In the recent appeal of Yerbury v Azets[1], the Court reiterated that an employer of an LPA receiver cannot be held vicariously liable for the actions of a receiver during a receivership and helpfully clarified the parameters of the receiver’s role by virtue of their appointment.

In this blog, we delve further into the High Court decision and its implications for receivers and their appointees.

Background

Joint LPA receivers were appointed over a retirement property, which was sold for £4,277,696 (plus the receiver’s costs). The consideration received amounted to around £700,000 less than the £5 million valuation obtained.

At first instance, the appellant claimed that the receivers failed to properly market the property and sold to a connected person. It was also asserted that the receivers failed to properly consider two other, higher offers for the property.

There was a series of acquisitions and name changes of the receivers’ firm following their initial appointment. However, it was accepted that the present firm had assumed all responsibilities and potential liabilities (if any) of its former entity.

Vicarious liability?

On appeal, the appellant argued that the receivers undertook the receivership in the course of their employment and therefore their employer should be vicariously liable for their actions. The core argument of the appellant was that the employer benefitted from the receivers’ activities and should bear the corresponding risk. Other arguments included:

  • the receivers were not paid personally for the receivership; they were remunerated as employees;
  • the employer bore the risk of loss and chance of profit, not the receivers;
  • the receivers were under the control of the employer;
  • the employer received the economic benefit of making employees available as receivers and should therefore bear the risks of wrongdoing committed by their employees; and
  • the receivers had professional indemnity insurance under a policy taken out by the employer.

The respondent argued that vicarious liability is not applicable in the context of LPA receivers or receivership generally on the basis that appointment as a receiver is a personal appointment, which is inconsistent with vicarious liability.

The Court agreed with this submission and noted that it was “too simplistic” to impart vicarious liability simply as a result of the employment relationship, particularly in circumstances where the individual appointment is fundamental to the nature of the role as a receiver. Crucially, the Court acknowledged that corporate bodies are unable to act as a receiver and only individuals are qualified to hold the position, as the judge concluded – the personal nature of a receiver’s appointment is fundamental to the language of the statutory framework. In addition, case law clearly establishes that an LPA receiver is the deemed agent of the borrower, not an employee or representative of their employer.

Duties of Receivers

The judgment helpfully outlined the core duties of a receiver, reiterating some now well-established principles:

  • a receiver managing mortgaged property owes their duties primarily to the mortgagor and anyone with an interest in the equity of the redemption;
  • a receiver can choose the time of sale, even if delaying the sale may have resulted in a better outcome for the debtor;
  • a duty of good faith is owed by the receiver and they should act autonomously and independently; and
  • any additional duty is fact and circumstance dependent.

Concluding Comments

The case is helpful in reminding practitioners about the nature of a receiver’s appointment and their relationship with their employer and that “a receiver is acting in the course of their appointment in respect of acts and defaults in the receivership and not in the course of their employment” (our emphasis added).

[1] Yerbury v Azets Holdings Limited [2025] EWHC 757