Receivers As Agents
| Author | David Milman |
| Date | 01 November 1981 |
| Published date | 01 November 1981 |
| DOI | http://doi.org/10.1111/j.1468-2230.1981.tb02756.x |
RECEIVERS
AS
AGENTS
THE
PROBLEM
DEFINED
IN
this article it
is
proposed to study the nature of the agency
relationship which often arises where
a
receiver is appointed over
a company’s assets.
Receivers Appointed
by
the
Court
Normally, where
a
receiver has been appointed by the court at
the instance
of
debenture holders, no question of agency
will
arise
since such
a
receiver is primarily
an
officer of the court: “A
receiver and manager appointed, as were those in the present case,
is the agent neither
of
the debenture holders, whose credit he
cannot pledge, nor of the company which cannot control him.”
Receivers Appointed out
of
Court
This second type
of
receiver, the most common species
of
the
genus,
will
always be an agent. Prima facie, he will naturally be
regarded as the agent of the debenture holders who appointed him
and for whose benefit he is acting.2 Yet in fact such a receiver is
invariably installed on the understanding that he is to be the
company’s agent.3 This may be achieved in two ways.
If
the debenture holders are mortgagees and appoint the receiver
in exercise of the powers conferred upon them by the Law of
Property Act 19254 then .section 109 (2)5 of the said Act states
that he is the agent of the mortgagor company. Debenture holders
who enjoy the security
of
a
specific charge, whether legal or
equitable, can clearly appoint
a
receiver under the Act and, on
the strict wording of the Act, it would appear that
a
similar right
is conferred upon the holder of
a
floating charge, because the
word
‘‘
mortgage
”
is
defined
so
as to include any charge. But it
was held in
Blaker
v.
Herts and
Essex
Waterworks
C0.l
that
a
floating charge cannot be classed as
a
mortgage for these purposes.
This case, in spite of criticism,* still remains the law.
The alternative and more popular ploy adopted these days
is
for
the debenture under which the receiver is appointed to provide
’:
1
Parsons
v.
Sovereign Bank
of
Canada 119131 A.C. 160, 167, per Viscount
Haldane L.C.
2
Re Henry Pound,
Son
&
Hurchins (1889)
42
Ch.D. 402, 423, per
Fry
L.J.
3
For the history
of
this practice see the dissenting judgment
of
Rigby
L.J.
in
Caskell
v.
Gosling [1896] 1
Q.B.
669, 691-693, which was approved
by
the House
of
Lords
sub
nom. Gosling
v.
Caskell [1897] A.C. 575.
4
s.
101
(1)
(iii).
5
Formerly the Conveyancing Act 1881.
s.
24 (2).
6
Law
of
Property Act 1925,
s.
205
(1)
(xvi).
7
(1889)
41
Ch.D.
399.
8
See Pennington’s Company
Law
(4th ed.), pp. 443444.
9
These clauses have become the standard practice
in
England-Grifirhs
v.
Secretmy
of
Sfafe
for
Social
Services C19731 3
All
E.R. 1184, pp. 1191-1192, per
658
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