Injunction against Receivers

Posted by Strettons on 2nd December 2019 -

Injunction against Receivers

We recently had an instance over the sale of a Grade I Listed fire damaged mansion in Cheshire where the borrower sought to obtain an injunction restraining us from selling. Agreements were reached to delay a sale but we are reminded of a similar attempted injunction against us in 2017 where a London judge said to the borrower:

“I’m not sure what jurisdiction I have to grant an injunction - you are out of the picture - the Receiver is in your place. In other words, the borrower has no standing to obtain an injunction against a Receiver, presumably unless the receiver is acting unlawfully.”

Whilst the decision, in this case, was not reported, it is an interesting indication because it is not unusual for borrowers to try to prevent or delay a sale by seeking an injunction. The excellent textbook – “Mortgage Receivership: Law and Practice” by Stephanie Tozer & Cecily Crampin of Falcon Chambers, suggests an alternative view which we subscribe to.

Annual Tax on Enveloped Dwellings (ATED)

Last year we were appointed as receivers over a mansion flat in Mayfair. On sale, we were asked by an offshore accountant to complete the ATED return. Our view, supported by advice, was that this is the taxpayer’s obligation rather than the Receiver. We were advised that the only exception would be a Receiver appointed by the Court of Protection.

No Gas Safety, No Possession

We have had several appointments where lenders advanced funds without checking that a Gas Safety Certificate was issued to the tenant by the borrower at the start of an AST. It wasn’t until we were appointed and needed to serve a Section 21 notice to recover possession, that anyone realised that this was an issue. Lenders’ due diligence should also include checking that the borrower has dealt with the deposit properly and issues a ‘How to rent: the checklist for renting in England’ leaflet to the tenant.

Freezing Orders

We have taken appointments several times where there are freezing or restraint orders in place of where Claimants try to impose them on us. Similarly, we have taken appointments where, because of litigation (usually divorce) or intestacy, it has been difficult to progress a sale. In these instances, we have been able to take control and proceed with sales, taking advantage of a strong market or reducing the cost of retaining the property, while undertaking to safeguard the sale proceeds.

Featured Instruction

Finally, while nowhere near the highest value receivership that we have dealt with, we think that this is a stunning property in Fowey, South Devon: 

The Strettons receivership team continues to grow and offers industry-leading receivership and insolvency advice. We provide a personalised service tailored to create a solution by managing all affairs that produce maximum value with minimal losses. For more information view our Insolvency and Receivership page here.