Denaxe Limited v Paul Cooper & Anor

The court has long had a jurisdiction to entertain claims by trustees for the determination of questions arising in the execution of a trust. That jurisdiction is now to be found in CPR rule 64.2(a) and Paragraph 1 of Practice Direction 64A which gives, as an example of the type of claims which can be made under CPR 64.2(a), a claim for “an order approving any sale, purchase, compromise or other transaction by a trustee”, and a claim for “an order directing any act to be done which the court could order to be done if the … trust in question were being administered or executed under the direction of the court”.

The court also has a jurisdiction to give directions to insolvency office-holders in connection with their functions (see e.g. paragraph 63 of Schedule B1 to the Insolvency Act 1986 in relation to administrators) and to give directions to receivers appointed by the court (see CPR Practice Direction 69 paragraph 6.1). Although these jurisdictional gateways are couched in terms of the court giving “directions” to its own officers, neither party suggested that the function of the court on such an application could not extend to giving its approval for proposed transactions, applying analogous principles to those exercised in relation to trustees.

Although the position might be different in other jurisdictions, at least as a matter of English law, it is clear that applications to the court by trustees under CPR 64.2(a) may be analysed by reference to a number of categories that were described by Hart J in Public Trustee v Cooper, citing an unreported decision of Robert Walker J given in chambers in 1995. For present purposes the primary categories are (i) cases in which the court accepts a surrender of discretion from the trustees, and then makes the relevant decision for itself and gives directions accordingly, and (ii) cases in which the trustees seek the approval of the court to a proposed course of action which they have themselves decided to take.

Although the Sanction Application and Mr. Phillips KC’s initial submissions to Marcus Smith J were couched in terms of the court giving a “direction” to the Receivers, which reflected the wording of paragraph 6.1 of CPR PD 69, it is clear that the Receivers were not seeking to surrender their discretion to the court, but were seeking the approval of the court to a transaction that they had already decided upon. Likewise, by the end of the hearing, and in his judgment, it is also clear that Marcus Smith J was not approaching the matter on the basis that he was deciding to exercise any discretion himself, but was merely considering whether to approve the sale proposed by the Receivers. That is consistent with the terms of the Sanction Order, which is in permissive rather than mandatory terms.

That is not surprising. In the absence of some deadlock or disabling conflict of interest, it is relatively rare for the court to accept a surrender of discretion from trustees. It is all the more difficult to imagine circumstances in which the court would think it appropriate to accept a surrender of discretion in relation to a proposed sale of assets by professional office-holders who had been appointed for their expertise in taking commercial decisions in relation to the realisation of assets, and who were being remunerated to do that job.

One of the singular features of this case is that none of the English cases to which we were referred actually involved a subsequent claim against a trustee or office-holder in respect of an earlier transaction that had been approved by the court. Hence we were not referred to any case that has directly addressed the precise extent of the immunity conferred by an approval decision. The authorities contain only passing comments on the issue of immunity in relatively general terms. However, since both parties sought to rely upon dicta in the cases, it is necessary to refer to them.

In Richard v Mackay [2008] WTLR 1667, a decision from 1987, the trustees in question sought approval, for the future and if they might think it appropriate, to transfer part of the trust funds from an English trust to a new trust to be established in Bermuda. Millett J drew the distinction between a case involving a surrender of discretion and an approval case. He then continued, at 1671,

“Where, however, the transaction is proposed to be carried out by the trustees in exercise of their own discretion, entirely out of court, the trustees retaining their discretion and merely seeking the authorisation of the court for their own protection, then in my judgment the question that the court asks itself is quite different. It is concerned to ensure that the proposed exercise of the trustees’ power was lawful and within the power and that it does not infringe the trustees’ duty to act as ordinary, reasonable and prudent trustees might act, but it requires only to be satisfied that the trustees can properly form the view that the proposed transaction is for the benefit of beneficiaries or the trust estate.”

Millett J then observed,

“It must be borne in mind that one consequence of authorising the trustees to exercise a power is to deprive the beneficiaries of any opportunity of alleging that it constitutes a breach of trust and seeking compensation for any loss which may flow from that wrong. Accordingly, the court will act with caution in such a case when evaluating the possibility of risk and it will need to be satisfied that the proposed transaction is not imprudent. But the appropriateness of the transaction is essentially for the trustees to decide, and different minds may have different views on what it appropriate in particular circumstances.”

At the time of Millett J’s decision, the equitable duty of care imposed upon trustees was usually expressed as a requirement to exercise the same degree of diligence and care which an ordinary prudent person of business would take in the management of his own affairs: see Speight v Gaunt (1883) 9 App Cas 1. Accordingly, at [81] of his Judgment, the Judge placed reliance on Millett J’s reference to prudent trustees to support a conclusion that the court could, on such an application for approval, consider matters going beyond the question of whether a trustee was acting in accordance with his fiduciary duties, and could also consider whether the trustee was discharging his equitable duty of care.

The Judge also took Millett J’s reference to beneficiaries being deprived of the opportunity to bring claims for breach of trust and seeking compensation for loss as envisaging that the immunity conferred on the trustees could extend to preventing claims against them for breach of that equitable duty of care.

I agree that Millett J’s comments could, if taken out of context, be read in that way. But they were plainly obiter. Millett J was not dealing with a case in which there was any suggestion that there might be a breach of a duty of care, still less was any claim of that nature being made. It is also not altogether easy to reconcile Millett J’s statement that the court should only need to be satisfied that the trustees could properly form the view that the proposed transaction was for the benefit of beneficiaries or the trust estate, with his immediately preceding reference to the trustees’ duty to act as ordinary, reasonable and prudent trustees might act, and his later remark that the court would need to be satisfied that the proposed transaction was not imprudent.

In [81] of his Judgment, the Judge also placed reliance on the decision of the Privy Council in Marley v Mutual Security Merchant Bank and Trust Company [1991] 3 All ER 198 (“Marley”). I do not, however consider that Marley is of any direct relevance to the instant case. That is because the Privy Council treated that case as involving a surrender of discretion to the court, rather than an approval case. That much is clear from the comment of Lord Oliver at page 201,

“A trustee who is in genuine doubt about the propriety of any contemplated course of action in the exercise of his fiduciary duties and discretions is always entitled to seek proper professional advice and, if so advised, to protect his position by seeking the guidance of the court. If, however, he seeks the approval of the court to an exercise of his discretion and thus surrenders his discretion to the court, he has always to bear in mind that it is of the highest importance that the court should be put into possession of all the material necessary to enable that discretion to be exercised. It follows that, if the discretion which the court is now called upon to exercise in place of the trustee is one which involves for its proper execution the obtaining of expert advice or valuation, it is the trustee’s duty to obtain that advice and place it fully and fairly before the court, for it cannot be right to ask the judge in effect to assume the burdens of a trustee without the information which the trustee himself either has or ought to have to enable him to carry out his duties personally.”

As Hart J subsequently made clear in Public Trustee v Cooper at pages 922-925, that approach did not reflect the practice in England and Wales, where a distinction has been drawn between cases involving a surrender of discretion and cases in which the court is merely asked to approve an exercise of discretion by a trustee. As such, the subsequent comments of Lord Oliver upon which the Judge relied must be read in context. Lord Oliver said, at page 203,

“The question whether the trustee has demonstrated that the contract submitted for approval is in the best interests of the beneficiaries reduces, in a case such as this, to whether the trustee can satisfy the court that it has taken all the necessary steps to obtain the best price that would be taken by a reasonably diligent professional trustee”.

Those comments would be entirely apposite in a case in which the court was being asked to decide for itself how to exercise a particular discretion to use or dispose of trust assets. But they cannot be taken as authority for the proposition that a court in England or Wales hearing an approval application where there was no surrender of discretion should necessarily take the same course.

In Public Trustee v Cooper, the application was to approve a sale of a substantial holding of shares in a company founded by the deceased settlor, which were held on trust for the employees of the company. An offer was made by a third party to buy the shares together with another block of shares held by a charitable trust. The offer had been accepted by the trustees of the charitable trust, and the trustees of the employee trust were also minded to accept it, but the sale was opposed by a number of the employees who were concerned for the future of the company. They contended (a) that the court did not have jurisdiction to grant approval (as opposed to accepting a surrender of discretion), (b) that the trustees’ decision to accept the offer was not in accordance with the proper interpretation of a particular provision of the trust deed, and (c) that the trustees of the employee trust were disabled by a conflict of interest arising from the fact that they were also trustees of the charitable trust.

Hart J rejected all three arguments. In doing so, his focus was on whether to follow the approach of the Privy Council in Marley, on the vires of the sale as a matter of interpretation of the relevant trust provisions, and on the question of whether there was a disabling conflict of interest.

It is important to note that there was no issue that the proposed sale was on the best terms reasonably obtainable. As Hart J stated in the first paragraph of his judgment,

“It has not and cannot be disputed that the terms of that offer represent in financial terms the best offer for their shares that the [trustees] can in current conditions expect to receive.”

Hart J also did not consider the extent of the immunity that the trustees would obtain as a result of his approval of the proposed sale.

X v A [2006] 1 WLR 741 is a further decision of Hart J. The case concerned the issue of whether the trustees of a marriage settlement could exercise a power of revocation and reappointment to release a substantial part of the trust to the wife to be used by her for charitable purposes. The case had nothing to do with questions of duties of care or the price to be obtained for sale of trust assets.

It was in that very different context that Hart J quoted from his earlier judgment in Public Trustee v Cooper and Millett J’s dictum in Richard v Mackay, and then continued, at [30],

“I would add that an additional reason for caution is that for procedural and other practical reasons the adversely affected beneficiaries are likely to be at a relevant disadvantage in such proceedings (assuming even that they have been made parties, which will not always be the case) as compared with the position they might be in if pursuing a hostile action after the event either against the trustees for breach of trust or designed simply to set aside the transaction as flawed. In particular the extent to which it is possible, or (while future discretions remain to be exercised) politic, to obtain full disclosure of all relevant deliberations of the trustees, or to subject evidence to cross-examination, is likely to differ in the two types of proceedings.”

That dictum, referring to the fact that beneficiaries would be deprived by the court’s approval of the possibility of pursuing a claim for breach of trust or to set aside a transaction as flawed was clearly the basis for the reference in the passage in Lewin which was approved by David Richards J in MF Global and to which I referred in Nortel. It can be seen, however, that it was made in a case in which the issue before the court had nothing at all to do with questions of whether trustees had fulfilled their equitable duty to obtain the best price on a sale of assets.

In MF Global, David Richards J was also not concerned with a question of whether the trustee in question had taken due care to obtain the best price reasonably obtainable on a sale of trust assets. In MF Global, the issue was whether the court should approve a compromise of claims to assets held by a financial services company which had been obliged by financial services regulations to hold so-called “client money” on trust in a client money pool (“CMP”). The company had become insolvent in circumstances in which there was a shortfall of segregated assets to meet such trust claims as well as a deficiency as regards the general body of unsecured creditors.

The administrators applied for approval of a compromise of the rival claims to the available assets, both on behalf of the company as trustee for the clients who had client money claims under the relevant regulations (“the CMP trustee”), and as insolvency office-holders representing the interests of the general body of unsecured creditors of the company. As David Richards J remarked, at [29], the compromise of these rival claims Was not necessarily in the same category as a decision by a trustee to dispose of the principal asset of a trust estate.

Moreover, after endorsing the extract from Lewin which I have set out in paragraph 28 above, David Richards J also made clear that he was carrying out a limited review exercise. That appears from [33] of his judgment in which he stated,

“33.

Applying this approach, I am satisfied that Mr Fleming, with the benefit of appropriate legal advice, and acting on behalf of the CMP trustee has properly formed the view that the proposed compromise is for the benefit of clients as beneficiaries of the trust and that there is no reason why the court should not give liberty to the CMP trustee to enter into the proposed compromise, and indeed every reason why it should do so.

David Richards J referred, at [36], and only in outline, to the advice obtained by the CMP trustee which indicated that there were novel legal issues that would cause any reasonable trust claimant to discount the full value of their claims. In that regard, he referred to the position of a number of sub-groups of clients. These included “decreased clients” whose open positions at the commencement of the administration had later closed at a lower value, and hence who had claims against the CMP which were larger than their contractual claims; and other clients whose open positions had improved after commencement of the administration, and who therefore had larger contractual claims against the company as well as their claims against the CMP. David Richards J continued, at [40],

“40.

These are all considerations which the CMP trustee has had to take into account in considering whether it is appropriate to settle the potential claims on the terms proposed. Having regard to all the factors mentioned above, the CMP trustee is satisfied that the settlement is in the best interests of the decreased clients as well as the other clients. This is a view with which I agree, although I need only be satisfied that the CMP trustee’s decision is a reasonable decision taken on proper grounds.”

On that basis, it is clear that David Richards J did not consider it necessary to determine whether the legal advice relied upon by the CMP trustee was actually correct, or that the terms of the proposed compromise were, as a matter of fact, the best terms reasonably obtainable. His approach was limited to a consideration of the rationality of the CMP trustee’s decision based upon the expert advice which it had received.

That was the background to my decision in Nortel, which requires some analysis because of the central place that it occupied in the argument before Marcus Smith J and in the Judge’s analysis.

In Nortel, I applied the principles derived from the cases on trustees to an application by administrators for approval to a proposed compromise by their companies of claims to very substantial monies held in escrow in the US. Those monies were the proceeds of sale of the worldwide Nortel group business. The administrators had been appointed to a number of the Nortel companies from Europe, the Middle East and Africa (EMEA), and the proposed settlement was intended to put an end to years of litigation over the entitlement to the proceeds of sale between the various different sub-groups of Nortel companies in the US, Canada and EMEA.

As indicated above, after referring to Public Trustee v Cooper and MF Global, I stated, at [49]-[50],

“49.

…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.

In these respects the approach of the court will mirror the attitude which the court would take to a subsequent challenge to the decision by a creditor: see e.g. In re Longmeade Ltd [2016] Bus LR 506, paras 61–65. 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.”

In passing, I would note that the word “subsequent” in the second line of paragraph 50 was incorrect. My reference to Re Longmeade was to authorities on the approach of the court to challenges to a proposed course of action by liquidators, which is that the court will not generally give directions to liquidators on commercial matters, and will only interfere with a proposed course of action if the liquidators are proposing to take a course that is wrong in law or “conspicuously unfair”.

It will be recalled from the exchange cited at paragraph 27 above, that a summary of these paragraphs from Nortel was cited to Marcus Smith J at the hearing of the Sanction Application. This led him to ask whether his role was not to “second guess” the Receivers’ decision but only to determine whether their proposed course, “when viewed from a certain distance … was proper”. That was a view with which counsel for the Receivers agreed in argument, and was reflected in paragraph [72] of his judgment.

However, counsel for the Receivers then also suggested to Marcus Smith J that my decision in Nortel – and in particular the last sentence of paragraph [50] – would answer the further question which had been raised in Mr. Collings’ skeleton argument as to whether the court was being asked to absolve the Receivers from any allegations of professional negligence.

Although Marcus Smith J expressly declined to consider the issue of immunity in his judgment on the Sanction Application, the decision in Nortel was also relied upon by the Judge when he came to decide the immunity point. In particular, as set out in paragraph 50 above, the Judge stated, at [83], that he could not imagine that I believed that any immunity for the Nortel administrators would be limited to claims for breach of fiduciary duty, and would not also extend to claims by creditors alleging that the Nortel compromise was a negligent breach of the administrators’ common law duty to obtain the best price reasonably available.

Unfortunately, and for the following reasons, the Judge’s view of my thought process and what I decided in Nortel was not correct.

As with MF Global, Nortel did not concern a sale of trust assets, but a complex negotiation leading to the compromise of factual and legal disputes which had already occupied the courts in the US and Canada for many years. As the judgment illustrates, I was able to review, in general terms, the process which had been adopted by the administrators during the administrations, the methods that they had adopted to deal with the obvious potential conflicts between the various creditors of the different companies to which they had been appointed, and their overall approach to the merits of the proposed compromise of the various disputes. I also had the benefit of confidential legal opinions that the administrators had obtained from various law firms in the UK, the US and Canada on the more important legal issues that had arisen.

However, given the very great complexity of the issues, even on the basis of the lengthy (but necessarily one-sided) evidence that I was given, there was no conceivable basis upon which I could sensibly have attempted to satisfy myself on the facts that the creditors of one or more companies might not have fared (slightly) better if the administrators had adopted a different approach, or that the administrators had not overlooked something in the negotiations, or that there was not some point on which the administrators might have obtained a (slightly) better deal for one or more groups of creditors.

In short, I did not consider that I was being asked to satisfy myself on the facts that no better deal might have been possible, or that the administrators had discharged their common law duty of care. I considered that my role was to conduct the more limited review of the case on the basis identified by Lewin and endorsed by David Richards J in MF Global, namely to concern myself “with limits of rationality and honesty”, and not to refuse approval simply because I might have taken a different decision (i.e. not to “second guess” the administrators).

As such I determined whether the administrators genuinely held the views that they espoused, that they had addressed the obvious conflicts of interest between the various companies, and that their views as to the merits of the proposed compromise had been formed rationally. That limited scope of review was reflected in the way in which I expressed my conclusions. At [54] of my judgment I stated,

“54.

At the end of that process, and on the basis of the evidence that I have seen, I am satisfied that the administrators … and the conflict administrator are genuinely and firmly of the view that the global settlement is in the best interests of each of the EMEA Companies for which they are responsible, together with their respective creditors. I am also satisfied that those views have been formed properly and rationally.”

See also the further references to rationality in [61], [76] and [79].

I would add that I was not asked in Nortel to determine the question of the immunity that would flow from my decision, and it is notable that my judgment does not contain any analysis of that question. My passing reference in [50] to the fact that approval “would prevent subsequent challenge” was, as the Judge observed at [83], in entirely general terms. It would be reading far too much into those very few words to think that I had considered, let alone reached any view on the precise extent of, the immunity for the administrators which would result from my approval of the proposed compromise.

I shall return to these aspects of Nortel at the end of this judgment, but for now I should simply record that I do not consider that it can bear the weight that the Judge placed upon it, either in relation to the scope of the exercise that I was conducting, or the immunity that would result from it.

The final authority to which I should refer is one which did involve a proposed sale of assets by trustees. It is the decision of this court in Cotton v Brudenell-Bruce [2014] EWCA Civ 1312, [2015] WTLR 39 (“Cotton”). The case concerned involving a dispute over whether trustees should sell an unoccupied listed building in accordance with advice which they had received from expert valuers and estate agents (GVA) who had conducted a limited and confidential marketing exercise. The trustees took the view, on the basis of that advice, that the price offered by a purchaser (Mr. A) identified by that process was “an opportunity not to be missed”; but one of the beneficiaries contended that it was “inadequate and the result of an ineffective marketing exercise”.

The court at first instance approved the sale by the trustees. Unusually, the parties were also engaged in a linked application in which the beneficiary had sought the removal of the trustees on the basis that they were unfit to act, based largely on the same allegations as to the inadequacy of the marketing process. After a lengthy review of a considerable amount of written evidence that had been filed by the parties, but upon which there had been no cross-examination, Vos LJ rejected the challenge to the approval based upon the alleged inadequacy of the marketing exercise. Vos LJ stated, at [72] and [77],

“72.

…. GVA were advising on marketing and sale processes. GVA in fact advised the trustees clearly and cogently that a limited directed marketing strategy was advantageous and appropriate. GVA gave good reasons for rejecting an open market campaign if the targeted approach produced the desired results. Those reasons were sensible and intelligible ... In my judgment, the trustees were entitled to take this advice ... I do not accept that the trustees were obliged to second-guess the professional view of the experts they had instructed to market the property and to obtain the best price available in the circumstances.

…

77.

I do not think that the trustees can be criticised for accepting GVA’s clear view. They were the experts. They were accomplished and well-reputed in this market … It is true, of course, that GVA may have acted negligently in selecting the bidders. If, for example, they were later shown to have excluded a worthy bidder for an inappropriate reason, there ightt be a claim by the trustees against them. But there is no evidence of anything of the sort, and, in any event, as I said at the outset, there is a clear distinction to be drawn between the duties of the trustees to the beneficiaries and the duties of the experts to the trustees.”

At [78], Vos LJ considered the purpose and proper procedure to be adopted by the court on an approval application by trustees. He stated,

“78.

This aspect of the argument raised in sharp focus the procedure that is adopted when trustees seek the approval of the court to a momentous transaction. The procedure is intended to be quick and accessible. The question was raised as to what ought to happen when issues of contested fact are raised that the CPR Part 8 procedure is not well adapted to resolve. As it turns out, in this case, it does not ultimately seem to me that such issues were central to the court’s determination. But one can imagine cases where they would be. In such a case, the court can always order that the issues of fact are tried under the Part 7 procedure, or anyway after disclosure and oral evidence. I do not, however, think that such a situation would frequently arise, because the trustees are not asking the court to find facts. They are asking the court to decide whether they have presented sufficient evidence to satisfy it that the trustees have fulfilled their duties to their beneficiaries in deciding upon the transaction in question, and have formed a view which, in all the circumstances, reasonable trustees could properly have formed. This is a very different exercise from the situation, after the event, where a beneficiary is seeking to prove that the trustees have failed in their duties by selling, for example, at an undervalue.”

I consider that it is readily apparent from this passage that Vos LJ did not think that trustees should ordinarily ask, or that the court would ordinarily be prepared to undertake in advance, the type of detailed fact-finding exercise involving oral and/or expert evidence which would be required to determine whether a proposed sale price was the best price reasonably obtainable for the property in question.

That having been said, Vos LJ returned to the question of the possibility of a subsequent claim by a beneficiary when dealing with the references in earlier authorities to the need for caution. At [84]–[87], Vos LJ said,

“84.

… The authorities that I have mentioned above that emphasise the need for caution in approving a trustee’s decision to undertake a momentous transaction need, I think, to be placed in context. The court will not approve a trustee’s decision without a proper evidential basis for doing so. But the court should equally not deprive a trustee of approval without good reason.

…

86.

The decision that these trustees have reached is indeed a momentous one. The court is not a rubber stamp and must be cautious to ensure that it is satisfied that the trustees are indeed justified in proceeding in accordance with their decision. But the court should not place insurmountable hurdles in the way of trustees in the position of those before this court. The court has a supervisory jurisdiction that needs to be exercised in appropriate circumstances. Caution cuts both ways.

87.

Finally, in this context, the fact that the beneficiary is in a weaker position than he would be, after full disclosure and cross-examination at a trial of an action to challenge the trustees’ actions, cannot, by itself, mean that the court should withhold consent. It is true that court approval will prevent a later challenge. But if the court is given sufficient and appropriate material on which to act, it should not withhold consent just in case something better might in the future turn up.”

Cotton is perhaps the case that comes closest to containing an indication that an approval decision by a court would necessarily prevent a subsequent claim by a beneficiary that a sale of assets had involved a breach of a duty of care to obtain the best price by a trustee. However, the case was unusual in that the court was prepared to review a considerable amount of expert evidence in some detail. It is also clear that Vos LJ’s brief comment in [87] was obiter since no question of immunity was being decided.

Given the lack of binding authority or any specific analysis in the cases of the degree of immunity that flows from an approval decision, I think it is necessary to return to first principles and to ask what is meant by a trustee or other office-holder obtaining “immunity” or “protection” from a subsequent claim. Put another way, what principle of law prevents such a claim from being pursued?

For the purposes of this analysis I assume, as the Judge held in the instant case, that the claimant has an arguable cause of action in equity or in negligence at common law, so that the trustee or office-holder could not seek to strike out the claim on the basis that there are no reasonable grounds for bring the claim or apply for summary judgment on the basis that it has no real prospect of success. In such a situation, the claimant will have a prima facie right to have his claim tried and determined by a court. Further, and subject to the possibility that an office-holder such as an administrator or receiver might have been granted a release when discharged from office, trustees or other office-holders have no special legal status to prevent such claims being made against them.

Although, following the lead of the parties, the Judge treated “immunity” as a discrete concept, there is in fact no separate doctrine of English business or property law called “immunity”, and none was identified in the Judgment. As such, to claim “immunity”, it seems to me that trustees or other officer-holders would have to be able to invoke some other established legal principle to prevent the subsequent claim from being pursued. In my view, although the parties and the Judge treated them as separate and distinct, the only two candidates to provide content to the notion of “immunity” are the doctrines of res judicata and abuse of process.

In Virgin Atlantic Airways v Zodiac Seats UK [2014] AC 160 (“Virgin”) at [17], Lord Sumption described res judicata as a portmanteau term for a number of principles based upon an underlying policy against abusive proceedings. Of the various categories of res judicata described by Lord Sumption, it is obvious that an approval decision could not give rise to a cause of action estoppel or merger of the first cause of action, because the basis of the application by trustees or office-holders in seeking the approval of the court is manifestly different from the cause of action which the claimant would be pursuing in a subsequent claim.

The only two potentially relevant categories of res judicata are Lord Sumption’s fourth and fifth categories, which he described in the following way, at [17],

“Fourth, there is the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties: Duchess of Kingston’s Case (1776) 20 State Tr 355 . “Issue estoppel” was the expression devised to describe this principle by Higgins J in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537, 561 and adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197–198.

Fifth, there is the principle first formulated by Wigram V-C in Henderson v Henderson (1843) 3 Hare 100, 115, which precludes a party from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones.”

In relation to issue estoppel, Lord Sumption referred to the classic statement of that principle by Lord Keith in Arnold v National Westminster Bank plc [1991] 2 AC 93 (“Arnold”) at page 105D-E,

“Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to reopen that issue.”

After considering the decision in Arnold, Lord Sumption also held, at [22], that there could be a limited exception to the doctrine of issue estoppel to avoid injustice, either where a point had been decided against a party or where it had not been raised in the first proceedings because it would not have been reasonable to do so, but where there had been a material change of circumstance since the first decision.

In relation to Henderson v Henderson abuse of process, Lord Sumption referred in Virgin at [24] to the well-known statement by Lord Bingham in Johnson v Gore-Wood [2002] 2 AC 1 at page 31,

“Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.”

As Lord Bingham indicated, issue estoppel undoubtedly has much in common with the concept of Henderson v Henderson abuse of process. There are, however, some differences. In Virgin, at [25], Lord Sumption identified that issue estoppel is a substantive legal principle, whereas Henderson v Henderson abuse of process is a procedural means by which the courts prevent abusive litigation. Another distinction is that issue estoppel only relates to attempts to relitigate issues that were a necessary ingredient of the original cause of action between parties to the original proceedings (or their privies), whereas Henderson v Henderson abuse is potentially broader in scope, both as to the centrality of the issues to the decision, and as to the identity of the litigants.

It should also be noted that there is a further category of abuse of process cases in which a second proceeding by someone who was not a party or a privy of a party to an earlier proceeding might amount to an abuse of process if the second proceeding constitutes an impermissible collateral attack on the decision in the earlier proceeding. The category is, however, very limited. In relation to civil proceedings, a subsequent claim which challenges the earlier decision will only be an impermissible collateral attack if  (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such re-litigation would bring the administration of justice into disrepute: see Secretary of State for Trade and Industry v Bairstow [2004] 1 Ch 1 at [38] per Morritt V-C.

Whatever the precise boundaries or overlap of these principles, it is readily apparent that in each of the relevant categories of issue estoppel and abuse of process there is a focus on the issues that were determined (or which could and should have been raised for determination), by the first court. For each of the doctrines, a comparison is then made with the issues that the claimant asks the court to decide in the subsequent claim.

In that regard, whilst I do not think the Judge’s formulation was entirely correct, I think that he was on the substantially the right track when he observed, at [80] of his Judgment, that the “immunity” which flows from an approval decision derives in principle from the nature of the review conducted by the approving court, and whether “immunity” extends to a subsequent claim depends upon the allegations made or necessarily involved in that second claim.

In my judgment, the concept of “immunity” flowing from an approval decision is most easily understood as judicial shorthand for the bar on subsequent proceedings that results from an issue estoppel. Although it is not entirely apposite to speak in terms of the applicant trustees or office-holders having a “cause of action” when making an approval application, the essence of the point is that 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. Although this is simply shorthand, the concept of a trustee or office-holder having the status of “immunity” from subsequent suit is also consistent with Lord Sumption’s point that issue estoppel is a substantive principle of law, rather than being a broader discretionary means by which it is the court that seeks to protect its own process from abuse.

Focussing in this way on the issues that have been decided also serves to emphasise that the question of the “immunity” which attaches to an approval decision does not permit a “one-size fits all” answer.

The cases to which I have referred above illustrate that the court’s willingness to entertain a particular application for approval and the issues that it may be prepared to determine will vary from case to case. They may, for example, depend on the identity of the applicant (e.g. are they a professional trustee or office-holder, or an unpaid family trustee?); the reasons why the proposed decision is said to be momentous (e.g. is it a disposal of hugely valuable or sensitive assets, or does it involve acute allegations of conflict of interest?); and the nature of the legal or evidential inquiry that would be involved (e.g. would the court be required to resolve a difficult question of law or be required to review complex expert evidence and reach a factual conclusion?).

Understood in this way, 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. Even that exercise would, of course, require the trustees to satisfy the court that they had put all information relevant to those issues before the court, and the comments on the caution required before granting approval are perfectly understandable, even on that limited basis.

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. That was, I believe the point that Hart J was alluding to in X v A at [30] and Vos LJ was making more explicitly in Cotton at [78] and [87] concerning the procedural differences between applications for approval and claims in hostile litigation. As Vos LJ further observed, a court asked to approve a transaction in advance might very well consider it inappropriate to embark upon a lengthy and detailed fact-finding process better suited to a trial after the event.

For the sake of completeness, I should add that the extent of the “immunity” conferred by an approval decision will also depend upon the identity of the parties to the approval decision and the subsequent claim.

As I have indicated, it is an essential requirement of issue estoppel 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. This is the underlying reason why, for example, trustees seeking approval to a proposed transaction will join all potentially interested beneficiaries, or, if that is not practical, seek the appointment of representative respondent beneficiaries. That regularly occurs, for example, in cases involving pension funds: see e.g. Re Merchant Navy Ratings Pension Fund [2015] EWHC 448 (Ch) at [9]-[14]. That is also often the case where insolvency office-holders seek the court’s determination of legal issues affecting the distribution of assets in an insolvency.

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. To that extent I would respectfully suggest that the references to “immunity” in MF Global and in my own decision in Nortel were misplaced.

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.

Some of the points that I have set out above are illustrated by a recent decision of Miles J in Re Sova Capital Limited [2023] EWHC 452 (Ch) (“Sova”), a case which was decided after the argument had concluded in the instant case, but which both parties subsequently referred us to.

The case concerned an application by joint special administrators (the “JSAs”) of an FCA authorised and regulated brokerage company, whose business involved trading in the Russian market for clients, and which had been severely affected by the turmoil in the financial markets following the invasion of Ukraine. The JSAs sought the approval of the court to a specific transaction under which the company would transfer an identified portfolio of Russian securities to one of its largest unsecured creditors in return for a waiver of that creditor’s claims against the company. The transaction was opposed by another creditor (“BZ”) who was part of a consortium that had made a rival bid to acquire the assets.

After quoting from some of the authorities referred to above and the Judgment in the instant case, Miles J continued, at [182],

“182.

It appears to me that the scope of any subsequent immunity where the court is asked for directions from an office-holder must be sensitive to the particular facts: it depends on the specific nature of the question(s) before the court on the application and of any answer(s) given by the court. I do not think there can be a blanket rule of law that the court’s approval of a transaction automatically generates full immunity in all respects concerning the transaction. It depends on the issues raised and the court’s answers.”

For the reasons that I have already set out, I entirely agree with that statement.

Miles J also set out, at [184], a number of further observations on the authorities. It is worth repeating those points in full,

“(a)

Administrators are professionals who fulfil a commercial role in conducting the business and affairs of the company in administration. They are generally required to make their own commercial decisions and cannot expect to rely on the approval of the court in those respects.

(b)

There may in this regard be differences between trustees of private trusts and office-holders appointed under the insolvency legislation. Office-holders are required routinely to take momentous commercial decisions and to weigh up the risks and rewards of competing courses. As Snowden J observed in Nortel the principles may be similar, but they may not be identical in all respects.

(c)

The question whether there are particular reasons for applying to the court cannot depend on whether the commercial decision is more or less difficult. Even hard commercial decisions are for the administrators, not the court. Nor can the scale of the transaction be the touchstone. Administrators should not assume that the court will entertain an application for directions simply because the matter is hard or large.

(d)

It may be appropriate to seek the court’s approval where doubts have been expressed about the administrators’ powers or there are potential conflicts of interest or where there may be potential issues as to the legality of a proposed transaction. This is not an exhaustive list but, putting it negatively, the court is unlikely to give directions in a case which is in truth seeking the blessing of a commercial decision.

(e)

The court may in an appropriate case also be asked to consider the rationality of the proposed course of action (for the purposes of the proper purpose rule). Where it does so, it does not necessarily follow from a ruling on rationality that the court is satisfied that there are no possible claims against the office holder (for example in negligence) concerning the process which has led up to the relevant decision. The scope of any immunity will depend very much on the facts (see above).

(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.

(g)

What most matters for office-holders and others interested in the estate is that the transaction covered by the approval is secure against future challenge (absent some flaw in the approval process).

(h)

On an application for directions, the court does not have the benefit of disclosure or cross examination. The court depends on the administrators to make complete and candid disclosure of the necessary material but the court is not in the position of making a full investigation of the position. A directions hearing should be comparatively short and contained. It is not intended to be a trial, even a mini one. This is a further reason why the court will be cautious about reaching findings of fact going beyond those strictly required by the directions sought.”

Again, I agree with those observations. In particular, I would endorse Miles J’s observation at (f) that the scope of any immunity depends on precisely what the court decides.

At [185] of his judgment, Miles J then identified the four issues for determination: (i) was it appropriate for the JSAs to seek the approval of the court to the proposed transaction; (ii) were they acting within their statutory powers and in accordance with insolvency law; (iii) was their decision to enter into the transaction rational and honest; and (iv) was there a real risk that the transaction would breach applicable sanctions laws?

Having identified those issues, Miles J determined them in favour of the JSAs and approved the proposed transaction. At the end of his analysis of the first three issues, Miles J concluded as follows, at [279]-[280],

“279.

Overall I have concluded that the decision of the JSAs to enter the Transaction is an honest and rational one, within the scope of their powers.

280.

However I am not expressing a more general view as to the conduct of the JSAs.  I do not e.g. express any view as to whether a different outcome could have been achieved had the JSAs taken the steps now suggested by BZ to market the assets. Nor do I express any view about the negotiations of the Transaction or whether better terms could have been reached. Nor do I express any overall view as to whether the JSAs have achieved the best price reasonably achievable. In setting out these reservations, I do not wish it to be understood either that I am suggesting that the JSAs have failed to act reasonably or have failed to achieve the best price. I am simply making no ruling either way. I return to something I explained earlier: the commercial decision to enter the Transaction is one the JSAs have already taken and by giving them permission to carry it out I am not seeking to remake or second guess the decision.”

Miles J’s clear expression of the limits of his approval and of the issues that he was determining reflected similar reservations made (albeit in a slightly different context) in earlier insolvency cases such as Re Montin [1999] 1 BCLC 663 at 669 (Neuberger J), Re Osmosis Group [1999] 2 BCLC 329 at 335 (Rimer J), and Re T&D Industries plc [2000] 1 WLR 646 at 658-659 (Neuberger J). In each of those cases the judge expressly stated that the direction he was giving that an administrator could dispose of a company’s assets prior to obtaining the approval of creditors to the proposals for the administration, would not insulate the administrator from a claim that the decision to make the disposal had been made negligently. I shall return to that point at the end of this judgment.

Having made those observations, I turn to apply them to the instant case.

As a preliminary observation it is evident that I think that the parties were wrong to invite the Judge to approach the first and second questions of immunity and issue estoppel separately. In my view they were one and the same question. (Footnote: ¹)

The need to focus on the issues that were decided by the approving court and those that are raised in the subsequent proceedings also explains why, in my view, Mr. Collings was wrong to submit that for the purposes of immunity, there was a conceptual distinction between claims alleging breach of a fiduciary duty or breach of an equitable duty of care (which he accepted would be covered by immunity), and breach of a common law duty of care or breach of a statutory duty of care (to which he contended that immunity would not attach). For reasons that I have explained, in my judgment the question of immunity depends upon a comparison of issues determined (or which could and should have been determined) in the earlier proceedings and those raised in the subsequent claim, not the precise juridical origins (i.e. common law or equity) of the applicant’s duties or the subsequent cause of action.

For the same reason, I do not consider that it is necessary to decide in the instant case whether a court-appointed receiver’s duty of care is properly to be characterised as a common law duty of care (as Mr. Collings contended in reliance on the dicta of Dillon LJ in IRC v Hoogstraten [1985] 1 QB 1077 at 1093-1094) or an equitable duty of care (as Mr. Mohyuddin contended, relying on the historical origins of the jurisdiction to appoint receivers by way of equitable execution). The relevant question is the content of the duty and the issues to which it gives rise, not its juridical origins.

I also do not agree with the way in which the Judge framed his analysis of immunity at [79], [82] and [86] of the Judgment, which depended on the proposition that if the court approved a specific transaction with a specific third party at a specific price, that necessarily conferred a wide immunity in respect of all subsequent claims. The Judge’s reasoning was that a subsequent claim that the transaction had been wrong, improper, irrational or a breach of a duty of care, would all be tantamount to saying that the applicant should not have entered into the specific transaction that the court had approved. 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.

In my view, in determining whether there was “immunity” in the sense in which I would prefer to use that term, the focus must first be on identifying the issues that were decided by Marcus Smith J, and then asking whether any of the same issues is a necessary ingredient of the Claim that Denaxe is now making.

In that regard, it is clear that Marcus Smith J was invited to approach his task by reference to my judgment in Nortel, and counsel expressly agreed that this did not require him to “second-guess” the Receivers’ decision but simply to check, “viewed from a certain distance”, that it was a proper decision. That limited formulation of his task was reflected in [71] and [72] of Marcus Smith J’s judgment, which faithfully reflected the principles derived from cases such as Richard v Mackay, Public Trustee v Cooper, MF Global and Nortel. However, as I have explained above, none of those authorities were a case in which any question of breach of a duty of care arose.

Likewise, when Marcus Smith J’s answer at [73] of his judgment is examined closely, it is clear that the judge only expressed himself satisfied that the price had been achieved after a competitive process for sale of the Footballing Assets together, that the price was “reasonable”, and that it was the best bid that had been received in that process. Those findings do not suggest that, at the hearing of the Sanction Application, Marcus Smith J had conducted the type of inquiry that would have been necessary to satisfy himself that the Receivers had in every respect exercised all necessary skill and care, and it is notable that he did not describe the agreed price as the best price reasonably obtainable for the Footballing Assets.

In particular, there is some force in Mr. Collings’ submission that Marcus Smith J did not expressly decide the issue of whether the Receivers had exercised all due skill and care to ensure that the best price would be obtained in the receivership by deciding to sell the Footballing Assets together in a composite transaction. There is no doubt that the Receivers had, from the outset, clearly explained their thought process in that regard, and indeed their views in this respect were the very reason that Marcus Smith J had thought it appropriate to appoint them by way of equitable execution in the first place.

However, there was no challenge raised at the hearing to the Receivers’ approach of selling all of the Footballing Assets together. Although Marcus Smith J’s judgment contains a detailed analysis of the bids that had resulted from the marketing process and he went on to consider the desirability of selling the VB shares in BFCL together with those held by Denaxe, he did not revisit the question of whether a better price would be obtained if the marketing had been of the property assets without the Club in situ. Nor did he address the type of questions that the Judge subsequently addressed when holding that the Claim disclosed an arguable case of negligence by the Receivers.

Against those points, there is considerable merit in Mr. Mohyuddin’s argument based upon the point that the only relevant allegation of breach of a duty of care of which any particulars are given is at paragraph 40 of the APOC, namely that no attempt was made to offer the property assets for sale separately to the shares in BFCL. That allegation is also reflected in the only pleaded claim for damages which depends upon the proposition that the Footballing Assets should have been sold separately.

Mr. Mohyuddin contended that the evidence in support of the Sanction Application made it clear that the Receivers were seeking approval to sell the Footballing Assets as a composite lot, and that this was implicit in the very way in which the Sanction Application was put to the court. He also contended that this was implicit in the Variation Application which was only needed because it was intended that the Receivers should sell Denaxe’s shares in BFCL together with its property assets, and could only do so if VB was also free to sell its shares as part of the same transaction. Reflecting that approach, he pointed out that the terms of the Sanction Order also made it express that the Footballing Assets listed in the schedule to the order, and VB’s shares in BFCL, could be sold “together as part of one transaction”.

These are powerful competing submissions. I do not, however, consider that I need to choose between them in order to dispose of the appeal. That is because even if the decision of Marcus Smith J and the Sanction Order did not give rise to an issue estoppel, I have no doubt whatever that the Judge was entirely correct to find, for the reasons that he gave, that it is a Henderson v Henderson abuse of process for Denaxe to bring the Claim, having been given the clearest possible opportunity at the hearing of the Sanction Application to raise what is now the only pleaded basis for its Claim, and not having done so.

As I have explained, the Sanction Application and Variation Application both depended upon a fundamental assumption, supported by evidence from the Receivers as to their opinion, that the Footballing Assets should be sold together in a composite transaction so as to preserve the Club in operation and thereby to maximise value for the assets sold.

The directors of Denaxe at the time did not object to the proposed sale, and as Marcus Smith J observed in his judgment at [70], the hearing of the Sanction Application had been fixed precisely in order to enable Mr. Oyston to raise any points that he wished to about the proposed sale. Although Mr. Oyston had been displaced as a director of Denaxe, he was still its majority shareholder and would remain so after the sale to Mr. Sadler was completed. As such, it was plain that the hearing had been arranged in order that everyone who could claim to be interested in Denaxe, and who might be entitled to express a view on its behalf in relation to the proposed transaction, had the opportunity to do so.

In that regard, as pointed out by the Judge, Mr. Oyston and Denaxe were in possession of the Colliers Valuations and were well aware of the financial state of the Club. The directors did not oppose the proposed sale, and Mr. Oyston chose to stay silent on the fundamental question of whether there should be a composite sale of the Footballing Assets, simply reserving his rights, very generally, on the questions of “marketing and value”.

Mr. Collings protested at the hearing of the appeal that Mr. Oyston was entitled to keep his (and Denaxe’s) powder dry in this respect, and he even went so far as to contend that a separate sale of the property assets is precisely what Mr. Oyston would have wished to see if he had been in control of the board of Denaxe at the time.

As Marcus Smith J indicated at [70], the former submission is unsustainable given paragraph 18 of the Receivership Order and the way in which the hearing of Sanction Application was set up, precisely so as to enable Mr. Oyston to raise any concerns he might have about the proposed sale. For the reasons given by the Judge at [105], and certainly taking the broad, merits-based view suggested by Lord Bingham in Johnson v Gore-Wood, it is unreal to draw a distinction between Mr. Oyston and Denaxe in this respect.

Mr. Collings’ second submission is also at odds with reality, not least given Mr. Oyston’s own evidence that after the Buy-Out Order he had “sought to sell the Club and the football related assets” together. On the facts in that respect, I consider that the Judge was entirely justified in his conclusions that Mr. Oyston made a calculated decision, as a long-time supporter of the Club, not to advocate a separate sale of the Footballing Assets that would have resulted in the Club ceasing to operate. The Judge was also entitled to find that if Mr. Oyston had spoken up, a different course might have been adopted by the Receivers and by Marcus Smith J.

In those circumstances, it seems to me that the Judge was entirely right to conclude that Denaxe could with reasonable diligence and should in all the circumstances have raised at the hearing of the Sanction Application the central issue upon which its Claim now depends, namely whether the Receivers should have sought to sell the property assets separately from the remainder of the Footballing Assets. I also consider that the Judge was right to conclude that it would be manifestly unjust to the Receivers and a misuse of the court’s resources for Denaxe now to be able to pursue the Receivers with that allegation. In my view, Denaxe is now prevented from raising that issue in the Claim on the basis of Henderson v Henderson abuse of process.

For these reasons, I consider that the Judge’s decision to strike out the Claim was correct, and I would dismiss the appeal.

POSTSCRIPT

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.

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.

That is precisely what Miles J did in Sova, and it follows the example set in T&D Industries plc and the cases that preceded it. Indeed, with the benefit of hindsight, it would have been better had I followed that course in Nortel, not least because it would have made it clearer to Marcus Smith J and to the Judge in the instant case precisely what the parameters and effect of my decision had been.