Will an office-holder be immune from future claims when a court approves their decision?


Denaxe Ltd v Cooper & Rubin [2023] EWCA Civ 752


1. If the court gives its blessing in respect of a decision taken by an office-holder, does the court’s approval mean that the office-holder is immune from any subsequent challenge to that decision? If so, to what extent? Is it blanket immunity? Those are the questions which this article will address following the Court of Appeal’s decision in Denaxe Ltd v Cooper & Rubin [2023] EWCA Civ 752.

2. After setting out the relevant background and exploring the decision, the author shall discuss the implications for insolvency practitioners and lawyers.


3. This case was an appeal against a decision to strike out a negligence claim brought against court appointed receivers.

Unfair Prejudice & Appointment of Receivers

4, Denaxe Limited was the majority shareholder of Blackpool Football Club Limited (“BFCL”). VB Football Assets (“VB”) held 20% of the shares in BFCL.

5. Denaxe owned inter alia the club’s football stadium and training ground. Denaxe’s shares in BFCL and its properties used in the operation of the club which included the stadium and training ground were referred collectively to as “the Footballing Assets”.

6. The club’s revenues increased following a season in the English Premier League in 2010-2011.

7. In 2017, VB succeeded in an unfair prejudice petition brought under s.994 of the Companies Act 2006 (“CA 2006”). VB obtained an order that Denaxe and its owner and controller Mr Owen Oyston (“Mr Oyston”) purchase VB’s shares at a price of £31.27 million.[1]

8. Following failed attempts at enforcement, on 13.02.2019 Marcus Smith J appointed Paul Cooper and David Rubin as recievers (“the Recievers”) over Mr Oyston’s shares in Denaxe and the Footballing Assets.

Sanction Application

9. The Recievers resolved to apply for an order permitting them to sell the Footballing Assets in conjunction with a sale of VB’s shares in BFCL (“the Sanction Application”). The Recievers received an offer of £8.2m for the Footballing Assets and VB’s shares in BFCL and that offer was considered the ‘most positive offer for the receivership and the future of Blackpool FC which is capable of being delivered in the required timeframe”.

10. The Recievers, VB and Mr Oyston were represented at the hearing of the Sanction Application. After citing Re Nortel Networks UK Limited [2016] EWHC 2768 (Ch) Marcus Smith J justified entertaining the Sanction Application on the basis that inter alia the proposed sale was a ‘momentous decision’.

11. Marcus Smith J granted the Sanction Application and thereby approved the proposed sale (“the Sanction Order”). Mr Oyston didn’t take any substantive point against the proposed sale although he did reserve his rights to take further points – the court considered that such an approach was inappropriate given that Mr Oyston had every opportunity to take any points.

12. The sale of the Footballing Assets and VB’s shares in BFCL was completed on 13.06.2019.

The Claim by Denaxe & the Strike-Out Application

13. On 30.01.2020 Denaxe issued a claim (“the Claim”) against the Receivers which alleged that they breached their duties of care and had sold the Footballing Assets at an undervalue. The crux of the allegation was that the Recievers failed to consider selling the shares in BFCL separately to the stadium and the other assets.

14. The Receivers sought to strike out the Claim or obtain summary judgment. The application was made on a number of bases:

(1) the Sanction Order gave the Receivers immunity from any claim against them which alleged that the Footballing Assets were wrongly sold as a single package in a single transaction;

(2) Denaxe was subject to an issue estoppel preventing it from bring such a claim on the basis of res judicata;

(3) Henderson v Henderson (1843) 3 Hare 100 – Denaxe could and should have raised arguments against the sale at the hearing before Marcus Smith J such that it was abusive to seek to do so now;

(4) there was no real prospect of success about the argument that the real property assets could have been sold for more money if sold separately.

15. Denaxe contended that any immunity was limited to immunity from claims alleging that a fiduciary had acted in excess of his powers or had improperly exercised a fiduciary power and did not extend to a claim alleging a breach of a common law duty to exercise reasonable care and skill.

The Decision of Fancourt J

16. Fancourt J granted the strike out application. The court decided that:

(1) The authorities did not suggest that immunity was limited to claim for breach of fiduciary duty and that it couldn’t extend to claims for breach of a common law or statutory duty of care. On the contrary, Nortel was interpreted as supporting the notion that immunity was not so limited.

(2) Marcus Smith J approved a specific transaction involving the sale of specific assets to a specific person at a specific price. Since the court approved the sale, the Recievers had immunity from a claim that they should have sold the assets in any different way:

“86. If the court approves an office-holder’s decision to enter into a specific sale, as was the case here, a person affected cannot allege a breach of duty by not retaining the asset, or not selling it in a different way, to someone else, or for a higher price. Such claims necessarily involve an allegation that it was wrong to decide to sell the asset in the way that the court has authorised.”

(3) Res Judicata was not accepted; Marcus Smith J’s judgment couldn’t be treated as having decided expressly or impliedly that the Recievers hadn’t broken their duty to use reasonable endeavours to obtain the best price for the Footballing Assets.

(4) The Claim was an abuse of process; Denaxe and Mr Oyston had notice of the Sanction Application. They should have made their objections at the hearing of the Sanction Application. Moreover, Mr Oyston decided not to object at the Sanction Application because he did not wish to see the club being broken apart by selling the properties separately. Such factors, along with others, “made the bringing of the Claim the clearest possible abuse of process”.

17. Denaxe appealed.


18. The Court of Appeal dismissed the appeal.

19. The Appellant’s arguments, in summary were that:

(1) On an approval application, and in the trustee context, the court’s function did not include consideration of whether a trustee was acting in accordance with a common law duty to exercise due care and skill to obtain the best price for the sale of assets. The same principle should apply to an approval application by court-appointed receivers. Especially where the proposed decision was a matter of commercial judgment.

(2) Marcus Smith J was only satisfied that the Recievers were acting honestly and rationally in line with their fiduciary duties. On the hearing of the Sanction Application the court expressly indicated that the question of immunity wasn’t being decided such that there was no basis for thinking that the court conferred any extended immunity upon the Receivers.

(3) If the hearing of the Sanction Application should have been limited to whether in equity it was proper for the Receivers to exercise their powers, then Mr Oyston was entitled to reserve his position on the separate matter of whether the Recievers had acted in accordance with their common law duty of care.


20. The court’s jurisdiction to determine questions by trustees arising in the execution of a trust is derived from CPR r.64.2(a) and CPR PD 64A Paragraph 1.

21. In the insolvency context, the court has jurisdiction to give directions to an administrator in connection with their functions under Paragraph 63 of Schedule B1 (“Sch B1”) to the Insolvency Act 1986 (“IA”). Snowden LJ acknowledged that no party suggested that on such an application the court could not give its approval for proposed transactions through the analogous application of the principles that apply in relation to trustees.

22. There was no authority before the court at the time of argument on the extent of the immunity conferred by an approval decision.

23. Snowden LJ disagreed with Fancourt J’s suggestion that Nortel supported the notion that the immunity conferred by an approval decision was not limited to a breach of fiduciary duty. In Nortel the court did not consider or reach any view on the extent of immunity which the administrators would have following the approval of a compromise in that case.

24. There was no doctrine in English business or property law called immunity. Immunity was judicial shorthand for issue estoppel.

25. The court concluded therefore that the scope of immunity depends on: (i) what the court previously decided in giving it’s approval; (ii) the identity of the parties to the approval decision and the subsequent claim:

“127…if the judge hearing the approval application determines a particular issue as a step in deciding to give his approval, that will operate as a bar to a party to the application (or one of their privies) seeking to relitigate that issue in subsequent proceedings against the trustees or office-holder.”

26. An example given by the court was as follows:

“130.…if, for example, the issue which the court was to ask itself on an approval application was whether the trustees were acting honestly and rationally in deciding to enter into a transaction, then the trustees would be protected by the court’s approval against a subsequent claim to set aside the transaction and for any consequential relief on the basis that they were not exercising their powers honestly or rationally in the best interests of the beneficiaries”.

27. And in respect of the identity of the parties:

“134…If, however, whether because of shortage of time or because it would be impracticable, trustees or office-holders do not seek to bind interested parties by joining them as parties or by the appointment of representative respondents, then I cannot see how they could obtain “immunity” from subsequent claims in any substantive sense.”

28. The court also highlighted the reluctance which a court might show if asked to determine whether a trustee’s decision to sell an asset was in accordance with their equitable duty of care.

“131. At the other end of the spectrum, if, for example, the issue which the court was asked to determine was whether trustees had reached a decision to sell an asset in accordance with their equitable duty of care, then one might well expect the court to be even more cautious about determining that issue. The precise procedure to be adopted would be a matter for the court, but if the matter was contested, one might ordinarily expect a judge to be very wary of determining that issue, at least in the absence of disclosure, production of expert evidence and/or cross-examination.”

29. The court also endorsed the observations of Miles J in Re Sova Capital Limited [2023] EWHC 452 (Ch) at [184], particularly (f) which said:

“(f) The court is not a sanctuary or bomb shelter for office-holders. There is no blanket or automatic rule about the scope of any immunity for the office-holder. The scope of any immunity depends on what precisely the court decides.”

30. Snowden LJ did not consider that simply because the court approved a specific transaction with a specific party at a specific price that that necessarily resulted in a widespread conferral of immunity in respect of all subsequent claims. This was contrary to the conclusion of Fancourt J who reasoned that a subsequent claim which alleged that the transaction was wrong, improper, irrational or a breach of a duty of care would all amount to saying that the applicant shouldn’t have entered the transaction which the court approved. As the court put it:

“147..It is, however, frequently the case that trustees or office-holders seek approval for a specific transaction on specific terms. But just because the subject matter, counterparty and terms of the proposed transaction are specifically identified, that does not mean that the approving court will think it appropriate to decide every potential issue that might be raised in a subsequent complaint, and for the reasons that I have outlined (and to borrow Miles J’s expression in Sova), approval does not confer blanket immunity: each case depends on its own facts.”

31. The court did not find it necessary to determine whether there was an issue estoppel in this case; and that is because of its decision as regards abuse of process.

Abuse of Process

32. The court decided that Fancourt J was correct to conclude that it was a Henderson abuse of process for Denaxe to bring the claim given that it was given a clear opportunity to raise its objection earlier and failed to do so.


33. Before going on to analyse the decision, it is worth recalling the legal test that applies when a court is considering whether to approve a decision by an insolvency office-holder.

34. The test for whether the court should approve a decision of an administrator is the same as the test which applies to trustees, Nortel. Where an administrator has a power which they  propose to exercise in a particular way, and there is proper justification for the matter being brought before the court, the court will apply the second of the three categories identified by Robert Walker J in Public Trustee v Cooper [2001] WTLR 90[2]:

“The second category is where the issue is whether the proposed course of action is a proper exercise of the trustees’ powers where there is no real doubt as to the nature of the trustees’ powers and the trustees have decided how they want to exercise them but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers. Obvious examples of that, which are very familiar in the Chancery Division, are a decision by trustees to sell a family estate or to sell a controlling holding in a family company. In such circumstances there is no doubt at all as to what the trustees want to do but they think it prudent, and the court will give them their costs of doing so, to obtain the court’s blessing on a momentous decision. In a case like that, there is no question of surrender of discretion and indeed it is most unlikely that the court will be persuaded in the absence of special circumstances to accept the surrender of discretion on a question of that sort, where the trustees are prima facie in a much better position than the court to know what is in the best interests of the beneficiaries.”

35. In Nortel, Snowden J (as he then was) said:

“49. For my part, whilst noting that the position of an administrator seeking directions under the Insolvency Act 1986, and a trustee seeking directions under the Trustee Act 1925 are not identical, I see no obvious reason why most of the same considerations should not apply when the court considers giving directions to an administrator who wishes to enter into a compromise which is particularly momentous. In short, the court should be concerned to ensure that the proposed exercise is within the administrator’s power, that the administrator genuinely holds the view that what he proposes will be for the benefit of the company and its creditors, and that he is acting rationally and without being affected by a conflict of interest in reaching that view. The court should, however, not withhold its approval merely because it would not itself have exercised the power in the way proposed.

50…But having regard to the fact that its approval will prevent subsequent challenge, the court will require the administrator to put all relevant material before it, including a statement of his reasons, and the court will not give its approval if it is left in any doubt as to the propriety of the proposed course of action.” (Emphasis added).

36. What this case clarifies is that an approval decision, does not, of itself, confer blanket immunity against subsequent claims. The term immunity is no more than shorthand for issue estoppel. Which, in turn, means that the scope of immunity depends on: (i) the issues decided by the approving court which is resolved by comparing the issues decided by the approving court and the issues which the claimant invites the court to decide in its subsequent claim and (ii) the identity of the parties to the approval decision and the subsequent claim.

37. The extent of ‘immunity’ has been scaled back; Fancourt J’s decision that the court’s approval of a specific transaction with a specific third party at a specific price conferred a wide immunity in respect of subsequent claims was expressly rejected. In that limited context, the immunity which office-holders may have previously enjoyed has been replaced with a more nuanced analysis and comparison of issues that have been decided and issues which a party invites the court to decide.

38. Issue estoppel requires that the claimant in the second set of proceedings should also have been a party (or a privy of a party) to the earlier decision. The court recognised that shortage of time may make it impracticable to bind interested parties by joining them as parties to the proceedings and that in such circumstances it is difficult to see how the office-holder could enjoy immunity from subsequent claims. What then, does an office-holder need to do to protect themselves?

39. As the court explained, the answer perhaps lies in ensuring that office-holders advertise their intention to seek approval of a momentous decisions such that creditors or other interested parties have an opportunity to attend and be heard. In such circumstances, the office-holder will have better prospects of persuading a court that a subsequent claim by a creditor would be an abuse of process on Henderson lines:

“135. What can, however, be said, is that if trustees or office-holders advertise their intention to seek approval for a momentous decision, so that beneficiaries or creditors have the opportunity to attend and be heard (which was the course adopted in MF Global at [15], and in Nortel at [39]-[43]), then the trustees or office-holders will undoubtedly have a better prospect of persuading a court that a subsequent claim by a beneficiary or creditor would be an abuse of process. In such a situation it would plainly be relevant to ask whether the claimant in those subsequent proceedings had knowledge of the earlier proceedings and had a proper opportunity to participate in them.”

40. It would in any event be sensible on an approval application to invite the court to identify which issues it is deciding and specifically the type of claims that would or would not be barred. Indeed, the court recognised that much difficulty could well have been avoided had the parties invited Marcus Smith J to do the same:

“164.As a postscript I should add that much of the difficulty in this case could have been avoided if, in the context of what was hotly contested litigation, Marcus Smith J had been invited to give more detailed consideration to the question of the consequences that would flow from his decision on the Sanction Application.

165. That would have reflected the reality that the whole purpose of trustees or other applicants in seeking the approval of the court is to obtain some measure of protection from subsequent complaints by interested parties. The court hearing an approval application is plainly not required actually to decide in advance precisely what immunity will flow from a decision to approve the transaction. However, identifying as clearly as possible the issues which the court is deciding and following that through by identifying specifically the type of claims that would or would not be barred, would, in my view, be a helpful exercise.”


41. Undoubtedly this case will be of importance to office-holders and lawyers and is essential reading if a party intends to seek the court’s approval or has received a complaint after an approval decision. The court pointed out that, ultimately, questions of ‘immunity’ are necessarily fact sensitive. However, by joining interested parties/advertising to interested parties the intention to seek the court’s approval of a momentous decision and taking the steps suggested by the court immediately above, the office-holder will have a great deal more clarity about their position/better prospects of arguing a subsequent claim is abusive.

Govinder Chambay

Guildhall Chambers

27 July 2023

Please Note:  The information provided in this article is provided for general information purposes only. It does not constitute legal or other professional advice. No responsibility is assumed by any member of chambers for its accuracy or currency, and reliance should not be placed upon it. Specific, personal legal advice should be obtained in relation to any case or matter. Any views expressed are those of the editor or named author.

[1] VB Football Assets v Blackpool Football Club (Properties) Limited [2017] EWHC 2767 (Ch).

[2] Re Petropavlovsk Plc [2022] EWHC 2097 (Ch) [71]


Govinder Chambay

Call: 2018

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