The court was asked as to ownership of documents coming into existence in the course of a receivership. The plaintiff companies had argued that all documents belonged to them because the receivers were their agents and the documents were created in the course of that agency.
Held: As between a principal and its agent, all documents prepared or received by agent belong to principal, and were to be delivered up on termination of agency on basis of ownership of them.
However, whilst the receivers were technically agents of the companies, the agency of a receiver is not an ordinary agency because it involves a tri-partite relationship in which the receiver owed duties to both the mortgagor company and the debenture holder. It determined the dispute over ownership by assessing the purpose for which the documents were created – whether as performance of one of the duties (in which case the companies could only claim ownership when the documents were created in the course of performing the duty to them to manage their affairs) or to enable them to carry out their professional duties as distinct from performance of a duty (in which case the documents were the property of the receivers).
Hoffmann LJ said that a receiver and manager ‘is no ordinary agent’ and continued: ‘Although nominally the agent of the company, his primary duty is to realise the assets in the interests of the debenture holder and his powers of management are really ancillary to that duty.’
Fox LJ discussed the nature of a receiver’s agency, saying: ‘The agency of a receiver is not an ordinary agency. It is primarily a device to protect the mortgagee or debenture holder. Thus, the receiver acts as agent for the mortgagor in that he has power to affect the mortgagor’s position by acts which, though done for the benefit of the debenture holder, are treated as if they were the acts of the mortgagor. The relationship set up by the debenture, and the appointment of the receiver, however, is not simply between the mortgagor and the receiver. It is tripartite and involves the mortgagor, the receiver and the debenture holder. The receiver is appointed by the debenture holder, upon the happening of specified events, and becomes the mortgagor’s agent whether the mortgagor likes it or not. And, as a matter of contract between the mortgagor and the debenture holder, the mortgagor will have to pay the receiver’s fees. Further, the mortgagor cannot dismiss the receiver since that power is reserved to the debenture holder as another of the contractual terms of the loan. It is to be noted also that the mortgagor cannot instruct the receiver how to act in the conduct of the receivership.’
Hoffmann, Fox LJJ
[1988] 1 WLR 1231, [1989] 1 All ER 261, (1988) 5 BCC 27, [1989] BCLC 115
England and Wales
Cited by:
See Also – Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) CA 1993
A clause entitling a mortgagee to recover legal costs from the mortgagor did not extend to costs that were unreasonably incurred or which were unreasonable in amount. Whether costs were unreasonably incurred or were unreasonable in amount was to be . .
Cited – Fairstar Heavy Transport Nv v Adkins and Another CA 19-Jul-2013
The court was asked whether the appellant company was entitled to an order requiring its former Chief Executive Officer, after the termination of his appointment, to give it access to the content of emails relating to its business affairs, and . .
Lists of cited by and citing cases may be incomplete.
Updated: 23 October 2021; Ref: scu.515262 br>