Dean v Barclays Bank Plc

A mortgagee exercising a power of sale must take reasonable care to obtain the best price reasonably obtainable at the time. The duty is equitable, and the remedy is an account for the amount that should have been received. Marketing decisions must fall within reasonable professional judgment, assessed in light of the property’s circumstances. The court should not substitute a different strategy merely because another approach was possible. The claim failed because the mortgagee’s marketing was reasonable and the price obtained fell within an acceptable valuation bracket.

John Warren Dean claimed that Barclays Bank plc, formerly the Woolwich, had under-realised Deanswood when selling it as mortgagee and holder of a charging order. The property comprised a dwelling and a larger plot formerly used for nursery and equestrian businesses. The claimant alleged that the bank failed to market the property properly and should have obtained substantially more than the £245,250 realised in May 1999.

The issues were the property’s physical condition, whether the marketing satisfied the mortgagee’s equitable duty to obtain the best price reasonably available, and the property’s market value if that duty had been breached.

1. A mortgagee exercising its power of sale under section 101(1)(i) of the Law of Property Act 1925 must take reasonable care to obtain the best price reasonably obtainable at the time. That expression is equivalent to a proper price and the true market value. The duty is equitable, and the remedy is an account for what should have been received.
2. The mortgagee was entitled to decide whether and when to sell, subject to that duty once the power was exercised. The relevant question was whether the bank and its agents acted within reasonable professional judgment, having regard to the property’s condition, planning restriction, lack of an operating business and difficulty in obtaining finance.
3. It was reasonable to focus the campaign on the dwelling rather than market the property primarily as a business opportunity. The choice of agents, local advertising, sales particulars, guide price and refusal to use national or specialist publications were reasonable. Although the initial period for offers was short, later invitations for further offers and the period before exchange provided adequate market exposure.
4. The property’s value was approximately £240,000. Given its unusual nature, a bracket of at least 20 per cent either side was appropriate. The realised price of £245,250 fell within that bracket. The claim was dismissed.