This case concerned a slurry tank which was installed by the Defender on the Pursuer's farm in 2011. The tank was installed on a large area of level ground surrounded by an embankment. In 2016, a circle slip of the embankment occurred, resulting in movement at the base of the tank. The tank required to be demolished and rebuilt as a result. The Pursuer sued the Defender for the losses which flowed from the Defender’s breach of contractual obligation and breach of duty. In particular, the Pursuer alleged that the Defender failed to give any consideration to the risks posed by the embankment, or to advise that engineering advice be taken.
Questions arose in respect of whether the five-year prescriptive period had commenced at the point at which the Pursuer had incurred expenditure on the tank, in which case the period would have expired prior to the date on which proceedings were raised.
Landmark cases such as Gordon's Trustees and Midlothian Council provide that "wasted expenditure" incurred on the basis of negligent advice is sufficient to constitute loss for the purpose of calculating the prescriptive period. In this case, the Defender sought to argue that the Pursuer's expenditure on the slurry tank constituted wasted expenditure on the basis that the tank had eventually failed to achieve its purpose.
The Pursuer argued that there had been no loss until the occurrence of the landslip; the landslip had not been inevitable, and had it never occurred, the slurry tank would have continued to achieve its intended purpose over the course of its usual lifespan.
Lord Braid held that until such time as the slip actually occurred, the loss had been purely contingent. It was not, therefore, sufficient to start the prescription clock, and the action had been raised timeously.
This action illustrates the difference between a purely contingent loss, in which case loss will not be held to have occurred until such time as the contingency actually comes to pass, and an inevitable loss, where, as a matter of law, loss will in most cases be held to have occurred at the point at which it became inevitable.
This case provides a route for a certain class of pursuers to raise timeous claims, providing they can show that the losses they suffered are truly contingent and not inevitable. Lord Braid acknowledged in the course of his judgment that "it is not always easy to decide on which side of the line an individual case lies”; much will continue to turn on the specific facts of individual cases.
read the opinion of the court in this case
This article is part of the Winter 2022 edition of our On Point Scottish Professional Indemnity newsletter. Subscribe here for future insurance updates and events.
