DENAXE LIMITED v PAUL COOPER & Anor.

When a trustee or office-holder obtains court approval for a specific transaction, the approval may confer immunity from later claims alleging that the decision was improperly made. The immunity is not confined to fiduciary claims. It may extend to claims framed as breach of a common-law or statutory duty of care where they require proof that the approved decision was wrong, that a different transaction should have been chosen, or that the asset should not have been sold.

The immunity is limited to the decision and transaction actually reviewed and approved. It does not protect unrelated conduct or earlier decisions that were not before the court. A party who could and should have objected during the approval hearing may also be barred from raising the objection later as an abuse of process.

Denaxe claimed substantial damages from court-appointed receivers who had sold its football-related assets, including shares and property, as a single transaction. It alleged that the receivers should have marketed and sold the property separately in order to obtain a higher aggregate price.

The receivers applied to strike out the principal claim or obtain reverse summary judgment. They relied on immunity arising from a prior sanction order, res judicata, abuse of process and the absence of a realistic prospect of success. Denaxe also advanced reduced claims concerning alleged intermeddling in its affairs and the removal or copying of an accounts computer.

1. The principal claim was struck out. The earlier sanction application concerned a specific proposed transaction: the sale of identified footballing assets and shares to an identified purchaser for £8.2 million. The court had reviewed the receivers’ decision, their marketing process, the advice obtained and the proposed price.

2. The sanction jurisdiction applied by analogy to receivers by way of equitable execution. The court’s task was to consider whether the office-holder had genuinely decided to enter into the transaction, had properly considered relevant matters, had avoided irrelevant considerations and conflicts, and had reached a rational decision that a reasonable office-holder could properly make. The court was not required to substitute its own commercial judgment.

3. Approval conferred immunity from a claim alleging that the approved decision was improper. The immunity extended beyond breach of fiduciary duty to a claim framed as breach of a duty of care. Denaxe’s allegation that the receivers failed to obtain the best price necessarily involved alleging that they should have entered into a different transaction. That was the very decision approved by the court.

4. The immunity did not extend to unrelated conduct or to decisions not reviewed by the court. Approval of a sale at a particular time did not endorse earlier failures to sell, and approval of a specific transaction did not protect unrelated wrongdoing.

5. Alternatively, the principal claim was an abuse of process. Denaxe and Mr Oyston knew of the proposed transaction and had the material needed to raise an objection at the sanction hearing. The objection could and should have been made then, and might have affected whether approval was granted.

6. The merits ground did not independently justify summary judgment. The evidence did not establish that the alternative sale strategy had no real prospect of success. The secondary claims were also not struck out, but Denaxe was required within 28 days to provide particulars of loss and serve an amended pleading limited to those claims. They were to be transferred to the Manchester County Court if that condition was met.

First-instance decision. The judgment refers to an earlier sanction decision by Marcus Smith J, [2019] EWHC 1599 (Ch), and a later procedural decision by Snowden J, [2021] EWHC 910 (Ch). Those decisions concerned the same litigation and are not treated as separate cited authorities in the case graph.