This article examines the recent judicial expansion of the duty of care owed by a receiver of a company’s assets to include third parties whose interests may adversly be affected by the receiver’s negligence. The Standard Chartered Bank Ltd. v. Walker 1 case follows naturally on the extension of liability in negligence in Ann’s v. London Borough of Merton,2 and Batty v. Metropolitan Property Realizations Ltd.,3 in which cases it was held that a duty of care arises in almost all situations where the person (or property of the plaintiff) is in such proximity to the person (or property of another person (the defendant)), that if due care is not taken by the defendant damage might result; and proximity in this context means such close and direct relations that the act complained of must directly affect a person whom the defendant should know is likely to be directly affected by his conduct. The duty of care is thus no longer restricted to those persons who are parties to a contract or agreement, or who stand in some special and distinctive relationship to the defendant, but also protects a third party whose interests are so closely affected by the defendant’s negligence that injury to him should be reasonably contemplated.

The function of the receiver is to take possession of the company’s assets, to realise them and to obtain the best price possible in order to discharge the amount secured by the debentures under which he is appointed. A receiver appointed by the trustees or debenture holders under a power in the debentures or covering trust deed is their agent, and consequently they are liable for any negligent act or default of the receiver. If, therefore, the receiver fails to obtain the best price possible on realising the company’s assets, while the debenture holders may bring a personal action against the receiver for negligence, they are importantly treated as having received the best possible price as against the company itself and guarantors of the debenture debt. However, if the debenture or trust deed expressly provides that the receiver will be deemed to be the company’s agent the company will be in the position of a principal in respect of contracts made by him, as receiver.

However, even if he is declared to be an agent of the company, and until recently it was assumed that the company would be responsible for his defaults, a receiver will be personally liable to the company if he acts without due care, or in bad faith. This is clearly established in Standard Chartered Bank Ltd. v. Walker but the case goes further and extends the duty of care owed by a receiver to third parties whose rights are likely