CR-2024-MAN-000540 - [2025] EWHC 2159 (Ch)

I share the concerns that have been expressed by Mr Faik with regard to the circumstances behind the sale of 6 Gezzerts Rise. Of particular concern, it seems to me, is that 6 Gezzerts Rise was sold by the LPA receiver, on the basis of a valuation, to the appointing chargee, without being exposed to the market at all. So far as Lamb & Swift’s valuation is concerned, I note that it was dated 17 March 2023, and it was therefore some nine months old at the time of sale of 6 Gezzerts Rise in December 2023. Further, I note that only a month or so beforehand, 5 Gezzerts Rise had been sold for £279,950 as against Lamb & Swift’s valuation of £240,000, a difference of some £40,000. To my mind, this ought to have called into question the value of 6 Gezzerts Rise as of December 2023, and whether reliance could be placed on Lamb & Swift’s valuation, in particular where the property was not to be exposed to the market.

A further consideration is, I consider, that having been advised by Lamb & Swift that the effect of the tenancy for a term of 10 years, with some four years still left to run, reduced the value of 6 Gezzerts Rise by some £100,000, somewhat surprisingly no attempt was made to explore with the tenants the possibility of a surrender for a sum of significantly less than £100,000, or to investigate further the purported one year tenancy.

Devon Commercial Property Ltd v Barrett [2019] EWHC 70 (Ch) at [28] is authority for the proposition that the sale by an LPA receiver to the mortgagee is not, in itself, objectionable on the grounds of self-dealing. Further, prima facie, Mr Craig, as LPA receiver, acted as agent on behalf of the mortgagor, Mr Martin in respect of the sale, and thus any remedy in respect of a sale at an undervalue would, prima facie, be that of Mr Martin as against Mr Craig. As to the duties of an LPA receiver to obtain a proper price, see Silven Properties Ltd v Royal Bank of Scotland plc [2004] 1 WLR 997.

A claim as against Milltom in respect of a sale at an undervalue is only likely to lie if the latter acted in bad faith in relation to the sale and/or if the circumstances were such that Mr Craig was, in fact, acting as agent of Milltom. Thus, again, prima facie, the claim would be that of Mr Martin, and not the Company – see e.g. Fisher and Lightwood’s Law of Mortgage,15^th Edn at [30.34]. The ability of Mr Faik, as administrator of the Company, to rely upon any sale at an undervalue as providing a basis for reducing the outstanding liability of the Company to Milltom is thus limited.

As I have already mentioned, no cogently articulated argument has been put forward on behalf of Mr Faik identifying a legal basis for saying that any sale at an undervalue of 6 Gezzerts Rise should be taken into account as between the Company and Milltom, albeit that Mr Couser did suggest the possibility of a claim in unjust enrichment, and Mr Faik said that he was taking further advice as to the position. Given that the question has not been explored as fully as it might have been in the evidence or submissions, I do not consider that the possibility that a sale at an undervalue might be of relevance as between the Company and Milltom can be wholly ignored at this stage.