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• United Kingdom

• Litigation and dispute management
• Real estate dispute resolution
• Real estate litigation

29-03-2018

Commodity Solution services Limited and Charles Henry Sands v First Scottish Searching Services Limited [2018] SC DUNE 74

In Scotland, inhibitions are a method of debt recovery designed to prevent a debtor selling or disposing of heritable property until the debt is discharged. Purchasers of such property obtain searches to check no inhibition has been registered, which should prevent the sale.

The creditors obtained judgment to recover £50,000 from the owner of a property in Arbroath and served an inhibition to prevent the owner disposing of the property pending repayment of the debt. The inhibition was properly registered. However, the owner sold the property in breach of the inhibition to purchasers who then registered title to it. The creditors could not recover the debt from the purchasers. The creditors sued the professional searchers instructed by the purchasers for failing to disclose the search to the purchasers.

The court considered in depth the circumstances in which financial loss can be recovered. There was no contract - the creditors had not instructed the defenders to carry out the searches. However, the court held that the defenders had a duty to use reasonable care in preparing a search report. They should have known that others, eg the creditors as inhibitors on the register which they were searching, would be adversely affected if they made a mistake of the nature made here.

Key points

• inhibitions can be an effective form of debt recovery but are seldom used
• the lengthy decision provides useful guidance of the law relating to recover of economic loss and the circumstances of which a party can recover even if there is no contract between parties