is an

English land law English land law is the law of real property in England and Wales. Because of its heavy historical and social significance, land is usually seen as the most important part of English property law. Ownership of land has its roots in the feudal ...

case, concerning the behaviour of receivers appointed under mortgages. It affirmed the proposition that a lender (and its agents or receivers) are not required to incur expenses that would likely delay a sale beyond the normal period of marketing.

Facts

In 1996,

Royal Bank of Scotland The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) and Ulster Bank ...

(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 maximise the value by getting planning permission for development and letting out of vacant properties. In the Chancery Division, Patten J held that neither the mortgagee nor receiver were required to incur expenses that would likely delay a sale beyond the normal period of marketing. This was supported by the cases of ''

Cuckmere Brick Co v Mutual Finance is an English tort law case, establishing the lender must publish/promote the materially beneficial key, intrinsic facts as to land in mortgage repossession sales. As it affects the duty of mortgagees (secured lenders), to that extent it can be c ...

'', '' 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 tort) but it was not breached on the facts. * The mortgagee is entitled to sell the mortgaged property as it is, but is under no obligation to improve it or increase its value. * The mortgagee is free (in his own interest as well as that of the mortgagor) to investigate whether and how he can "unlock" the potential for an increase in value of the property mortgaged, but he is likewise free at any time to halt his efforts and proceed instead immediately with a sale. * If the mortgagor requires protection in any of these respects, whether 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 available to the mortgagor to prevent the mortgagee from exercising his rights is to redeem the mortgage.

Impact

''Silven's'' reasoning was also 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. As

Longmore LJ Sir Andrew Centlivres Longmore (born 25 August 1944), styled The Rt Hon. Lord Justice Longmore, is a British lawyer and judge. Educated at Winchester College and Lincoln College, Oxford, he was called to the Bar at the Middle Temple in 196 ...

noted in his ruling:

Facts

Judgment

Impact

See also

References

Further reading