Further changes to the law on prescription (limitation) are now in force in Scotland

Although the Prescription (Scotland) 2018 Act (the 2018 Act) received Royal Assent several years ago, the remaining sections only recently came into force on 28^th of February 2025. These sections amend the existing Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) to make certain parts of it simpler and clearer.   

(Sections 5 and 13 of the 2018 Act have been in force since 1 June 2022 Changes to prescription law in Scotland - TLT LLP).  

The rationale for the 3-year lead in time for the remainder of the Act was to give creditors and debtors time to put their affairs in order so as to protect their position. There is a presumption that if a claim has been raised prior to the 2018 Act coming into force and is ongoing then it won’t be affected by the changes.

In addition, if a right or obligation would have expired before 28^th February 2025 under the 1973 Act then that right or obligation is not affected by the 2018 Act amendments (i.e. the right or obligation is not revived). In order to prevent a prescriptive period calculated under the 2018 Act resulting in a right or obligation prescribing before the 2018 Act comes into force, there is also a saving provision to extend the prescriptive period to 27^th February 2025. (These provisions don’t apply to sections 5 and 13 of the 2018 Act).

Changes to 5-year negative prescription

The 5-year negative prescriptive period applies to the obligations listed in paragraph 1, Schedule 1 of the 1973 Act.   The changes introduced by the 2018 Act are:

• Obligation to pay damages

- The obligation to make “reparation” is now an obligation pay damages (whatever the source of the obligation). This will apply to damages whether the obligation to pay arises from legislation, breach of contract, the common law or delict.

- This is also extended to any obligations to pay damages arising from delict that aren’t already listed in paragraph 1, Schedule 1.

• Obligations relating to contract

  - Any obligation relating to the validity of a contract (so for example a contract induced by error or innocent misrepresentation)

- Any obligation to reimburse expenditure incurred in reliance on a representation about the existence of a contract.

• Statutory Obligations

  - The 2018 Act simplifies the position so that all statutory obligations to make payment fall under the five-year time limit unless they are excluded under paragraph 2 of Schedule 1 of the 1973 Act. The list of excluded obligations has been amended. Council tax, non-domestic rates, child support maintenance, taxes and the recovery of benefits payments are all now expressly excluded from the 5-year prescriptive period.
  
  - The provision excluding any obligation relating to land (including an obligation to recognise a servitude) is simplified and remains excluded from the 5 year prescriptive period (unless expressly included in the 5 year prescriptive period, for example payments due under a lease). 

• Fraud or Error

  - Under the 1973 Act, the 5-year prescriptive period could be extended if the person making the claim had not done so sooner as a result of fraud or error by the debtor. The wording in this section has been amended to clarify that the creditor doesn’t need to prove they had decided to make a claim and was then induced not to by the debtor. All the creditor needs to show is as result of the fraud or error the creditor failed to make a claim. In addition, there is no requirement for the creditor to show that the debtor intended for their actions to stop the creditor from proceeding with a claim. This is in line with current case law on this issue.

Changes to the 20-year negative prescriptive periods

• The 20-year prescriptive period can no longer be interrupted by a relevant claim or acknowledgement. The changes to the 1973 Act ensure that the 20-year prescriptive period acts as a long stop. The 20 years can be extended if a claim has been made until the claim is disposed of (rather than the full 20-year period starting again which was the position before the changes to the 1973 Act).

• The 20-year prescriptive period for certain property rights that have existed continuously for 20 years without being exercised or enforced and so would come to an end can also no longer have be interrupted by a relevant claim being made but can be extended.

• There is now clarity that the 20-year prescription period in relation to claims involving the recovery of damages will run from the date the act or omission occurred, or if the act is a continuing one the date on which it ceased, (this is a change from the date of loss or damage being the start date).

Relevant Claim

• In certain circumstances, the appointment of a receiver or administrator or the submission of a claim in an administration or receivership is now included in the definition of relevant claim in the 1973 Act.

• Importantly, the 2018 Act also clarifies that if a relevant claim is made where the 5-year or 2-year prescriptive period applies then this interrupts the prescriptive period until the claim has been disposed of (i.e. the prescriptive period doesn’t immediately start again from the date of the claim).

• The meaning of “final disposal” of a relevant claim is also clarified.

These changes will be beneficial to those pursuing claims as it expands the options for interrupting prescription and also provides certainty that once a claim is raised the prescriptive period is suspended.

Burden of Proof  

This section gives certainty to the position that it is for the creditor to prove that the obligation or right has not been extinguished by prescription. It is only necessary for the creditor to address this issue if it is raised.   

What this means for you?

As a result of the changes to the 1973 Act, there will be some instances where the amount of time before an obligation prescribes has been reduced and some occasions where the amount of time has increased.

The changes in relation to which obligations the 5-year prescriptive period applies to means there are now more obligations which will fall within this category. Pursuers should check any potential claims and seek legal advice at an early stage to avoid claims prescribing.

On the other hand, changes such as the addition of certain appointments or claims in administration and receivership now being included as relevant claims, means that that the opportunities to stop the prescriptive clock have been expanded which is good news for pursuers.

Overall, the changes made by the 2018 Act should provide more certainty and reduce the likelihood of prescription challenges being raised.

Co-author: Lucy Harington 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.