Summary

The claimant alleged sale at an undervalue of a drag racing track by a bank, which had taken over at the last minute from its receivers. The nature of the business was unusual, and the sale effected quickly and in circumstances which the Claimant alleged called into question whether it was at a proper value. Unusually the bank had obtained summary judgment against the Claimant's co-guarantor but the Claimant had avoided this by relying upon additional material and a detailed consideration of the timing of relevant events (the summary judgment hearing is not reported)

Facts

Trial of a claim by a guarantor ('M') that the defendant ('the Bank') had realised its security too quickly and without properly testing the market with the result that a proper market price had not been obtained. The Santa Pod drag racing track ('the property') had been charged by its owner ('SPP'), a company owned and controlled by M, to the Bank. M had given an unlimited guarantee in favour of the Bank to secure the liabilities of SPP. On 16 February 1996 the Bank appointed administrative receivers of SPP. The Bank decided that it wished to sell the property before an important drag race meeting on the Easter weekend. The receivers instructed valuers to value the property on the basis of a "prompt" sale, and information packs were sent to 73 interested parties towards the end of February. On 26 February an offer of #965,000 was received from a prospective purchaser ('RCA'). On 29 February the valuers, who were aware of the existing offer and also that there were no other offers, valued the property at #925,000. On 8 March the Bank repossessed the property and, after making allowances for certain items which had been removed from the property, sold it to RCA for #945,000, notwithstanding that another potential purchaser ('MP') had made enquiries in the interim, with an offer or expression of interest substantially in excess of the sale price. By these proceedings M contended that the marketing period had been too short, that MP had not been told that there was a deadline to which the Bank and/or the receivers were working, and that as a consequence the property had been sold at an undervalue.

Held

(1) On the evidence the court was entirely satisfied that the supposed intended offer from MP was a sham, concocted to give credence to M's claim that the property had been sold at an undervalue. (2) It was reasonable for the Bank to have decided that it was imperative that the property be in the hands of a new owner before the Easter meeting. In that circumstance a curtailed exposure of the property to the market was justified. No criticism could legitimately be made of the way in which the receivers had marketed the property in the period available to them. Over 70 enquiries had been received in response to the marketing which they had undertaken. (3) The fact was that only RCA had come up with a genuine, properly funded bid. The failure of any other group to put forward a comparable offer was strong evidence that the Bank had obtained the best price reasonably obtainable.

Claim dismissed.