Case Nos: CA-2024-002667 and CA-2025-000223 - [2025] EWCA Civ 951

Mr Vesnin’s Appeal

Issue estoppel

An issue estoppel may arise where a court decides an issue between parties to proceedings on a final basis at an interlocutory stage in the proceedings. In such a case, the decision will bind the parties to those proceedings and prevent it being re-litigated at a later stage (except in special circumstances): Fidelitas Shipping v V/O Exportchler [1966] 1 QB 630 at pages 640B-F and 642B-643C; and Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46 at [17]-[20].

In any case in which an issue estoppel is alleged, it is essential to identify precisely what issue was decided. In the instant case, Mr Vesnin contends that the ratio of the Johnson Judgment was that the meaning and effect of the Tomlin Order was that the Undertaking “should not be released until the true ultimate beneficial owner of Q&M has been established following a fair procedure that allows all parties to be heard”.

I do not accept that submission. I do not consider that was what the Johnson Judgment decided.

Although, in paragraph 6.7 of his judgment, Adam Johnson J decided that the expression “any claim to, or interest in, those shares” in the announcement should be given a wide meaning, he followed that up by saying,

“The gist of the machinery was to say to third parties as follows: if you want to argue that these certificates ought not to be released to [Q&M], so that those presently standing behind [Q&M] can deal with them freely, you should say so, and if you say so further directions should be given as appropriate to resolve the expression of interest in the certificates.”

(my emphasis)

Adam Johnson J then went on to repeat, at the end of paragraph 6.8, that

“… if any communication of whatever type “in relation to the subject matter of the announcement” was received, it seems to me that the machinery in paragraph 7 [of the Schedule to the Tomlin Order] contemplated that further directions would be given as appropriate and the undertaking would remain in force until further order of the Court.”

(my emphasis)

It is impossible to read those parts of the Johnson Judgment as a decision that the parties had agreed, and still less that the future discretion of the Court had been restricted, so that the Court would be obliged to maintain the Undertaking in force until after it had finally resolved any issues of whatever nature that might have been raised by any third party in response to the announcement.

That reading of the Johnson Judgment is also consistent with the terms of the Johnson Order. As indicated above, the “Issue” to which directions were to be given was simply whether the Undertaking should be released; it was not for resolution of any issue of the nature suggested by Mr Vesnin.

Accordingly, I do not consider that the Johnson Judgment or Johnson Order gave rise to any issue estoppel that prevented Mr James Morgan KC from deciding to release the Undertaking prior to a determination by the English court of the ultimate beneficial owner of Q&M.

The meaning and effect of the Tomlin Order

Mr Vesnin’s alternative argument was to criticise the interpretation placed upon the Tomlin Order by Mr James Morgan KC. In essence he repeated the argument that the meaning of the Tomlin Order was that it obliged the Court to maintain the Undertaking in force until after final determination of the identity of the ultimate beneficial owner of Q&M.

Again, I do not accept that submission. I agree with Adam Johnson J’s interpretation of the Schedule to the Tomlin Order as expressed in paragraphs 6.7 and 6.8 of his Judgment (above), together with Mr James Morgan KC’s characterisation of the purposes of that agreement in paragraphs 46-47 of his Judgment (above). The mechanism in the Tomlin Order provided that if a response had been received to the announcement, the Court would, to the extent that it considered it appropriate, give directions for the determination of issues arising from any expression of interest in the Replacement Eurasia Share Certificates, and for the Undertaking to remain in force until the Court ordered otherwise.

While the Court could naturally be expected to assist the interested parties to resolve their differences finally and expeditiously, it is clear, as Adam Johnson J and Mr James Morgan KC both indicated, the ultimate decision as to how such matters would be resolved resided with the Court, and third parties responding to the announcement would have no rights of veto or control over the process or the decision as to when the Undertaking might be released. The latter point is made clear by the point made by Falk LJ in argument, to which no good answer was given, that it is impossible to see how the Tomlin Order could mean that Mr Vesnin is entitled to insist that the Court determines the issue that he has raised within the framework of the Tomlin Order, when paragraph 7 of the Schedule expressly provides that the Undertaking could be released by the agreement of Eurasia and Q&M without reference to the Court.

Standing back, it would be a surprising result if an agreement between two litigating parties embodied in the schedule to a Tomlin order could have the effect that the future discretion which the Court would otherwise have to control its own procedure in a case before it, and to determine whether to release a person from an undertaking given to the Court, was in some way curtailed or restricted. Even if it were possible for contracting parties to impose such a limitation upon the exercise of the Court’s future powers, it would, I think, require both very clear words and some careful judicial consideration and affirmative decision to that effect when the order was made. That is not the clear meaning of the words, and we were not provided with any indication that there had been any such consideration or decision when the Tomlin Order was made.

Denaxe v Cooper

In argument before us, as well as in Mr Vesnin’s Defence, Mr Davies KC suggested that the parties to the Tomlin Order had invoked, by analogy, the process which he said was identified in Denaxe v Cooper [2023] EWCA Civ 752 (“Denaxe”). He contended that under such procedure, the purpose of the Tomlin Order from Eurasia’s perspective, was to obtain “immunity” from future proceedings in relation to its issue of the Replacement Eurasia Share Certificates and that this required the Court to resolve the issues raised by Mr Vesnin. Quite apart from whether Eurasia and Q&M actually had Denaxe in mind when they agreed the Tomlin Order (or whether their subjective intentions would be relevant to its interpretation in any event), I do not consider that Denaxe in any way supports Mr Davies KC’s contention.

Denaxe was a case in which receivers who had been appointed by the Court sought, and obtained, the approval of the Court to enter into a sale of the assets over which they had been appointed on certain terms. A claim was later made by the owner of the assets that the receivers had negligently sold them at an undervalue. The receivers sought to strike out the claim on the basis that they had “immunity” from that claim because of the approval order that they had obtained.

In giving a judgment, with which Asplin and Falk LJJ agreed, at paragraph 70 et seq I traced the origins of the jurisdiction under which the court has long been willing to entertain applications by trustees and others in similar positions, such as Court appointed receivers and insolvency officeholders, for the determination of legal issues arising in the administration of the trust or analogous process, and for orders giving approval for such persons to enter into “momentous” transactions with assets under their control.

I then went on to point out, at paragraph 115 et seq that although the intention of the applicants in such cases might be to obtain protection against future allegations that they had exceeded their powers or otherwise acted inappropriately, the extent of any such protection would not be the result of some free-standing legal principle of “immunity” conferred by the court, but would depend upon whether the applicants would be able to involve the conventional principles of issue estoppel against future claimants.

In that respect I stated, at paragraphs 127-129,

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 … 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…

Focusing 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?).”

This reasoning in Denaxe emphasises that the degree of protection which a trustee or similar officeholder will obtain from future claims will be entirely dependent upon the willingness of the Court to entertain an application for approval, and, if it is prepared to do so, upon the particular issues that the Court, in its discretion, will be willing to decide.

As I see it, if it is relevant at all, the decision in Denaxe tells against, rather than in favour of, Mr Davies KC’s argument on the meaning of the Tomlin Order. None of the parties to the Tomlin Order in the instant case were trustees or officeholders, and there is no indication that the courts have ever been prepared to entertain applications of the type under consideration in Denaxe from commercial companies or their directors. Still less is there any basis upon which to conclude that litigating parties could, by the terms of an agreement between them, fetter the discretion of a Court so as to require it to decide any particular point that a third party might care to raise before deciding to release an undertaking given to the Court any more than a trustee or officeholder could insist on the Court doing so before they embarked upon a course of action. Denaxe makes clear that the decision whether, and if so, on what terms, to decide any issues presented to the Court, lies with the Court.

Moreover, paragraph 135 of Denaxe, upon which Mr Davies KC placed particular reliance, has to be read in context. That paragraph was dealing with the issue of whether an officeholder could not obtain the benefit of an issue estoppel unless a potential future claimant had actually been joined, or at least given the opportunity to participate in the proceedings. The material section of the judgment was as follows,

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 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…

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 …, 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.”

What those paragraphs most assuredly did not say was that the mere fact that proceedings had been advertised to third parties would necessarily require the court to resolve every issue that might be raised by a third party. The point being made was that providing the opportunity for third parties to appear and be heard was the very least that would be required before it would be possible to assert that a subsequent claim would be an abuse of process. But, as I have indicated, that does not affect the prior point that the issues that the Court might choose to determine would be a matter for the exercise of the Court’s discretion on the facts of each case.