Denaxe Ltd v Paul Cooper
| Jurisdiction | England & Wales |
| Judge | Lord Justice Snowden,Lady Justice Falk,Lady Justice Asplin |
| Judgment Date | 30 June 2023 |
| Neutral Citation | [2023] EWCA Civ 752 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case Nos: CA-2022-000811, 000811A and 000811B |
[2023] EWCA Civ 752
Lady Justice Asplin
Lord Justice Snowden
and
Lady Justice Falk
Case Nos: CA-2022-000811, 000811A and 000811B
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
Mr. Justice Fancourt
Royal Courts of Justice
Strand, London, WC2A 2LL
Matthew Collings KC and Gareth Darbyshire (instructed by FieldFisher LLP) for the Appellant
David Mohyuddin KC and Daniel Burton (instructed by Beale & Co. Solicitors LLP) for the Respondents
Hearing date: 22 February 2023
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10.30 a.m. on 30 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This is an appeal against a decision of Mr. Justice Fancourt (“the Judge”), striking out a negligence claim (“the Claim”) by the Appellant (“Denaxe”) against the Respondents (“the Receivers”): [2022] EWHC 764 (Ch), [2022] 4 WLR 52. The appeal concerns the extent of immunity from subsequent claims which is 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.
A. BACKGROUND
The factual history of the dispute is complicated, and was set out in some detail by the Judge in his judgment (the “Judgment”). A shorter summary will suffice for the purposes of this judgment. Given the nature of the appeal, it will, however, be necessary to set out what occurred in relation to the relevant court hearing to approve the sale of assets by the Receivers in a little detail.
The parties
Denaxe was formerly known as Blackpool Football Club (Properties) Limited. It was the owner of about 76.3% of the shares in Blackpool Football Club Limited (“BFCL”) which operated the Blackpool football club business (“the Club”). About 20% of the shares in BFCL were owned by VB Football Assets (“VB”) and the remaining about 3.7% were owned by individual supporters of the Club.
Denaxe also owned the football stadium at Bloomfield Road, Blackpool (“the Stadium”) at which the Club played its home games and rented out office space. Denaxe also owned the shares in a subsidiary company which ran a hotel located in one of the stands at the Stadium. It also owned the training ground used by the Club and some residential properties near the Stadium. Denaxe's shares in BFCL, and its real properties used in the operation of the Club (including, in particular, the Stadium and the training ground), were referred to collectively in the various judgments as “the Footballing Assets” and I shall continue to use that expression in this judgment.
Following a season in the Premier League in 2010–2011 and the increased revenues that this generated, a dispute broke out between Denaxe (as majority shareholder of BFCL) and Denaxe's owner and controller, Mr. Owen Oyston (“Mr. Oyston”) on the one hand, and VB (as minority shareholder in BFCL), on the other. The dispute led to an unfair prejudice petition being issued by VB, in which VB ultimately succeeded in obtaining an order (the “Buy-Out Order”) from Marcus Smith J for its shares in BFCL to be bought by Denaxe and Mr. Oyston at a price of £31.27 million: see VB Football Assets v Blackpool Football Club (Properties) Limited [2017] EWHC 2767 (Ch). A large part of that sum related to concealed dividends paid by BFCL to Denaxe or Mr. Oyston and his son, rather than the value of VB's shares in BFCL.
The appointment of the Receivers
Denaxe and Mr. Oyston paid less than a third of the amount due under the Buy-Out Order. Following failed attempts at enforcement using third party debt orders and charging orders, VB applied for the appointment of the Receivers by way of equitable execution over various categories of assets owned by Mr. Oyston (including his shares in Denaxe) and over the assets of Denaxe itself (including, in particular, the Footballing Assets).
On 13 February 2019, Marcus Smith J refused some of the orders sought but appointed the Receivers over Mr. Oyston's shares in Denaxe and Denaxe's Footballing Assets. In his judgment, VB Football Assets v Blackpool Football Club (Properties) Limited [2019] EWHC 530 (Ch), at [7]–[10] and [15]–[20], the judge identified that the jurisdiction to appoint receivers by way of equitable execution would only be exercised where there was some hindrance or difficulty with execution at law. He made it clear that if he had thought that the most efficacious way of maximising the value of the Footballing Assets was simply to close down the Club and sell the Stadium and the other real properties separately by way of the conventional procedures for obtaining charging orders and orders for sale, he would have been minded to refuse the appointment of the Receivers over the Footballing Assets. The judge recited and relied on the evidence on behalf of VB to the effect that it had approached the Receivers because they had significant experience of football receiverships and that VB understood that it was their intention, if appointed, to sell the Footballing Assets as a single package and as a going concern, rather than as separate assets, because they believed that this would maximise their sale value.
The order appointing the Receivers (the “Receivership Order”) included a provision (paragraph 18) that Mr. Oyston's shares in Denaxe should only be sold by the Receivers “on terms subject to the further approval of the court following the reaching of an agreement in principle with a proposed purchaser or purchasers” and required Mr. Oyston to file any evidence in opposition to such application prior to the hearing.
The marketing of the Footballing Assets
After their appointment, the Receivers used their powers over the shares in Denaxe to replace the existing board of directors of Denaxe and BFCL, thereby excluding Mr. Oyston from the management of the companies and the Club. The Receivers also instructed Lambert Smith Hampton (“LSH”) on about 25 February 2019 to give valuation advice, with a view to the marketing of the Footballing Assets, and instructed Hilco on about 27 March 2019 to advise how the sale of the Footballing Assets could best be advertised to attract potential buyers. The marketing process for the sale of the Footballing Assets formally started on 9 April 2019.
As a result of the sales process, a number of expressions of interest and offers were received, but a problem emerged. The problem was that although Denaxe and Mr. Oyston had not paid the balance of amount due to VB under the Buy-Out Order, the possibility remained that they could do so, and so acquire VB's 20% of the shares in BFCL. The Receivers were told by several interested parties that any prospective buyer would insist on acquiring as close to 100% of the Club as possible, and would not countenance ending up with Mr. Oyston or anyone associated with him as a minority shareholder in BFCL.
The Applications
The decision was therefore taken that the Receivers should apply for an order permitting them to sell the Footballing Assets in conjunction with a sale of VB's shares in BFCL. On 10 May 2019 the Receivers issued an application (the “Sanction Application”) to the court for an order that they might sell the Footballing Assets over which they had been appointed together with VB's minority stake in BFCL as part of one transaction. The Receivers' evidence stated,
“In order to complete a successful sale of the assets, we intend to sell all assets related to the operation of the football club as part of one transaction in order to protect the football club and maximise value.”
The Receivers' evidence in support of the Application included a confidential exhibit outlining the valuations and strategy underpinning the sales process. That evidence was to the effect that LSH had valued the various income streams from the Stadium (i.e. the football operations, the office space and the hotel), together with the training ground and residential properties, at a total of £12.6 million.
This capital value was stated to have been arrived at on the basis of a number of assumptions, the main one of which was that the Club would remain in occupation and take a lease of the Stadium at a rent of about £275,000 per annum. The report noted that the problem with this assumption was that even with the receipt of rent from the offices at the Stadium, the Club was loss-making and could not afford to pay such a rent. However, the report also stated that it was unlikely that the Stadium could be used by any other football club, so that there was no market for sale of the Stadium as such without the on-going operations of the Club. The result was said to be that if the assets were sold on a stand-alone basis, the Club would be deprived of a venue to play football and its major source of income, destroying the value of the shares in BFCL, and the only realisable value of the Stadium would be as its underlying land for redevelopment.
At a hearing on 14 May 2019, attended by the Receivers and VB, Marcus Smith J gave directions for an expedited hearing of the Sanction Application. These also included permission for VB to issue an application for a variation of the Buy-Out Order to enable it to sell its shares in BFCL in conjunction with a sale of the Footballing Assets by the Receivers. That application (the “Variation Application”) was issued the following day, 15 May 2019.
On 22 May 2019 the Receivers served further evidence in support of the Sanction Application outlining the marketing which had been conducted and the state of the bids. The preferred buyer was a Mr. Simon Sadler (“Mr. Sadler”),...
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Are UK Officeholders Protected if a Court Sanctions Their Actions?
...protected from subsequent claims relating to the same? The Court of Appeal, in the case of Denaxe Limited v Cooper & Rubin [2023] EWCA Civ 752 recently considered this question in the context of Receivers who had obtained the approval of the court for a sale of assets over which they had be......