LPA Receivers – the buck stops with you

Tyler Ross, Trainee Solicitor

For professional firms, normal service resumes. For LPA receivers, a reminder to tread carefully or risk personal liability.

Until recently, there has been a lack of legal grounding to support the widespread view that a professional firm is not vicariously liable for the acts of its employees who have been appointed as an LPA receiver. However, in the recent case of Yerbury v Azets Holdings Ltd [2025] EWHC 757 (KB), the High Court has provided welcome clarity on the point. The facts of the case are as follows.

Case Facts

A lender exercised its right to appoint LPA receivers, being Mr Getliffe and Ms Hill, over a property following a default on the mortgage. The LPA receivers went on to sell the property for £4.28 million, which was £722,000 less than its valuation.

A claim was then brought against the accountancy firm who employed Mr Getliffe and Ms Hill on the basis that the property was sold at an undervalue and without proper market exposure. Initially, the claim was struck out on a number of grounds. However, the Claimant obtained permission to appeal on the point of vicarious liability.

Vicarious Liability

So what is vicarious liability? This is where one party is deemed responsible for the actions of another, usually where an employer is liable for the actions of its employees.

To establish vicarious liability, the following two stage test must be met:

1. Whether the relationship between the parties was one of employment or akin to employment; and
2. Whether the wrongful conduct was so closely connected with acts that the wrongdoer was authorised to do that it can be fairly and properly regarded as having been done by the wrongdoer while acting the course of their employment.

High Court Decision

Upon hearing the appeal, the High Court confirmed that vicarious liability does not apply to LPA receivers. The Court’s reasoning for this was, because once receivers have been appointed, they are independent agents of the borrower. This means they owe their duties to a borrower’s creditors and not their employers, and as such, are not acting in the course of their employment during the appointment.

The High Court consequently held that the accountancy firm was not vicariously liable for the LPA receivers actions in selling the property for far below its £5million value. The Court went on to reject the appeal, as the claim was wrongfully brought against the accountancy firm instead of the LPA receivers themselves.

Considerations

This decision, therefore, is confirmation that insolvency practitioners hold personal appointments and are therefore personally liable for their wrongdoings as opposed to their employers.

This also serves as a warning to claimants that it is essential the correct defendants are properly identified and far in advance of commencing proceedings.

For more information on this or any other topic please do not hesitate to contact Dermot Preston or Nichola Evans from our Insolvency and Restructuring team on 0161 832 3434 or via email info@kuits.com.