Date: 01 November 2025
DEALING WITH ALLEGATIONS OF SALE AT AN UNDERVALUE
Stephanie Tozer K.C. and Doug Robertson
The Receiver’s Duties on Sale
Silven Properties Ltd v Royal Bank of Scotland [2003] EWCA Civ 1409 – planning permission
Bell v Long [2008] EWHC 1273 (Ch)
Centenary Homes v Liddell [2020] EWHC 1080 (QB) – auction; indemnity policies against planning issues
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch)
Centenary Homes v Liddell [2020] EWHC 1080 (QB) - auction
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch) – approaching local developers known to the agent
Bell v Long [2008] EWHC 1273 – portfolio sale
National Westminster Bank plc v Hunter [2011] EWHC 3170 (Ch) – borrower’s own offer
McDonagh v Bank of Scotland [2018] EWHC 3262 (Ch) – portfolio sale
Centenary Homes v Liddell [2020] EWHC 1080 (QB)
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch)
Stephanie Tozer K.C. and Doug Robertson
The Receiver’s Duties on Sale
- Receivers must use their powers for proper purposes and in good faith
- They must also take reasonable care to sell at the best price reasonably obtainable at that time; there is no obligation to wait for the market to improve, to grant leases, apply for planning permission or carry out improvements to the property beforehand
Silven Properties Ltd v Royal Bank of Scotland [2003] EWCA Civ 1409 – planning permission
Bell v Long [2008] EWHC 1273 (Ch)
Centenary Homes v Liddell [2020] EWHC 1080 (QB) – auction; indemnity policies against planning issues
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch)
- If they have the necessary expertise about the local market, there is no requirement to take independent advice/appoint independent agents – but taking reasonable steps to appoint an independent person to advise about marketing strategy can provide useful evidence. However, even if an independent agent is appointed, the receivers remain responsible if the advice given is negligent.
- There is no requirement to expose to the open market; however, if the receivers do not do so, the receivers may have to explain why this was not necessary in order to achieve the best price reasonably obtainable
Centenary Homes v Liddell [2020] EWHC 1080 (QB) - auction
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch) – approaching local developers known to the agent
- When considering whether to accept an offer, receivers must consider the value of a “bird in the hand” and ALL the terms; e.g. the time required before another offeror might be ready to complete and/or a reasonable doubt about the genuineness or proceedability of other offers might justify accepting a lower offer.
Bell v Long [2008] EWHC 1273 – portfolio sale
National Westminster Bank plc v Hunter [2011] EWHC 3170 (Ch) – borrower’s own offer
McDonagh v Bank of Scotland [2018] EWHC 3262 (Ch) – portfolio sale
- There is a wide margin of appreciation; a receiver will only commit a breach of duty if he is “plainly on the wrong side of the line”. If receivers have considered the best approach and made a reasonable judgment call, they will not be in breach, even if others would have acted differently.
Centenary Homes v Liddell [2020] EWHC 1080 (QB)
Serene Construction ltd v Salata [2021] EWHC 2433 (Ch)
- A borrower will only be able to obtain conduct of the sale process in order to attempt to get a higher price in exceptional circumstances and if there is hard evidence that a sale at a higher price could be achieved
- For a case on the wrong side of the line: Glatt v Sinclair [2011] EWCA Civ 1317 (and see [2015] EWHC 1673 (Admin) at [9] for what happened afterwards).
