A firm of searchers which failed to report on the existence of an inhibition against the disponer of a property has been found liable to his creditors who lost the chance of recovering a proportion of their debt – the transfer of the property to the debtor's son having been held to have been in good faith and for adequate consideration.
Sheriff Pino Di Emidio at Dunfermline Sheriff Court found in favour of Commodity Solution Services Ltd and its liquidator, in their action against First Scottish Searching Services Ltd arising from an inhibition against the first pursuers' director Ian Donald Gardner.
The first pursuers went into liquidation in 2010. In 2011 they obtained decree against Mr Gardner in the sum of £50,000 with interest and expenses. No payment had been made towards the sum due. In February 2012 they served and registered an inhibition against Mr Gardner, identifying him as resident at an address in Arbroath. The property had previously been marketed for sale at around £160,000 but had attracted little interest. It was remarketed by estate agents at offers over £124,950; an offer of £126,500 was received in March 2012 but later withdrawn. In May 2012 Mr Gardner's son Paul and his partner agreed to buy the property. There were no missives but the disposition executed in July stated a price of £120,000. The two sides were represented by separate solicitors; the purchasers required a mortgage loan.
After two secured loans were repaid, Ian Gardner's share of the net sale proceeds was £30,003. He was sequestrated in November 2014, at which time he had no assets with which to meet the sums due to the pursuers.
Sheriff Di Emidio rejected an argument for the defenders that the inhibition did not cease to have effect as the good faith criterion had not been met. There was no issue on adequate consideration, the transaction was at arms' length, and it could be inferred that Ian Gardner had concealed the existence of the inhibition from his solicitor. The purchasers and their solicitors were in good faith and would have been unable to proceed had the defenders reported the inhibition at the time. Although it had not been proved that the purchasers were unaware of the inhibition, and the presumption in s 159(4) of the Bankruptcy and Diligence etc (Scotland) Act 2007 did not therefore apply, that did not prevent a finding that the requirements of s 159(1) (including that the property had been acquired in good faith) had been met.
There was nothing to suggest that the transaction would have been cancelled if the inhibition had been reported; the only effect would have been on what happened to Ian Gardner's share of the proceeds. Loss had been sustained by the pursuers of a kind covered by the duty of care owed by the defenders. While it was of the nature of the loss of a chance, the pursuers would have been in a strong position and there was no basis for concluding that they would not have obtained 100% of that share, which was the measure of the decree granted.