No duty to enhance value before sale

Silven Properties and another v Royal Bank of Scotland plc and others CA TLR 27 October

The borrowers were property companies who had large borrowings from the bank secured by mortgages over 34 properties. The bank appointed receivers who sold off all the properties. In each of those sales it was conceded by the borrowers, or established by evidence at the trial, that the sales were at the best price reasonably obtainable at the dates of each sale for the properties in the condition in which they were. The borrowers complained that the receivers were under a duty not to sell the properties as they were, but, in order to obtain the best possible price, to pursue planning applications for the development of the properties and in the case of two of the properties which were vacant or partially vacant, to defer sale until leases had been granted. Consideration was called for whether the express appointment in the mortgage of receivers as agents of the borrower led to the assumption by receivers who accepted such appointment of responsibilities and duties which differed from those owed by the lenders, who did not have the duties to which the borrowers contended.