Denaxe Ltd v Cooper

The (seemingly rather limited) scope of immunity granted by claims for approval

Luke Harris

Practitioners experienced in advising trustees as to the exercise of their powers will be very familiar with the court's power to approve trustee decisions. The jurisdiction, which is an extremely convenient one, allows trustees to ask the court for a blessing of momentous decisions affecting the trust. The great benefit of the procedure for the trustees has generally been understood to be that, if their decision is approved, they are immune from a subsequent claim for breach of duty by a disgruntled beneficiary for carrying out whatever step the court has sanctioned. In Denaxe Ltd v Cooper and Another [2023] EWCA Civ 752, however, the Court of Appeal has put the cat among the pigeons. There, receivers by way of equitable execution (who have a similar right to ask the court for directions) were granted approval of a decision to sell certain assets of a company. After the receivership was later discharged, the company sued the receivers for negligently selling the assets at an undervalue and the Court of Appeal was required to consider the extent to which the approval order gave immunity to the receivers from the claim. This required the court to consider the true legal basis of the immunity which court approval confers. Although the upshot was that the receivers were, on the facts of the case, protected, the court's reasoning makes clear that approval is not a magic bullet against all future challenges. As Asplin LJ said at the end of her judgment: