R (Glatt) v Sinclair
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE KENNETH PARKER |
| Judgment Date | 04 November 2010 |
| Neutral Citation | [2010] EWHC 3082 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CJA/32/1997 |
| Date | 04 November 2010 |
[2010] EWHC 3082 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Before: Mr Justice Kenneth Parker
CJA/32/1997
Mr Geoffrey Zelin (instructed by Messrs Edward Hayes Solicitors) appeared on behalf of the Claimant
Mr Andrew Mitchell QC (instructed by Messrs Denton Wilde Sapte) appeared on behalf of the Defendant
: This is an application by Louis Glatt for permission to proceed with an existing action against the respondent, Mr Heath Sinclair, a court appointed receiver under the Criminal Justice Act 1988, for negligence or breach of duty arising out of the sale by the respondent of the property known as 107 Station Road, Hendon NW4, (“the property”).
The background is as follows. On 12th February 2001, the applicant was convicted of conspiracy to contravene section 93 of the Criminal Justice Act 1988 in laundering the proceeds of the criminal conduct of a named third party. On 15th February 2001, the respondent was appointed receiver and manager of the respondent's assets. On 25th November 2001, there was an order permitting the respondent to sell the property. On 15th January 2002, the property was marketed through Moreland Estate Agents. On 3rd or 15th April 2002 (the date is not of great materiality), the exchange of contracts for sale of the property was for £330,000. On 15th April 2002, it appears that the prospective purchasers apparently placed an advert for publication on 18th April to sell the property at £445,000. On 18th April 2002, completion of sale of the property took place. That sale is the impugned transaction in these proceedings. On 18th April 2002, the initial purchasers marketed the property for sale at £445,000.
The applicant alleges that the initial purchasers then agreed in May 2002 to sell the property for £455,000. The applicant alleges that the sale of the property was then completed for £455,000 on August 2002.
On 18th October 2002, Munby J, as he then was, ordered that litigation concerning the applicant be reserved to himself. However, he has subsequently released this matter to the Administrative Court generally.
On 27th April 2006, the respondent was discharged as receiver and manager and on 1st April 2008 the applicant issued his claim form in the present action in the Queen's Bench Division. It was not, however, until 5th September 2008 that the permission application was first issued. By that time the limitation period in respect of the proposed action had lapsed.
26th January 2009 was the date listed for the first hearing of this permission application. After the court indicated on that occasion some concern on the merits of the application, the applicant sought an adjournment of the application. The learned judge, Sir George Newman, made clear that in his view the only basis on which permission could be granted would be in the event that the applicant was able to provide prima facie evidence of bad faith on the part of the respondent.
The legal test for permission
The claim was issued before the limitation period expired. However, as the respondent was a court appointed receiver, the court's permission is required for the claim to proceed. The court has a discretion whether to allow the claim to proceed: see McGowan v Chadwick and Grant [2002] EWCA Civ 1758 per Jonathan Parker LJ:
”As to the approach which the court should take to such an application, it is a matter for the court's discretion whether or not to give permission, and accordingly no hard and fast rules can be laid down as to the requirements which a prospective claimant must meet or as to the manner in which he brings forward his application. What can, in my judgment, safely be said is that permission will not be granted unless the applicant satisfies the court that his claim is a genuine one, in the sense that the allegations which he seeks to make are such as to call for an answer from the receiver. On the one hand, the receiver must not be subjected to vexatious or harassing claims; on the other hand, as Nevill J observed, the court must see that justice is done.”
The duties of the receiver
There appears to have been some earlier issue between the parties as to the precise scope of the respondent's duties. There is now largely, as I apprehend, common ground. In summary, Mr Zelin for Mr Glatt submitted that the duty of good faith imposed on the respondent means that, in deciding whether and when to exercise a power, the receiver must act honestly and for a proper purpose and he is not constrained by the fact that his choice may occasion loss to one or other of the persons interested in the property or its proceeds. But in the execution of that decision the receiver must show due diligence, that is take reasonable care.
Both parties referred to Lightman v Moss, the Law of Administrators and Receivers of Companies (4th edition) at paragraph 10-039 and that paragraph reads as follows, under the rubric “The content of the duty of care”:
“A mortgagee or receiver is only to be adjudged negligent if he has acted as no mortgagee or receiver of ordinary competence acting with ordinary care and (where appropriate) on competent advice would act. In deciding whether he has fallen short of his duty, the facts must be looked at broadly and he will not be adjudged to be in default unless he is plainly on the wrong side of the line. Thus, if two or more alternative courses of action are available, there is no negligence if the course taken might have commended itself to a competent mortgagee or receiver, even though subsequent events show that it was in fact the 'wrong' course. However, the receiver or mortgagee would not escape liability simply by showing some other receivers or mortgagees would have acted as he has. Rather, the receiver or mortgagee must have acted consistently with a practice that is respectable, responsible and reasonable, and which has a logical basis.”
I gratefully adopt that as an accurate and succinct statement of the law. The relevant question then on this application is: Is there any realistic prospect of the applicant showing that the respondent was plainly on the wrong side of the line?
The merits of the application
The applicant alleges firstly that this is a case almost of res ipsa loquitur. It appears that within a short period of the impugned transaction the property was sold for substantially a higher price, £440,000 or thereabouts, as I have already indicated. This was evidenced by an entry in the Land Registry that, notwithstanding the very lengthy nature of these proceedings, emerged only at the hearing before me. However, notwithstanding that evidence, in my view res ipsa loquitur can have no application in the present context. On authority, it is well established that the receiver is not guaranteeing that he will obtain the market price. The question is simply whether he took reasonable steps with a view to obtaining that price.
I turn then to investigate what happened here.
In the context of the pressures of a receivership under the Act, the receiver appointed an expert firm of chartered surveyors to value the property, Smith Hodgkinson. I see no basis at all for any suggestion that Smith Hodgkinson...
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