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Menon v Pask [2019] EWHC 2611 (Ch)

It has long been one of the great unsolved problems of mortgage receivership whether the receiver can take possession of the mortgaged property against a non-company borrower, despite being the borrower’s deemed agent. On 7 October 2019 Mann J handed down judgment in Menon v Pask [2019] EWHC 2611 (Ch), at last giving a reported decisions on this issue in this jurisdiction. The answer is yes - though (as also suggested in Tozer & Crampin: Mortgage Receivership Law & Practice) Mann J took the view that the receiver should make the claim in his own name, rather in that of the borrower.

Mann J also found that s36 of the Administration of Justice Act 1970 applies to a claim for possession by receivers against the borrower, so that the borrower can make proposals for repayment of the underlying debt, and seek an adjournment, or a stay or suspension of any possession order. 

In this case, under the mortgage, the receivers were given the power to take possession of and manage the Property, as well as to sell it. Mann J concluded that this was enough to allow them possession against the borrowers; the deemed agency did not prevent this conclusion. At [26] he summarised the reasons why in this case the receivers could take possession: (1) it was known that the receivership would be carried out in the lender’s interests, (2)  in this dwelling-house case, it was known that the person against whom possession would most likely be needed was the borrower; (3) the receiver has a power of sale, and the parties would have expected that to have been sale with vacant possession; (4) other receiver’s powers in the mortgage, for example to manage, would only make business sense if the receivers could take possession.

On s36, Mann J decided that the definition of “mortgagee” as including “any person deriving title under the original … mortgagee” included a receiver, even where as here the receiver had the power to take possession as the borrower could, not the power the lender had. At [41] he decided that it was appropriate to see the right to appoint receivers as a property right of the mortgagee, and that the receivers stood in the place of the mortgagee for the purposes of enforcement. For that reason, he said, it did not strain the meaning of “title” to say that the receivers had title from the mortgagee, so that a receiver seeking possession of the property was subject to s36.

As noted at [13] of the judgment, Tozer & Crampin on Mortgage Receivership: Law and Practice is the only established textbook on receivership to address the issue of whether the receiver can take possession against the borrower. Stephanie and Cecily are interested to see a reported decision on this previously unresolved issue, and are pleased that the answer agrees with the thesis of their book that the answer to that question is yes. 

Stephanie Tozer QC and Cecily Crampin respectively will be speaking at the NARA’s London and Northern training days in November 2019, and will discuss this exciting new case in greater detail in their presentations.



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