Collateral warranties, recoverable loss and prescription periods

In Legal and General Assurance (Pensions Management) Ltd v The Firm of Halliday Fraser Munro [2025] CSIH 24, it was held by the Inner House of the Scottish Court of Session that a collateral warranty given by the first defenders enabled the pursuers to bring a claim for damages, notwithstanding the fact that the collateral warranty was entered into after the pursuers purchased the building in respect of which the claim was brought. More significantly, it was held that a new prescriptive period applied from the time of entry into the collateral warranty and that the applicable prescriptive period was not that which was applicable to the contract under which the first defenders provided their services. The "no greater duties" term in the collateral warranty did not create an equivalence of defences. The conclusion on both issues was reached as a matter of interpretation of the wording of the collateral warranty, emphasising the need to pay careful attention to the wording of the particular collateral warranty, especially if the aim is not to create a fresh prescriptive period as a result of entry into the collateral warranty.