Claim against fixed charge receivers fails

This case concerned an unbuilt residential development site, the claim being by a mortgagor against receivers alleging breach of fiduciary duty by reason of failure to achieve the best price available for the land.

The court rejected the claim, finding:

  • The position may now be different than the earlier case of Cuckmere Brick in 1967, where a property was advertised as having planning permission to build houses, but no mention was made of a further permission to build flats. There was evidence before the court in that case that it would have attracted a higher price if the permission had been included in the advertisement. It could not necessarily be assumed that the same evidence would be given today, since any prospective purchaser can see the whole planning history online.
  • The claimant submitted that the receivers should not have relied on the valuer as he was not a MRICS and because he was a consultant of the agents who were expected to be instructed on the sale. The court held however that the duty is not prescriptive about who the valuer should be or, for instance, that they should have no other role in the sales process.
  • The crux of the case was the allegation that the receivers marketed the site only to a limited number of buyers, and did so without a guide price. The court found however that these were both matters of deliberate decision by the receivers on the grounds that (a) a guide price that was out of line with what buyers were prepared to consider might put off people; and (b) the site was only likely to be of interest to small scale local developers to whom it could be directly marketed. Furthermore, there was little assistance to be gained here from cases relating to the sale of individual residential properties where the range of potential purchasers was wide and unpredictable.

Serene Construction Ltd v Salata and Associates Ltd and others [2021] EWHC 2433 (Ch), Chancery Division in Birmingham

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