Meeting of the Parliament

Meeting date: Thursday, November 8, 2018

Official Report 1008KB pdf

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Prescription (Scotland) Bill

The next item of business is a debate on motion S5M-14665, in the name of Ash Denham, on the Prescription (Scotland) Bill at stage 3.

Before I invite Ash Denham to open the debate, I call the Cabinet Secretary for Justice, Humza Yousaf, to signify Crown consent to the bill.

For the purposes of rule 9.11 of the standing orders, I advise the Parliament that Her Majesty, having been informed of the purport of the Prescription (Scotland) Bill, has consented to place her prerogative and interests, in so far as they are affected by the bill, at the disposal of the Parliament for the purposes of the bill.

Thank you.

16:32  

I am pleased to be here today to open the debate on the Prescription (Scotland) Bill. I thank members of the Delegated Powers and Law Reform Committee for their work in considering the bill and I thank the clerks for supporting them. I also thank David Johnston QC and Gillian Swanson, whose work at the Scottish Law Commission informed the bill.

The aim of the bill is to increase clarity, legal certainty and fairness in the law of negative prescription. In civil law, the doctrine of negative prescription serves the vital function of setting time limits for when obligations and rights are extinguished. That serves the interests of individuals where, after a certain lapse of time, it is fairer to deprive one person of a right rather than to allow it to trouble another, and it serves the public interest because litigation begun promptly encourages legal certainty.

The law of negative prescription cuts across many policy areas; we saw that today when we discussed amendment 2, in the name of Mark Griffin. Negative prescription is just one piece of a jigsaw, but it is an important piece. It is worth bearing in mind that the intentions of the bill are to resolve certain issues in negative prescription law that have caused difficulty in practice. The intention is not to make changes in specific policy areas.

So what does the bill do? We have already heard what section 3 does not do, so I will begin by explaining what it does. It extends the five-year negative prescription to cover all statutory obligations to make payments that are not already subject to that rule. The new general rule significantly simplifies the law in that area, because there are currently some such obligations that are not subject to five-year prescription, and it means that the list of specific obligations does not have to be continually updated. However, as we know there are exceptions to the new rule—such as for taxes, council tax and Department for Work and Pensions overpayments—that maintain the current position.

Negative prescription is about the extinction of obligations after they become enforceable, but it is difficult for someone to say that there is an enforceable obligation unless they know who to enforce it against. If they may be entitled to damages, it is only fair that if they do not know who is responsible, the clock should not start to run until they know—or can reasonably be expected to know—who caused the loss, injury or damage. Section 5 of the bill does just that for five-year prescription, because it makes little sense for the prescription clock to start running when the creditor is aware of the cause of their loss but does not know who is responsible for it. If it is fair to creditors that the five-year clock will not start until they discover the identity of the person responsible, it is also fair to defenders that the 20-year clock does not carry on against them indefinitely.

It is a feature of the current law that both the five-year and the 20-year prescriptive periods run from when an obligation becomes enforceable. For obligations to pay damages, that means when the loss, injury or damage occurs. As a result, a long period of time can pass after an act or omission before the 20-year period starts to run. Another feature is that the 20-year prescription period can be interrupted and the clock reset, so it is possible for a very long time to pass before an obligation finally prescribes. The bill will address both of those features by making the 20-year prescription, in relation to obligations to pay damages, begin on the date of the defender’s act or omission, and also making it a true long stop by preventing that period from being interrupted. Where proceedings are on-going when the 20-year period expires, the prescriptive period will be extended until the proceedings are finished. I am grateful to the committee for its work in clarifying how such an extension would apply to property rights.

As time is running out, I will briefly mention some of the miscellaneous provisions that are set out in the bill. First, once a dispute has arisen, the bill allows parties to agree to extend the five-year prescriptive period once only, for a maximum of one year. That is so that they can negotiate an end to their dispute without the need to resort to legal proceedings, meaning that they can avoid the expense of protracted litigation.

Secondly, the bill seeks to take account of claims that are made in sequestrations and company administration receiverships, both of which are not covered by the definition of “relevant claim” and so cannot stop the prescription clock.

The approach that is taken in the bill is not one of wholesale reform. It is, after all, one piece of the wider jigsaw that is Scots law. The focus is on areas that have been identified by the Scottish Law Commission as causing difficulty in practice, and it is such areas that the bill addresses.

Prescription plays an essential part in Scots law, in balancing the interests of creditors on the one hand and debtors on the other. I believe that the bill strikes a fair balance overall, redressing cases of unfairness for creditors and debtors while also serving the wider interests of fairness, justice and certainty.

I move,

That the Parliament agrees that the Prescription (Scotland) Bill be passed.

16:38  

Until this point, the Prescription (Scotland) Bill has made its way through the parliamentary process barely noticed. Members can be thankful to the DPLR Committee for doing the heavy work on the bill and protecting them from its intricacies, and I thank the committee’s clerks. Members would have been none the wiser about the bill until Richard Leonard brought it to the First Minister’s attention earlier today. No doubt a nation will now be watching the debate agog, thanks to Mr Leonard.

The bill may not have set the heather on fire until today, but it is important nonetheless. Gordon Lindhurst spoke at length—well, it certainly seemed that way—during the stage 1 debate, and—[Interruption.]

Gordon Lindhurst (Lothian) (Con) rose—

I give way to Mr Lindhurst.

In fairness to me, now that my contribution—or non-contribution—has been mentioned, does the member agree that it would be helpful if, given the question of the five-year and 20-year prescription periods, the minister were to clarify what she meant when she suggested that a 20-year period might, in fact, be meaningless because of some Scots law concept of delay? That would, if anything, make the argument for Neil Findlay’s amendments, which have already been rejected.

That intervention was somewhat lengthy, but I will give you some of your time back, Mr Simpson.

I think that I agree with Mr Lindhurst, Presiding Officer. You can see why his catchphrase is a dry pause. [Laughter.] This Scottish Law Commission bill aims to amend the law relating to the extinction of civil rights and obligations by the passage of time. [Interruption.] Is Mr Lindhurst okay back there?

The bill concerns only negative prescription, which is the time limit within which a person who is aggrieved must raise their claim in court. If the time limit is missed, the ability to pursue the claim is lost. The bill would amend the current law found in the Prescription and Limitation (Scotland) Act 1973, which says that some legal obligations are affected by five-year prescription, some are affected by only 20-year prescription and some are never brought to an end by prescription. In other words, there are some cases where people have five years in which to take action and others where they have 20 years. It is important that the right balance is struck.

Most of the bill is not controversial. As we have already heard about and debated the areas that are, I do not propose to go over them again. However, I want to give the chamber another example of why the bill is so important—and it is not related to council tax or benefits. I am talking about the case of Morrison v ICL Plastics. It stemmed from the tragic explosion at the Stockline plastics factory in Glasgow in May 2004, in which nine employees were killed and many were left seriously injured. The case centred on a nearby business, David T Morrison and Co. It had suffered significant damage from the explosion, and when it sued ICL Plastics, which owned Stockline, for its loss, ICL defended the claim on the basis that it had already prescribed. In essence, Mr Morrison was told that he was too late to receive justice.

The case revolved around the interpretation of the existing legislation and the start date of the loss, injury or damage. Morrison believed that the start date was in 2013, when it found out that the explosion was ICL’s fault; however, ICL argued that the start date was in 2004, when Morrison’s had initially suffered the loss, and the Supreme Court found in favour of ICL by a majority of three to two. Because it allows the pursuer to know who caused the loss before the prescription period begins, the bill will mean that, in the future, people like David Morrison who are trying to seek recompense for damage that they have suffered due to negligence will not be told that it is too late. That is a welcome change to the law, and we therefore support the bill.

16:43  

Prescription might be a technical area of law, but it undoubtedly has very direct and real human consequences. It is right that we reform the law not only to protect people from the unreasonable pursuit of debt, but to protect some of the most vulnerable people who are in the most difficult of circumstances.

Labour will therefore support the bill and what it sets out to do. However, let me be clear that it is far from perfect. We sought to amend it to make it fairer and more just, so we are disappointed that the Government did not support our amendments. That was a missed opportunity.

I want to thank the many people and organisations who have shared their insights and experience, which have undoubtedly been of use in informing the debate. I also thank the DPLR Committee and its clerks. In particular, I want to acknowledge the work of the Scottish Law Commission, which prompted the bill’s introduction in the first place.

Prescription encourages people to enforce their rights promptly before it becomes too difficult for the person or organisation that is defending the claim to gather appropriate evidence. Delay can cause the quality of evidence that is needed to defend a court case to deteriorate. Bills and bank statements can be damaged or destroyed, for example. Who here keeps their bank statements for more than a couple of years, let alone for 20 years? Witnesses might also die or become untraceable, or might simply not recall the facts.

An unduly long time limit might lead to people being pursued for debts after a length of time that anyone would consider to be unreasonable, which could leave people vulnerable to high penalties many years after they first incurred the debt, and when they might not even be aware, or have received notice, of those debts.

The Prescription (Scotland) Bill therefore makes positive changes, including the test of discoverability, which will ensure that three criteria must be fulfilled before a five-year prescription period begins. The changes are positive and will make a real difference, but that is also why the Government’s failure to back our amendments is so disappointing, because that failure renders the approach inconsistent.

As the bill stands, council tax and benefit payments that are administered by the Department for Work and Pensions are exempted from the five-year prescription period, making them subject to the 20-year period. The bill makes it clear that it is unreasonable for individuals and private companies to be subject to a 20-year prescription period. If it is unreasonable for individuals and private companies to pursue debts in those circumstances, does the Government believe that it is acceptable for state bodies, whose very existence and purpose is to support people, to be exempted from a five-year prescription period? If five years is right for Scottish social security debt, surely it is a reasonable period for United Kingdom social security debt.

That inconsistency—that double standard—at best encourages and facilitates bad practice and inefficiency from the state, which should be leading by example, not looking for get-out clauses. It is deeply unfair that people can be pursued for up to 20 years for a debt of which they were unaware, and charged interest. That is why we proposed to reduce the amount of time that local authorities have in which to notify people that they are in debt before that debt expires. We do not believe that it is too much to expect our public bodies to be able to organise their finances in that reasonable time.

Recognising that that would be a significant change to the bill, we offered a compromise. We offered the Government a delay of five years in the introduction of a five-year prescription for council tax debt—a grace period that would have given local authorities 10 years to get their affairs in order. But, no. Given the evidence, the argument for removing the exemption from the five-year prescription from council tax is compelling. That is why Citizens Advice Scotland, StepChange Debt Charity Scotland, Money Advice Scotland and the Law Society of Scotland support it.

I turn to the advice that the Government sought. Not too long ago, people were being hounded for historical poll tax debt. Why, then, is the Scottish Government enabling historical injustices to be repeated? Why is the Scottish Government taking its cues from the UK Government? Let us be clear. We are talking about debts that have been accrued through the public benefits system from, among other things, the roll-out of universal credit, so why on earth are Scottish National Party ministers seeking advice from a Government as reviled as the current Tory Government at Westminster is, in a policy area where that Government is wilfully impoverishing people, and why are they writing to ask for advice from Esther McVey—the very minister who is responsible for so much of the damage that is being done through the roll-out of universal credit? That is shocking. The SNP should be ashamed that it is taking its policy cues from that shameful Conservative Government.

To conclude, I say that the bill contains many good measures and we will be supporting it, but it is undoubtedly a missed opportunity.

16:48  

I know that time is short, and I do not want to speak for long. However, the controversy surrounding the amendments that were debated earlier makes it worth my while to set out some thoughts on the core issue of dispute. Before I do that, I join other members in thanking the Scottish Law Commission for its work, and the DPLR Committee for the scrutiny that it carried out so diligently. I record the Scottish Liberal Democrats’ support for legislation that will, I believe, help to modernise and to bring greater clarity to the law on prescription.

Establishing a cut-off point for claims to be raised or rights to be asserted has the advantage of providing certainty and giving individuals and businesses a chance to organise their affairs and plan for the future. People who pursue a claim, debt or obligation will also benefit from the enforced discipline of making a claim in good time.

On the proposed exemption for council tax and business rates from the five-year prescription, I accept that the case may be more nuanced than has been suggested. We have heard some of that debate being played out this afternoon. CAS and others that work to support people who find themselves in financial difficulty have concerns about the exemption, as does the Law Society of Scotland. I agree that councils—like other organisations—must do everything possible to pursue debt in a timely fashion, but I struggle to accept that the 6 per cent penalty charge that attaches to unpaid council tax would act as a disincentive on the collecting council. I cannot see a council adopting a strategy—in effect, that is what it would be—to delay collections deliberately in order to increase penalty charges.

The Convention of Scottish Local Authorities’ concern that introducing five-year prescription would

“dis-incentivise payment and lead to a decline in in-year collection”

seems credible and worthy of our consideration. Even with the grace period that was suggested by Daniel Johnson, it could also inhibit current work to collect outstanding debt at a time when every council in Scotland is having to deal with budget cuts.

On balance, my party was not persuaded by the case that was put forward by Neil Findlay. Of course, we will be interested in the outcome of any future consultation on the specific issue.

However, today, I confirm that the Scottish Liberal Democrats will support the bill at decision time.

16:51  

I thank all the members today for their speeches in what has been an important debate. I have listened to what has been said and I welcome the support offered for the provisions of the bill by members of parties from across the chamber.

In closing the debate, I will pick up on a few of the provisions that have been discussed this afternoon, which aim to bring clarity, legal certainty and fairness to the law of negative prescription in Scotland.

As has already been mentioned, section 3 of the bill extends the five-year negative prescription to cover all statutory obligations to make payment that are not already subject to that rule, with some exceptions. That general rule provides a more straightforward means to establish whether an obligation prescribes after five years or after 20 years.

We have already spent a lot of time this afternoon discussing some of the exceptions to the general rule, so I will not go over them again. It is enough to say that there are some exceptions to the rule—obligations that are primarily of a public nature—and that they maintain the status quo.

Section 5 is an important section because it has caused some anxiety among practitioners. The bill seeks to restore a more equal balance between a pursuer and a defender where damages are sought. It does that by laying out a three-part test that, when met, begins the five-year prescription clock. That clock will now not start until pursuers discover the identity of the person responsible for the loss, injury or damage caused or could reasonably be expected to have identified the person responsible.

Equally, the 20-year prescription clock does not carry on indefinitely against defenders. That creates a fine balance between the rights of a pursuer seeking to enforce their obligation and the duties of a defender to undertake their obligation.

In the case of obligations to pay damages, the 20-year prescriptive period begins on the date of the act or omission giving rise to the claim. It makes the 20-year prescription no longer amenable to interruption either by a relevant claim or by a relevant acknowledgment, while allowing the 20-year prescriptive period to be extended in cases where a relevant claim has been made during the prescriptive period and where, by the end of that period, that claim has not been finally disposed of and proceedings are on-going.

Finally, I want to mention the extension of the five-year negative prescriptive period by agreement that the bill allows. The provision recognises the need to balance the interest of legal certainty with a way of resolving disputes that does not require going to court in the first instance. Such agreements can be entered into only after a dispute has arisen and would allow the prescriptive period to be extended by a maximum of one year. I was glad that the committee recognised the merit of such agreements at stage 1.

I again thank members who contributed to today’s debate. I am pleased to hear members express their support for the principles of the bill, which aims to provide fairness, clarity and certainty to areas of the law of negative prescription that have caused practical difficulties in their operation.

The bill’s provisions protect those who have a claim from running out of time in which to proceed with it, change the current situation of possible perpetual liability, including for people who have historical council tax debt, and make clearer which obligations prescribe after five years.

I commend the motion in my name.