Beveridge & Anor v Quinlan& Ors

Receivers appointed over contractual security assets may receive sums payable in respect of those assets and use the chargors’ names to collect them, where the security documents confer those powers. A declaration may be granted where there is a real dispute, the affected parties are before the court, and declaratory relief is the most effective way to secure certainty. A contractual obligation to facilitate realisation of security may require chargors to execute notices, including notarised notices where reasonably necessary to achieve the intended effect abroad. An order for execution by another person should not ordinarily be made in anticipation of non-compliance unless the defendant’s conduct shows that refusal is likely.

The claim was an expedited Part 8 application by two receivers appointed under security documents granted by the defendants in favour of RBS. The receivers sought declarations that they were entitled to receive sums payable by Ramblas Investments BV in respect of shareholder loans and to use the defendants’ names to collect those sums.

They also sought a mandatory injunction requiring the defendants to execute notices, before a suitable Spanish notary, directing that any such sums be paid to the receivers. Finally, they sought an order under section 39 of the Senior Courts Act 1981 permitting execution of the notices by another person if the defendants failed to comply.

1. Declaratory relief. The court granted declarations that, by virtue of their appointment and the security documents, the receivers were entitled to receive any sums otherwise payable by Ramblas to the defendants in respect of the shareholder loans and to use the defendants’ names to collect those sums. The receivers remained subject to the duties arising under the security documents and at law or in equity.

2. Declaratory relief was discretionary. Applying the principles in Rolls-Royce plc v Unite the Union [2010] 1 WLR 318, the court considered the existence of a real dispute, the presence of the affected parties, whether the declaration would serve a useful purpose, and whether it was the most effective means of resolving the issue. The considerations identified in Financial Services Authority v Rourke [2002] CP Rep 14, including justice to each party and any special reason for granting relief, supported the same conclusion.

3. Mandatory injunction. Clause 13 of the security agreement required each defendant to take whatever action the receivers reasonably required to facilitate realisation of a security asset. The clause expressly included giving notices. Requiring notices in notarised form was reasonable because the Spanish insolvency administrator had requested confirmation and the evidence indicated that notarisation was most likely to secure the desired effect in Spain. The mandatory injunction was therefore granted.

4. Anticipatory execution order. The court refused to make an order under section 39 of the Senior Courts Act 1981 in anticipation of a failure to execute the notices. Following Savage v Norton [1908] 1 Ch 290, such an order should not be made unless the defendant’s conduct has shown that the defendant refuses, and will refuse, to execute. The defendants’ conduct did not satisfy that threshold. There was liberty to apply if non-compliance occurred.