Managing Distress: When will the Court transfer conduct of a sale from receivers to the borrower? – Fairmont Property Developers UK Ltd v Venus Bridging Ltd

Fairmont Property Developers UK Ltd v Venus Bridging Ltd clarifies Court powers under s.91 LPA 1925 to direct sale of mortgaged property amid marketing disputes.

On 26 November 2025, judgment was handed down in the Court of Appeal case of Fairmont Property Developers UK Ltd v Venus Bridging Ltd [2025] EWCA Civ 1513 which further clarifies the application of the Court’s power to direct a sale of mortgaged property under s. 91 of the Law of Property Act 1925 (“LPA 1925”) in circumstances where borrower and receiver agreed a property should be sold, but disagreed over marketing strategy.

Background

The Claimant, Fairmont, was the proprietor and mortgagor of a commercial warehouse (the “Property”), and had defaulted on its mortgage to the Defendant, Venus. Receivers were appointed to carry out the sale of the Property and had begun marketing it for offers in the region of £4.7 million by the time proceedings were commenced. Fairmont claimed that the marketing strategy adopted by the receivers would result in the Property being sold at an undervalue, and following the grant of an interim injunction, sought an order under s. 91 LPA 1925 to be granted conduct of the sale themselves, with the aim of implementing a new marketing strategy and obtaining a higher sale price closer to their valuation of £7.2 million (based on approaches received several years earlier).

Judgment

Fairmont’s application was refused by the High Court. The Court recognised that it had an unfettered discretion under s 91(2) to order a sale on whatever terms it found appropriate following the application of either borrower or lender. However, it stressed that exceptional circumstances must exist before it will order a sale on terms against the wishes of the lender. There must be “some identifiable and more than trivial unfairness” to the borrower. This was particularly so in a situation where the Property was in negative equity and all parties were in agreement that the Property should be sold.

The Court of Appeal unanimously upheld the High Court’s decision finding that the High Court was correct to conclude that:

• An order under s. 91 must only be made in exceptional circumstances and that a borrower’s belief that the property is being sold at an undervalue was by itself insufficient.
• The burden of proof was on the borrower to establish that the sale would likely be at an undervalue (rather than that there was merely a real risk of the sale being at an undervalue) and that, in the present case, there was no identifiable unfairness to the borrower.

What does the judgment in Fairmont tell us?

The decision is consistent with previous cases concerning s. 91(2) where the few successful applications to direct a sale have typically been in relation to residential mortgages and where the borrower and lender were in disagreement as to whether there should be an immediate sale or not (such as in Palk v Mortgage Services Funding plc [1993] Ch 330)or where the borrower had already lined up a sale to which the lender had no real objection (such as in Barrett v Halifax [1996] 28 HLR 634 – a decision which has subsequently been criticised by the Court of Appeal).

In giving their judgments, both the High Court and the Court of Appeal recognised the risk of opening the floodgates to similar claims. Disgruntled borrowers will often claim that the value of the property is greater than the sale price achieved by a receiver or lender and criticise the marketing strategy adopted. However, receivers are not required to adopt a borrower’s preferred marketing strategy but rather to take reasonable care to obtain the best price reasonably obtainable at the time of sale. Furthermore, the power of sale was granted to the lender/receiver by the borrower and were the Court to subsequently grant the borrower the conduct of the sale, this would undermine the parties’ bargain. The Court of Appeal’s decision acknowledged these points and reiterated that the Court should be slow to permit borrowers to invoke s. 91 and will require proof of exceptional circumstances beyond mere dissatisfaction with the marketing strategy adopted. The decision should be welcomed by lenders and receivers.

If you have any questions or wish to discuss any of the issues raised in this article, please reach out to James Sutherland, Rob Bailey or your usual Burges Salmon contact.