The Supreme Court upheld interim relief to protect rent collection by two receivers appointed over eight residential properties, but said the properties should not be sold before the legal dispute is decided at trial.
The appeal concerned an injunction granted by the High Court in August 2014. The receivers, Luke Charleton and Michael Cotter, had sought control of the properties after Bank of Scotland appointed them on 4 June 2014. The properties were let, and the immediate dispute was over whether tenants should pay rent to the receivers or to Gerard Scriven, the borrower and property owner.
Scriven argued that the receivers’ appointment was arguably invalid because the mortgage deeds allowed the bank to appoint a “receiver and manager”, while the appointment documents named them only as “receivers”. The Supreme Court said there was a fair issue to be tried on that question. It noted, however, that the mortgage deeds defined “receiver” to include a receiver and manager, and said that definition could arguably apply to the appointment documents.
The Court distinguished between interim measures to secure rent and relief that would require Scriven to hand over possession or otherwise enable a sale. It treated the rent protection as essentially prohibitory. Given the fair issue to be tried, and the balance of convenience, it considered rent should continue to be paid to and held by the receivers pending trial. That would allow the money to be returned to Scriven if the receivers ultimately lost.
The Court said the receivers’ case was not strong enough to justify mandatory relief that could effectively allow the properties to be sold before the dispute was resolved. It also criticised the time taken to bring the substantive proceedings to trial, while saying it lacked enough information to assign responsibility for the delay. The Court observed that a party benefiting from an interim injunction may be asked to show why it should retain that benefit if it has not moved the case forward with reasonable expedition.
The Supreme Court did not set out a final replacement order in the judgment. It proposed hearing further submissions from counsel on the precise orders needed to ensure rents were paid to the receivers without interference. The validity of their appointment remained for trial.