Paul Yerbury v Azets Holdings Limited

An employer is not vicariously liable for acts or defaults committed by an employee acting as a personally appointed LPA receiver. Vicarious liability requires both an employment or akin-to-employment relationship and a sufficiently close connection between the tort and authorised employment activities. Those stages cannot be satisfied merely because the receiver is employed by a firm that provides receivership services and benefits economically from the work. The receiver’s statutory and personal appointment, independent duties and autonomous decision-making mean that acts done qua receiver are done in the course of the receivership, not in the course of employment. An assignment of claims against receivers personally does not, without more, assign a claim against their employer.

The appellant, as assignee of Bethel Retirement Villages-Herne Bay Court Ltd’s alleged claims, sued Azets Holdings Ltd for losses said to arise from the conduct of two LPA receivers appointed over Bethel’s mortgaged property. The receivers were employees of the respondent’s predecessor and sold the property during the receivership.

Master Davison struck out the claim, holding that the receivers had been appointed personally, that the assignment covered claims against them rather than the respondent, and that the respondent was not the proper defendant. Permission to appeal was granted only on whether an employer could be vicariously liable for an LPA receiver’s acts.

1. Appeal dismissed. The Master reached the correct decision on the permitted ground of appeal.
2. Vicarious liability involves two stages. First, the relationship between defendant and tortfeasor must be one of employment or akin to employment. Secondly, the wrongful conduct must be so closely connected with acts authorised by that relationship that it can fairly and properly be regarded as occurring in the course of employment or quasi-employment.
3. The fact that an employee remains contractually employed, or that the employer provides and benefits from the services, is insufficient by itself. The employee’s capacity and the nature of the activity may alter the incidence of vicarious liability.
4. LPA receivers are appointed personally. Their powers and duties arise from the appointment and the statutory and equitable framework governing receivership. Under Law of Property Act 1925, s 109(2), the receiver is deemed the mortgagor’s agent and the mortgagor is solely responsible for the receiver’s acts or defaults, subject to the mortgage deed. This is a statutory allocation of responsibility rather than a true agency relationship.
5. The receivers owed their duties to Bethel’s creditors and those interested in the equity of redemption. They were required to act autonomously and independently, including in making commercial decisions about the sale. In performing acts or defaults qua receiver, they acted in the course of their appointment and not in the course of employment. Their employer was therefore not vicariously liable.
6. The assignment was unambiguous and covered claims against the receivers personally, not Azets. The appeal was dismissed.

• High Court (King’s Bench Division): Appeal from Master Davison’s order striking out the claim. The appeal was dismissed on the issue for which permission had been granted.