Glatt v Sinclair

Permission to continue proceedings against a receiver is discretionary. It should be granted where the claim is genuine and calls for an answer, while preventing vexatious claims. A receiver’s reliance on a reputable valuation does not necessarily discharge the separate duty to consider marketing strategy, asking price, advertising and whether an offer should immediately be accepted. Serious allegations effectively amounting to fraud require convincing evidential support. After limitation has expired, allegations of intentional wrongdoing which introduce a new factual inquiry distinct from negligence or incompetence generally constitute a new cause of action and cannot be added by amendment.

Louis Glatt sought permission to continue a breach-of-duty claim against Nigel Heath Sinclair, a receiver appointed by the court pursuant to the Criminal Justice Act 1988. The receiver had sold a property for £330,000, after obtaining professional valuations, and it was later resold for £455,000.

Glatt alleged that the property had been inadequately valued or marketed and that the purchaser was connected with the selling agent. Kenneth Parker J dismissed the application and ordered the receiver’s costs to be paid from the receivership assets: [2010] EWHC 3082 (Admin). The Court of Appeal considered fresh evidence, the arguability of the claim, proposed amendments after expiry of the limitation period, and the costs order.

1. Fresh evidence. The application to adduce further evidence on appeal was refused. The evidence had been capable of being obtained without difficulty before the judge, and no special grounds were shown under the approach in Ladd v Marshall [1954] 1 WLR 1489.
2. Receiver’s duties and valuation. A receiver must act in good faith and take reasonable steps to obtain a proper price, meaning the best price reasonably obtainable at the time. This reflected Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 (PC), Medforth v Blake [2000] Ch 86 (CA) and Mortgage Express v Trevor Mardner [2004] EWCA Civ 1859. The judge was entitled to find that the Smith Hodgkinson valuation was reputable, competent and not manifestly flawed. The Colleys report provided limited corroboration. There was no realistic prospect of establishing that reliance on the valuation itself breached the receiver’s duty.
3. Marketing. A valuation did not necessarily remove the need for further advice about the asking or guide price, advertising, marketing strategy, market conditions and whether to accept an offer immediately or await further exposure. The rapid acceptance of an offer matching the earlier valuation, despite several substantial offers and a forthcoming advertisement, together with the absence of evidence about the marketing process, raised an issue fit for trial. The judge therefore erred in refusing permission on this aspect.
4. Connected purchaser and delegation. The allegations that the purchaser was connected with the agent and that competing offers were fictitious were serious, but the supporting evidence was too flimsy and stale. The judge was entitled to expect more convincing evidence. The Court also left open whether the best-price duty of a court-appointed receiver is non-delegable. It accepted the rule for mortgagees and mortgagee-appointed receivers discussed in Raja v Austin Gray [2003] BPIR 725, but regarded the position of a court-appointed receiver as requiring further argument.
5. Limitation and orders. The proposed allegations in paragraphs 16(j), (k) and (l) introduced intentional wrongdoing and a new factual inquiry into the honesty of the selling agent. Applying Paragon Finance plc v DB Thakerar [1999] 1 All ER 400, they were new causes of action and did not arise from the same or substantially the same facts as the existing claims. They could not be added after expiry of the six-year limitation period. The appeal was allowed to the limited extent explained, permission was granted to pursue the arguable marketing claim, the particulars were to be amended accordingly, and the first-instance costs order was set aside.

• Court of Appeal (Civil Division): In [2011] EWCA Civ 1317, the appeal was allowed to a limited extent. Permission was granted to pursue the arguable marketing issue, subject to the limitation ruling, and the first-instance costs order was set aside.
• High Court of Justice, Queen’s Bench Division, Administrative Court: In [2010] EWHC 3082 (Admin), Kenneth Parker J dismissed the application for permission to continue the claim and ordered that the receiver’s costs be paid as an expense of the receivership.