Prescription; whether claim made in 'appropriate proceedings'; arbitration

20 November 2010

Clark v Argyle Consulting Ltd

Mr Clark raised court proceedings against Argyle Consulting Limited for damages as a result of allegedly negligent financial advice.  The summons in the action was served more than 5 years after Mr Clark had allegedly suffered loss.  Argyle therefore argued that any obligation it may have had to make reparation to Mr Clark had prescribed before the summons was served.  Mr Clark argued that an earlier complaint made by him to the Financial Ombudsman within the 5 year prescriptive period (in respect of the same subject matter as in the court proceedings) amounted to a claim made in 'appropriate proceedings' and therefore prevented his claim from having prescribed prior to service of the summons in the court proceedings.  More specifically, Mr Clark argued that his complaint to the Financial Ombudsman amounted to a claim made in an arbitration.

Lord Woolman rejected Mr Clark's argument and dismissed the action.  He held that although there are similarities between dispute resolution under the Financial Ombudsman Scheme and arbitration, there are also important differences.  In particular, the Financial Ombudsman is not required to determine a complaint in accordance with the common law and accordingly cannot be required to state a case.  The parties are bound by the decision of an arbitrator, but a complainant has an option to accept or reject a decision of the Financial Ombudsman.  The language of the Prescription and Limitation (Scotland) Act 1973 supported Argyle's argument.  Recent decisions of the Inner House emphasised that clear distinctions must be drawn between different forms of dispute resolution: there was no warrant to collapse the distinction between ombudsmen and arbitrators.

Alasdair McKenzie of Axiom Advocates appeared for Argyle Consulting Limited.

http://www.scotcourts.gov.uk/opinions/2010CSOH154.html