The Inner House of the Court of Session has upheld a decision of the Lord Ordinary in an appeal by Shetland Islands Council under the Prescription and Limitation (Scotland) Act 1973 against a claim by Highlands and Islands Airports Ltd (HIAL) arising out of alleged defects in the Council’s works to extend the runway at Sumburgh Airport.

Terra Firma Chambers’ J. Gordon Reid QC (and Euan Duthie, Advocate) successfully appeared for HIAL in both the Outer and the Inner House.

In November 2011 HIAL raised an action against the Council, claiming it was in breach of contract and in breach of its duty of care over “defects” in the provision of its services and its failure to correct those defects.  There was no conclusion for damages because, according to HIAL, the extent of the alleged loss could not then be properly quantified. 

In May 2013, HIAL lodged a minute of amendment to add a conclusion for payment by the Council of £14.21m plus interest. The Council maintained the claim for payment came too late and had prescribed but Lady Scott essentially accepted HIAL’s arguments that a relevant claim had been timeously made and repelled the Council’s arguments based on prescription.

The Council reclaimed against that decision, on the grounds that the Lord Ordinary erred in holding that the declaratory conclusions sought “part-implement” of the contractual and delictual obligations for which HIAL now sought payment; and in holding that the action gave fair notice of the claim.

It was also argued that the Lord Ordinary erred in holding that that the action “served justice” in the protection of rights, consistent with the underlying purposes of the 1973 Act; and in placing weight on HIAL’s argument that it felt that it was unable, when the action was raised, properly to quantify its claim.

The Council's challenge to that ruling has been rejected by a bench of Lord President Lord Gill, sitting with Lord Menzies and Lord Drummond Young.  Lord Gill said:

"It is not disputed that if the claim can be said to have been made only when the amendment was allowed, the claim has prescribed.  The short question therefore is whether the declaratory conclusions in this action constituted the making of a relevant claim.

"On a fair reading, the summons left the defender (the council) in no doubt that a claim was being made, that it was a claim for payment and that precise quantification of it would follow in due course.

"It was plainly a claim in part-implement of the defender's alleged obligations, being a definitive step in the process of enforcing them."

Their Lordships’ Opinions can be found here.