It is unlikely that the implementation of the remaining sections of the 2018 Act on 28 February 2025 will lead to a new, uncontroversial phase for the law of negative prescription in Scotland, but it should (hopefully) increase clarity and certainty by removing some of the legacy gaps carried over from the Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”).

Key Provisions coming into force

The scope of the 2018 Act significantly expands the application of prescription from the 1973 Act in several areas. Section 1 now makes clear that all obligations to pay damages fall within the scope of the five-year prescription regardless of their source, in contrast to the 1973 Act which was restricted only to reparations. In addition, appointments and applications under the Insolvency Act 1986 are now relevant claims which stop the clock (section 10).

A driving force behind the change to the prescription regime was the uncertainty created by the fraud/error provisions in the 1973 Act, and the series of landmark judicial decisions on that topic. Section 4 of the 2018 Act clarifies that the creditor does not need to have first formed an intention to make a claim which they were then dissuaded from making by the debtor, the requirement is simply the failure to make a claim. Moreover, the 2018 Act confirms that the debtor's state of knowledge is irrelevant: the inducement does not have to be intentional.

In a similar vein, section 2 of the 2018 Act brings two additional types of obligations related to contract within the scope of five-year prescription: obligations relating to the validity of a contract; and obligations to reimburse expenditure incurred as a result of dealings in anticipation of the coming into existence of a contract which does not in fact come into being.

Section 3 of the 2018 Act brings within the scope of the five-year prescription all statutory obligations to make a payment in so far as they don't fall within any provision in the other sub-paragraphs of paragraph 1 of schedule 1 of the 1973 Act (nor are specifically excluded by statute). As a result Council Tax, child support maintenance, and recovery of social security benefits are now caught by the Act.

Under the 1973 Act, the 20-year prescription period could be interrupted by a relevant claim/acknowledgement, which had the undesired effect that the full 20-year period could be re-started. The 2018 Act now ensures that the 20-year period functions as a longstop, which is only capable of extension in cases where a claim has been made and proceedings are underway (section 6). Section 7 makes similar changes to the law relating to the extinction of certain rights relating to property by 20-year prescription.

Section 8 seeks to bring some certainty to the question of when the 20-year clock starts to run in relation to claims involving recovery of damages. In these cases, time will run from the date of the act or omission giving rise to the claim. This replaces the previous position of time running from the date of loss or damage, which allowed extended periods of time passing before the prescriptive clock even commenced.

Finally, the 2018 Act settles beyond doubt that "final disposal" of a relevant claim requires a final determination without the possibility of onward appeal (section 12); and that in the event of a time-bar defence the burden of proof is on the pursuer to prove that the claim is not prescribed (section 14).

In summary, the final tranche of the 2018 Act provisions introduce significant reforms to the prescription regime, addressing uncertainties from the 1973 Act and expanding the scope of obligations subject to prescription. By clarifying key provisions and ensuring a more predictable framework, the provisions should provide greater legal certainty and fairness in the handling of claims, which will ultimately benefit both creditors and debtors.