Qualified immunity: Lessons from the decision in Denaxe v Cooper & Anor - Boodle Hatfield

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19 Jul 2023

Qualified immunity: Lessons from the decision in Denaxe v Cooper & Anor

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Mark Lindley View profile
4 min read

On 30 June 2023, judgment was handed down by the Court of Appeal in the matter of Denaxe Ltd v Cooper & Anor [2023] EWCA Civ 752. The Court dismissed the appeal and, ultimately, upheld the decision of Mr Justice Fancourt below which struck out a claim brought against court-appointed receivers arising from the sale of, in effect, the assets of Blackpool Football Club (the "Club").  

Although strictly relating to decisions taken by receivers appointed by way of equitable execution, the judgments of Fancourt J and the Court of Appeal in Denaxe address the fundamental question of the extent of immunity from subsequent claims enjoyed by those who obtain the approval of the court for a particular course of action.   

In summary of the facts, the receivers sold the majority shareholding in the Club, the Club's stadium and its training ground in June 2019 for £8.2million.  Before completing the sale, the receivers sought the approval of the court for the transaction, which approval was given by Marcus Smith J (the "Sanction Order").

Following the sale, Denaxe Limited (formerly Blackpool Football Club (Properties) Limited) ("Denaxe") issued a claim against the receivers which alleged that the Club had been sold at an undervalue. The receivers sought to strike out the claim on the basis, inter alia, that the Sanction Order provided them with "immunity" from such claims.

At first instance Fancourt J struck out Denaxe's claim, finding that the receivers indeed had immunity, as the court had, by the Sanction Order, provided approval for "that specific transaction", which (by analogy with the Public Trustee v Cooper line of cases) meant that "it must logically be the case that immunity follows if, as the Judge held, the position of a receiver by way of equitable execution is comparable to that of a trustee or administrator seeking the court's directions".

Court of Appeal judgment 

Snowden LJ, in his leading judgment, ultimately agreed that Denaxe's claim should be struck out, dismissing the appeal from the judgment of Fancourt J.

However, Snowden LJ did not agree with the reasoning of Fancourt J and provided an analysis of the authorities that is likely to be of importance to trust practitioners.

Snowden LJ noted that none of the earlier decisions dealt with "a subsequent claim against a trustee or office-holder in respect of an earlier transaction that had been approved by the court".  Further, there seemed to be limited or no authority on the precise nature of the immunity or protection actually being granted to trustees or other fiduciaries who obtain the court's sanction to a particular course of action.

In the view of the Court of Appeal, there was no free-standing concept of "immunity" from claims; in order to succeed in their application to strike out Denaxe's claim the receivers needed to invoke one or both of the established concepts of either res judicata (encompassing cause of action estoppel and issue estoppel), or abuse of process. 

In Snowden LJ's view, "immunity" from subsequent claims in relation to a decision previously expressly approved by the court will likely engage the concept of issue estoppel i.e. where a particular issue forming an ingredient to a cause of action has already been litigated and decided, such that the same issue cannot be re-opened in subsequent proceedings between the same parties involving a different cause of action.  Similarly, an 'abuse of process' will be found where a party seeks to raise in subsequent proceedings matters which were not, but could and should have been raised, in earlier proceedings.

Here, the Court of Appeal found that Denaxe's claim was founded on criticisms which could and should have been raised in the proceedings leading to the Sanction Order, but which were not. It was therefore clear that its attempt to bring claims now against the receivers was an abuse of process and that the claims should therefore be struck out. 

This formulation of "immunity" means, however, that the question whether immunity from future claims flows from the sanction of the court "[does] not permit a "one size fits all" answer". 

In summary: "approval does not confer blanket immunity: each case depends on its own facts".  It also likely depends on whether the parties to any sanction/blessing application are the same as those subsequently seeking to pursue a claim in relation to the relevant decision.

A properly formulated application for the court's sanction of a decision, to which the parties affected are properly joined or otherwise bound, clearly offers substantial protections to trustees and their equivalents.   The suggestion that the question of what "immunity" is actually conferred by the court giving such sanction, in each case, should be considered and expressly decided however, may well introduce a new and potentially heated area for debate in such claims. 

Links:

Denaxe Ltd v Cooper & Anor [2023] EWCA Civ 752 (30 June 2023) (bailii.org)

Denaxe Limited v Cooper & Anor [2022] EWHC 764 (Ch) (06 April 2022) (bailii.org)

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.

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