A receiver appointed over secured properties of a company recently sought a High Court direction pursuant to Section 438(1) of the Companies Act 2014, to allow the sale of secured properties to a proposed purchaser, pursuant to an existing contract for sale.
In their application, a third party asserted to the High Court that he had already entered into a contract for sale in 2004 relating to the secured properties and sought to oppose the application made by the receiver, on the basis that he had an equitable interest.
In respect of the alleged contract for sale entered into by the third party, the Court followed the case law that a purchaser obtains a beneficial interest "to the extent only to which the purchase price is paid". The Court found that it was evident that the third party neither paid any amount in relation to the relevant property nor sought specific performance of the alleged contract and thus could not enforce the alleged contract of sale.
The Court allowed the application of the receiver to sell the secured properties to the proposed purchaser. It stated that the third party was not a creditor of the company and had no locus standi to challenge the receiver’s dealings with assets of the company.
This case confirms the position that only direct stakeholders can challenge the actions taken by the receiver of a company. Third parties without any direct interest do not have the locus standi to intervene.