Prescription (Scotland) Act 2018 commencement regulations: consultation

3. Commencement of the 2018 Act

3.1 A number of provisions in the 2018 Act can, for the purposes of commencement, usefully be divided into two broad categories: those which might in practice reduce the amount of time before an obligation prescribes and those which might in practice increase the amount of time.

3.2 Under the first category we have identified two types of provision which might reduce the amount of time before an obligation prescribes. These are:

i. provision which makes obligations that were previously subject to the 20 year prescription subject to the 5 year prescription;

ii. provision which may in practice reduce the amount of time before an obligation is extinguished under the 20 year prescription, by –

a. providing for an earlier starting point for the 20 year prescription for obligations to pay damages,

b. making the 20 year prescription no longer amenable to interruption.

3.3 In the second category, we have identified 5 types of provision which might increase the amount of time before an obligation prescribes. These are:

iii. provision which introduces a new (later) start date for the 5 year prescription for obligations to pay damages;

iv. provision allowing greater periods of time to be discounted from the 5 year prescriptive period by reason of fraud or error;

v. provision which expands the definition of relevant claim, potentially creating new interruptions to the 5 year prescription;

vi. provision that the 5 year prescriptive period, where interrupted, will restart upon final disposal of the relevant claim, rather than from the point when the claim was made; and

vii. provision allowing the 5 and 2 year prescriptive periods to be extended by agreement for up to 1 year.

3.4 Taken together, these seven types of provision give rise to a number of recurring issues that may require a transitional provision when the 2018 Act is commenced.

3.5 The first of these issues we refer to here as “overnight prescription”. At the point when the reforms made by the 2018 Act come into force a creditor might find that their claim is extinguished “overnight” by the commencement of the 2018 Act. This issue can best be illustrated if we consider the provision in the 2018 Act that will make obligations currently subject to the 20 year prescription subject to the shorter 5 year prescription.^[8] Consider a shop premises located beneath residential property consisting of flats. In the course of refurbishment to the flats damage is caused to the shop. If the shop owner were to raise an action to require the defenders to reinstate, repair and if necessary rebuild part of the shop then, under the current law, this obligation is subject to the long 20 year prescription. Under changes made by the 2018 Act, however, an obligation of this type would likely be made subject to the shorter 5 year prescriptive period. This shorter period might have already expired by the time the 2018 Act is commenced. Therefore the obligation, which had many years left before it would prescribe under the current law might, could prescribe immediately when the 2018 Act comes into force.

3.6 A second, closely related, issue which may require a transitional provision is referred to here as “retrospective prescription”. This might occur where, at the point when the 2018 Act comes into force, an obligation has not yet prescribed according to the 1973 Act (as it stood prior to amendment), but when the prescriptive period is calculated in accordance with the changes made by the 2018 Act, it is found to have expired on a date which precedes the coming into force of the 2018 Act.

3.7 For example, a planning authority‘s obligation to pay statutory compensation is an obligation arising from delict other than the obligation to pay damages. The obligation is currently subject to the 20 year prescription and might not yet have prescribed when the 2018 Act comes into force. On commencement of the 2018 Act the obligation becomes subject to the 5 year prescription.^[9] The changes made by the 2018 Act might feasibly provide that the prescriptive period expired before the date when the 2018 Act came into force. This has potential to create uncertainty over when the obligation in fact prescribes.

3.8 The final issue we refer to as “revived obligations”. This might occur where, according to the 1973 Act (as it stood prior to amendment), an obligation has prescribed before the coming into force of the 2018 Act, but amendments made by the 2018 Act provide that the obligation has not yet prescribed. The commencement of the 2018 Act might create uncertainty as to whether obligations which had previously prescribed are revived.

Question 1: We have identified three potential issues that may benefit from transitional or saving provision when the 2018 Act is commenced. These are ‘overnight prescription’, ‘retrospective prescription’ and ‘revived obligations’. Are there any other issues that you consider may benefit from transitional or saving provisions?

Existing transitional provision

3.9 As already mentioned, the rules of prescription as they currently stand are, for the most part, to be found in the 1973 Act. The Interpretation Act 1978 (“the 1978 Act”) governs the way that the 1973 Act is interpreted.^[10] Amendments made to the 1973 Act by the 2018 Act will be interpreted in light of the 1978 Act.

3.10 Section 16 of the 1978 Act makes general savings provision that -

(1) Without prejudice to section 15, where an Act repeals an enactment, the repeal does not, unless the contrary intention appears,—

(a) revive anything not in force or existing at the time at which the repeal takes effect;

(b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment;”

3.11 Sections 16(1)(a) and (b) have the potential to mitigate many of the potential problems identified in connection with the commencement of the 2018 Act. However, making bespoke savings and transitional provision in the commencement regulations would provide greater certainty as to the effect of the commencement of the 2018 Act than relying on the provision in section 16 of the 1978 Act alone. For instance, the application of section 16 of the 1978 Act would depend on the provision of the 2018 Act in question constituting a repeal of an enactment. This may not be clear in every case.

Proposed transitional and saving provision

3.12 Commencement of the 2018 Act must give sufficient notice to creditors and debtors before they are affected by the changes made to the law. This is necessary to allow people to adequately arrange their affairs and protect their position in anticipation of the potential for an earlier (or later) date of prescription under the rules as amended by the 2018 Act. For this reason it is proposed to allow a period of 3 years between the commencement regulations being made and the substantive provisions of the 2018 Act coming into force. Regulation 2 of the illustrative Commencement Regulations (Annex A), would have this effect.

3.13 There is a presumption that legislation does not affect proceedings which are ongoing at the time when the legislation comes into force.^[11] The Regulations proceed on the basis of that presumption and do not propose provision on this matter. Accordingly, where proceedings are initiated prior to, and remain ongoing at the time of, the coming into force of the 2018 Act, the changes made by the 2018 Act will not affect the underlying right or obligation until the proceedings are concluded or otherwise ended (in relation to that obligation). As a result the 2018 Act will not interfere with proceedings which are ongoing when it comes into force by causing the underlying obligations on which the proceedings are based to prescribe while the proceedings remain ongoing.^[12]

Question 2: The 1973 Act allowed those affected by the incoming regime a period of 3 years to arrange their affairs. Do you agree that 3 years is a sufficient length of time to ensure that creditors/debtors have the necessary time to arrange their affairs accordingly? If not, what period of notice would you suggest and what are your reasons for this suggestion?

3.14 Commencement of the 2018 Act must not create legal uncertainty. It should be beyond doubt that obligations which have been extinguished by the 1973 Act (as it stands before amendment by the 2018 Act) are not revived by the coming into force of the 2018 Act. This applies to obligations which would not yet have prescribed if the prescriptive period were to be (re)calculated according to the 1973 Act as amended the 2018 Act. To achieve this, we propose that the Commencement Regulations should contain a savings provision (Regulation 3 of the illustrative draft). This would provide that the amendments made to the 1973 Act by the 2018 Act have no effect in relation to any right or obligation which has prescribed prior to the coming into force of the 2018 Act.

Question 3: Do you consider the savings provision proposed is sufficient to ensure that obligations which have prescribed under the 1973 Act as it stands prior to amendment by the 2018 Act will not be revived? Do you consider any further provision is required?

3.15 Changes to the law of prescription made by the 2018 Act should not result in rights and obligations being extinguished with effect from a point in time before the coming into force of the 2018 Act. To put this beyond doubt we propose to make provision to ensure that a prescriptive period calculated in accordance with the amendments made by the 2018 Act cannot expire before the moment the 2018 Act comes into force. (Regulation 4 of the illustrative draft.)

3.16 It is proposed to achieve this by making provision which extends any prescriptive period calculated in accordance with the amendments made by the 2018 Act to ensure that it expires no earlier than the moment the 2018 Act comes into force.^[13] While provision is made to extend a prescriptive period so that it expires on that date, the intention is not to prevent an (extended) prescriptive period from itself being further interrupted or extended in accordance with the 1973 Act as amended by the 2018 Act, for instance where a relevant claim which is capable of interrupting the prescriptive period has been made within the extended prescriptive period.

3.17 This provision will avoid any potential uncertainty that might otherwise arise where the changes made by the 2018 Act provide for the expiry of a prescriptive period on a date before the 2018 Act comes into force. The effect would be similar to the transitional provision contained in section 14(1)(a) of the 1973 Act, which was made to facilitate the coming into force of that Act.

Question 4: Do you consider the transitional provision proposed to prevent the amendments made by the 2018 Act from providing for a date of prescription which pre-dates the coming into force of the 2018 Act are sufficient? Do you consider any further provision is required?

3.18 In line with the analysis outlined above, an illustrative draft of the Commencement Regulations has been prepared for the purposes of this consultation and is included at Annex A. The purpose is to afford anyone with an interest the opportunity to consider and comment on the proposed provision made.

Question 5: Do you agree that the manner in which the Scottish Government proposes to commence the 2018 Act address the potential issues highlighted in this consultation?

Question 6: Are there any effects of the commencement provision proposed that are not anticipated and addressed in this consultation?