Ogilvie v M1 – The Status Quo Remains for Discoverability in Prescription

The recent Outer House decision in Ogilvie Construction Limited (“Ogilvie”) v M1 RE Glasgow Limited (“M1”) and Ogilvie Construction Ltd v Leach Rhodes Walker Ltd (“LRW”) [2026] CSOH 44 provides further guidance on the ever-evolving law of prescription in Scotland. The Court considered whether obligations to make reparation had been extinguished by the five-year prescriptive period under the Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”), as amended by the Prescription (Scotland) Act 2018 (“the 2018 Act”). In particular, it examined for the first time the effect of the new “discoverability test” as set out under Section 11 of the 2018 Act and the degree of “awareness” required to postpone the start of prescription.

Key takeaways

• The 2018 Act does not change the established approach to “loss, injury and damage” under Sections 6 and 11: prescription begins when the factual elements constituting the loss occur.

• Awareness under the 2018 Act is not knowledge that the works were defective, that a person was responsible for the deficiency of the works and that such person is identifiable. It is knowledge that the work was done, expense was incurred, and who was responsible for those works being done and expenses being incurred.

• Lord Lake held that the creditors had the necessary knowledge, so prescription could not be postponed. Given that awareness of any defect was unnecessary, the obligations had prescribed.

Background

M1 contracted with Ogilvie for the design and build of the 15-storey Motel One hotel in Glasgow. Ogilvie appointed LRW as architect. After the Grenfell Tower disaster, the hotel’s cladding design was reviewed, leading to alterations of the insulation design.

In 2020, Ogilvie raised an action against LRW for the cost of the works required to implement the amended insulation design, alleging that the original design was defective. LRW subsequently found that the amended insulation was also defective, as were the building’s cavity barriers. This was raised with Ogilvie in 2023.

Ogilvie sought to amend its claim against LRW to recover further losses relating to the amended insulation and cavity barriers, but LRW argued that those obligations had prescribed. Ogilvie also sought declarators from M1 that any obligation upon Ogilvie to make reparation to M1 had prescribed, which M1 opposed.

Key findings: the meaning of “loss, injury and damage”, and how this impacts the prescriptive period

1. Sections 6(1), 6(3) and 11(1): When did the prescriptive period commence?

The Court held that the prescriptive period began on “the appropriate date”, namely when the obligation became enforceable. Under section 11(1), as amended by the 2018 Act, that is when the loss, injury or damage occurred.

Lord Lake held that “loss, injury or damage” refers to the existence of physical damage or financial loss as an objective fact. Prescription starts with the occurrence of the factual elements constituting that loss.

It was held that Ogilvie’s loss occurred when it began implementing the designs and incurred expenditure that was ultimately wasted. M1’s loss occurred when the designs were installed, because the building was then constructed with elements that did not comply with building regulations.

2. Section 11(3): Could the start of the prescriptive period be postponed? 

Section 11(3) of the 1973 Act allows postponement where the creditor could not, with reasonable diligence, have been aware that loss, injury or damage had occurred. Case law had established that the knowledge required for “awareness” was knowledge of the objective fact of loss: knowledge that one has incurred expenditure.

The 2018 Act amended section 11(3) so postponement depends on whether the creditor could, with reasonable diligence, have known: (a) that loss, injury or damage had occurred; (b) that it was caused by a person’s act or omission; and (c) that person’s identity. It was generally thought that this test would prevent situations where an obligation prescribed before creditors were even aware it existed.

The Court held, however, that the 2018 Act did not alter the meaning of “loss, injury and damage”. The established case law therefore still applies, and the relevant concept remains knowledge of the objective fact of loss. Lord Lake held that both Ogilvie and M1 knew of the relevant losses when they occurred.

Lord Lake also held that “knowledge that the actions of a known party had the consequences which gives rise to the action” was sufficient. In this case, parties knew the building had been constructed in accordance with LRW’s design and that the relevant works had been paid for. On that basis, Ogilvie and M1 had knowledge of all three elements set out under Section 11(3).

Potential impact of relevant acknowledgement or induced error

The Court also considered whether prescription was postponed by a relevant acknowledgement under Section 10(1) or by induced error under Section 6(4) of the 1973 Act.

The Court held that the remedial works undertaken by Ogilvie did not amount to acknowledgement of a claim which could interrupt the prescriptive clock and Lord Lake also reaffirmed that merely performing the contract by providing services or seeking payment does not induce error. On the facts, there was therefore no induced error.

Conclusion

The Court held that all five obligations identified in relation to Ogilvie’s claim against LRW and M1’s potential claim against Ogilvie had prescribed. The five-year period began in 2017, when the relevant work started and expenditure was incurred, and when the building was constructed with elements that did not comply with building regulations. Therefore, the prescriptive period could not be postponed.

The decision will be welcomed by defenders. Section 11(3) of the 2018 Act had been expected to soften the “discoverability test” and reduce the risk of obligations prescribing before creditors appreciated they had a claim. This recent judgment suggests otherwise: the concept of knowledge remains tied to awareness that work was done, expenditure incurred, and the relevant party identified, not to awareness of defect or legal wrong.

We are of the view that an appeal may follow in due course as the decision has received some criticism in certain legal circles given the remaining uncertainty concerning the law of prescription.