Yerbury v Azets Holdings Limited

An action alleging breach of duty by LPA receivers must ordinarily be brought against the receivers personally. The receivers are appointed as principals, and their employer is not vicariously liable merely because the receivers are its employees. An assignment of a claim against the receivers does not assign a separate, unassigned claim against their employer. Estoppel cannot make an employer a proper defendant where the assignment does not cover the relevant cause of action. Joinder may be possible under CPR 19.6, but the procedural and limitation requirements must be satisfied; the court cannot rewrite a standstill agreement to overcome them.

The claimant brought proceedings against Azets Holdings Limited concerning the alleged undervalue sale of charged property by LPA receivers employed by Azets. He claimed under an assignment from the borrowers, but the assignment expressly transferred the claim against the receivers rather than any claim against Azets. The sale occurred on 19 September 2016, and the claim was issued on 23 January 2023 after a standstill agreement.

The defendant applied to strike out the claim or obtain summary judgment. The issues were whether Azets was the correct defendant, whether it was vicariously liable or estopped from denying that status, and whether the receivers could still be joined under CPR 19.6.

1. Application upheld. The claim was struck out and/or summary judgment was entered for the defendant.
2. The assignment transferred the borrowers’ claim against the receivers. It did not transfer any distinct cause of action against Azets. The claimant’s contention that the reference to the receivers included their employer was rejected as a matter of construction.
3. LPA receivers are appointed as individuals and act as principals in conducting the receivership. They are not subject to the control and direction of their employer in that capacity. The proper defendant to an action for breach of duty as receiver is therefore the receiver personally. The court relied on the judicially approved concession recorded in Serene Construction Limited v Salata and Associates Limited and Others [2021] EWHC 2433 (Ch).
4. No authority established that an employer of an LPA receiver is vicariously liable for the receiver’s breach of duty to a third party. The practice of suing the receivers, rather than their employers, was consistent with their status as principals. Bell v Long and Others [2008] EWHC 1273 (Ch) did not assist because the issue had not been explored and was redundant when the claim failed.
5. Azets’ correspondence and conduct did not clearly establish an estoppel. There was no duty, in the context of opponents in proposed litigation, to identify the correct defendants or state that Azets was not a proper defendant. In any event, estoppel could not cure the defective assignment.
6. Joinder under CPR 19.6(2)-(3) could not provide a remedy. No joinder application had been made, and the limitation condition in rule 19.6(2)(a) was not met because the standstill agreement was narrowly worded. The court had no power to rewrite it.