Where a dispute arises in a trust or estate matter, the time limit for raising court action should be considered at the earliest possible opportunity.
Legal claims are subject to time limits. If you miss the time limit for raising court action you may be prevented from pursuing your claim. It may not always be clear when the clock starts to tick and as such early advice is recommended.
Legal time limits operate to completely extinguish an obligation following the passage of a fixed period of time (known as the prescriptive period). The relevant Scottish legislation is the Prescription and Limitation (Scotland) Act 1973 (forthcoming changes to the law of prescription are referred to below).
Subject to limited exceptions, there is no statutory provision for the court to allow a prescribed claim to be brought out of time because prescription operates to extinguish the right altogether. It is therefore of paramount importance to consider prescription at the earliest possible opportunity to identify the date by which an action must be raised.
Length of Prescriptive Period
Many claims in Scots law prescribe after five years, including claims for professional negligence, breach of contract, unjustified enrichment and payment of interest. However, there are some claims which are imprescriptible and specific rules for longer periods for other types of claims (e.g. a claim for payment of legal rights has a 20 year prescriptive period).
Interruption of the prescriptive period
The prescriptive period can only be interrupted in a limited number of ways. The most certain way to interrupt the prescriptive period is to raise court proceedings.
When does the prescriptive period start?
In Scotland, the prescriptive period runs from the date that the claimant became aware or could with reasonable diligence have become aware of having sustained a loss – irrespective of whether they were aware of any fault or negligence on the part of a third party.
In contentious executry matters, the earliest date from which the prescription timer could run may be the date of execution of the will. That being said, the date could even be earlier!
The recent case of Anderson v Wilson was an action raised by two of five daughters of a deceased farmer. The farmer left his estate to his wife and on his wife’s death their daughters became the beneficiaries of the estate. On 9 October 2011(before his death), the farmer sold 255 acres of his farm land to another daughter’s husband. The pursuers argued the land was sold for less than market value and that they as beneficiaries had suffered a loss (being the difference between the market value and the sale price of the land).
The Court held that the date of the loss was the date of the sale at alleged undervalue. The allegedly wrongful diminution in the value of the deceased’s estate occurred on the date of the sale. Neither the death of the father nor of the mother resulted in any diminution in the value of the estate. The pursuers’ right of action accordingly prescribed on 8 October 2016 (five years after the date of the sale). As the action was not raised until 28 July 2017, the pursuers’ claim had prescribed.
Anderson v Wilson is a cautionary tale for any individual or practitioner who find themselves involved in a contentious executry or trust to seek legal advice and to consider prescription of claims promptly.