Santander UK plc v. Allied Surveyors Scotland plc [2011] CSOH 13

In this action, the pursuers (who were the successors to the rights and claims of Girobank plc) sued the defenders for breach of contract. The defenders were chartered surveyors, who had provided Girobank with a valuation report in respect of certain properties in October 2001. The pursuers argued that the defenders had breached their contract, through failing to exercise reasonable skill and care to be expected of ordinarily competent chartered surveyors providing such a valuation report.

The defenders argued that any cause of action available to the pursuers had been extinguished by short negative prescription, as the occurrence of iniuria and damnum had occurred in October 2001 when the incorrect report had been rendered and in any event, certainly prior to October 2003. The defenders therefore argued that any claim would have prescribed in October 2008 at the latest, by virtue of section 11(3) of the Prescription and Limitation (Scotland) Act 1973. By contrast, the pursuers submitted that iniuria and damnum had only occurred in August 2005, when insolvency proceedings resulting from the sale of the properties concluded and it was established that the pursuers were worse off as a result of the defenders' negligence.

Having heard evidence and submissions, the court noted that it was clear from the authorities that there is only point at which iniuria and damnum can both occur. The Lord Ordinary noted from the evidence that it was clear that Girobank would not have provided a loan over the properties, had the valuation report reflected the correct information available at the time. Thus, the Lord Ordinary concluded that from the moment they advanced monies in October 2001, they had made a loss and that Girobank could have sued from that moment onwards.

The Lord Ordinary concluded that any obligation of the defenders to make reparation to the pursuers was extinguished by short negative prescription and dismissed the action on the plea-in-law of the defenders.