry until the first tenant fell ill, but didn’t accept “that it follows from that that [the Council] was not aware that it had suffered loss”.

His Lordship concluded that:

“[a]s soon as the pursuer accepted the fourth defender’s advice and acted upon it there was damnum.”

“[T[he expenditure which the pursuer incurred constructing the development between December 2007 and June 2009 was loss, injury or damage…The expenditure was wasted.”

The Court concluded that, on the Pursuer’s own pleadings, the Council:

“…knew between December 2007 and June 2009 that it was incurring expenditure on construction of the development in reliance on the fourth defender’s advice. It did now know at the time it was being incurred that the expenditure was wasted or would fail to achieve its purpose. Nevertheless as matter of objective fact, and with the benefit of hindsight, the expenditure was wasted and did fail to achieve its purpose. As a matter of objective fact it was “loss, injury or damage”.

The court concluded the Council “was aware of having suffered loss, injury or damage more than five years before the action was raised on 4 September 2018”. Accordingly any obligation on the 4th defender to make reparation was extinguished by short negative prescription.   

The case serves as a further reminder of the importance, in the context of prescription, of looking at expenditure with the benefit of hindsight to determine whether that expenditure is loss by another name.  

Contact:  Jamie Robb, Senior Solicitor E:  jro@bto.co.uk  T:  0131 222 2939

 

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