In a recent Court of Appeal decision (Silven Properties Ltd & anor v Royal Bank of Scotland plc and ors [2003] EWCA Civ 1409), the Court upheld the law that a receiver, who was appointed by a mortgagee under the terms of a mortgage as agent of the mortgagor, was entitled to, when exercising a power of sale, sell a secured property at his own time and as it was. In particular, the receiver was under no duty to postpone a sale until after pursuing an application for planning permission or granting of a lease.
In this case, the claimant companies brought claims against their mortgagee bank (the "Bank") and the receivers appointed by the Bank for damages arising from the sale of the mortgaged properties, which they alleged were sold at an undervalue. The claimants contended that the Bank and the receivers were obliged, as part of their duty to obtain the best price reasonably obtainable when exercising a power of sale, to pursue planning applications for the development of 6 of the properties concerned, and to complete the grant of leases in respect of 2 of them. The judge in the first instance dismissed the claims on the basis that a receiver appointed by a mortgagee owed the same obligations to the mortgagor as the mortgagee and that he, like a mortgagee, was under no duty to postpone the sale of the mortgaged properties as they stood without incurring money or time to increase the likely sale value of the properties. The Court of Appeal held that the judge was correct and dismissed the appeal brought by the claimants.
