Fairmont Property Developers v Venus Bridging: Section 91 LPA 1925 Orders Displacing Mortgagees’ Conduct of Sale Confined to Exceptional Cases of Likely Undervalue

1. Introduction

The Court of Appeal’s decision in Fairmont Property Developers UK Ltd v Venus Bridging Ltd & Ors [2025] EWCA Civ 1513 is an important modern authority on the scope of the court’s power under section 91 of the Law of Property Act 1925 (“s. 91 LPA 1925”) in the context of mortgaged property.

The case addresses a recurring practical problem: where a mortgagor believes that receivers (appointed by a mortgagee) are selling a property too cheaply, can the court step in under s. 91 to take the conduct of the sale away from the receivers and hand it back to the mortgagor?

Nugee LJ (with Lewis LJ and Asplin LJ agreeing) clarifies that:

While s. 91 confers an unfettered discretion in formal terms, the court will only displace a mortgagee’s (or its receivers’) conduct of sale in exceptional, out-of-the-ordinary circumstances.
The mortgagor must normally show that the proposed mortgagee/receiver sale is likely to be at an undervalue, not merely that there is a risk of undervalue.
The contractual and proprietary rights of the mortgagee, and the receivers’ primary duty to the mortgagee, carry substantial weight and are not lightly overridden.
In fast-track Part 8 proceedings under s. 91, the court will be reluctant to convert the dispute into a mini-trial of valuation by admitting late expert evidence where it is not “reasonably required” within the British Airways plc v Spencer test.

The decision sits at the intersection of mortgage law, receivership, case management and the equitable jurisdiction over sales of mortgaged property. It substantially confines the circumstances in which mortgagors can use s. 91 to regain control of the sale process once a mortgagee is actively enforcing its security.

1.1 Parties and Property

Appellant (Claimant below): Fairmont Property Developers UK Ltd (“Fairmont”), the registered freehold owner of an industrial/warehouse property in Milton Keynes (“the Property”), let on a 10-year commercial lease to Supreme Wheels Direct Ltd at circa £360,000–£370,000 per annum.
1st Respondent: Venus Bridging Ltd (“Venus”), holder of a second legal charge over the Property securing a short-term bridging loan of £810,500 (assigned to Venus in 2024).
2nd and 3rd Respondents: The receivers appointed by Venus (“the Receivers”) under the second legal charge, with power of sale.
First mortgagee (non-party): Coutts & Co held a first charge securing a loan of £3.85m. Coutts did not call in its loan or participate in the proceedings.

1.2 Factual Background

Fairmont, a special purpose vehicle, acquired three warehouses in 2015, refurbished them, sold two, and retained the Property. In January 2020, it granted a first legal mortgage to Coutts for £3.85m.

In March 2023, Fairmont granted a second charge to Pearl Bridging Ltd (later assigned to Neptune Funding Ltd and then to Venus) to secure a short-term bridging loan of £810,500, also backed by a debenture and a personal guarantee from Fairmont’s director/shareholder, Mr Vitale.

The loan was extended once in March 2024 but not repaid on expiry. Venus demanded repayment in September 2024 and, when Fairmont defaulted, appointed the Receivers on 20 September 2024. There was no challenge to the validity of that appointment.

The Receivers marketed the Property seeking offers in excess of £4.75m, supported by:

Marketing advice from two firms of agents (advising a guide price of £4.75–£4.8m), and
Two “Red Book” valuations, giving ranges of £4.8m–£5.3m and £4.6m–£5m respectively.

A best-and-final offers process produced a top bid of £5.025m, which the Receivers wished to accept.

Fairmont, through Mr Vitale, believed the Property was worth over £6m, relying in particular on:

Historic marketing efforts that had elicited interest and draft heads of terms at £7m+, and
A valuation by its own surveyor, Mr Giles Ferris, valuing the Property at around £7.23m.

Fairmont was acutely concerned that a sale around £5m would leave a shortfall after discharging both the Coutts and Venus charges, whereas a sale at £6m–£7m could generate a surplus for Fairmont.

1.3 Procedural History

Fairmont issued Part 8 proceedings on 5 December 2024 seeking an order under s. 91 LPA 1925 that it be given conduct of the sale for a period, in place of the Receivers.
The High Court (Ms Saira Salimi, sitting as a Deputy High Court Judge) heard the application on 25 February 2025 and:
- Refused Fairmont’s late application to rely on expert evidence (Mr Ferris’s valuation report); and
- Dismissed the substantive s. 91 application, holding that:
  - s. 91 should only be used in exceptional circumstances where a mortgagee is actively exercising its power of sale;
  - Fairmont had not shown the proposed sale was likely to be at an undervalue so as to constitute unfairness; and
  - Delaying the sale would cause real detriment to Venus.
Fairmont appealed with permission from Asplin LJ. The Court of Appeal heard the appeal, discharged an injunction restraining the Receivers’ sale, and at the end of the hearing indicated that the appeal would be dismissed, with reasons to follow. The detailed judgment is now given by Nugee LJ.

1.4 Issues on Appeal

The appeal raised four key issues:

Ground 1 – “Exceptional circumstances” threshold: Was the Judge wrong to accept that, where a mortgagee is actively exercising its power of sale, the court will only exceptionally exercise its s. 91 discretion in favour of the mortgagor?
Ground 2 – Test of unfairness and standard of proof: Was the Judge wrong in holding that:
- Fairmont had to show unfairness in the sense of a likely sale at an undervalue; and
- This had to be proved on the balance of probabilities, rather than merely demonstrating a “real risk”?
Ground 3 – Prejudice to the mortgagee: Was the Judge wrong to find that restraining the imminent sale would cause prejudice/detriment to Venus?
Appeal against refusal of expert evidence: Was the Judge wrong to exclude Mr Ferris’s expert report on value and marketing strategy?

2. Summary of the Judgment

The Court of Appeal dismissed the appeal in its entirety. The key holdings can be summarised as follows:

2.1 Refusal of Expert Evidence Upheld

Applying the tripartite test from British Airways plc v Spencer [2015] EWHC 2477 (Ch), the Judge was entitled to refuse permission for Fairmont to rely on Mr Ferris’s expert valuation report.
The application was late and admitting the evidence would have unfairly prejudiced the Receivers and Venus, potentially necessitating cross-examination, counter-evidence, and conversion of the Part 8 claim into more complex Part 7 proceedings.
The report was not “reasonably required” for resolving the real issue (who should conduct the sale) and would not have materially assisted the court in that evaluative judgment.

2.2 Section 91: Only Exceptional, Out-of-the-Ordinary Cases Justify Displacing Mortgagee’s Conduct of Sale

While s. 91 confers an unfettered discretion in form, the court will be slow to interfere with the mortgagee’s contractual and statutory rights where the mortgagee (or receivers) is actively enforcing by sale.
Relying on Palk v Mortgage Services Funding plc [1993] Ch 330 and Cheltenham & Gloucester plc v Krausz [1997] 1 WLR 1558, the Court approved the Judge’s characterisation that “exceptional circumstances” – in the sense of circumstances “out of the ordinary” – are required before displacing the mortgagee’s conduct of sale.
Merely believing that the property is worth more, or being in negative equity, does not ordinarily reach that threshold.

2.3 Unfairness Requires a Likely, Not Merely Possible, Sale at an Undervalue

Following Palk, the court’s jurisdiction under s. 91 is anchored in preventing “manifest unfairness”.
Where a mortgagee (or receivers) is proceeding to a timely, properly marketed sale, the mortgagor must show that a sale by the mortgagee is likely to be at an undervalue in order to justify court intervention.
A mere “risk” of an undervalue – especially in the context of a Part 8 process not designed to determine contested valuation issues – is insufficient to override the mortgagee’s contractual rights.

2.4 Prejudice to Venus and the Receivers

The Judge was entitled to conclude that restraining an imminent sale to an identified buyer (after a competitive bidding process) would cause real detriment to Venus.
Potential consequences include:
- The loss of the current buyer;
- The costs and delay of re-marketing and running a second/third sales campaign; and
- Possible negative market signalling from repeated marketing of the same asset.
In any event, the Court of Appeal emphasised that the question of prejudice to the mortgagee only arises if the mortgagor has first demonstrated sufficient unfairness to justify overriding the mortgagee’s rights – which Fairmont had not done.

2.5 Overall Result

The Court of Appeal found no error of principle in the Judge’s approach, no misdirection in her understanding of s. 91, no misuse of discretion in her refusal of expert evidence, and no error in her evaluative conclusions on unfairness or prejudice. The appeal was therefore dismissed and the Receivers were free to proceed with the sale.

3. Legal and Historical Framework

3.1 Section 91 LPA 1925 and Its Origins

Section 91(1)–(2) of the Law of Property Act 1925 provides:

“91 Sale of mortgaged property in action for redemption or foreclosure

(1) Any person entitled to redeem mortgaged property may have a judgment or order for sale instead of for redemption in an action brought by him either for redemption alone, or for sale alone, or for sale or redemption in the alternative.

(2) In any action, whether for foreclosure, or for redemption, or for sale, or for the raising and payment in any manner of mortgage money, the court, on the request of the mortgagee, or of any person interested either in the mortgage money or in the right of redemption, and, notwithstanding that—

(a) any other person dissents; or

(b) the mortgagee or any person so interested does not appear in the action;

and without allowing any time for redemption or for payment of any mortgage money, may direct a sale of the mortgaged property, on such terms as it thinks fit…”

Historically:

The provision originated in s. 48 of the Chancery Amendment Act 1852 and s. 25(2) of the Conveyancing Act 1881.
It was primarily concerned with empowering the court to order a sale instead of foreclosure, thereby protecting mortgagors and junior mortgagees from the draconian complete loss of their equity.
The traditional practice was conservative: courts often refused a sale unless the mortgage debt was fully secured and the sale would not prejudice the (usually first) mortgagee, as exemplified by Merchant Banking Company of London v London and Hanseatic Bank (Ltd) (1886) 55 LJ Ch 479.

In modern practice, foreclosure is rare; the key contemporary use of s. 91 lies in controlling the timing and manner of sale, rather than in choosing between sale and foreclosure.

3.2 Modern Use of Section 91: From Palk Onwards

Palk v Mortgage Services Funding plc [1993] Ch 330 was a turning point. In that case:

The mortgagee did not want to sell immediately. Instead it wished to retain the property, let it out, and await market improvement, even though there was significant negative equity.
This strategy caused the mortgagors’ debt to increase dramatically due to interest, outstripping any rental income.
The Court of Appeal (Sir Donald Nicholls V-C and Sir Michael Kerr) held that s. 91(2) could be used to compel a sale at the request of the mortgagors, despite the mortgagee’s opposition and despite the sale yielding less than the mortgage debt.
The key rationale was “manifest unfairness”: it was inequitable to force the mortgagor to underwrite the mortgagee’s speculative hold strategy.

Later, s. 91 began to be invoked not only in “sell vs hold” disputes, but also in “who conducts the sale” disputes, as in Barrett v Halifax Building Society (1996) 28 HLR 634. The present case falls squarely in this second category.

3.3 Mortgagees, Receivers and Their Duties

The rights and duties of receivers, and their relationship with the mortgagee and mortgagor, are critical to understanding the Court of Appeal’s reluctance to interfere.

In Silven Properties Ltd v Royal Bank of Scotland plc [2003] EWCA Civ 1409, [2004] 1 WLR 997, Lightman J summarised that:

Receivers are appointed as agents of the mortgagor, but their primary duty is to the mortgagee to realise the security and repay the loan.
They are not managing the property for the mortgagor’s benefit but realising a security interest that is the property of the mortgagee.
On sale, receivers must take reasonable care to obtain the best price reasonably obtainable at the time, but they are not guarantors of achieving some idealised maximum price.

These principles are heavily relied upon by Nugee LJ in affirming that receivers, properly appointed and properly advised, should normally be left to get on with selling the property.

4. Precedents Cited and Their Treatment

4.1 Palk v Mortgage Services Funding plc [1993] Ch 330

Palk is the foundation for modern s. 91 jurisprudence. Key points:

Sir Donald Nicholls V-C emphasised that s. 91(2) confers an unfettered discretion, exercisable at any time, but that the court must act judicially, with due regard to all interests. He held that:

“It cannot be right that the court should decline to exercise the power if the consequence will be manifest unfairness.”
Sir Michael Kerr, concurring, recognised that orders compelling sale against the mortgagee’s wishes should be made only in exceptional circumstances, particularly where a substantial part of the mortgage debt remained outstanding. He stressed the importance of not depriving a mortgagee of contractual rights without good reason.

In Fairmont, Nugee LJ carefully draws on both limbs of Palk:

From Sir Donald Nicholls: the lens of manifest unfairness as the trigger for judicial intervention.
From Sir Michael Kerr: the notion that intervention against a mortgagee’s contractual rights should be confined to exceptional cases.

However, Nugee LJ also stresses that Palk concerned a mortgagee who was refusing to sell, not one actively selling. It does not support taking conduct of sale away from a mortgagee who is properly exercising its power of sale.

4.2 Barrett v Halifax Building Society (1996) 28 HLR 634

In Barrett, Evans-Lombe J permitted mortgagors to complete a sale they had negotiated, even though the sale would still leave a shortfall, and over the Halifax’s objection. Key features:

The mortgagors had an identified buyer at a fixed price.
The Halifax’s objections were policy-based, not grounded in any clear advantage in stopping the sale.

However, Barrett has long been regarded with caution, particularly after the Court of Appeal’s comments in Krausz. In Fairmont:

Nugee LJ accepts that Barrett was an “unusual case” and must now be read subject to the reservations of Phillips LJ and Millett LJ in Krausz.
The present Court sees no proper foundation in Barrett for a general principle that mortgagors may routinely obtain conduct of sale simply because they disagree with the mortgagee’s assessment of value.

4.3 Cheltenham & Gloucester plc v Krausz [1997] 1 WLR 1558

Krausz is perhaps the most influential authority supporting the restrictive approach adopted in Fairmont regarding mortgagors’ attempts to control the sale.

In Krausz:

The Court of Appeal considered the extent to which Palk allowed mortgagors to interfere with the mortgagee’s enforcement rights, especially through County Court powers to suspend possession orders.
Phillips LJ expressed strong reservations that Barrett “tend[ed] fundamentally to undermine the value of the mortgagee’s entitlement to possession”.
Millett LJ went further, explicitly doubting whether Barrett was rightly decided and stating that Palk did not support granting conduct of sale to the mortgagor where:
- The mortgagee was taking active steps to realise its security by sale; and
- There was negative equity (i.e. the mortgagee had the greater incentive to obtain the best price).

Nugee LJ in Fairmont effectively endorses these concerns:

He agrees that Palk does not justify giving the conduct of sale to a mortgagor where the mortgagee is actively selling.
He adopts and reinforces Millett LJ’s view that Barrett should be treated with caution, especially where there is likely negative equity.

4.4 GMAC-RFC Ltd v Pearson [2005] EWCA Civ 330

In GMAC-RFC v Pearson:

Neuberger LJ granted a stay of execution of a possession order to allow mortgagors to apply under s. 91 for conduct of a sale.
His remarks that the court would have jurisdiction to grant conduct of sale to mortgagors were tentative and made in the mortgagee’s absence.
Importantly, the property there was worth more than the mortgage debt (positive equity).

Nugee LJ notes Pearson but emphasises that:

The only actual decision was to allow the mortgagors an opportunity to apply; and
It provides no real guidance that such an application ought to succeed, and certainly not where there is negative equity or disputed value.

4.5 Toor v State Bank of India [2010] EWHC 1097 (Ch) and NatWest Bank v Hunter [2011] EWHC 3170 (Ch)

Both cases involved unsuccessful attempts by mortgagors to obtain conduct of a sale under s. 91:

In both, the courts refused to wrest the conduct of sale from the mortgagee where it was already taking active steps to realise the security.
These cases illustrate the courts’ consistent reluctance, post-Krausz, to allow mortgagors to supplant mortgagees in managing the sale process.

Fairmont sits firmly in line with these authorities, confirming that Palk is not a carte blanche for mortgagors to reconfigure enforcement when they believe the mortgagee is selling too low.

4.6 Silven Properties Ltd v RBS plc [2003] EWCA Civ 1409; [2004] 1 WLR 997

As noted earlier, Silven is used primarily for its characterisation of the receivers’ role and duties:

Receivers’ primary duty is to the mortgagee, not the mortgagor.
They must take reasonable care to obtain the best price reasonably achievable, but there is no obligation to improve the property or await speculative market improvements for the mortgagor’s benefit.

Nugee LJ relies on this to emphasise that the contractual scheme Fairmont agreed (allowing receivers with power of sale on default) is a central starting point; the court will not lightly override this.

4.7 British Airways plc v Spencer [2015] EWHC 2477 (Ch)

British Airways v Spencer supplies the test for when expert evidence should be admitted:

Is expert evidence necessary to resolve an issue?
Would it be of assistance to the court in resolving an issue?
Is it reasonably required to resolve an issue?

Both parties accepted this test. The Judge and the Court of Appeal focused on the third limb – whether Mr Ferris’s report was “reasonably required” to resolve the real issues in a Part 8 s. 91 application. Both courts held it was not.

4.8 R v Kelly (Edward) [2000] QB 198

This criminal sentencing case is cited for Lord Bingham CJ’s authoritative explanation of “exceptional circumstances”:

“out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.”

Nugee LJ uses this to clarify what he means in endorsing the Judge’s “exceptional circumstances” test for s. 91 intervention. The threshold is high, but not impossibly so: the situation must be distinct from what is “regularly, or routinely, or normally” encountered in mortgage enforcement.

5. The Court’s Legal Reasoning

5.1 Refusal of Expert Evidence

The first issue addressed by Nugee LJ is the Judge’s refusal to admit Mr Ferris’s expert report on value and marketing strategy.

5.1.1 Timing and Procedural Context

Fairmont’s report was served as an exhibit to a reply witness statement on 10 January 2025 without prior permission.
The Receivers’ solicitors immediately objected (13 January), pointing out permission was required for expert evidence under CPR Part 35.
Fairmont only applied for permission on 18 February 2025, shortly before the hearing on 25 February 2025, in a matter listed for a half to one day Part 8 hearing.

This timing was central to the court’s caution: admitting the report at that late stage risked unfairness to the Respondents and undermined the efficiency of the Part 8 process.

5.1.2 Application of the British Airways v Spencer Test

It was accepted that the expert evidence was not “necessary” for the court to decide the application. The focus therefore shifted to:

Assistance: Would the report significantly help the court resolve the real issue (who should have conduct of the sale)?
Reasonably required: Did fair resolution of that issue reasonably require expert evidence?

Nugee LJ endorses the Judge’s conclusions:

The report primarily offered a valuation significantly above the Receivers’ valuations (circa £7.23m vs £4.6–£5.3m). But the Judge was not being asked to determine the market value of the Property.
If the report were admitted to challenge the Receivers’ marketing strategy substantively, fairness would require:
- Cross-examination of Mr Ferris;
- Possibly competing expert evidence from the Receivers/Venus; and
- Potential conversion to Part 7 proceedings, with full disclosure and a longer trial.
That was inconsistent with the nature of the Part 8 s. 91 application.
If the report were not to be used to challenge the marketing strategy decisively, its utility was limited to suggesting that a higher value was “possible”. That marginal contribution did not justify the procedural burdens and delay.

Nugee LJ emphasises the appellate deference to case management decisions. The Judge’s refusal, involving an evaluative judgment about the utility and fairness of late expert evidence, was a classic case management decision not to be disturbed absent an error of principle. No such error was found.

5.2 Ground 1 – Need for Exceptional Circumstances Before Displacing the Mortgagee’s Conduct of Sale

The central legal issue was whether the Judge was wrong to require “exceptional circumstances” before exercising her discretion under s. 91 in favour of the mortgagor when the mortgagee is already selling.

5.2.1 Contractual and Statutory Framework

Fairmont had granted a second legal charge containing the usual enforcement mechanisms:

On default, Venus could appoint receivers with power to sell.
Receivers’ primary duty was to realise the security for Venus’s benefit.

Nugee LJ stresses that these are contractual and statutory rights which Fairmont freely agreed. Interfering with them is not a trivial matter; strong justification is required.

5.2.2 Authorities Support a Restrictive Approach

Having reviewed Palk, Barrett, Krausz, Toor, Hunter and Pearson, Nugee LJ concludes:

The authorities provide clear support for using s. 91 to order a sale where the mortgagee declines to sell (e.g. Palk).
There is very little support for displacing a mortgagee who:
- Is actively enforcing its security; and
- Is reasonably following professional advice on marketing and valuation.
Barrett is an outlier with special features (an existing agreed sale, no real advantage to the mortgagee in obstructing it) and has been cast into doubt by Krausz.
Palk does not support taking conduct of sale from a mortgagee already selling the property, especially where there is (or may be) negative equity.

5.2.3 “Exceptional circumstances” – Meaning and Justification

Nugee LJ accepts and refines the trial Judge’s reference to “exceptional circumstances”:

He draws on Sir Michael Kerr in Palk, who recognised that overriding the mortgagee’s wishes when the debt is not fully repaid is something that should occur only in uncommon situations.
He adopts Lord Bingham CJ’s definition in R v Kelly, making clear that “exceptional” means:

Out of the ordinary course, or unusual, special or uncommon; not necessarily unique or very rare, but not something regularly or routinely encountered.

Applying that standard:

A mortgagor simply disagreeing with the mortgagee’s valuation, or fearing a shortfall, is not exceptional.
Where receivers have been properly appointed, have obtained professional valuations, and have run a competitive marketing process, the default position is that the contractual scheme stands.
Only where something genuinely out of the ordinary – such as a clearly abusive hold strategy (as in Palk) or plainly irrational refusal to allow an obviously beneficial sale – arises, is the court likely to intervene.

Nugee LJ also endorses the Judge’s policy concern about floodgates: if mortgagors could routinely invoke s. 91 whenever they claimed a proposed sale was at an undervalue, the courts would be swamped with valuation disputes, undermining the certainty and efficiency of mortgage enforcement.

5.3 Ground 2 – Unfairness, Standard of Proof and Likelihood of Undervalue

Fairmont argued that the Judge wrongly:

Required it to prove on the balance of probabilities that the proposed sale would be at an undervalue; and
Equated unfairness with “likely undervalue”, rather than only needing a “real risk” of undervalue.

5.3.1 What Counts as “Unfairness”?

Both sides accepted that some “identifiable and more than trivial unfairness” was necessary, drawing on Palk. Nugee LJ endorses the Judge’s approach:

The mere fact that the sale may leave a shortfall (i.e. the mortgagor remains in debt) is not sufficient unfairness by itself.
In this case, unfairness could only arise if the Receivers’ sale was likely to be at an undervalue – i.e. if there was a real prospect that the Receivers’ process would not achieve the “best price reasonably obtainable at the time”.

5.3.2 Why “Likelihood”, Not Mere “Risk”?

The Court accepts that:

In any contested valuation scenario, especially under a summary Part 8 procedure without full expert evidence, there is nearly always some possibility that a sale will be at an undervalue.
If a mere possibility or “risk” of undervalue were enough, then s. 91 would be invoked in almost every enforcement case, dramatically undermining the reliability of mortgagee sales.

Therefore:

The court requires a likelihood (i.e. more probable than not, within the civil standard of proof) that the proposed sale will be at an undervalue before it will characterise the circumstances as sufficiently unfair to justify s. 91 intervention.
This does not require the court to fix a precise value, but it must be satisfied that the Receivers’ marketing and pricing strategy is likely to undershoot the “best price reasonably obtainable” to a degree that renders it unfair to let the sale proceed.

5.3.3 Application to the Evidence

On the evidence before the Judge:

The Receivers had:
- Obeyed their duty to obtain professional advice (two agents, two Red Book valuations);
- Run a marketing campaign that attracted numerous enquiries; and
- Received best-and-final offers topped at £5.025m, with some bidders even below the guide price of £4.75m.
Fairmont had:
- Historic “soft marketing” and aborted negotiations suggesting higher figures (up to £7.2m) in earlier periods; and
- Mr Ferris’s higher valuation, which the Judge excluded as expert evidence but was also referenced in older valuations.

Nugee LJ accepts that:

There was a possibility that the Receivers’ sale would be below what might be achievable; but
The Judge was entitled to find that Fairmont had not proved that it was likely that the sale would be at an undervalue.

Accordingly, the threshold for unfairness – in the sense needed to override Venus’s and the Receivers’ rights – was not met.

5.4 Ground 3 – Prejudice to Venus

Fairmont contended that:

It was unlikely simply to leave the property unsold; it had a strong incentive to complete a sale;
Any additional interest accruing during delay could be largely covered from rent; and
Mr Vitale had offered to make up any shortfall in interest, meaning Venus would only suffer minimal, if any, prejudice.

5.4.1 Judge’s Assessment of Prejudice

The Judge held (and Nugee LJ agrees) that:

Venus was being asked to give up a concrete opportunity to sell to an identified buyer in a competitive process at £5.025m.
If Fairmont failed to achieve a better sale, the Receivers would need to embark on repeat marketing, incurring:
- Additional costs and professional fees; and
- Possible market scepticism about a property repeatedly put up for sale, potentially depressing price.
There was no adequate evidential basis to treat these risks and costs as negligible.

5.4.2 Logical Priority: Unfairness Before Prejudice

Importantly, Nugee LJ adds a further analytical point:

One only reaches the balance of prejudice to the mortgagee if the mortgagor has first shown sufficient unfairness to justify interference with the mortgagee’s rights.
Since Fairmont failed to establish that the Receivers’ sale was likely to be at an undervalue, the question of balancing prejudice did not strictly arise.

Even if that balancing stage had been reached, the Judge’s conclusion that there was real detriment to Venus in delaying and potentially jeopardising the current sale was, in Nugee LJ’s view, unassailable on the evidence.

6. Simplifying Key Legal Concepts

Mortgagee: The lender who takes security over property (real estate) as collateral for a loan. Here, Coutts (first mortgagee) and Venus (second mortgagee).
Mortgagor: The borrower who grants the mortgage over its property. Here, Fairmont.
Receiver (LPA Receiver / Fixed Charge Receiver): A person appointed (usually by the mortgagee under the mortgage deed) to take control of the mortgaged property, collect income, and/or sell it to repay the mortgage debt. Although technically an agent of the mortgagor, the receiver’s primary duty is to the mortgagee.
Power of Sale: The right given to a mortgagee (often exercised through receivers) to sell the mortgaged property when the mortgagor defaults, without needing a court order in most commercial contexts.
Section 91 LPA 1925: A statutory power allowing the court to order a sale of mortgaged property in various types of mortgage litigation (foreclosure, redemption, sale, or raising mortgage money). It can be invoked by the mortgagee or by anyone with an interest in the mortgage money or the right of redemption (including the mortgagor and subsequent mortgagees).
Redemption: The mortgagor’s right to pay off the mortgage and recover the property free from the mortgage.
Foreclosure: A historic remedy whereby the court could extinguish the mortgagor’s equity of redemption and vest the property absolutely in the mortgagee. Now rarely used.
Negative Equity: A situation where the total secured debt on a property exceeds its market value. In such cases, even a full-value sale leaves a shortfall owed by the mortgagor.
Sale at an Undervalue: A sale at less than the best price reasonably obtainable at the time. It does not necessarily mean less than the highest possible price in theory; it refers to a failure to take reasonable steps in marketing and timing, leading to an avoidably low price.
Balance of Probabilities: The standard of proof in most civil cases: the court must be satisfied that it is more likely than not (over 50% probability) that something is true.
Part 8 Claim: A procedural route in the Civil Procedure Rules for claims where there is unlikely to be a substantial dispute of fact, typically decided on written evidence and short hearings. It is not designed for heavy factual or expert disputes.
Expert Evidence (CPR Part 35): Evidence given by a qualified expert (e.g. a chartered surveyor) to assist the court on technical matters such as valuation. Permission is required, and the court will only admit it where it is necessary or reasonably required for determining the issues.

7. Practical and Doctrinal Impact

7.1 Impact on Mortgagors

For mortgagors, especially commercial borrowers and property developers, Fairmont sends a clear message:

S. 91 is not a general appeal mechanism from the mortgagee’s or receivers’ commercial judgment about marketing strategy or guide price.
To succeed in displacing the mortgagee’s conduct of sale, the mortgagor must:
- Identify circumstances that are “exceptional” in the sense of out of the ordinary; and
- Show that a mortgagee/receiver-conducted sale is likely to be at an undervalue, causing manifest unfairness.
Mere dissatisfaction with valuations, or pointing to past higher interest from potential buyers, is unlikely to suffice, especially when the receivers have current, independent valuations and live bids.

Practically, mortgagors may now:

Focus more heavily on pre-emptive negotiation with lenders before default, seeking express contractual rights over conduct of sale or approval of agents/valuations.
Reserve s. 91 applications for genuinely extreme situations, such as:
- Where a mortgagee refuses to sell in a falling market, causing spiralling indebtedness (as in Palk); or
- Where there is clear evidence of irrational or bad-faith conduct by the mortgagee/receivers.

7.2 Impact on Mortgagees and Receivers

For lenders and receivers, the judgment is reassuring:

It confirms that properly advised and conducted sales are unlikely to be derailed by mortgagors via s. 91 merely because mortgagors believe the price is too low.
If receivers:
- Obtain professional valuations (ideally more than one);
- Follow conventional and comprehensive marketing strategies; and
- Run transparent bidding processes;
the courts will be slow to intervene.
The emphasis on negative equity as a factor weighing against handing conduct to the mortgagor is particularly important in distressed lending contexts. Where the lender stands to lose money, it will generally have the greater incentive to achieve the best price.

7.3 Litigation Strategy under Section 91

Procedurally, Fairmont has significant implications:

It confirms that s. 91 applications are suitable for Part 8 where the core question is one of jurisdiction and discretion, not detailed valuation disputes.
Courts will be reluctant to admit late expert valuation evidence which threatens to turn s. 91 proceedings into full-blown valuation trials.
Mortgagors considering s. 91 applications must:
- Identify early whether expert evidence is truly necessary; and
- Seek permission in good time, with clear justification.

Conversely, mortgagees and receivers can:

Challenge late or tactical attempts to introduce expert evidence without proper procedural compliance;
Emphasise the unsuitability of Part 8 for contested valuations when seeking to uphold the integrity of their sales.

7.4 Potential Impact on Residential Mortgages

Although this case concerns commercial property, the principles are not confined to that context. For residential mortgagors:

Palk remains a potential route in cases where mortgagees refuse to sell and seek to “warehouse” properties at the mortgagor’s expense.
However, where the lender is actively selling, Fairmont will make it harder for homeowners to use s. 91 to regain control of the sale process simply because they believe the lender is selling too cheaply.
Claims are more likely to shift towards post-sale litigation (e.g. actions for sale at an undervalue or negligent receivership) than pre-sale intervention via s. 91.

7.5 Relationship with Claims for Sale at an Undervalue

The Court explicitly acknowledges that:

If a sale does ultimately occur at an undervalue, the mortgagor may have a subsequent cause of action against the mortgagee/receivers for breach of duty.
While litigation is “expensive and uncertain”, that fact alone does not justify pre-emptive s. 91 intervention where the mortgagor has not shown a likely undervalue.

In effect, Fairmont:

Narrows the availability of pre-sale injunctions or redistributions of conduct under s. 91; and
Leaves dissatisfied mortgagors to rely more heavily on post-sale claims where they can marshal evidence (including expert valuation) in the usual way.

8. Critical Evaluation

From a doctrinal perspective, Fairmont represents a consolidation rather than a revolution, but it does so at a high appellate level and with considerable clarity.

8.1 Balancing Contractual Rights and Equitable Fairness

The case highlights a tension:

On one side, Palk stands for the proposition that mortgagee rights are not absolute and must yield where their enforcement would cause “manifest unfairness”.
On the other, Krausz and now Fairmont stress the importance of not allowing mortgagors to use s. 91 to unravel the bargain or frustrate mortgagee enforcement in ordinary circumstances.

The Court of Appeal resolves this by:

Treating Palk as exceptional on its facts (mortgagee refusing to sell and causing spiralling debt), and
Treating Fairmont as an “ordinary case” of enforcement, where fairness lies in respecting the contractual scheme.

Some may question whether the requirement for a “likely” undervalue, proved on balance of probabilities in necessarily truncated Part 8 proceedings, sets the bar too high for mortgagors genuinely facing sub-optimal sales. However, the Court’s concern with certainty and efficiency in enforcement is powerful.

8.2 The Role of Evidence and Procedure

The judgment exposes a structural tension in valuation disputes:

Proper resolution of contested valuation usually requires expert evidence, disclosure, and often trial.
Yet s. 91 applications under Part 8 are designed for speed and simplicity.

If courts routinely admitted late expert reports in s. 91 applications, they would:

Undermine the utility of Part 8; and
Risk turning emergency/interim proceedings into de facto mini-trials of valuation.

Nugee LJ’s endorsement of the Judge’s refusal to admit Mr Ferris’s report reflects a strong commitment to procedural fairness and practicality. But it also means that mortgagors may find it structurally difficult to prove “likely undervalue” at the pre-sale stage.

8.3 Barrett v Halifax: Quietly Marginalised

Without overruling Barrett, the Court has effectively confined it to its facts, subject to Krausz’s criticism.

The doctrinal significance is that:

The once-optimistic reading of s. 91 as allowing relatively liberal court reallocation of conduct of sale in mortgagors’ favour is no longer tenable.
Courts will view Barrett as a narrow exception, perhaps confined to situations where:
- The mortgagor has already negotiated a sale which is plainly not worse for the mortgagee; and
- The mortgagee’s objection is based on rigid policy, not financial rationality.

8.4 Policy Concerns: Floodgates and Market Confidence

The Court is plainly concerned with a “floodgates” problem:

It anticipates that many mortgagors, commercial and residential, will believe that receivers are undervaluing their property.
If s. 91 could be used whenever such a belief is asserted, enforcement processes would be frequently disrupted, leading to higher transaction costs, more litigation, and impaired credit markets.

By insisting on:

Exceptional circumstances; and
Likely, not merely possible, undervalue,

the Court safeguards market confidence in lender and receiver-led sales. This inevitably shifts some risk onto mortgagors, who must live with the possibility that they cannot prevent a sale they view as sub-optimal, and may have to resort to post-sale claims instead.

9. Conclusion

Fairmont Property Developers UK Ltd v Venus Bridging Ltd & Ors [2025] EWCA Civ 1513 is now a leading authority on the scope of s. 91 LPA 1925 where a mortgagee (or its receivers) is actively exercising the power of sale.

The key takeaways are:

S. 91 confers a wide discretion in form, but in substance the courts will only displace a mortgagee’s or receivers’ conduct of sale in exceptional, out-of-the-ordinary circumstances.
Manifest unfairness is the touchstone for intervention. In cases where the mortgagee is selling in the ordinary way, unfairness will generally only be shown if:
- A sale by the mortgagee is likely to be at an undervalue; and
- This has been sufficiently proved on the balance of probabilities, not merely asserted as a risk.
The court will be slow to override contractual enforcement rights freely granted by the mortgagor, particularly in negative equity cases where the mortgagee has the primary financial stake.
Expert valuation evidence in s. 91 Part 8 applications will be tightly controlled. Late or marginally helpful expert reports are unlikely to be admitted where they would derail summary procedures.

In doctrinal terms, the decision harmonises Palk and Krausz, marginalises Barrett, and provides much-needed clarity on the circumstances in which mortgagors can seek to wrest control of the sale of mortgaged property from mortgagees and their receivers.

In practical terms, Fairmont confirms that, provided lenders and receivers obtain professional advice and run a proper sale process, the courts will usually leave them to get on with realising their security, even over the strong objections of the mortgagor.