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I often get the "blah blah has sunk the contact, do you wish to continue the search" or some such.

The problem is that they often have not actually sunk the contact.

I don't care if the sub has 93% damage and the rudder and weapons mount is damaged, I want it sunk properly, is that I would say to any subchaser who wanted to RTB before getting their target.

They may also ignore the "keep searching" option.

What scenario were you playing at the time?
 
There are some 'issues' with neutral units firing on the AI side which result in those messages (i.e. a Neutral sub sinks a Red sub that you never saw, message appears and you wonder what in the world happened). 
 
Or you may have found a new bug [:'(]

It was WestPac 6.0 - Operation Shield

I doubt there is any neutral shipping in the scenario. There are alot of korean subs though.

The p3's actually hit the sub themselves, do damage around 90% and then want to RTB.