Scotland v Patel & Ors

A mortgagee exercising a power of sale owes an equitable duty to the mortgagor and others interested in the equity of redemption to take reasonable precautions to obtain the best price reasonably obtainable. A solicitor conducting the sale does not thereby owe the mortgagor a separate duty of care. Claims alleging undervalue, fraud or conspiracy require properly particularised primary facts and may be abusive where they constitute a collateral attack on earlier decisions. Long-delayed claims may also be time-barred. An appeal against strike-out and summary judgment orders will fail where the proposed claims have no real prospect of success.

Mr Scotland sought permission to appeal against Master Teverson’s judgments and orders striking out claims against five defendants involved in the sale of his property and related enforcement proceedings. He alleged that the property had been sold at an undervalue through a fraudulent scheme, and advanced further claims concerning goods and chattels, mortgage redemption sums, solicitors’ costs and interest.

The applications also sought permission to adduce new evidence and amend the claims. The central issues were whether the proposed claims disclosed reasonable grounds, had a real prospect of success, were time-barred or abusive, and whether the defendants owed the duties alleged.

1. Permission refused. Master Teverson was right to strike out the claims and grant the consequential orders. The proposed appeals had no real prospect of success.
2. The evidence supported a sale at a fair value, not an undervalue. The allegations of a fraudulent scheme were unsupported by identified overt or primary acts connecting the defendants with fraud.
3. Further proceedings concerning the alleged undervalue and the goods and chattels amounted to collateral attacks on earlier decisions and were an abuse of process. The claims concerning the goods and chattels were also time-barred or otherwise impermissible in the circumstances.
4. Following Silven Properties v RBS [2004] 1 WLR 997, a mortgagee exercising its power of sale owes an equitable, rather than tortious, duty to take reasonable precautions to obtain the fair or true market value, or the best price reasonably obtainable, at the date of sale.
5. Mr Frankish, acting as solicitor for the mortgagees and conducting the sale, owed no separate duty of care to Mr Scotland beyond the duty owed by the mortgagees. Any wider claim in negligence was in any event statute-barred after six years.
6. The challenge to solicitors’ costs should have been pursued by taxation under section 71 of the Solicitors Act 1974. The late challenge to the redemption account and the claim concerning early-redemption interest were not properly raised and disclosed no sufficient basis for permission to amend.
7. The claims against the valuers and agents likewise lacked evidential support and were abusive. The orders under appeal stood.

High Court (Chancery Division) — Applications for permission to appeal against Master Teverson’s judgments and orders of 12 and 13 June 2007 and 16 September 2008 were refused. The claimant’s ancillary applications to adduce evidence and amend the claims were also unsuccessful.