This question had until recent times been a conundrum of modern fixed charge receiverships (as well as receivers appointed under the Law of Property Act 1925), because in the scenario of the receiver seeking to step in and deal with property, the receiver is also said to be the borrower's deemed agent. It therefore begged a thorny question of the receiver, about how to reconcile being on both sides of the possession action.

FC/LPA receiverships are a species of English & Welsh law; and the position is different in Scotland. For more information about the position in Scotland please see our blog on the topic here. They are also different from administrative receivers, who can be appointed (in certain situations) by a floating charge holder.

In Menon v Pask [2019] EWHC 2611 (Ch) the mortgage document gave express powers that, in the event of default by the borrower, the receiver would be entitled to take possession of the property, as well as to manage and sell it.

It was held that the use of this wording was sufficient to allow the receiver possession of the property against the borrowers, despite also being their agents; and the receiver should make the claim in the receiver's own name, not the borrower's name.

The court reasoned that to construe the term as benefiting only the mortgagee, would (amongst other things) negate the commercial purpose of a receivership.

The court also found that section 36 Administration of Justice Act 1970 applies in these claims, meaning a borrower can make proposals to repay the defaulted sums and has standing in the court proceedings to seek an adjournment, stay or suspension of an order for possession.

If you are a receiver seeking to deal with property or a borrower subject to possession action, or you have any concerns or questions about these matters and how they may impact you or your business, please do not hesitate to get in touch with our Litigation team or your usual Brodies' contact.

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Lucie Barnes

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