Commodity Solution Services Ltd v First Scottish Searching Services Ltd

CourtSheriff Appeal Court
JudgeSheriff Principal DCW Pyle,Sheriff Principal RA Dunlop QC,Sheriff PJ Braid
Judgment Date04 February 2019
Docket NumberNo 7

[2019] SAC (Civ) 4

Sheriff Principal DCW Pyle, Sheriff Principal RA Dunlop QC and Sheriff PJ Braid

No 7
Commodity Solution Services Ltd
First Scottish Searching Services Ltd
Cases referred to:

Anns v Merton London Borough Council [1978] AC 728; [1977] 2 WLR 1024; [1977] 2 All ER 492; 75 LGR 555

Caparo Industries plc v Dickman [1990] 2 AC 605; [1990] 2 WLR 358; [1990] 1 All ER 568; [1990] BCC 164; [1990] BCLC 273; [1990] ECC 313; [1955–95] PNLR 523

Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28; [2007] 1 AC 181; [2006] 3 WLR 1; [2006] 4 All ER 256; [2006] 2 All ER (Comm) 831; [2006] 2 Lloyd's Rep 327; [2006] 1 CLC 1096

Donoghue v Stevenson 1932 SC (HL) 31; 1932 SLT 317; [1932] WN 139; [1932] AC 562

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] 3 WLR 101; [1963] 2 All ER 575; [1963] 1 Lloyd's Rep 485

Junior Books Ltd v Veitchi Co Ltd 1982 SC (HL) 244; 1982 SLT 492; [1983] 1 AC 520; [1982] 3 WLR 477; [1982] 3 All ER 201; [1982] Com LR 221; 21 BLR 66

Ministry of Housing and Local Government v Sharp [1970] 2 QB 223; [1970] 2 WLR 802; [1970] 1 All ER 1009; 68 LGR 187; 21 P & CR 166

Perrett v Collins [1998] 2 Lloyd's Rep 255; [1999] PNLR 77

Robinson v Chief Constable, West Yorkshire Police [2018] UKSC 4; [2018] AC 736; [2018] 2 WLR 595; [2018] 2 All ER 1041; [2018] PIQR P9

Smith v Eric S Bush (a firm); Harris v Wyre Forest District Council[1990] 1 AC 831; [1989] 2 WLR 790; [1989] 2 All ER 514; [1989] 17 EG 68

White v Chief Constable, South Yorkshire Police [1999] 2 AC 455; [1998] 3 WLR 1509; [1999] 1 All ER 1; [1999] ICR 216; [1999] IRLR 110; 45 BMLR 1

White v Jones [1995] 2 AC 207; [1995] 2 WLR 187; [1995] 1 All ER 691; [1995] 3 FCR 51

Textbooks etc referred to:

Charlesworth, J, and Percy, RA, Negligence (13th Walton et al ed, Sweet and Maxwell, London, 2014), para 2.94

Hope (Lord), “The Strange Habits of the English” in Miscellany VI (MacQueen ed, Stair Society, Glasgow, 2009), vol 54, pp 309–332

Reparation — Negligence — Duty of care — Professional searchers instructed by purchasers of a property failing to find inhibition over property — Whether searchers owe inhibitors duty of care

Commodity Solution Services ltd and the liquidator thereof raised an action for damages against First Scottish Searching Services Ltd for losses sustained as a result of the defenders alleged negligence in undertaking searches of the Register of Inhibitions and Adjudications. The action came before the sheriff (JCC McSherry) for a debate at the sheriff court in Dunfermline. On 5 March 2018, the sheriff allowed a proof on quantum ([2018] SC DUNF 14). The defenders appealed to the Sheriff Appeal Court.

Section 159 of the Bankruptcy and Diligence (Scotland) Act 2007 (asp 3) (‘the 2007 Act’) provides, “(1) … an inhibition ceases to have effect (and is treated as never having had effect) in relation to property if a person acquires the property (or a right in the property) in good faith and for adequate consideration. … (3) An acquisition under subsection (1) … may be from the inhibited debtor or any other person who has acquired the property or right (regardless of whether that person acquired in good faith or for value). (4) For the purposes of subsection (1) …, a person is presumed to have acted in good faith if the person– (a) is unaware of the inhibition; and (b) has taken all reasonable steps to discover the existence of an inhibition affecting the property.”

In 2011, the pursuers obtained decree against the owner of property for payment of the sum of £50,000. They served and registered an inhibition effective against his property. In 2012 the property was in the process of being sold and the purchasers instructed the defenders to carry out a search of the Register of Inhibitions and Adjudications. That search did not disclose the inhibition, which was not discharged before the sale and the registration of the purchasers' title without qualification. The pursuers raised an action against the defenders for losses sustained as a result of the negligent search of the register. Following debate on whether the defenders owed the pursuers a duty of care, the sheriff held that they did owe such a duty and allowed a proof. The defenders appealed to the Sheriff Appeal Court.

The defenders argued that in enacting sec 159 of the 2007, Parliament could have chosen to impose a duty of care on searchers but did not do so and that the sheriff had erred in his approach in imposing a duty. They argued that there was no relationship of any sort between an inhibiting creditor and a private firm of searchers and that to hold a duty of care to exist would not be an incremental development of the law, nor would it be just and reasonable.

Held that: (1) the searchers voluntarily undertook the task of searching the register and should be taken to have been aware that the economic well-being of an inhibiting creditor was dependent on their carrying our their task carefully, accordingly they assumed responsibility to the class of persons affected by that task (paras 1, 14, 42, 45); (2) viewed objectively, there was a relationship between creditors who had registered an inhibition and the searchers tasked with finding them and the fact that, subjectively, the defenders were unaware of that relationship because they did not carry out their task with care did not mean that there was no relationship as a matter of law (paras 1, 14, 45); (3) where the task of searching has been undertaken voluntarily for profit in circumstances where the economic well-being of inhibiting creditors was known to be dependent on searches being carried out with care it was just and reasonable that the defenders owe the pursuers a duty of reasonable care (paras 1, 14, 46, 47); and appeal allowed in part and cause remitted to the sheriff for a proof before answer.

Observed (per Sheriff Principal DCW Pyle) that: (1) while it was understandable that there were many references in argument to the facts of the authorities relied upon, a better approach might have been to identify the broad principles in each case and then to decide whether they applied to the factual circumstances of the appeal (para 8); (2) Parliament must have expected the court not to do anything which would undermine the statutory regime and to buttress it when necessary to do so (para 12); and (3) one of the roles of the law of delict was to provide a remedy where an actor in the performance of his duties within the system of law and practice is negligent and causes foreseeable damage to a party who relies upon that system operating in its intended manner, which fits into the principle that the common law of negligence should dovetail with the intention of Parliament (para 12).

Ministry of Housing and Local Government v Sharp [1970] 2 QB 223 considered and Robinson v Chief Constable, West Yorkshire Police[2018] AC 736followed.

The cause called before the Sheriff Appeal Court, comprising Sheriff Principal DCW Pyle, Sheriff Principal RA Dunlop QC and Sheriff PJ Braid, for a hearing, on 27 and 28 November 2018.

At advising, on 4 February 2019—

Sheriff Principal DCW Pyle— [1] I concur with the conclusions reached by Sheriff Braid and his reasoning. I also agree with his proposals for the disposal of this appeal. I do, however, have some observations to make, both on the general approach to be adopted in cases such as this and the particular circumstances which here arise.

[2] In an article published in 2009 (‘The Strange Habits of the English’ in Stair Society, vol 54, pp 309 et seq), Lord Hope of Craighead wrote at length about the considerable contribution to Scots law of the late Prof Bill Wilson. Alumni (of a certain age) of the University of Edinburgh remember him with great respect and affection. Lord Hope described the professor's lectures on delict and recalled his memorable conclusion on the law of negligence: ‘There is no real law here, beyond that which is to be found in the actual cases.’ That was in 1963. It seems to me that little has changed. Indeed, as Lord Hope pointed out (p 318), Lord Hoffmann declared 36 years later that no one can pretend that the existing law of negligence is founded upon principle (White v Chief Constable, South Yorkshire Police).

[3] In the same article (p 317), Lord Hope drew the distinction between the Scots use of the term ‘delict’ in the singular as part of the law of obligations outside contract and the English use of the term ‘torts’ in the plural and which has grown up by the use of precedent. He continued:

‘Nowhere has the influence of the English approach been more keenly felt than in the development of the law of negligence. Had its development been left in the hands of Scottish jurists it might have been directed to issues of principle. But, as Bill Wilson pointed out in his valiant attempts to make sense of the authorities, the English approach has been to develop new categories of negligence incrementally and by analogy with established cases … This approach leads to decisions which are influenced not by principle but by policy.’

And of course the majority of the UK Supreme Court in Robinson v Chief Constable, West Yorkshire Police followed that same approach (Lord Reed, paras 27 et seq). But there are it seems to me two dangers in it.

[4] First, it raises the spectre of the law of negligence being no more than a conglomeration of individual decisions on individual facts. (In Customs and Excise Commissioners v Barclays Bank plc (para 8) Lord Bingham of Cornhill described it as ‘a morass of single instances’.) That might bring succour to a modern day Oliver Wendell Holmes and other American realists, but it also might lead to practical commercial difficulties. Underwriters of professional indemnity insurance require to assess and predict the level of risk before deciding whether to insure and, if so, the level of premium to be fixed. Doubtless, they...

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