CNM Estates (Tolworth Tower) Ltd v VeCREF I Sarl & Ors (Rev 1) [2020] EWHC 1605 (Comm) (22 June 2020)

CNM Estates (Tolworth Tower) Ltd v VeCREF I Sarl & Ors (Rev 1) [2020] EWHC 1605 (Comm) (22 June 2020)

Clause 19.1 of the Debenture does not exclude the Receivers' equitable duty of care; clause 16.10(a)(i) of the Intercreditor Agreement validly limits actionable liability to gross negligence or wilful misconduct, thereby excluding liability for ordinary negligence in the exercise of receivers' functions.

Citation
[2020] EWHC 1605 (Comm)
Parties
Claimant: CNM Estates (Tolworth Tower) Limited; Defendant: VeCREF I SARL; Defendant: VENN Partners LLP; Third Defendant (receiver): Simon Peter Carvill-Biggs; Fourth Defendant (receiver): Freddy Khalastchi; Third Party: Knight Frank LLP
Jurisdiction
England and Wales
Judgment Date
22 June 2020
Procedural Posture
Commercial Court Preliminary Issues Trial / Judgment on Preliminary Issues
Outcome
Receivers' liability for breach of equitable duty of care is excluded except in cases of gross negligence or wilful misconduct; CNM's claims for ordinary negligence fail on preliminary issues.
Legal Topics
Exemption Clauses, Receivers' Duties, Interpretation of Contracts, Exclusion of Liability, Equitable Duty of Care
Contract Law Property Law Equity Exemption Clauses Receivers' Duties Interpretation of Contracts Exclusion of Liability Equitable Duty of Care

Case Brief

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Parties

CNM Estates (Tolworth Tower) Limited

Claimant

VeCREF I SARL

Defendant

VENN Partners LLP

Defendant

Simon Peter Carvill-Biggs

Third Defendant (receiver)

Freddy Khalastchi

Fourth Defendant (receiver)

Knight Frank LLP

Third Party

Procedural Posture

Commercial Court Preliminary Issues Trial / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether clause 19.1 of the Debenture excludes the Receivers' equitable duty of care
  2. 2 Whether clause 16.10(a)(i) of the Intercreditor Agreement limits Receivers' liability to gross negligence or wilful misconduct
  3. 3 Interaction between ICA clause 9.5 and exclusion clauses

Ratio Decidendi

Clause 19.1 of the Debenture does not exclude the Receivers' equitable duty of care; clause 16.10(a)(i) of the Intercreditor Agreement validly limits actionable liability to gross negligence or wilful misconduct, thereby excluding liability for ordinary negligence in the exercise of receivers' functions.

Court Disposition

Receivers' liability for breach of equitable duty of care is excluded except in cases of gross negligence or wilful misconduct; CNM's claims for ordinary negligence fail on preliminary issues.

Orders

  • Issues as to effect of clause 19.1 in costs context reserved for later determination.
  • Receivers not liable for ordinary negligence under the Debenture or ICA.