Meeting of the Parliament 27 June 2018
I am pleased to be here today on behalf of the Scottish Government to open the debate on the general principles of the Prescription (Scotland) Bill, which began as part of the Scottish Law Commission’s ninth programme of law reform. I thank those who gave evidence, the convener and members of the Delegated Powers and Law Reform Committee and, in particular, the Scottish Law Commission, whose report included the draft of the bill, for its work. The bill will be taken forward by the new Cabinet Secretary for Justice and Minister for Community Safety following their formal appointment, subject to Parliament’s approval tomorrow.
The Scottish Government welcomes the committee’s support for the general principles of the bill and its recognition that the bill will provide clarity and legal certainty in those areas of negative prescription that have caused practical difficulties for creditors and debtors alike in Scotland.
The bill began as part of the Scottish Law Commission’s ninth programme of law reform, and its aim is to increase clarity, legal certainty and fairness in the law of negative prescription. In civil law, that doctrine serves a vital function: it sets time limits for when obligations and correlative rights are extinguished. That serves the interests of individuals where, after a certain lapse of time, it is fairer to deprive one of a right rather than allow it to trouble the other; it also serves the public interest, because litigation begun promptly encourages legal certainty.
It is probably worth briefly revisiting the bill’s intentions, which are to resolve issues with the law of negative prescription that have caused practical difficulty. Those are deemed to be worthy and welcome reforms to this aspect of the law. We should perhaps bear that in mind when we debate the bill’s principles this afternoon.
What does the bill do? By extending the five-year negative prescription period to cover all statutory obligations to make payment, the bill will significantly simplify the law in that area. Currently, the Prescription and Limitation (Scotland) Act 1973 lists specific categories of obligation that are subject to the five-year prescriptive period. Consequently, that list needs to be constantly updated if new obligations are to come under the five-year prescription. At the same time, there are statutory obligations that do not come under the five-year prescription but where there are no policy grounds to explain or justify that. There are exceptions to the new rule, such as taxes, council tax and Department for Work and Pensions overpayments—in other words, generally those statutory obligations of a public law nature.
Negative prescription is about the extinction of obligations after they become enforceable but it is difficult to say that there is an enforceable obligation unless we know whom to enforce against. In the case of seeking damages, it is, after all, only fair that, if a person does not know who was responsible for their loss, injury or damage, time should not run against them until they know, or can reasonably be expected to know, who was responsible. Section 5 will do just that. It makes little sense to postpone the start of prescription when the creditor becomes aware of the cause of their loss yet unaware of the identity of those responsible. The Scottish Government welcomes the committee’s recognition that the new test proposed in the bill will achieve a fair balance between the interests of the creditor and those of the debtor.
While it seems fair to creditors to allow them some time to discover the identity of the person responsible for their loss or damage, it is also fair to defenders that time does not carry on indefinitely against them. An unusual feature of Scots law is that both the five and 20-year prescription for obligations to pay damages run from the same date—that is, the date of the loss. Another unusual feature is that the 20-year prescription can be interrupted, with the effect that the 20-year period starts again, so it is possible for a long time to pass before an obligation finally prescribes.
The bill will make the 20-year prescription, in relation to obligations to pay damages, commence on the date of the act or omission giving rise to the loss. It will also make the 20-year prescription a true long stop by preventing the period from being restarted. The committee, along with a number of those who gave evidence at stage 1, agree with the Scottish Government that such provision will increase legal certainty and clarity. The committee also recognises the logic in allowing the prescription period to continue until proceedings finish, where that happens after the end of the 20-year period.
A good deal of time has been spent on what the bill does not do, as opposed to what it does. It simply maintains the exceptions that exist under Scots law. With respect to council tax and non-domestic rates, the bill does not seek to change the position as it is generally understood. Local taxes are vital sources of income for local authorities in the same way that other taxes are vital sources of income for the Scottish and United Kingdom Governments, and the Scottish Government does not want, as the SLC has indicated, to differentiate the treatment of local taxation payments from all other tax payments.