B - Breach of duty
6/5/20
CENTENARY HOMES LTD v LIDDELL [2020] EWHC 1080 (QB)
Summarises duties owed by receivers to the mortgagor when selling mortgaged property [58] - [77]. The court rejected submissions that mere negligence is not sufficient to establish a breach of duty [63] and that receivers are under a duty only to sell so much of the charged property as is required to repay the mortgage [69]. The receivers had not been under a duty to make the properties more marketable by purchasing an indemnity policy in respect of lack of consent to change of use of part of the property [81]. Claims that the receivers had failed to maintain the properties were dismissed on the facts [85] - [115]. Claims that flats had been sold at an undervalue succeeded only to the extent that the value of a storage room had not been taken into account, which would have added £10,000 to the sale proceeds.
30/11/18
McDONAGH v BANK OF SCOTLAND PLC [2018] EWHC 3262 (Ch)
On its proper interpretation a loan agreement required payment in Euros, not in Sterling as the claimant had argued. Had it been necessary, the agreement would have been rectified to that effect. A subsequent agreement had been effective to vary the terms of the loan agreement without any further draw down and a claim to set aside the subsequent agreement for economic duress failed, as did a claim for damages for intimidation. The bank had done nothing illegitimate, inequitable or unconscionable [119]. A further claim that receivers acted in breach of duty in selling the security for the loan as part of a portfolio of properties belonging to other borrowers, also failed. Although accounting issues might arise as to the correct apportionment of the proceeds of a portfolio sale, no claim for an account had been made [132]. A portfolio sale would not necessarily involve a breach of duty so long as the receivers reasonably considered such a sale was in the best interests of the mortgagor [149] as well as being in the interests of the mortgagee. On the facts, the receivers had satisfied that test in this case [193].
19/9/17
CENTENARY HOMES LTD v GERSHINSON (Ch)
Summary judgment was given dismissing a claim that receivers sold mortgaged property at an undervalue by selling it as a block of flats rather than selling the flats individually. The court reviewed the duties of receivers realising security [29]. The undervalue allegation was not supported by credible valuation evidence and there was nothing to suggest the receivers had acted outside the wide margin of appreciation recognised in the authorities.
20/6/17
PROMPT MOTOR LTD v HSBC BANK PLC [2017] EWHC 1487 (Ch)
The court dismissed the claimant's application under CPR 3.1(7) to set aside earlier orders dating back to 2011 granting summary judgement and refusing permission to appeal. The court had no jurisdiction, under CPR 3.1(7), to set aside the orders in respect of what was a very stale claim. Even if there was jurisdiction, the court would not have exercised its discretion to set aside the orders because there had been nothing to affect the validity of the bank's letter of demand, nor was there anything to prevent individuals who had been involved in working for the bank on the affairs of the borrower at an earlier date, from being appointed as administrative receivers.
5/11/15
PUREWAL v COUNTRYWIDE RESIDENTIAL LETTINGS LTD [2015] EWCA Civ 1122
A bankrupt mortgagor could not sue receivers for breach of duty because any cause of action vested in his trustee in bankruptcy as the person entitled to the equity of redemption. Even if the receivers had been at fault in failing to make a claim on an insurance policy for water damage to the mortgaged property, there was no evidence that the mortgagee would have allowed the insurance money to be used to repair the property rather than applying it in reduction of the mortgage debt.
14/3/13
BARCLAY PHARMACEUTICALS LTD v WAYPHARM LP [2013] EWHC 503 (Comm)
The respondent stood no real prospect of claiming that a receiver appointed by the court over a company had caused the company to go into liquidation by acting in breach of duty. On the assumption that the respondent had been the beneficial owner of the company, he had a sufficient interest to bring the claim, but the evidence showed the company had been hopelessly insolvent before the appointment.
16/7/12
INTERNATIONAL LEISURE LTD v FIRST NATIONAL TRUSTEE LTD [2012] EWHC 1971 (Ch), [2013] 1 Ch 346
A borrower company and secured lender dissatisfied with the conduct of an administrative receivership brought proceedings against the receiver for alleged breaches of duty. Having regard to the nature of duties owed by a receiver to his appointor, the court refused to strike out the claim as offending the rule against reflective loss which prevents shareholders suing for company losses. That principle does not extend to such claims.