The Inner House of the Court of Session has upheld a decision of the court of first instance on the interpretation of sections 6 and 9 of the Prescription and Limitation (Scotland) Act 1973 and, in particular, the meaning of the expression “relevant claim” in an action for damages against Shetland Islands Council (SIC) by the operators of Shetland Airport, Highland and Islands Airports Limited (HIAL).
HIAL entered into a contract with SIC in January 2005 for professional services in relation to a runway extension. HIAL raised an action for damages against SIC claiming it was in breach of contract and in breach of its duty of care over "defects" in the provision of its services.
The action was raised within the prescriptive time bar period, however HIAL were unable to properly quantify the loss when it was first raised. After the prescriptive period had expired, HIAL lodged a proposed amendment to add a conclusion for payment by SIC of £14,210,000. SIC argued that the action had declaratory conclusions only when it was raised and that HIAL's claim had time barred.
SIC arguments were based on the interpretation of sections 6 and 9 of the 1973 Act and, in particular, the meaning of the expression “relevant claim” in section 6. That section states that "If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years…. without any relevant claim having been made…. the obligation shall be extinguished". Section 9 states that a "relevant claim" means a claim made for "implement or part implement of the obligation…. in appropriate proceedings".
The Judge at first instance allowed a Proof Before Answer to be fixed after accepting HIAL's submission that a “purposive approach” to the statutory interpretation of sections 6 and 9 of the 1973 Act should be adopted and that since prescription involved curtailment of rights, the legislation should be construed in a way that “minimised” that effect.
It was also held that the action constituted "fair notice" and “a claim in part-implement of the obligations alleged” as it sufficiently specified the nature of the alleged liabilities, albeit quantification of the claim was not stated when the action was initially raised. SIC appealed.
In refusing the appeal the Inner House stated that “A ‘relevant claim’, so far as is material to this action, is a claim made in implement or part-implement of the obligations, contractual and delictual, on which the action is founded and is a claim made in appropriate proceedings (s 9(1)(a)).
“Section 4(2)(a) implies that the requirement that the proceedings should be ‘appropriate’ refers to the forum in which the proceedings are brought rather than to the form that the proceedings take. The present proceedings are therefore appropriate.”
The Court also held that if HIAL had raised the action and "simply made its best estimate of its loss on the information then available" and averred in the pleadings that this sum was a "reasonable estimate" then the time bar question would not have been raised. In that scenario HIAL would have been free to adjust or amend their claim if better information was made available, even after expiry of the prescriptive period.
Even where a claim is made in part implement of the obligations on which the action is founded, generally the courts will allow other parts of the claim to be included, including payment of a sum not previously claimed, after the prescription period has expired. The courts generally construe legislation that curtails rights in a way that minimises that effect.