Medforth v Blake | |
Court: | Court of Appeal |
Full Name: | Medforth v Blake & Ors |
Citations: | [1999] EWCA Civ 1482, [2000] Ch 86 |
Judges: | Scott VC, Thomas LJ, Tuckey LJ |
Number Of Judges: | 3 |
Decision By: | Scott VC |
Keywords: | Administration |
Medforth v Blake. 1999. EWCA. Civ. 1482. is a UK insolvency law case concerning the duties of a receiver and manager in the United Kingdom, over and above a duty of good faith, as to the manner in which he conducts a business.
Medforth conducted pig farming on a large scale, with a £2 million annual turnover and a herd of 3000 sows, 120 boars and 11000 weaners. His bank appointed receivers who ran the business from February 1984 to September 1988, when Medforth found a new source of finance and repaid the bank. Medforth advised the receivers that they could get large discounts from foodstuffs suppliers, amounting to £1000 a week, which he had previously been able to obtain, but the receivers did not attempt to obtain any such discount until early 1988. In February 1990, Medforth sued them for failure to obtain such commercial discounts either as breach of a duty of care, or if the only duty was that of good faith, such a breach (even though it did not arise from any deceit or of any conscious or deliberate impropriety).
In the Queen's Bench Division, McGonigal J ruled:
The receivers appealed to the Court of Appeal.
The Court of Appeal dismissed the receivers' appeal and held that the duty of care in equity was breached. Scott VC, drawing upon jurisprudence established in such prior cases as Cuckmere Brick Co v Mutual Finance and Downsview Nominees Ltd v First City Corporation Ltd, summarised the law as follows.
However, McGonigal J's ruling, while essentially correct, required some minor qualifications:
Swinton Thomas LJ and Tuckey LJ concurred.
Medforth revised the position previously taken by the Privy Council in Downsview Nominees, where a receiver's duty of care to the company was limited to a requirement that he take reasonable steps to obtain a proper price on the exercise of his power of sale. The Court of Appeal effectively stated that: