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Denaxe Ltd v Cooper & Anor [2023] EWCA Civ 752
30 June 2023
Lady Justice Asplin
“169. It seems to me to be quite clear that the protection afforded to officers of the court or trustees seeking directions and the approval of the court for their proposed conduct, must depend on the nature of the approval sought, the issues which the court is required to consider in order to reach its decision and the parties which were before the court. If an issue has been decided as part of the process of giving approval, a party to the approval application or one of their privies, cannot seek to re-litigate the issue in subsequent proceedings against the trustees or office-holders.”
Introduction
The appeal concerned the extent of immunity from subsequent claims which may be enjoyed by receivers appointed by the court by way of equitable execution who obtain the approval of the court for a sale of assets over which they have been appointed.
The Court of Appeal upheld the decision of Mr Justice Fancourt, who struck out a claim against the court-appointed receivers in respect of a sale of assets.
It emerges from the judgment that there is no doctrine in English business or property law strictly called ‘immunity’.
Background
In summary, the appeal concerned the assets of Blackpool Football Club. The court-appointed receivers sold the majority shareholding in the football club along with the club’s stadium and training ground for c£8.2m. The package also included the sale of the minority shareholding of the judgment creditor. Prior to completing the sale, the receivers made an application to the court seeking approval of the proposed sale, which was given. The court will not normally be asked to approve a commercial decision of a receiver, but in this case, application was necessary in order to obtain a variation of the previous order that the minority shareholder be bought out by the majority shareholder. The sale of these shares to the third party purchaser was a key part of the package.
Following the sale, a claim was issued by Denaxe Limited formerly Blackpool Football Club (Properties) Limited alleging that the football club and other assets had been sold at an undervalue, despite them being notified of the receivers’ application to the court with regard to the proposed sale. No objections or concerns were raised at this hearing, beyond a purported reservation of a right subsequently to challenge the marketing and valuation in relation to the proposed sale.
The receivers successfully applied to strike out the claim on the basis that sanctioning of the sale of the club and other assets provided them with ‘immunity’ from such claims.
Denaxe Limited appealed the decision to strike out.
Decision of the Court of Appeal
The appeal was dismissed. However, Snowden LJ did not wholly agree with the reasoning of the first instance decision, in particular the part concerning ‘immunity’.
As noted above, immunity does not exist as a concept in business law. The term is best understood as a shorthand for a bar on subsequent proceedings by reason of issue estoppel or abuse of process.
The Court of Appeal found that the claim by Denaxe Limited was based on matters which could and should have been raised at the approval hearing. Snowden LJ did not decide whether an issue estoppel arose in this case, but he was clear that the attempt to bring claims now against the receivers, when the opportunity to question the basis of the sale at the approval hearing had been missed, was an abuse of process and that the claims should therefore be struck out.
For officeholders it is important to note that a decision by the court to approve a particular action does not confer blanket immunity against subsequent claims. Notifying relevant parties of an intention to seek the court’s approval of a decision will be an important factor in obtaining protection.
Asplin LJ’s brief judgment concurring with the detailed judgment of Snowden LJ is a neat summary:
Lady Justice Asplin
“169. It seems to me to be quite clear that the protection afforded to officers of the court or trustees seeking directions and the approval of the court for their proposed conduct, must depend on the nature of the approval sought, the issues which the court is required to consider in order to reach its decision and the parties which were before the court. If an issue has been decided as part of the process of giving approval, a party to the approval application or one of their privies, cannot seek to re-litigate the issue in subsequent proceedings against the trustees or office-holders.”
“170. When considering the extent of any protection afforded, it is important, therefore, not only to take into account the issues which were decided on the approval application but also the identity or interest of the parties who were before the court. A party to the approval proceedings will not be allowed to raise the same issues in subsequent proceedings. It is for this reason that it is usual for trustees or office-holders to seek to join all interested parties or to seek representation orders so that all interests are before the court on the hearing of the approval application.”
“171. As Snowden LJ points out, one size does not fit all. There is a wide spectrum of applications which may be made by trustees or office-holders and the nature of the approval they seek will vary. Inevitably, the factual background of each application will be different. It follows that the nature of any immunity which may arise is highly fact sensitive and must be considered with some care. There is no single answer to the question of whether subsequent proceedings will be barred.”
The judgment is available here.
Ben Luxford
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