Silven Properties Ltd v Royal Bank of Scotland [2003] EWCA Civ 1409 is an English law law on the behavior of receivers under mortgages .

Facts

In 1996, Royal Bank of Scotland (RBS) appointed receivers over 33 properties mortgaged by Silven Properties to it, and proceeded to sell them off. The receivers explored planning and letting out the properties, but decided to sell them straight away. Silven alleged that RBS’s receivers were under a duty to maximize the value by getting planning permission for development and letting out of vacant properties.

In the Chancery Division , Patten J held that neither the mortgage nor the receiver were required to incur expenses. This was supported by Cuckmere Brick Co v Mutual Finance , Downsview Nominees Ltd. v First City Corporation Ltd. , and Medforth v Blake .

Judgment

Lightman J held that RBS had not breached its duty. A duty is owed in equity (rather than wrong) but it was not breached on the facts.

  • The mortgage is entitled to sell the mortgaged property as it is, but it is under no obligation to improve it or increase its value. [1]
  • The mortgage is free (to his own interest as well as of the mortgagor) to investigate whether and how he can “unlock” the potential for an increase in the property mortgaged, but he Efforts and proceeds immediately with a sale. [2]
  • If the mortgagor requires protection in any of these respects, if by imposing further duties on the mortgagee or limitations on his rights and powers, he must insist upon them when the bargain is made and upon the inclusion of protective provisions in the mortgage. The one method to the mortgagor to prevent the mortgagee from exercising his rights is to redeem the mortgage. [3]

Impact

Silven’s reasoning Was aussi held-to apply to other forms of mortgages in Den Norske Bank ASA v Acemex Management Company Ltd. Which was handed down several days later. [4] As Longmore LJ noted in his ruling:

25. … These statements of the law can not be sidestepped by saying, in the case of a moveable chattel, as to the transfer to the place where the best price is available, because to transfer Will not be able to make any changes. It is entirely different from a case where a short delay is appropriate. [5] The position might not be the same in the case of the chattel concerned to the place in which the mortgagee proposes to sell. It might, for example, be inappropriate for Panama. Purpose, even then,

See also

  • English land law
  • English trusts law
  • English property law

References

  1. Jump up^ Silven, para. 16
  2. Jump up^ Silven, para. 17
  3. Jump up^ Silven, para. 18
  4. Jump up^ Den Norske Bank ASA v Acemex Management Company Ltd. [2003] EWCA Civ 1559, [2004] 1 All ER (Comm) 904 (7 November 2003)
  5. Jump up^ Meftah v Lloyd’s TSB Bank Plc, [2001] 2 AER (Comm) 741