A borrower company granted security over a property to a private company lender. The lender enforced its security over the property and sold it to a purchaser company, one of whose directors was also a director of the borrower.
The company issued proceedings against the lender, and its controlling director, alleging unlawful means conspiracy and dishonest assistance, in light of the common director’s breach of duty, albeit proceedings were not issued against the common director.
The borrower also claimed damages from the lender for its breach of duty to obtain the best price reasonably obtainable for the property in the circumstances.
A split trial was ordered and the deputy judge considered liability in respect of the alleged claims. The deputy judge found, on the facts, that the company succeeded on the unlawful means conspiracy and dishonest assistance claims.
On the breach of mortgagee’s duties, the deputy judge restated the settled legal position and, whilst she held that the lender had not breached its duty to enforcing its security, in light of the fact that the lender neither took independent valuation advice nor openly marketed the property, the deputy judge found that the mortgagee had breached its duty.
In calculating the value of damages for such a breach of duty, the deputy judge assumed that the property should have been sold at auction, indicating that a sale at auction was a starting point in mortgagee, or a receiver for that matter, establishing that it had obtained the best price reasonably obtainable for the property, in the circumstances.
The Conditioning House Limited v JBG Enterprises Limited and another [2025] EWHC 3260 (Ch)
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