Michael Wilson and Partners Ltd v Emmott

Case •

[2021] NSWCA 315

•

17 December 2021

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Michael Wilson & Partners Ltd v Emmott [2021] NSWCA 315
Hearing dates: 20 July 2021; Further Submissions 23, 27 July, 1, 22 September, 12, 28 October 2021
Date of orders: 17 December 2021
Decision date: 17 December 2021
Before: Leeming JA at [1];
Brereton JA at [8];
Emmett AJA at [127]
Decision:

(1) Dismiss the appellant’s motion of 14 September 2021, with costs;

(2) Grant leave to appeal;

(3) Allow the appeal;

(4) Set aside the orders made in the Commercial List of the Equity Division on 8 March 2019 and in lieu thereof:

(a) Grant leave under Uniform Civil Procedure Rules 2005 (NSW), r 11.5, to the plaintiff to serve the proceedings on the defendant outside Australia and in England, insofar as it relates to the claims for relief in paragraphs 3 to 10 of the Further Amended Summons of 3 October 2018;

(b) Order that proceedings on the Further Amended Summons other than in respect of the claims referred to in (a) be permanently stayed;

(c) Otherwise dismiss Mr Emmott’s motion filed on 1 November 2018; and

(d) No order as to costs of the motion, to the intent that each party bear its own costs; and

(5) Save insofar as any interlocutory costs order otherwise provides, no order as to costs of the appeal, to the intent that each party bear its own costs.   

Catchwords:

PRIVATE INTERNATIONAL LAW – Jurisdiction – Personal jurisdiction – Service outside of the jurisdiction – Partnership and contribution claims by corporate appellant as assignee of the rights of the trustees in bankruptcy of two former business associates of respondent – Respondent and two associates previously members of appellant firm operating in Kazakhstan but departed to establish competitor – Prior arbitration in London between appellant and respondent – Prior proceedings in Australia by appellant against two associates – Appeal from permanent stay of claims pursuant to rules for service outside of Australia

PRIVATE INTERNATIONAL LAW – Jurisdiction – Personal jurisdiction – Service outside of the jurisdiction – Connecting factors – Person outside of Australia a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court – Whether insufficient prospects of success to warrant service – Whether amount in issue only approximately USD$2,000 – Whether any right of contribution – Appeal on contribution claim dismissed

PRIVATE INTERNATIONAL LAW – Orders with extraterritorial effect – Anti-suit injunctions – Anti-suit injunction restraining claims previously determined and adverse findings previously made by arbitration in London – Interpretation of arbitral award – Majority of aspects of contribution claim covered – No error in finding that claim could only amount to USD$2,000

EQUITY – Contribution – Exclusion of right – Knowing assistants – Persons with liabilities not of same nature and extent not entitled to contribution – Persons without clean hands not entitled to contribution – Previous High Court proceedings identified two associates as knowing assistants in dishonest breach of trust, with liability of potentially differing nature and extent – Appellant as assignee not entitled to claim contribution, let alone indemnity

EQUITY – Contribution – Exclusion of right – Persons who have not paid just proportion of liability or not willing and able to do so not entitled to contribution – Two associates both bankrupt and one deceased – No prospect of payment – Appellant as assignee not entitled to claim contribution

PRIVATE INTERNATIONAL LAW – Jurisdiction – Personal jurisdiction – Service outside of the jurisdiction – Connecting factors – Whether partnership formed or carried on business in Australia – Whether partnership agreement governed by Australian law or enforceable or cognizable in an Australian court – Nothing to indicate satisfaction of such requirements – Leave to serve required

PRIVATE INTERNATIONAL LAW – Applicable law – Choice of law rules – Partnerships – Place where partnership formed or carries on business – Partnership formed and operated in Kazakhstan – Partnership not governed by Australian law

PRIVATE INTERNATIONAL LAW – Jurisdiction – Personal jurisdiction – Service outside of the jurisdiction – Leave to serve – Real and substantial connection – Previous proceedings in Australia resulting in partnership liability, bankruptcy events, unsigned consultancy agreements, citizenship, and litigation funding all insufficient – Existence of partnership assets in Australia – Partnerships can, and possibly only can, be wound up and accounts taken in Australia – Real and substantial connection established – Australia an appropriate forum – Leave to serve granted

PARTNERSHIPS AND JOINT VENTURES – Partnership property – Identification – Evidence that partnership has asset-owning and operating entities in Australia – Evidence in the form of engagement contracts, receipts, and Australian bank account

APPEALS – Point not taken below – Conduct of trial – Existence of partnership assets not referred to in submissions below nor primary judgment but was in evidence and articulated in affidavit of solicitor – Raised in submissions on appeal and not contested by respondent – Radical effect upon outcome – Permissible to consider on appeal

PRIVATE INTERNATIONAL LAW – Foreign judgments and orders – Effect of recognition and enforcement – Whether English courts mandated consideration of partnership claim by Australian courts – English courts merely ordered case management stay in context of lis pendens – Judgments say nothing about jurisdiction or appropriateness of Australian courts

PRIVATE INTERNATIONAL LAW – Non-exercise of jurisdiction – Inappropriate forum – Existence of real and substantial connection makes Australia an appropriate forum and negates inappropriate forum conclusion

APPEALS – Leave to appeal – Whether leave required – Interlocutory decisions – Appeal from permanent stay – No final determination of rights and obligations of parties – Distinction from final resolution by way of estoppel arising from earlier proceedings – Leave required – Decision nevertheless finally determined ability of appellant to litigate – Appeal heard concurrently and in full – Appeal meritorious – Leave to appeal granted   

CIVIL PROCEDURE – Time – Extension of time – Motion by appellant seeking extension of time to comply with orders for provision of transcripts, orders, and reasons of English courts – Material of relevance – Material said to already have been in possession of solicitor – Material not responsive and ought to have been obtained prior to hearing – Extension granted but appellant to pay costs of motion

APPEALS – Further evidence – Evidence not available at hearing – Evidence of transcripts, orders, and reasons of English courts – Motion not required for Court to have regard to such evidence – No reason to permit other further evidence identified in motion – Motion dismissed with costs

COSTS – Party/Party – Appeals – Equal measure of success and failure for each party on appeal – Appellant improved position but incurred and inflicted unnecessary costs – No order as to costs of appeal and primary proceedings

Legislation Cited:

Municipal Corporation Reform Act 1835 (UK)

Supreme Court Act 1970 (NSW), s 101(2)(e)

Uniform Civil Procedure Rules 2005 (NSW), rr 11.4, 11.5, 11.6, 13.4; Pt 11; Sch 6

Cases Cited:

AB v New South Wales [2014] NSWCA 243

Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41

Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342; [1969] HCA 55

Attorney-General v Wilson (1840) Cr & Ph 1; 41 ER 389

Bahin v Hughes (1886) 31 Ch D 390

Barnes v Addy (1874) LR 9 Ch App 244

Baynard v Woolley (1855) 20 Beav 583; 52 ER 729

Belan v Casey (2003) 57 NSWLR 670; [2003] NSWSC 159

Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538; [2009] FCA 868

Bialkower v Acohs Pty Ltd (1998) 83 FCR 1; [1998] FCA 446

Bond v Larobi Pty Ltd (1992) 6 WAR 489

Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193; [1987] FCA 64

Bracks v Smyth-Kirk (2009) 263 ALR 522; [2009] NSWCA 401
Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17

Caledonian Railway Co v Colt (1860) 3 Macq 833

Carron Iron Co v Maclaren (1855) 5 HL Cas 416; 10 ER 961

Chillingworth v Chambers [1896] 1 Ch 685

Cornfoot v Holdenson [1932] VLR 4; (1932) 37 ALR 376

Craythorne v Swinburne (1807) 14 Ves Jun 160; 33 ER 482

Davies v Humphreys (1840) 6 M & W 153; 151 ER 361

Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184

Drip World Pty Ltd v Dardy Touring Corp [2020] NSWSC 1772

Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1

Egglishaw v Australian Crime Commission (2007) 164 FCR 224; [2007] FCAFC 183

Ellesmere Brewery Co v Cooper [1896] 1 QB 75

Emmott v Michael Wilson & Partners Ltd [2017] 2 All ER (Comm) 569; [2016] EWHC 3010 (Comm)

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21

Frigger v Lean (No 2) [2016] WASCA 212

Glenmont Investments Pty Ltd v O’Loughlin (No 2) (2001) 79 SASR 288; [2001] SASC 88

Goodwin v Duggan (1996) 41 NSWLR 158

Hanave Pty Ltd v LFOT Pty Ltd (1999) 168 ALR 318; [1999] FCA 1568

Harpley Nominees Pty Ltd v Jeans [2006] NSWCA 176

Henry v Henry (1996) 185 CLR 571; [1996] HCA 51

Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346; [1978] FCA 105

Kent v Abrahams [1928] WN 266

Kermani v Westpac Banking Corporation (2012) 36 VR 130; [2012] VSCA 42

L Grollo Darwin Management Pty Ltd v Victor Plaster Products Pty Ltd (1978) 19 ALR 621; [1978] FCA 36

Lane v Bushby (2000) 50 NSWLR 404; [2000] NSWSC 1029

Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741; 13 ACLC 1244

Leybourne v Habkouk [2012] NSWCA 212

Lingard v Bromley (1812) 1 V & B 114; 35 ER 45

Little v Victoria [1998] 4 VR 596

Luck, Re (2003) 78 ALJR 177; [2003] HCA 70

Macatangay v New South Wales (No 2) [2009] NSWCA 272

Madden International Ltd v Lew Footwear Holdings Pty Ltd (2015) 50 VR 22; [2015] VSCA 90

Mahoney v McManus (1981) 180 CLR 370; [1981] HCA 54

Maunder v Lloyd (1862) 2 J & H 718; 70 ER 1248

McGinn v Cranbrook School [2016] NSWCA 226

McNally v Harris (2008) 1 ASTLR 549; [2008] NSWSC 659

Melhem v Katter [2021] NSWCA 273

Michael Wilson & Partners Ltd v Nicholls [2008] NSWSC 501

Michael Wilson & Partners Ltd v Nicholls [2009] NSWSC 1033

Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48

Michael Wilson & Partners Ltd and Emmott (Second Interim Award, International Dispute Resolution Centre, 19 February 2010)

Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51

Michael Wilson & Partners Ltd v Emmott [2019] 4 WLR 53; EWCA Civ 219

Michael Wilson & Partners Ltd v Emmott [2019] NSWSC 218

Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 139

Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 245

Muller v Fencott (1981) 37 ALR 310; [1981] FCA 147

Murakami v Wiryadi (2010) 268 ALR 377; [2010] NSWCA 7

National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) (2001) 183 ALR 700; [2001] FCA 237

News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553

Nicholls v Michael Wilson & Partners Ltd (2011) 243 FLR 177; [2011] NSWCA 222

Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383

Page v McKensey [2004] NSWCA 437

Patterson v Arcade Buildings Ltd (1930) 31 GLR 312

Pendlebury v Walker (1841) 4 Y & C Ex 424; 160 ER 1072

Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35; [1980] HCA 41

Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95

Richardson, Re; Ex parte The Governors of St Thomas’s Hospital [1911] 2 KB 705

Selkirk v McIntyre [2013] 3 NZLR 265; NZHC 575

Sky Channel Pty Ltd v Tszyu (No 2) [2000] NSWSC 1150

Smith v Cock [1911] AC 317

Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287; [1992] FCA 71

Tampion v Anderson (No 2) [1973] VR 829

Thomas v Atherton (1878) 10 Ch D 185

Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 30 ACSR 698; [1999] FCA 218

Wickstead v Browne (1992) 30 NSWLR 1; [1992] NSWCA 272

Wolmershausen v Gullick [1893] 2 Ch 514

Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242

Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5

Texts Cited:

EH Scamell and RC I’Anson Banks, Lindley on the Law of Partnership (15th ed, 1984, Sweet & Maxwell)

R Goff & G Jones, The Law of Restitution (3rd ed, 1986, Sweet and Maxwell)

G Spence, The Equitable Jurisdiction of the Court of Chancery (1846, V and R Stevens and GS Norton)

ICF Spry, Equitable Remedies (9th ed, 2013, Lawbook Co)

J Story, Commentaries on Equity Jurisprudence (3rd ed, 1920, A Maxwell & Son)

JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths)

JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

P Birks and G McLeod (trs), with P Krueger (contrib), Justinian’s Institutes (1987, Cornell University Press)

RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (4th ed, 2002, LexisNexis Butterworths)

Category:Principal judgment
Parties: Michael Wilson & Partners Ltd (Appellant)
John Forster Emmott (Respondent)
Representation:

Counsel:

DMJ Bennett QC, RG Thomas (Appellant)
CRC Newlinds SC, J Baird (Respondent)

Solicitors:

Duggan Legal (Respondent)
File Number(s): 2019/103863; 2019/170998
Publication restriction: N/A
 Decision under appeal 
Court or tribunal:
Supreme Court
Jurisdiction:
Equity Division, Commercial List
Citation:

[2019] NSWSC 218

Date of Decision:
08 March 2019
Before:
Ball J
File Number(s):
2016/034380

HEADNOTE

[This headnote is not to be read as part of the judgment]

By contract dated 7 December 2001, the respondent, Mr John Emmott, became a director of and one-third shareholder in the appellant, Michael Wilson & Partners Ltd, a company incorporated in the British Virgin Islands and operating in Kazakhstan and its surrounds. That contract provided for the respondent to resign as a director and sell his shares to the appellant or its nominee upon termination, that it was to be governed by the laws of England and Wales, and for all disputes to be submitted to arbitration in London.

Subsequently, between 2004 and 2005, the appellant engaged two further associates, Mr Robert Nicholls and Mr David Slater, under contracts expressed to be governed by the laws of NSW. By June 2005, the respondent, Mr Nicholls, and Mr Slater had departed the appellant and together established in Kazakhstan the competing ‘Temujin’ group. The appellant commenced arbitration proceedings in London against the respondent and court proceedings in NSW against Mr Nicholls and Mr Slater.

In 2010, the London arbitration resulted in a substantial award in favour of the respondent, as although he was found to be liable to the appellant in various respects, this was set-off by his entitlement to undrawn accumulated profits and the price of his shares. Meanwhile, after appeals to this Court and the High Court, and then remitter to this Court, in 2012 the appellant obtained judgment against Mr Nicholls and Mr Slater for substantial sums (“NSW-1”). Mr Nicholls and Mr Slater were made bankrupt, and two of the Temujin group entities were wound up.

In 2016, the appellant took an assignment of the rights of the trustees in bankruptcy of Mr Nicholls and Mr Slater and of the liquidators of the two entities. In its capacity as assignee, the appellant then commenced the present proceedings on 2 February 2016 by way of Summons and Commercial List Statement, with an Amended Summons filed the following day; the respondent was served ex juris in England without leave. The two claims initially pleaded (which, as it transpired, remained the only two pursued in the present appeal) sought contribution from the respondent in respect of the NSW-1 judgment, and an account of all benefits received by the respondent as an alleged partner with Mr Nicholls and Mr Slater in the Temujin group. In 2018, the respondent sought an anti-suit injunction in England, but was ultimately successful only in restraining the appellant from prosecuting claims already determined by the London arbitration, and any fraud or conspiracy claims, but specifically not the partnership claim noted above.

On 1 November 2018, the respondent filed a motion seeking to set aside service of the Amended Summons and Commercial List Statement, on the basis that they were served outside Australia without leave and in circumstances not permitted by Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), rr 11.4-11.5. Alternatively, a permanent stay was sought pursuant to r 11.6, in exercise of the general discretion to decline jurisdiction. In respect of the contribution claim, the primary judge held that service ex juris without leave was authorised by UCPR, Sch 6(h)(ii), but that the amount capable of being in issue was, as a result of the anti-suit injunction, only in the order of USD$2,000, and thus had insufficient prospects of success. In respect of the partnership claim, the primary judge held that no paragraphs within Sch 6 enabled service without leave, and that there was no real and substantial connection with Australia such as to warrant leave under r 11.5. The proceedings were therefore permanently stayed pursuant to r 11.6(2)(c). The appellant now appeals to this Court.

Prior to the hearing of the appeal, the appellant filed several motions, some of which were disposed of by the Court while others were ultimately not pressed. Additionally, however, at the conclusion of the hearing, upon request by the appellant, the Court made orders granting leave to supply copies of the transcripts, orders, and reasons of two English court decisions involving the parties. The appellant subsequently filed a motion for an extension of time on 19 August 2021, which was granted with reasons reserved, and a further motion seeking to rely on further evidence was filed on 14 September 2021. Both motions are dealt with in the present judgment, together with the appeal in respect of the contribution and partnership claims and the question of whether leave to appeal is required.

Held (per Brereton JA; Leeming JA and Emmett AJA agreeing), dismissing the 14 September 2021 motion, granting leave to appeal, allowing the appeal, setting aside the orders of the primary judge, and in lieu thereof ordering that leave be granted to the appellant to serve the proceedings on the respondent ex juris insofar as it relates to the partnership claim, but otherwise permanently staying the proceedings: [1] (Leeming JA), [126] (Brereton JA), [141] (Emmett AJA).

As to the motions:

1. The Court extended time for the appellant to provide the transcripts, orders, and reasons in question as they were relevant to the contention that the English courts have “deferred” the partnership claim to NSW. However, this extension was an indulgence. Moreover, the documents ought to have been obtained prior to the hearing. Further, according to an affidavit of Mr Michael Wilson, most of the documents were in his possession when the motion was filed. The Court ordered the appellant to pay the costs of the motion: [1] (Leeming JA), [32]-[36] (Brereton JA), [141] (Emmett AJA).

2. There is no reason to permit the appellant to adduce further evidence pursuant to its second motion. Insofar as that motion seeks to adduce evidence of “judicial acts” (judgments, orders, etc), the Court may have regard to such material without their being tendered in evidence. The motion should be dismissed with costs: [1] (Leeming JA), [37]-[39] (Brereton JA), [141] (Emmett AJA).

As to the contribution claim:

3. The London arbitration did resolve, and the English anti-suit injunction ergo does extend to, the majority of the aspects of the contribution claim, including those brought “qua Mr Nicholls and Mr Slater”. There was hence no error in the primary judge’s conclusion that the claim only amounts to USD$2,000 and thus has insufficient prospects of success: [1] (Leeming JA), [40]-[53] (Brereton JA), [137] (Emmett AJA).

Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51, followed.

4. Per Leeming JA and Emmett AJA: That the claim only amounts to USD$2,000 is a sufficient reason for this aspect of the appeal to fail: [1] (Leeming JA), [137] (Emmett AJA).

5. Per Leeming JA: If contribution is available, it is only to achieve an equal bearing of the burden of coordinate liabilities, and not indemnification: [4]

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17, applied.

6. Per Brereton JA: For there to be contribution between co-trustees, there must be a co-ordinate obligation of the same nature and extent. Further, while a trustee who has caused loss by personal fraud may be liable to indemnify his or her co-trustees, co-trustees who are knowing assistants under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 are not entitled to contribution. This reflects the general rule that a person guilty of fraud, illegality, wilful misconduct, or gross negligence does not have ‘clean hands’ and is not entitled to contribution. In the NSW-1 proceedings, the High Court foreshadowed both that the liabilities of Mr Nicholls and Mr Slater do not necessarily coincide in either nature or quantum with that of the respondent, and that Mr Nicholls and Mr Slater are liable as knowing assistants in a dishonest breach of trust. Consequently, the appellant, as assignee, is not entitled to claim contribution, let alone indemnity: [55]-[63], [121].

McNally v Harris (2008) 1 ASTLR 549; [2008] NSWSC 659; Belan v Casey (2003) 57 NSWLR 670; [2003] NSWSC 159; Attorney-General v Wilson (1840) Cr & Ph 1; 41 ER 389; Lingard v Bromley (1812) 1 V & B 114; 35 ER 45, applied; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17; Bahin v Hughes (1886) 31 Ch D 390, considered.

7. Per Emmett AJA: A person knowingly concerned in a breach of fiduciary duty is not entitled to indemnification by the main perpetrator, and would only need to be pursued if the main perpetrator is impecunious. Roman law may provide some guidance in this area: [135]-[136], [138].

8. Per Leeming JA: Contribution will not be ordered unless the claimant has or is ready, willing, and able to pay more than its proportionate share. Presently, there is no basis for such a suggestion, and this is a further sufficient reason for this aspect of the appeal to fail: [5]-[7].

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21, applied.

9. Per Brereton JA: Even if contribution is available in this case, and although it appears that the right to contribution accrues as soon as there is judgment against the claimant for contribution, unless the claimant has paid more than its just proportion of the debt he or she is generally only entitled to a declaration of his or her right to contribution, conditional upon making the further payment. Importantly, where there is no prospect of the claimant paying more than his or her just proportion, there is no utility in making such a declaration, and the proceedings may be stayed. Presently, Mr Nicholls and Mr Slater have not paid their proportions, and there is no prospect of them ever doing so; this, together with the other reasons above, provides a clear basis for concluding that the contribution claim has insufficient prospects of success and was rightly stayed pursuant to UCPR, r 11.6(2)(c): [64]-[79], [121].

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21; Harpley Nominees Pty Ltd v Jeans [2006] NSWCA 176; Bond v Larobi Pty Ltd (1992) 6 WAR 489; Mahoney v McManus (1981) 180 CLR 370; [1980] HCA 54; Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5; Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95; Re Richardson; Ex parte The Governors of St Thomas’s Hospital [1911] 2 KB 705, considered.

As to the partnership claim:

10. The partnership was neither formed nor carried on business in Australia, this being the choice of law rule that governs partnerships, and nothing else indicates that the alleged partners intended their agreement to be governed by Australian law or enforceable or cognizable in an Australian court. The primary judge therefore correctly held UCPR, Sch 6(b)(iv), to be inapplicable: [2] (Leeming JA), [88]-[89], [122] (Brereton JA), [140] (Emmett AJA).

11. None of the links to Australia relied upon before the primary judge – past proceedings (including NSW-1, a judgment of an Australian court which resulted in a partnership liability), bankruptcy events, unsigned consultancy agreements, citizenship, and litigation funding – suffice to establish a ‘real and substantial connection’ for the purposes of leave under UCPR, r 11.5: [2] (Leeming JA), [90]-[93], [122] (Brereton JA), [140] (Emmett AJA).

12. However, there is evidence of partnership assets in Australia, and if so, as appears sufficiently arguable, then the partnership can (and possibly can only) be wound up and accounts taken in Australia. Although this was understandably not considered by the primary judge, as no relevant submissions were made, the relevant evidence was adduced and not contradicted. This provides a ‘real and substantial connection’ for the purposes of UCPR, r 11.5(5)(a): [2] (Leeming JA), [94]-[98], [122] (Brereton JA), [140] (Emmett AJA).

Murakami v Wiryadi (2010) 268 ALR 377; [2010] NSWCA 7; Maunder v Lloyd (1862) 2 J & H 718; 70 ER 1248, considered.

13. The appellant’s contention that the English courts have mandated that the partnership claim be dealt with in Australia is misconceived. There has been merely a case-management stay, which says nothing as to jurisdiction or appropriate forum. Nevertheless, the presence of partnership assets in Australia dictates that Australia is an appropriate forum and that, in all the circumstances, the Court should assume jurisdiction. UCPR, rr 11.5(5)(b)-(c), are thus satisfied, and Australia is not an inappropriate forum for the purposes of r 11.6(2)(b). Leave to serve the proceedings ex juris should be granted, and this conclusion renders consideration of UCPR, Sch 6(o), unnecessary: [2] (Leeming JA), [99]-[112], [122]-[123] (Brereton JA), [140] (Emmett AJA).

Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51; Henry v Henry (1996) 185 CLR 571; [1996] HCA 51; Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287; [1992] FCA 71, considered.

As to leave to appeal:

14. The cases where a permanent stay has been characterised as a final order are confined to those where there has been a final resolution of the issues by way of estoppel arising from earlier proceedings. In other cases, such as the present, where there has been no final determination of the rights and obligations of the parties, and where the decision appealed from is analogous to summary dismissal, a permanent stay is interlocutory and leave is required. However, the permanent stay in this case finally determined the appellant’s ability to litigate the issues in this forum, and the appeal was heard in full and has merit. Leave to appeal should be granted: [1] (Leeming JA), [113]-[119], [124] (Brereton JA), [141] (Emmett AJA).

Leybourne v Habkouk [2012] NSWCA 212; Bracks v Smyth-Kirk (2009) 263 ALR 522; [2009] NSWCA 401; Egglishaw v Australian Crime Commission (2007) 164 FCR 224; [2007] FCAFC 183; Re Luck (2003) 78 ALJR 177; [2003] HCA 70, applied; Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35; [1980] HCA 41, distinguished.

As to costs:

15. There has been an equal measure of success and failure for each party, and although the appellant has improved its position as a result of the appeal, it has incurred and inflicted unnecessary costs in doing so. There should be no order as to costs for both the proceedings below and the appeal: [1] (Leeming JA), [125] (Brereton JA), [141] (Emmett AJA).

Judgment

  1. LEEMING JA: I have had the very considerable advantage of reading the reasons for judgment of Brereton JA in draft. What follows uses the same abbreviations and presupposes familiarity with his judgment. I agree with the orders his Honour proposes. I agree with his Honour’s reasons dealing with the fraught interlocutory history of these proceedings and with the conclusion that an appeal lies only with a grant of leave. I agree with his Honour’s reasons concerning the conclusion by the primary judge that the contribution claim amounted to no more than about USD$2,000, and would go further and conclude that that was sufficient to warrant refusing leave in relation to the stay applicable to this aspect of the claim.

  2. I also agree with Brereton JA’s reasons that, on a point seemingly not argued before the primary judge, concerning the Australian assets of the partnership, the appeal should be allowed in part. I am conscious that that involves the grant of leave on a point not argued before the primary judge, and that it may be said that leave should not be granted to advance a point for the first time on appeal. But as Brereton JA points out, the claim that there were substantial assets was advanced without opposition in the written submissions supplied well in advance of the hearing in this Court, and the stay for practical purposes finally determines MWP’s ability to litigate these issues in this Court.

  3. I also agree with Brereton JA that there are additional reasons to refuse leave to appeal in relation to the availability of equitable contribution, although I would frame the position more narrowly than does his Honour. What follows is based on the rights said to have been acquired from the trustees in bankruptcy of Messrs Nicholls and Slater and the liquidators of TIL and TSL. I proceed on the basis, favourably to MWP, that the assignments (which were not in evidence) vested the entirety of those rights in it.

  4. First, it was contended, seemingly for the first time in this Court, that the “contribution” sought in the Commercial List Summons should be regarded as an indemnity, on the basis that a person found to have been knowingly involved in a dishonest and fraudulent breach of fiduciary duty was entitled to shift the entirety of that person’s liability to the fiduciary. No authority was advanced in support of that proposition. To the contrary, it is settled law that contribution is available to achieve an equal bearing of the burden of coordinate liabilities: see, for example, Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [14] and [38]; cf the dissenting view of Kirby J at [119]-[123]. MWP’s submission is inconsistent with the principles underpinning the doctrine as explained by French CJ, Gummow, Hayne and Bell JJ in Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [38]-[40].

  5. Secondly, such rights as vested by reason of the assignments were the rights of contribution enjoyed by the trustees in bankruptcy and the liquidators. The evidence of the facts underlying the claimed entitlement to contribution was scant. Mr Bennett QC, who had not appeared at first instance, addressed the difficulties thus:

“As I understand it, some parts of the judgment were paid by the sale of a Mosman house belonging to Nicholls, but there’s no evidence of that and there doesn’t need to be. That's all matters as to which evidence would be brought at the hearing.”

  1. I do not accept the submission. The claim was for equitable relief. Contribution would not be ordered unless either there had been payment of more than a proportionate share of the liabilities, or else it were established that the trustees or liquidators were ready, willing and able to do so. This was the obstacle identified by the joint judgment in Friend v Brooker at [60]:

“[F]or [Mr Brooker] to seek equity it would be necessary for him to do equity. This, consistently with the reasoning of Needham J in Woolmington v Bronze Lamp Restaurant Pty Ltd, would require him, in seeking contribution, to have satisfied the trial judge that he was ready, willing and able to pay at least one half of the indebtedness to SMK. Given what the trial judge identified as Mr Brooker's financial straits, this probably could not be realistically attempted.” (footnotes omitted).

  1. This gap in the case sought to be advanced by MWP is not merely evidentiary. That is because the evidence was that “MWP has successfully pursued bankruptcy proceedings against Messrs Slater and Nicholls ... and liquidation proceedings against TIL and TSL”. That is to say the plaintiff which as assignee sought to assert rights of contribution against Mr Emmott was the same petitioning creditor who had sought and obtained sequestration and winding up orders against Mr Emmott’s co-obligees. In those circumstances, there is no basis for suggesting that the trustees or the liquidators had any entitlement to contribution on the basis that they had paid more than their proportionate share of a coordinate liability (and to be fair, I did not understand any such submission to have been made). That is sufficient to affirm by a separate route the conclusion of the primary judge that the claim for contribution had insufficient prospects of success.

  2. BRERETON JA:

Preliminary

The appellant Michael Wilson & Partners Ltd (“MWP”) is a company incorporated in the British Virgin Islands and controlled by a solicitor Mr Michael Wilson. At all material times, it has operated a law and consultancy practice in Kazakhstan and surrounding regions, including Azerbaijan. On 7 December 2001, MWP and the respondent Mr John Forster Emmott, a solicitor, entered into a contract in the nature of a quasi-partnership under which, in consideration for his services and for relinquishing rights to share in MWP’s net profits up to £225,000, Mr Emmott would become a director of MWP and acquire one third of the shares in it. The agreement also provided that upon termination, Mr Emmott must resign as a director and sell his shares to MWP or its nominee. It was expressed to be governed by the law of England and Wales, with all disputes to be referred to arbitration in London.

  1. In 2004 and 2005, MWP engaged two additional lawyers, Mr Robert Colin Nicholls and Mr David Ross Slater, as associates, under contracts which were expressed to be governed by the law of New South Wales. However, by June 2005, Messrs Emmott, Nicholls, and Slater had left MWP and set up in competition with it in Kazakhstan, through a number of vehicles styled ‘Temujin’. MWP commenced proceedings, against Mr Emmott before an arbitral tribunal in London (“the London Arbitration”), and against Mr Nicholls, Mr Slater, and various Temujin entities in New South Wales (“the NSW-1 proceedings”), for breach of contract, breach of fiduciary duty, and conspiracy.

  2. In 2010, in the London Arbitration, Mr Emmott was held liable for breach of contract and fiduciary duty and to account for the value of work taken by him upon leaving MWP, but it was also held that he was entitled to be paid for his one-third shareholding and his undrawn accumulated profits. After setting off the respective liabilities and entitlements, there was a net award in favour of Mr Emmott for USD$667,859 and £3,209,613 (“the London Award”). Mr Emmott consequently obtained worldwide freezing orders against MWP in the Commercial Court of the High Court of England and Wales

  3. Meanwhile, the NSW-1 proceedings against Mr Nicholls and Mr Slater ultimately resulted, after appeals to this Court [1] and then to the High Court of Australia [2] and ultimately remitter to this Court, in judgments in favour of MWP in the principal sums of USD$666,335 and €378,160 which, together with pre-judgment interest, amounted to USD$1,106,090 and €618,449 (“the NSW-1 judgment”). [3] Consequently, Mr Nicholls (who is since deceased) and Mr Slater were made bankrupt, and two of the Temujin entities, Temujin Ltd (“TIL”) and Temujin Services Ltd (“TSL”), were wound up.

    1. See Nicholls v Michael Wilson & Partners Ltd (2011) 243 FLR 177; [2011] NSWCA 222.

    2. See Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 (“HCA Appeal”).

    3. See Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 (“2012 CA Judgment”).

  4. In 2016, MWP took an assignment of the rights of the trustees in bankruptcy of Mr Nicholls and Mr Slater and the liquidators of TIL and TSL against Mr Emmott, and in February 2016, in its capacity as assignees (“qua Mr Nicholls and Mr Slater”) commenced the present proceedings (“the NSW-2 proceedings”), by Summons and Commercial List Statement, in which they initially sought (1) contribution from Mr Emmott in respect of the liability of Mr Nicholls, Mr Slater, TIL, and TSL under the NSW-1 judgment (“the contribution claim”); and (2) declarations to the effect that Messrs Emmott, Nicholls, and Slater had established a partnership (“the Temujin Partnership”), and an account of all benefits received by Mr Emmott (and related entities) as a partner (“the partnership claims”). The Summons and Commercial List Statement was amended, in a manner not presently material, on the day after it was filed, and the Amended Summons was served ex juris on Mr Emmott in England, without leave. Mr Emmott sought an anti-suit injunction in England to restrain MWP from pursuing the NSW-2 proceedings, and at first instance succeeded, [4] but on MWP’s appeal the injunction was, on 31 January 2018, modified by the Court of Appeal of England and Wales, which concluded that the injunction should not extend to the partnership claims, and should restrain MWP only from prosecuting claims concluded by the London Arbitration and claims for fraud or conspiracy. [5] It was relevantly ordered that (“the EWCA injunction”) (emphasis added): [6]

“[MWP, by its directors, servants, agents or otherwise, is injuncted against] advancing in NSW2 [these proceedings]: (1) claims which it lost in the arbitration; (2) matters contrary to findings in the arbitration which were adverse to MWP; and (3) claims for fraud or conspiracy. The injunction would not extend to the Temujin partnership claims [defined to be the claims advanced in paras 3 to 9 of the Amended Summons].”

4. See Emmott v Michael Wilson & Partners Ltd [2017] 2 All ER 569 (Comm); [2016] EWHC 3010 (Comm).

5. See Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51 (“2018 EWCA”).

6. 2018 EWCA at 749-750 [70] (Etherton MR; Jackson LJ and Underhill LJ agreeing).

  1. An application by Mr Emmott for permission to appeal to the Supreme Court of the United Kingdom was refused on 31 July 2018.

  2. By a Further Amended Summons and Commercial List Statement filed in October 2018, MWP amended its claim in these proceedings, so as to (1) exclude those claims which were caught by the EWCA injunction (“the excluded claims”), and (2) add claims by TIL, TSL, and a related trust (“the Temujin entities”) against Mr Emmott for alleged breach of his duties said to be owed to them as a shadow director, officer, and controller (“the director duties claims”).

  3. By Notice of Motion filed on 1 November 2018, Mr Emmott sought an order setting aside the service of the Amended Summons and Commercial List Statement, on the basis that they were served outside Australia without leave and in circumstances not permitted by the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”); and alternatively, a permanent stay, on the basis that NSW is an inappropriate forum. The primary judge determined the issues by reference to the Further Amended Summons, as distinct from the Amended Summons referred to in the motion, on the basis that it was the Further Amended Summons that would be the foundation of the proceedings going forward, if they did. This also meant that the applicable rules were the current, amended UCPR, Pt 11, and not the earlier version which had been in effect when Mr Emmott was initially served in 2016. No complaint was made about this approach.

  4. On 8 March 2019, Ball J permanently stayed the proceedings. [7] MWP appeals to this Court.

    7. Michael Wilson & Partners Ltd v Emmott [2019] NSWSC 218 (“Primary Judgment”).

The relevant rules

  1. Provision for service ex juris without leave is made by UCPR, r 11.4(1), which (in its current form, as applied by the primary judge) is as follows:

Originating process may be served outside of Australia without leave in the circumstances referred to in Schedule 6.

  1. The following provisions of Schedule 6 are potentially relevant:

An originating process may be served outside of Australia without leave in the following cases–

….

(b)   when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which–

…

(iv)   was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court,

…

(h)   when any person outside of Australia is–

…

(ii)   a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court,

…

(o)   when the claim affects the person to be served in respect of his or her membership of a corporation incorporated in Australia, or of a partnership or an association formed or carrying on any part of its affairs in Australia,

  1. If a matter cannot be brought within UCPR, r 11.4, via one of the provisions of Sch 6, leave under r 11.5 – which may be granted prospectively or retrospectively – is required for service of an originating process outside Australia. UCPR r 11.5(5) provides:

The court may grant an application for leave if satisfied that–

(a)   the claim has a real and substantial connection with Australia, and

(b)   Australia is an appropriate forum for the trial, and

(c)   in all the circumstances the court should assume jurisdiction.

  1. Rule 11.6,empowers the Court to stay proceedings if service ex juris is not authorised, or if the Court is an inappropriate forum, or if the claim has insufficient prospects of success:

Court's discretion whether to assume jurisdiction

(1)   On application by a person on whom an originating process has been served outside of Australia, the court may dismiss or stay the proceeding or set aside service of the originating process.

(2)   Without limiting subrule (1), the court may make an order under this rule if satisfied–

(a)   that service of the originating process is not authorised by these rules, or

(b)   that the court is an inappropriate forum for the trial of the proceeding, or

(c)   that the claim has insufficient prospects of success to warrant putting the person served outside Australia to the time, expense and trouble of defending the claim.

The primary judgment

  1. The primary judge dealt discretely with the contribution claim, the director duties claims, and the partnership claims. As to the contribution claim, his Honour found that service ex juris was authorised by UCPR, Sch 6 para (h)(ii), Mr Emmott being a defendant to a claim for contribution or indemnity in respect of a liability enforceable by the NSW-1 proceedings, which is a proceeding in the Court. However, his Honour found that nine of the ten heads of claim were “excluded claims” covered by the London Award, leaving only a claim which, after allowing credit for payments made by Mr Emmott, appeared likely to be for about USD$2,000 net. Construing the reference in UCPR, r 11.6(2)(c), to “insufficient prospects of success” as including a reference to the quantum of a claim within the concept of “sufficient prospects of success”, his Honour concluded that the contribution claim was insufficient, for the purposes of r 11.6(2)(c), to warrant putting Mr Emmott to the time, expense, and trouble of defending it from overseas, and in any event, having regard to its quantum, ought to be dismissed or stayed in exercise of the general power conferred by r 11.6(1).

  2. As to the director duties claims, it was not suggested that there was any authority for service ex juris under UCPR, Sch 6, thus leave under r 11.5 was required. His Honour found no basis for granting leave, having regard to the requirements in r 11.5(5), as:

  1. there was no real and substantial connection to Australia, as the alleged breaches of duty did not occur in Australia, no Australian residents were involved, Australian law was not applicable, and there was no other relevant factual connection to Australia. The fact of the earlier NSW-1 proceedings, and Mr Emmott’s Australian citizenship, did not constitute a “real and substantial” connection;

  2. for the same reasons, and the further fact that there were no witnesses or original documents in Australia, Australia was not an appropriate forum; and

  3. in those circumstances, it could not be appropriate that the Court assume jurisdiction.

  1. As to the partnership claims, MWP invoked Sch 6, para (b)(iv), on the basis that they were claims “for the … dissolution … of, or for damages or other relief in respect of a breach of, a contract which … was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court”. [8] His Honour rejected this, on the grounds that, there being no written partnership agreement, it was not suggested that any partnership was formed in Australia or performed activities in Australia; and while there was a “Cooperation Agreement” relating to a consultancy business to be owned by TIL, it was expressed to be governed by the law of England and Wales, and contained an agreement to refer all disputes to arbitration in London. Thus service ex juris depended on leave under r 11.5. In that respect, relevant connecting factors were said to be that:

    8. Before the primary judge, MWP did not rely on para (o).

  1. Mr Slater and Mr Nicholls had been defendants in the NSW-1 proceedings and were the subject of orders in them;

  2. this Court had exercised jurisdiction over and applied Australian law to that dispute;

  3. Mr Nicholls was bankrupted in Australia, and Mr Slater’s bankruptcy (in the United Kingdom) was recognised in Australia;

  4. there were unsigned consultancy agreements between Mr Emmott and TIL which contained Australian choice of law clauses;

  5. Mr Slater and Mr Emmott were, and Mr Nicholls before his death had been, Australian citizens;

  6. Mr Emmott, Mr Slater, and the Temujin entities were being funded by an Australian corporation; and

  7. Mr Emmott has previously given evidence in Australia.

  1. The primary judge observed that while citizenship was not irrelevant, it is not usually a significant connecting factor; that unsigned agreements, not shown ever to have come into effect, were irrelevant; that there was no evidence that the defence of the current proceedings was being funded by an Australian corporation, and that even if there was it was not apparent why it was relevant; and that the fact that Mr Emmott had previously given evidence in Australia did not create a connecting factor between the current (partnership) claims and Australia. That left what his Honour regarded as MWP’s principal point, namely that the current claim arises from an underlying dispute which has already been dealt with by Australian courts applying Australian law, and involves working out between Messrs Nicholls, Slater, and Emmott their respective responsibilities for those claims and associated costs. However, his Honour was of the view that the connection with Australia ceased upon the Court of Appeal giving final judgment in the NSW-1 proceedings, and was in any event insufficient when compared to the core substance of the partnership in question, which was all situated outside of Australia. As to this, his Honour said (emphasis added): [9]

“[65] However, in my opinion, the connection with Australia largely ceased once final judgment was given by the Court of Appeal. The fact that judgment was obtained against two alleged partners in an Australian court in respect of what is said to be a partnership debt or liability is not itself sufficient to mean that there is a real and substantial connection between Australia and a claim brought to recover contribution in respect of that judgment and related costs orders from someone said to be liable to contribute to that debt or liability as a partner. It is true that the debt arises as a consequence of the judgment of an Australian court. But the relevant claim is a claim for contribution arising from a partnership, and that claim depends on the existence and terms of the partnership and whether the judgment can properly be characterised as a liability of the partnership. In the present case, it is difficult to see how the resolution of any of those issues has a connection with Australia. As I have said, all the conduct said to give rise to the partnership and to the liability to contribute to the judgment debt occurred outside of Australia between persons who were not residents of Australia.

[66] For similar reasons, I do not accept that Australia is an appropriate forum to hear the dispute. Apart from the judgment and costs orders themselves, all the events occurred, and all the persons concerned in those events reside, outside of Australia.”

9. Primary Judgment at [65]-[66].

  1. As to what became a major plank of MWP’s argument in this Court, namely that the London Award, and the England and Wales Court of Appeal, had contemplated that the partnership claims might be determined in the NSW-2 proceedings, the primary judge held that such comments were not binding on him, and in any event were not to be understood as expressing a view as to whether the NSW courts have jurisdiction or are an appropriate forum, as the Master of the Rolls had explicitly acknowledged. [10]

    10. 2018 EWCA at 748 [62] (Etherton MR; Jackson LJ and Underhill LJ agreeing).

  2. His Honour therefore permanently stayed the proceedings.

The course of the appeal

  1. The proceedings in this Court have an unhappy procedural history. The appeal was initially listed for hearing on 25 November 2019, but was that day vacated on the application of MWP, when orders as to costs, and for additional security for costs of the appeal, were also made. MWP did not pay those costs nor provide the additional security in compliance with those orders, with the result that the appeal was stayed pending compliance. MWP filed two Notices of Motion, seeking to set aside or vary, extend time for compliance with, or stay those orders; and Mr Emmott filed a motion for dismissal of the appeal. MWP also served a Notice to Produce, dated 12 April 2020; and Mr Emmott then filed a Notice of Motion on 30 April 2020, seeking to set aside that Notice to Produce.

  2. In a judgment given on 10 July 2020, McCallum JA dismissed the application for a stay, holding that neither an application on foot in the United Kingdom to vary the freezing orders made against MWP, nor the COVID-19 pandemic, provided a sufficient reason. Her Honour further ordered that until further order, Mr Emmott was not obliged to comply with MWP’s Notice to Produce. [11] On 2 October 2020, the Full Court (Emmett AJA; Meagher JA and White JA agreeing) dismissed the balance of MWP’s motion, and also dismissed MWP’s motion for review of the orders of McCallum JA; extended time for MWP to comply with the 25 November 2019 orders for costs and security for costs until 16 October 2020; and made an order that the appeal be dismissed if that order were not complied with, but otherwise dismissed Mr Emmott’s motion for dismissal of the appeal. [12]

    11. See Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 139.

    12. See Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 245.

  3. The appellant filed two further Notices of Motion, one dated 7 December 2020 (filed 10 December 2020) and one dated 11 April 2021. The first sought leave to file an elaborate Amended Notice of Appeal. Ultimately, however, the grounds of appeal were much narrowed, and this application was not pressed. The second sought leave ‘in so far as is necessary’ to argue that the claims were within UCPR, Sch 6 para (g) (person to be served outside Australia is domiciled or habitually resident in Australia) – a basis for extraterritorial jurisdiction which had not been relied on at first instance. This application too was not pressed at the hearing.

The grounds are confined at the hearing

  1. The appeal was heard on 20 July 2021. Although many pages of elaborate, extensive, and discursive written submissions had been lodged at earlier stages, addressing other issues, ultimately Mr DMJ Bennett QC, who appeared for MWP, presented the appeal in a focussed and relatively narrow scope. In the course of the hearing, the director duties claims were expressly abandoned. [13] It was clarified that the application to rely on domicile was not pressed; [14] nor was the application to adduce fresh evidence [15] – though subsequently it was sought to rely on evidence of events in proceedings in the United Kingdom since the primary judgment, which is further addressed below. Essentially, it was submitted that:

  1. as to the contribution claim, in respect of which the primary judge had found the requisite basis for jurisdiction in UCPR, Sch 6 para (h)(ii), his Honour erred in finding that it was only in the order of USD$2,000, and that it should be dismissed or stayed for that reason;

  2. as to the partnership claims, that the primary judge erred in finding that they did not have a real and substantial connection to Australia, and in finding that Australia was not an appropriate forum for determining them, in particular having regard to the attitude expressed by the London Tribunal, the England and Wales Court of Appeal, and in subsequent decisions of HHJ Pelling in the Commercial Court, which were said to have mandated that the partnership claims be determined in the NSW-2 proceedings; and

  3. if leave to appeal were required, it should be granted as the permanent stay effectively finally determined MWP’s ability to litigate the claims in this forum.

    13. Tcpt, 20 July 2021, pp 3(39)-4(3).

    14. Tcpt, 20 July 2021, p 3(7)-(12).

    15. Tcpt, 20 July 2021, p 2(11)-(15).

  1. At the conclusion of the hearing, after Mr Bennett had addressed in reply, Mr Wilson was granted leave to address the Court, purportedly as to the quantum of the contribution claim, but in fact his address roamed much further. An issue arose as to whether, as Mr Wilson claimed, the Commercial Court had “deferred” the partnership claims to the courts of this State. Some of the orders relied on for that submission were not included in the appeal papers, or were incomplete. At the conclusion of the hearing on 20 July 2021, in response to a request on behalf of MWP, the Court made orders granting leave to both parties to supply:

  1. within 28 days, copies of the transcript of the proceedings resulting in the orders of 7 October 2020 and 27 May 2021, if that transcript is available; a full copy of the orders made on 27 May 2021; and if there are reasons for the orders of 7 October 2020 or 27 May 2021, a copy of those reasons; and 

  2. within seven days, a note not exceeding 1,000 words on the case Re Richardson; Ex parte The Governors of St Thomas’s Hospital,[16] the potential relevance of which had been raised by a member of the Bench in the course of the hearing.

    16. [1911] 2 KB 705 (“St Thomas’s Hospital”).

Motion for extension of time

  1. Although when those orders were made Mr Wilson informed the Court that MWP had already ordered transcripts of the 7 October 2020 and 27 May 2021 hearings, and that the ex tempore judgment of the 7 October 2020 hearing had been prepared and was with the judge for approval, on 19 August 2021, MWP Wilson filed a motion seeking an extension of time to exercise the leave referred to in order 1 of 20 July 2021. Initially, the motion was not accompanied by any supporting affidavit, but when this omission was drawn to MWP’s attention, an affidavit of Mr Wilson of 30 August 2021, comprising 87 paragraphs and 51 pages of annexures, much of which was entirely superfluous repetition and reproduction, was filed. In accordance with directions made by the Court, MWP lodged submissions on 1 September 2021, and Mr Emmott on 3 September 2021. On 6 September 2021, the Court made the following orders:

“1.   Extend to 14 September 2021 time for the applicant to exercise the leave granted in order 1 made on 20 July 2021.

2.    Order that the applicant (Michael Wilson & Partners Ltd) pay the respondent's (Mr Emmott's) costs of the motion dated 18 August 2021.

3.    Reserve the Court's reasons for those orders, which will be included in its judgment on the application for leave to appeal.”

  1. These are the reasons so reserved. The first section of Mr Wilson's affidavit of 30 August 2021 (paras [5]-[12]) was addressed to a new basis for claiming standing and substantive relief, namely an assignment of rights from another person in addition to Mr Slater, Mr Nicholls, TIL, and TSL – one Mr Sinclair. This has nothing to do with the motion for an extension of time, and is entirely outside the scope of the leave granted. No further regard was had to it by the Court.

  2. The leave granted related to transcripts of proceedings resulting in the orders of 7 October 2020 and 27 May 2021, the orders of 27 May 2021, and any reasons of 7 October 2020 and 27 May 2021. Contrary to the supposition in [16] of Mr Wilson’s affidavit, time ran from when the order was made in the (virtual) presence of the parties on 20 July 2021 – not when it was subsequently confirmed in writing on 23 July 2021.

  3. All of these transcripts, orders, and reasons represent material on which Mr Wilson wishes to rely in his case in chief, to support the contention that the English courts have “deferred” the partnership claims to New South Wales; it is not responsive, and if relevant and important it ought to have been obtained before the hearing. Any leave to provide it after the hearing is an indulgence. According to the table at [44] of his affidavit, Mr Wilson was, by the time he swore his affidavit, already in possession of all the items for which leave was granted (being items 9, 17, 18, and 19 in that table), other than the transcript of proceedings resulting in the order of 7 October 2020 (being item 8). As he had the reasons for that order (item 9), it did not appear that the transcript (item 8) could add much if anything.

  4. In those circumstances, the Court was of the view that Mr Wilson should be allowed a further seven days to exercise the leave he was given, which would permit him to provide such material as he already had, and any more that was received in the meantime. As Mr Wilson required an indulgence, and unnecessarily expanded the scope of the exercise of seeking it, he was ordered to pay the costs of the motion.

A further motion

  1. On 14 September 2021, Mr Wilson filed an affidavit of that date (“9th Wilson Affidavit”), of 48 paragraphs, accompanied by a bundle of documents of 2002 pages, comprising “Part A: Judgments, Orders, Transcripts and other documents in the UK” (725 pages, being 29 separate documents including those referred to in order 1 of 20 July 2021, but also many others) and “Part B: Relevant Judicial Acts (Judgments, Orders, Transcripts and other documents) in Australia, NZ & the UK, which form part of the Record, and arise out of the NSW-1 proceedings” (1277 pages, being 66 separate documents, none of which were the subject of the directions made on 20 July 2021), together with a motion seeking an order “To the extent necessary and required, leave is sought to file, refer to and rely upon all of the judicial acts (and related material) as is set out in Mr Wilson’s 9th Affidavit of 14 September 2021, given that all of the same arise out of the final judgments, orders and declarations made as a result of the proceedings before this Court, and the plurality of the High Court of Australia from 9 October 2006 to 31 May 2013”. On 16 September 2021, Mr Emmott’s counsel informed the Court that the respondent objected to the whole of that affidavit on the grounds that it was outside the leave granted by the Court. On 16 September 2021, the Court informed the parties that:

“The Court proposes to deal with the motion on the papers as part of the substantive judgment, and that any evidence or submissions in response should be lodged before 27 September 2021,

The following directions are therefore made:

1. Vacate the return date of the motion on 27 September 2021.

2. Any evidence or submissions in response to the motion are to be lodged by 27 September 2021.”

  1. Mr Emmott lodged submissions on 27 September 2021, and MWP were permitted to lodge submissions in reply, the ultimate version of which was received on 12 October 2021.

  2. Save insofar as it is within the scope of the directions made on 20 July 2021, there is no apparent reason to permit MWP to adduce further evidence. Insofar as the material conveniently assembles relevant “judicial acts” which form part of the record, the Court may have regard to them. This does not make them matters for “evidence”, let alone at this stage of the proceedings. MWP’s motion of 14 September 2021 should be dismissed with costs.

The contribution claim

  1. MWP, qua Mr Slater and Mr Nicholls, claimed to be entitled to contribution from Mr Emmott in respect of their liability to MWP under the NSW-1 judgment, which is said to amount to a total of USD$1,839,997 and €1,028,800, being the judgment sums (inclusive of pre-judgment interest) of USD$1,106,090 and €618,449, together with post-judgment interest amounting to USD$733,907 and €410,350. The judgment comprises amounts in respect of ten matters, the benefit of which was taken by the Temujin partnership upon Messrs Emmott, Slater, and Nicholls leaving MWP, as summarised in the following table:

Serial

Matter

Principal

Judgment [17]

Post-judgment interest

Total

1

Chilisai (Lost Fees)

USD$284218

USD$464815

USD$308412

USD$773227

2

Chilisai (Success Fee)

USD$140000

USD$228958

USD$151917

USD$380875

3

Urals Gold

USD$98363

USD$160864

USD$106735

USD$267600

4

ROXI (Phase 1)

€351205

€574367

€381101

€955468

5

Project X

€26955

€44082

€29249

€73332

6

Eragon and ADA

USD$5000

USD$24531

USD$16276

USD$40808

7

Benkala Copper

USD$53280

USD$87135

USD$57815

USD$144950

8

Project Ablai

USD$28764

USD$47041

USD$31212

USD$78253

9

Maersk

USD$16960

USD$27736

USD$18403

USD$46140

10

Kangamiut Seafoods

USD$39750

USD$65007

USD$43133

USD$108141

17. Including pre-judgment interest.

  1. In addition, MWP submits that Mr Slater and Mr Nicholls have associated liabilities to it, in respect of which Mr Emmott is liable to contribute, for costs – under orders of this Court in the NSW-1 proceedings totalling AUD$10,234,283 and interest thereon of AUD$9,642,457, a total of AUD$19,876,740; under an order of the High Court on the appeal to it in the NSW-1 proceedings of AUD$247,291 and interest of AUD$170,839, a total of AUD$418,130; and under an order of the Federal Circuit Court in bankruptcy proceedings against Mr Nicholls of AUD$84,000 with interest of AUD$39,487, a total of AUD$123,487.

  2. At least some of the claims referred to in the above table were also referred to in the London Arbitration. In this respect, the primary judge said: [18]

“[36] Of those losses, the first seven were the subject of claims against Mr Emmott in the Arbitration, but no amount in respect of them was awarded by the Tribunal.

[37] The position appears to be that no claim was made in the Arbitration against Mr Emmott in respect of Project Ablai. On the other hand, Mr Emmott was held liable in the Arbitration in respect of losses claimed in respect of Maersk (described by the Tribunal as the Lancaster Group claim) (USD10,190 and with interest USD16,518)) and Kangamiut Seafoods (USD16,395 and with interest USD27,742). Mr Emmott must be taken to have paid those amounts (including interest) because they were deducted from the amount that MWP owed him.

[38] In those circumstances, it is difficult to see how MWP (as assignee) has any significant claim for contribution in respect of the judgments it obtained against Messrs Nicholls and Slater and TIL and TSL. Consistently with the English Injunction, no claim for contribution can be made in respect of the first seven claims that succeeded in NSW1, since the Tribunal determined that Mr Emmott is not liable in respect of those claims. It must follow from what was said earlier that MWP no longer asserts a claim for contribution in respect of those amounts.”

18. Primary Judgment at [36]-[38].

  1. Then, after referring to issues raised by Mr Emmott which are the subject of the Notice of Contention referred to below, his Honour continued: [19]

“[40] In my opinion, it is not necessary to form a view on the strength of those defences. At most, the total amount in respect of which a claim for contribution could be made is USD85,474 (that is, USD28,764.00 plus USD16,960 plus USD39,750) plus interest. However, the total amount Mr Emmott must be taken to have paid in respect of those claims is USD26,585 plus interest. In other words, Mr Emmott has already paid, or should be taken to have paid, close to a third of the amount in respect of which the claim for contribution might be made. No reason was advanced for why Mr Emmott should be liable to contribute more than a third of the amount claimed. That is, no reason was advanced for why Messrs Emmott, Nicholls and Slater should not bear the amounts for which they have been held to be liable equally. In any event, it is doubtful whether the general law of contribution permits contribution except equally, or proportionately to their liability where the amount of their liability differs: see Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 13; 154 ALR 534 at 546 per Beaumont, Hill and Sundberg JJ; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [14] per Gaudron ACJ and Hayne J; cf per Kirby J at [119]-[120]. Even if the Court did have power to apportion liability according to the parties’ culpability, the finding of the Tribunal was that Mr Slater was the instigator and leading spirit behind the establishment of Temujin. If liability were apportioned according to culpability, the likelihood is that Mr Slater would bear a greater proportion of the liability.

…

[49] It is true that on the analysis set out above, MWP (as assignee) may have a small claim for contribution against Mr Emmott on the basis of equal apportionment. That claim appears to be in the order of USD2,000. However, in my opinion, the phrase “insufficient prospects of success” in UCPR r 11.6(2)(c) must include a reference to the quantum of any claim as well as its likelihood of success. To put the test in the affirmative, the question is whether the claim has sufficient prospects of success to warrant putting the person served outside Australia to the time, expense and trouble of defending it. A claim that is unlikely to succeed for anything more than several thousand dollars does not meet that requirement, even if it is likely to succeed for that amount. The amount of the claim does not justify the time, expense and trouble of defending it from overseas. In any event, having regard to the quantum of the claim, in my opinion, the claim should be dismissed or stayed in exercise of the general power conferred by UCPR r 11.6(1).”

19. Primary Judgment at [40], [49].

  1. Thus, as has been noted, while his Honour found that in respect of the contribution claim service ex juris was authorised by UCPR, Sch 6 para (h)(ii) (person served outside of Australia is a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court), the claim appeared likely to be for only about USD$2,000 net, which was insufficient, for the purposes of r 11.6(2)(c), to warrant putting Mr Emmott to the time, expense, and trouble of defending it from overseas. His Honour also found that in any event, having regard to its quantum, the contribution claim ought to be dismissed or stayed in exercise of the general power conferred by r 11.6(1).

  2. On appeal, MWP contends that his Honour erred in finding that any maintainable claim was for only in the order of USD$2,000, and that it should be dismissed or stayed for that reason. Although MWP submitted that it was “at least tens or even hundreds” of thousands of dollars, and possibly “millions”, its quantum was not more clearly refined.

  3. In this respect, the appellant first submitted that Mr Emmott’s liability to contribute was not limited to one-third, but extended to a full indemnity. Although (as the primary judge observed) in the London Arbitration it was found that Mr Slater was the instigator, that was not so in the NSW-1 proceedings which founded the contribution claim, in which he and Mr Nicholls were held liable as accessories to Mr Emmott as the principal. However, as appears from the primary judgment, [20] no such argument was advanced below. Moreover, for reasons elaborated later, it is misconceived. In any event, of itself it would only serve to increase the quantum of the claim to USD$6,000, which would not warrant a different outcome.

    20. At [40].

  4. The appellant also submitted that the EWCA injunction did not extend to all nine claims (other than Ablai, which the primary judge accepted was not caught), in whole or in part. This was put on several bases.

  5. One was that the EWCA injunction did not extend to the “derivative” claims, brought “qua Mr Nicholls and Mr Slater” but only to claims brought by MWP in its own right. However, this cannot be correct. The proceedings in respect of which an anti-suit injunction was sought, and in respect of which the EWCA injunction was granted, were entirely “derivative”, being brought by MWP “qua Mr Slater and Mr Nicholls”. The EWCA judgment explicitly refers to the claims being prosecuted in the NSW-2 proceedings, the subject of the application before it, as being brought by MWP in its capacity as assignee. [21] There is no reason whatsoever to suppose that the England and Wales Court of Appeal intended to restrain the prosecution of claims which had been neither brought nor contemplated, as distinct from those which had been brought. To the contrary, the rationale for the EWCA injunction was that the NSW-2 proceedings were an abuse of process insofar as MWP sought to relitigate claims which it had not pursued, or had lost, in the London Arbitration, as Etherton MR explained (emphasis added): [22]

“[56] [NSW2] plainly is, in part, vexatious and oppressive on that approach. In NSW1 MWP succeeded on some diversion allegations which it had decided not to advance in the arbitration and on some others which it lost in the arbitration. It had, for example, originally advanced but then dropped claims for fraud and conspiracy. It is not in dispute that it lost in the arbitration on claims relating to Project X, Eragon and ADA and Benkala Copper but succeeded on all of them in NSW1. It is in dispute whether or not it lost in the arbitration on its claims relating to Chilisai (lost fees), Chilisai (success fees), Urals Gold and Roxi but we do not have to decide that issue now.

[57] Furthermore, it is clear from the evidence before us that, if free to do so, MWP will seek in NSW2 to challenge adverse findings in the arbitration on the grounds that there was inadequate disclosure of written material, that fraudulent evidence was given by and on behalf of Mr Emmott and that the evidence was incomplete.

[58] It would be oppressive and vexatious, and highly unjust, in the light of the arbitration provisions in the MWP Agreement and the elaborate and extremely lengthy arbitration with Mr Emmott over eight years, for MWP, on the basis of joint and several liability, to be able to recover compensation from Mr Emmott in NWS2 on the basis of claims on which it lost and other findings which were adverse to it in the arbitration or which it made a conscious decision not to advance. I entirely agree with the Judge to that extent.”

21. 2018 EWCA at 743 [26], 745 [43] (Etherton MR; Jackson LJ and Underhill LJ agreeing).

22. 2018 EWCA at 747-748 [56]-[58] (Etherton MR; Jackson LJ and Underhill LJ agreeing).

  1. Another way in which the submission that the EWCA injunction did not extend to all nine claims was put was that the London Award did not resolve all the claims. While it appears from the above passage from the judgment of the England and Wales Court of Appeal that it was not disputed that MWP lost in the Arbitration on claims relating to Project X, Eragon and ADA, and Benkala Copper (though it succeeded on them in NSW-1), it was left open whether MWP had lost in the Arbitration on the first four claims (Chilisai x 2, Urals, and ROXI). MWP made a claim against Mr Emmott in respect of the Chilisai matter in the Arbitration, which was considered in the Second Interim Award. [23] The Arbitrators found that Mr Emmott was not responsible for the diversion of the Chilisai matter. [24] As a result, the London Award included no amount in respect of Chilisai. It follows that MWP lost the Chilisai claim in the Arbitration. MWP also made a claim against Mr Emmott in respect of the Urals matter in the Arbitration, which was considered in the Second Interim Award. [25] The Arbitrators found that Mr Emmott was relevantly in breach of his fiduciary duties. [26] However, the London Award included no amount in respect of Urals. It follows that the Arbitration concluded that Mr Emmott was not liable to MWP in respect of Urals, and thus that MWP lost the Urals claim in the Arbitration. Finally, MWP also made a claim against Mr Emmott in respect of the ROXI matter in the Arbitration, which was considered in the Second Interim Award. [27] The Arbitrators found that although Mr Emmott was relevantly in breach of his fiduciary duties, his conduct did not cause a loss to MWP, and he did not receive a secret profit. [28] The London Award included no amount in respect of ROXI. It follows that the Arbitration concluded that Mr Emmott was not liable to MWP in respect of ROXI, and thus that MWP lost the ROXI claim in the Arbitration. MWP naturally emphasise the statement of the Arbitrators (emphasis added): [29]

“We have read the Judgment of Justice Einstein in the Supreme Court of New South Wales of 6 October 2008. Whilst that Judgment is not binding upon us, and we understand is under appeal, in light of the remedies awarded in that Judgment against Temujin in respect to the diversion work, we make no separate award in respect to this part of the claim. If Mr Emmott is a partner in Temujin, he and Temujin will be liable to account in those proceedings but not before us.”

23. Michael Wilson & Partners Ltd and Emmott (Second Interim Award, International Dispute Resolution Centre, 19 February 2010) at [4.110]-[4.129] (“SIA”).

24. SIA at [4.129].

25. SIA at [4.132]-[4.135].

26. SIA at [4.134].

27. SIA at [4.136]-[4.144].

28. SIA at [4.144(h), (s)].

29. SIA at [4.144(s)].

  1. That passage immediately follows the statement: “We find that Mr Emmott did not receive a secret profit directly from this transaction.” The Arbitrators thus held that Mr Emmott did not have a direct personal liability to MWP in this respect, but that if he is a partner in Temujin he might be liable to account in that capacity. That does not alter the position that MWP lost the ROXI claim in the Arbitration. The Arbitrators were contemplating that he might be liable, not to contribute as a co-obligor, but to account as a partner in the context of claims such as those involved in the partnership claims. Similarly, in another passage at the conclusion of the Second Interim Award, the Arbitrators state: [30]

“Temujin has been found liable in damages by the Australian Court, and if Mr Emmott is a partner in that firm (as to which we have insufficient evidence to form an opinion) he will be liable jointly and severally for Temujin’s debts.”

30. SIA at [8.22].

  1. Again, that contemplates liability as a partner – not liability to contribute as a co-obligor.

  2. It was also put that in respect of those claims which were resolved by the Arbitration, it remained open to MWP, qua Mr Slater and Mr Nicholls, to claim contribution where the period in respect of which they were held liable to account was different from that for which claims were made against Mr Emmott in the Arbitration. There is nothing in the order or reasons of the England and Wales Court of Appeal which would support so narrow an approach. It is plain, from the passages set out above, that the intent of the anti-suit injunction was to preclude the relitigation, under the guise of joint and several liability, of claims which had been resolved in favour of Mr Emmott in the arbitral proceedings. That purpose would be defeated if it were open to MWP to propound claims on the footing of joint and several liability in respect of the same matters, just because the period in respect of which they claimed in the Arbitration did not coincide with that in respect of which they claimed in NSW-1.

  3. Accordingly, I am unpersuaded that the primary judge erred in concluding that the contribution claim amounted to no more than about USD$2,000. However, it is unnecessary to resolve this issue, because I prefer to rest my decision to uphold the declining of jurisdiction in respect of the contribution claim on the alternative grounds raised by the respondent’s Notice of Contention dated 4 October 2019, which contends that the decision below should be upheld on two grounds advanced below but not determined by the primary judge, namely that:

  1. there was no coordinate liability between Mr Nicholls and Mr Slater on the one hand and Mr Emmott on the other, thus precluding the contribution claim; and

  2. Mr Nicholls’ and Mr Slaters’ assignee (MWP) cannot make a contribution claim against Mr Emmott in circumstances where Mr Nicholls and Mr Slater have not paid the judgment amount to the assignee but Mr Emmott has.

  1. Although MWP opposed the filing of the Notice of Contention, ample notice of the intention to rely on it was given, the grounds it raised were clearly argued though not decided before the primary judge, no relevant prejudice was apparent, and MWP made submissions engaging with the substance of the notice.

No entitlement to indemnity or contribution in respect of the NSW-1 judgment

  1. The equitable doctrine of contribution derives from the equitable maxim that “equality is equity”; and the notion that, as between multiple interested parties, ultimately liability should not depend on the creditor’s choice of defendant, nor (as the common law would insist in requiring a claim to be brought within the framework of contract, express or implied) on the knowledge of one obligor of the existence, present or proposed, of the others. [31] Its rationale is to protect one of several obligors from having to bear more than its just share of the obligation. [32] One application of the doctrine – and one in which contribution can be had only in equity – is between trustees, who are jointly and severally liable to the beneficiaries for any loss caused by a breach of trust, so that one who makes good the loss is generally entitled to call upon the others to contribute their share. [33]

    31. Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1 at 12-13 (Lord Selborne LC); Craythorne v Swinburne (1807) 14 Ves Jun 160 at 169-170 (Lord Eldon LC); 33 ER 482; Dering v Earl of Winchelsea (1787) 1 Cox 318 at 321-322 (Lord Eyre CB); 29 ER 1184 (“Dering”); JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2002, LexisNexis Butterworths) at 398-399 [10-040] (“Meagher, Gummow & Lehane 5th ed”); J Story, Commentaries on Equity Jurisprudence (3rd ed, 1920, A Maxwell & Son) at ¶243.

    32. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351 (Kitto J; Windeyer J agreeing); [1969] HCA 55 (“Albion Insurance”), citing Davies v Humphreys (1840) 6 M & W 153 at 168-169 (Parke B); 151 ER 361.

    33. Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 292 [14] (Gaudron ACJ and Hayne J); [2002] HCA 17 (“Burke”); Chillingworth v Chambers [1896] 1 Ch 685 at 698 (Lindley LJ), 707 (AL Smith LJ); Lingard v Bromley (1812) 1 V & B 114 at 117-118 (Grant MR); 35 ER 45 (“Lingard”); JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at 524-525 [21-18] (“Jacobs”).

“We have read the judgment of Justice Einstein in the Supreme Court of New South Wales of 6 October 2008. Whilst that judgment is not binding upon us, and we understand is under appeal, in light of the remedies awarded in that judgment against Temujin in respect to the diversion work, we make no separate award in respect to this part of the claim. If Mr Emmott is a partner in Temujin, he and Temujin will be liable to account in those proceedings but not before us.”

…

[61]   It will be a matter for the Australian courts to decide in NSW2 [ie, these proceedings] whether or not it would be an abuse or unjust or unconscionable for MWP to recover, by means of the assigned rights of Mr Nicholls and Mr Slater in respect of the Temujin partnership claims, a contribution to damages or equitable compensation owed by Temujin to MWP under NSW1 insofar as such damages and compensation are based on matters consciously not advanced by MWP in the arbitration or on which it lost in the arbitration or for which Mr Emmott has already compensated MWP pursuant to the SIA and the TQA.”

92. 2018 EWCA at 748 [59], [61] (Etherton MR; Jackson LJ and Underhill LJ agreeing).

  1. In respect of these passages, the primary judge said: [93]

“First, the comments of the Tribunal and the English Court of Appeal are not binding on this Court. Second, none of the passages should be understood as expressing a view on whether this Court has jurisdiction and is an appropriate forum for determining the partnership claims. The point made by the Tribunal was simply that it was not considering any claim arising from the alleged partnership. Although the Master of the Rolls interpreted those statements as an indication that the Tribunal thought those issues would be dealt with by an Australian court, he made it quite clear that he was not expressing any view on the question whether Australia was an appropriate forum in the following passage (at [62]), which follows those relied on by MWP:

“It would also be a matter for the Australian courts to decide whether, as was contended on behalf of Mr Emmott, there is no relevant connection between New South Wales and the Temujin partnership claims and, if so, whether that carries any consequences as to the jurisdiction of New South Wales.”“

93. Primary Judgment at [69].

  1. Before us, MWP referred to subsequent decisions, in particular of HHJ Pelling in the Commercial Court, as further demonstrating that the English courts have “deferred” the partnership claims to the NSW courts. On 7 October 2020, on the application of MWP and upon Mr Wilson informing the Commercial Court that the current NSW appeal had been or was likely to be listed for hearing in December 2020, HHJ Pelling ordered that the trial of a preliminary issue that was listed for a period of 4½ days commencing on 19 October 2020 be vacated, and that the parties inform the Court in writing of the outcome of the NSW appeal within three days after delivery by this Court of its judgment. As described above, this appeal did not proceed as Mr Wilson had represented, and on 27 May 2021, HHJ Pelling ordered that there be a case management stay of all proceedings between the parties before the Commercial Court (with certain specified exceptions), until such time as this Court hands down its final judgment and orders in relation to MWP’s NSW appeal. On 16 September 2021, HHJ Pelling considered and allowed an application by MWP “to lift the case management stay of these proceedings that has been applied to these proceedings by consent until after determination of proceedings between the Applicant and the Respondent in the Court of Appeal of the New South Wales Supreme Court” in certain respects.

  2. None of these orders involved a decision that the partnership claims should be heard in Australia and not in England. The notion of a “case management stay” is well-established. It does not involve any conclusion as to jurisdiction, or as to appropriate forum, but is a technique for the management of proceedings in the context of lis alibi pendens. The applicable principles were expounded by Lockhart J in Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd,[94] to which reference was made by the High Court in Henry v Henry, as follows: [95]

“Foreign proceedings usually fall for consideration in a context in which they involve the same or related factual issues as those involved in the local proceedings, but not the same legal issue and, perhaps, not the same parties. Even in cases of that kind it may sometimes be appropriate to grant a temporary stay of the local proceedings to allow the factual issues to be determined in the other jurisdiction [See, eg, Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287]. There are more compelling considerations in favour of a stay of the local proceedings if, as can happen, there are proceedings in another country which has jurisdiction to entertain those proceedings and the proceedings are between the same parties and with respect to the same issue or controversy.”

94. (1992) 34 FCR 287; [1992] FCA 71 (“Sterling Pharmaceuticals”).

95. (1996) 185 CLR 571 at 590 (Dawson, Gaudron, McHugh and Gummow JJ); [1996] HCA 51.

  1. Lockhart J rejected a submission that the principles relating to the permanent stay of proceedings in Australia where there are other proceedings pending in a foreign country between the same parties for the same cause of action are applicable in the context of a temporary stay. His Honour said: [96]

“There is obviously a substantial difference between a motion for a permanent stay or dismissal of a proceeding and a motion for a temporary stay or lengthy adjournment of a case ... The court remains in full control of the proceeding before it when it is stayed only temporarily or where, as I propose, the proceeding will be stood out of the list for a substantial time until later this year.”

96. Sterling Pharmaceuticals at 294 (Lockhart J).

  1. On an application for a temporary stay, the question is not whether the proceedings are vexatious and oppressive. The power of the Court to grant a temporary stay of this kind is an aspect of its general power to control its own proceedings, and is exercisable where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first. Its exercise is informed by the general principle that it is undesirable that two courts should determine the same dispute, and practical considerations based on common-sense and fairness guide which action should proceed first. [97]

    97. Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538 at 543 [22]-[24] (Finkelstein J); [2009] FCA 868; Sterling Pharmaceuticals at 291 (Lockhart J); Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 210-211 (French J); [1987] FCA 64; Muller v Fencott (1981) 37 ALR 310 at 314-315 (Toohey J); [1981] FCA 147; Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 351-355 (Bowen CJ); [1978] FCA 105; L Grollo Darwin Management Pty Ltd v Victor Plaster Products Pty Ltd (1978) 19 ALR 621 at 628 (Smithers, St John and Fisher JJ); [1978] FCA 36. A non-exhaustive list of relevant considerations was provided by Lockhart J in Sterling Pharmaceuticals at 291, as follows: (1) which proceeding was commenced first; (2) whether the termination of one proceeding is likely to have a material effect on the other; (3) the public interest; (4) the undesirability of two courts competing to see which of them determines common facts first; (5) consideration of circumstances relating to witnesses; (6) whether work done on pleadings, particulars, discovery, interrogatories, and preparation might be wasted; (7) the undesirability of substantial wasted time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues; (8) how far advanced the proceedings are in each court; (9) the fact that the law should strive against permitting a multiplicity of proceedings in relation to similar issues; and (10) the general balancing of the advantages and disadvantages to each party.

  2. Thus the “case management stay” of the Commercial Court proceedings is not a permanent or even a substantive stay of those proceedings, but a case management stay until this Court decides this appeal.  The English Court has simply decided that this appeal should be decided before the case before it proceeds.  HHJ Pelling has done no more than accede to the proposition that it is desirable that present appeal should be determined before the proceedings in his Court proceed. There is no implication that a NSW court, rather than an English or Kazakhstani court, should determine the partnership claims. As the primary judge rightly pointed out, not only could the observations of the Arbitral Tribunal and the England and Wales Court of Appeal – and for that matter of HHJ Pelling in the Commercial Court – not bind the Supreme Court of New South Wales, they involved no observation as to whether NSW has jurisdiction or is an appropriate forum – as the passage in the judgment of the Master of the Rolls referred to by the primary judge makes manifest. MWP’s repeated submission that the English courts have mandated that the partnership claims be conducted in Australia is misconceived.

  3. What the decision of the England and Wales Court of Appeal did however determine was that it would not restrain the prosecution in NSW of the partnership claims. In that is implicit a conclusion that it was not vexatious or oppressive, from the perspective of the English courts, for such claims to be prosecuted here.

  4. The primary judge did not accept that Australia was an appropriate forum to hear the dispute, essentially because, apart from the judgment and costs orders themselves, all the events occurred, and all the persons concerned in those events reside, outside of Australia. [98] However, for essentially the same reasons as establish a “real and substantial connection” with Australia, the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictates that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the Court should assume jurisdiction. The requirements of r 11.5 for a grant of leave are therefore satisfied.

    98. Primary Judgment at [66].

Conclusion as to partnership claims

  1. On appeal, MWP sought to rely also on Sch 6 par (o) (claim for relief which affects the defendant in respect of his or her membership of a partnership carrying on any part of its affairs in Australia). This was not relied on before the primary judge. However, it was an issue that Mr Emmott was aware, before the hearing at first instance, was one on which he would be required to adduce evidence. In his written submissions to the primary judge, Mr Emmott identified paragraph (o) (along with paragraphs (g), (h), (k), (n), and (p)) as those potentially relevant, and he expressly submitted that it did not apply as there was no evidence that the Temujin partnership carried on any part of its affairs in Australia. In his affidavit evidence, Mr Emmott deposed that so far as he was aware TIL nor any other of the “Temujin Entities” had carried on business elsewhere than in Kazakhstan. Although the respondent objected forcefully to MWP’s attempt – later abandoned – to rely on appeal on paragraph (g) (domicile), it did not express any objection to reliance on paragraph (o).

  2. However, given the conclusion I have reached that leave should be granted in any event under r 11.5 in respect of the partnership claims, it is unnecessary to rely on paragraph (o).

Rule 11.6(2)(b) – inappropriate forum

  1. Before the primary judge, Mr Emmott also invoked the Court’s power to stay proceedings on the ground that it is an inappropriate forum, under UCPR, r 11.6(2)(b). Given his Honour’s conclusion under r 11.5 that Australia was not an appropriate forum, it was not necessary for his Honour separately to address r 11.6(2)(b). However, a conclusion that Australia was an inappropriate forum also for the purposes of r 11.6(2)(b) is implicit. It is encapsulated in the concluding paragraph of his Honour’s judgment: [99]

“There has been extensive litigation between MWP and Messrs Nicholls, Slater and Emmott both here and in England, as well as other jurisdictions, relating to events that primarily took place in Kazakhstan. The only real connection that the underlying disputes have with Australia is that Mr Nicholls and Mr Slater’s employment contracts with MWP were governed by New South Wales law and both were at times residents of Australia, although not at the time of the events giving rise to any of the claims sought to be advanced in these proceedings. The proceedings between Messrs Nicholls and Slater and MWP have been resolved; and with the resolution of that dispute, the principal connections the underlying dispute had with Australia no longer exist or at least are not relevant. Those with an interest in the current dispute reside either in the United Kingdom or Kazakhstan. All the relevant events occurred in Kazakhstan and relate to legal and consulting firms operating there. Having regard to those matters, it could not be said that in all the circumstances this Court should assume jurisdiction over what remains of the dispute.”

99. Primary Judgment at [70].

  1. My above conclusions, for the purposes of r 11.5, that the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictate that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the Court should assume jurisdiction, apply equally to negate the conclusion, for the purposes of r 11.6, that Australia is an inappropriate forum.

Leave to appeal

  1. The appeal is purportedly brought as of right, although leave is sought if it be required. There is some controversy as to whether leave is required.

  2. The appellant submits that leave is not required, as a permanent stay of proceedings is a final disposition of them, citing Port of Melbourne Authority v Anshun Pty Ltd (No 1), in which Gibbs J (with whom Mason J and Murphy J agreed) held that an order permanently staying proceedings as an abuse of process on the basis that they were “an attempt to litigate an issue which is res judicata” was final, because “as a matter of reality ... [it] does finally dispose of the rights of the parties”. [100] However, while that establishes that an order staying proceedings on the ground that they are an abuse of process because the point raised is res judicata is a final judgment, [101] many orders – including permanent stays – which have apparently final effect but do not involve a judgment on the merits are, for present purposes, regarded as interlocutory, including an order striking out a claim on the ground that it discloses no reasonable cause of action and staying or dismissing further proceedings, [102] an order dismissing proceedings for want of prosecution, [103] and an order summarily dismissing proceedings under UCPR, r 13.4, and its equivalents. [104] In Re Luck, McHugh ACJ, Gummow and Heydon JJ, without reference to Anshun (No 1), said that “[f]or more than a century, courts ... have consistently held that an order staying an action on the ground that is frivolous, vexatious or an abuse of process is an interlocutory order”. [105]

    100. (1980) 147 CLR 35 at 38 (Gibbs J; Mason J and Murphy J agreeing); [1980] HCA 41 (“Anshun (No 1)”).

    101. See also Leybourne v Habkouk [2012] NSWCA 212 at [13]-[16] (McColl and Meagher JJA) (“Leybourne”); Kermani v Westpac Banking Corporation (2012) 36 VR 130 at 151-152 [89]-[90] (Robson AJA; Neave JA and Harper JA agreeing); [2012] VSCA 42.

    102. AB v New South Wales [2014] NSWCA 243 at [8]-[17] (Leeming JA); Macatangay v New South Wales (No 2) [2009] NSWCA 272 at [10]-[13] (Allsop P, Tobias JA and Handley AJA) (“Macatangay”); Re Luck (2003) 78 ALJR 177 at 178-179 [4]-[10] (McHugh ACJ, Gummow and Heydon JJ); [2003] HCA 70 (“Re Luck”); Little v Victoria [1998] 4 VR 596 at 597-602 (Callaway JA; Buchanan JA agreeing); Tampion v Anderson (No 2) [1973] VR 829 at 830-832 (Smith J; Pape J and Crockett J agreeing).

    103. See National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) Pty Ltd (2001) 183 ALR 700 at 702-703 [4]-[11] (Cooper, Whitlam and Tamberlin JJ); [2001] FCA 237.

    104. McGinn v Cranbrook School [2016] NSWCA 226 at [9], [20], [40] (Gleeson JA; Beazley P and Simpson JA agreeing); Macatangay at [11] (Allsop P, Tobias JA and Handley AJA); Page v McKensey [2004] NSWCA 437 at [30] (Mason P; Hodgson JA and Pearlman AJA agreeing); Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 30 ACSR 698 at 704 [22] (Whitlam J); [1999] FCA 218; Wickstead v Browne (1992) 30 NSWLR 1 at 11 (Handley and Cripps JJA; Kirby P agreeing); [1992] NSWCA 272.

    105. Re Luck at 178 [6] (McHugh ACJ, Gummow and Heydon JJ).

  3. As noted by McColl and Meagher JJA in Leybourne,[106] the apparent tension between Anshun (No 1) and Re Luck was discussed by McColl JA in Bracks v Smyth-Kirk,[107] and previously by the Full Court of the Federal Court (Finn, Kenny and Edmunds JJ) in Egglishaw v Australian Crime Commission,[108] which concluded that there was no inconsistency between the two High Court decisions but that the difference between them flowed “from the difference between the judgments from which an appeal was brought or sought to be brought”. Anshun (No 1), in their Honours' view, concerned a case “where an earlier judgment or proceeding preclude[d] a further judgment or proceeding”. [109] Such a case was to be distinguished from “the ordinary case [such as Re Luck], where a proceeding discloses no cause of action, is frivolous or vexatious, or is to be dismissed on some other basis involving no final determination of rights”. [110] In Bracks v Smyth-Kirk, McColl JA accepted the validity of that distinction, [111] as did McColl and Meagher JJA in Leybourne v Habkouk: [112]

“The distinction the Full Federal Court drew in Egglishaw between the nature of what we will, for convenience, call a Re Luck and an Anshun (No 1) judgment has been recognised in this Court: Frumar v the Owners of Strata Plan 36957 (at [36]). The Court of Appeal of the Supreme Court of Victoria has also followed Anshun (No 1) and held to be final in character an order permanently staying as an abuse of process later proceedings which the primary judge held to amount to a collateral attack on the decisions made in earlier proceedings: Kermani v Westpac Banking Corporation (at [89]-[90]). There is, accordingly, a substantial body of authority which this Court would ordinarily follow supporting the applicant's position that the permanent stay order the primary judge made in Jacisa's favour at least was a final one.”

106. Leybourne at [15] (McColl and Meagher JJA).

107. (2009) 263 ALR 522 at 526-530 [14]-[36] (McColl JA); [2009] NSWCA 401 (“Bracks”).

108. (2007) 164 FCR 224 at 234-236 [39]-[44] (Finn, Kenny and Edmonds JJ); [2007] FCAFC 183 (“Egglishaw”).

109. Egglishaw at 236 [44] (Finn, Kenny and Edmonds JJ).

110. Egglishaw at 236 [44] (Finn, Kenny and Edmonds JJ).

111. Bracks at 529 [32] (McColl JA).

112. Leybourne at [16] (McColl and Meagher JJA).

  1. Leybourne was a case in which proceedings had been permanently stayed on the basis that “they were an abuse of process because they sought “to agitate in substance ... the same if not identical claims against [Jacisa] having consented to judgment in favour of [Jacisa] in ... [the first Supreme Court proceedings]””. [113]

    113. Leybourne at [8] (McColl and Meagher JJA).

  2. Thus the cases in which it has been held that a permanent stay is or may be a final order are confined to cases in which there was deemed to have been a final resolution of the issues by way of estoppel arising from earlier proceedings. In other contexts, the authority that a permanent stay is interlocutory for present purposes is overwhelming. [114] Consistently with Egglishaw, that can be explained on the basis that in the latter class of case there has been no final resolution, actual or deemed, of the real issues in dispute between the parties.

    114. See also Frigger v Lean (No 2) [2016] WASCA 212 at [74] (Martin CJ, Buss P and Murphy JA).

  1. In follows in my opinion that, for the purposes of provisions such as Supreme Court Act 1970 (NSW), s 101(2)(e), a stay of the kind involved here should be regarded as interlocutory. This is because it does not involve a final determination of the rights and obligations of the parties, and it is closely analogous to the summary dismissal of proceedings, which is for such purposes regarded as interlocutory. [115]

    115. See, most recently, Melhem v Katter [2021] NSWCA 273 at [12] (Brereton JA; McCallum JA and Garling J agreeing).

  2. However, the stay practically finally determines MWP’s ability to litigate these issues in this forum. The appeal and the application for leave were heard concurrently and in full. If there is merit in the appeal, leave, if required, should be granted.

Conclusion

  1. My conclusions may be summarised as follows:

  2. The liabilities of Mr Slater and Mr Nicholls as “knowing assistants” are not co-ordinate with the liability of Mr Emmott. Moreover, Mr Slater and Mr Nicholls, being liable as knowing assistants in a dishonest breach of trust, are not entitled to claim contribution, let alone indemnity, from Mr Emmott. Even if they were otherwise entitled to contribution, in circumstances where they have not paid their proportionate share of the liability, and there is no prospect of them ever doing so, proceedings in their name for contribution against Mr Emmott would be liable to be stayed. Those conclusions provide more than sufficient basis for upholding his Honour’s conclusion that the contribution claim has insufficient prospects of success to warrant putting Mr Emmott to the time, expense, and trouble of defending the claim in Australia, without needing to consider the arguments concerning the extent to which it is caught by the EWCA injunction.

  3. As to the partnership claims, his Honour rightly held that it did not appear that the partnership agreement was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court, and thus that par (b)(iv) of Sch 6 was not engaged. However, in concluding that the claims had no real and substantial connection with Australia and thus refusing leave under UCPR, r 11.5, his Honour overlooked – understandably in circumstances where the submissions of the parties did not refer to it – the circumstance that it was alleged, and appears at least sufficiently arguable, that there are partnership assets – or assets into which they may be traced – in Australia, in respect of which the partnership can (and possibly can only) be wound up in in Australia and accounts taken here. In that context, the presence of partnership assets in Australia provides ample “real and substantial connection” for the purposes of r 11.5(5)(a). For essentially the same reasons, the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictates that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the court should assume jurisdiction. [116] While this issue did not receive attention in the submissions of the parties before the primary judge, the evidence was there, and the issue was articulated in Mr Wilson’s affidavit. Leave should have been granted in respect of the partnership claims, under r 11.5. Having reached that conclusion, it is unnecessary to consider the additional ground, invoked by MWP only on appeal, that service ex juris was authorised, without leave, under par (o) of Sch 6.

    116. UCPR, rr 11.5(5)(b)-(c).

  4. The same conclusions negate any proposition that, for the partnership claims, Australia is an inappropriate forum within UCPR, r 11.6(2)(b). Accordingly, while proceedings on the contribution claim and the director duties claims were rightly stayed, the partnership claims ought to have been permitted to proceed. [117]

    117. Cf Lenfest at 576 (Giles J).

  5. Leave to appeal is required. However, the permanent stay granted by the primary judge practically finally determines MWP’s ability to litigate the partnership claims in this forum. The appeal and the application for leave were heard concurrently and in full. Leave to appeal should be granted.

  6. The outcome at first instance ought to have been that Mr Emmott succeeded in respect of the contribution claim and the director duties claims, but failed in respect of the partnership claims. That represents an approximately equal measure of success and failure for each party, and is appropriately reflected in neither party being required to bear the other’s costs of the motion. In this Court, in my opinion, MWP should succeed in respect of the partnership claims but fail in respect of the contribution claim and director duties claims. Although MWP has improved its position as a result of the appeal, it has incurred and inflicted costs which were quite unnecessary to achieve that result. Again, in my view, there should be no order as to the costs of the appeal, save to the extent that extant interlocutory costs orders otherwise provide.

  7. I propose the following orders:

  1. Dismiss the appellant’s motion of 14 September 2021, with costs;

  2. Grant leave to appeal;

  3. Allow the appeal;

  4. Set aside the orders made in the Commercial List of the Equity Division on 8 March 2019 and in lieu thereof:

  1. Grant leave under Uniform Civil Procedure Rules 2005 (NSW), r 11.5, to the plaintiff to serve the proceedings on the defendant outside Australia and in England, insofar as it relates to the claims for relief in paragraphs 3 to 10 of the Further Amended Summons of 3 October 2018;

  2. Order that proceedings on the Further Amended Summons other than in respect of the claims referred to in (a) be permanently stayed;

  3. Otherwise dismiss Mr Emmott’s motion filed on 1 November 2018; and

  4. No order as to costs of the motion, to the intent that each party bear its own costs; and

  1. Save insofar as any interlocutory costs order otherwise provides, no order as to costs of the appeal, to the intent that each party bear its own costs.

  1. EMMETT AJA:

Introduction

  1. The question in the proceedings before this Court is whether Michael Wilson & Partners Limited (Wilson Partners) should be permitted to prosecute proceedings commenced in the Equity Division against Mr John Emmott (the Current Proceedings). By its further amended summons filed in the Current Proceedings, Wilson Partners claimed an order that Mr Emmott contribute towards the liability of certain judgment debtors (the Temujin Entities) under judgments obtained by Wilson Partners against the Temujin Entities in proceedings in the Commercial List heard by Einstein J (the Original Proceedings). The Temujin Entities are Mr David Slater, Mr Robert Nicholls, Temujin International Limited (TIL), both in its own right and as trustee of the Temujin International (Trading) Trust, and Temujin Services Limited (TSL). In the Current Proceedings, Wilson Partners also claimed damages and equitable compensation for various breaches of fiduciary and contractual duties owed as a shadow director and officer and controller of TIL, its trust, and TSL, although this was not pursued on appeal. Finally, Wilson Partners claimed declarations to the effect that Messrs Emmott, Nicholls and Slater had established a partnership upon leaving Wilson Partners (the Partnership), and sought an account of all benefits received by Mr Emmott as partner.

  2. By notice of motion filed on 1 November 2018. Mr Emmott sought, relevantly, a stay of the Current Proceedings (the Stay Application). On 8 March 2019, for reasons published on that day, a judge of the Equity Division (the primary judge) ordered that the Current Proceedings be permanently stayed and that Wilson Partners pay Mr Emmott's costs of the motion. By notice of appeal filed on 31 May 2019, Wilson Partners appealed from those orders. Against the contention that the orders were interlocutory, Wilson Partners has also sought leave to appeal from the orders made by the primary judge.

Background

  1. In the Original Proceedings, Wilson Partners sought judgment against the Temujin Entities. Ultimately, judgments were entered against all of those parties after appeals to this Court and to the High Court of Australia and a further hearing by this Court. [118] Sequestration orders were subsequently made in respect of the estates of Mr Slater and Mr Nicholls, and TIL and TSL have been wound up in insolvency. While Wilson Partners has received some payments from trustees in bankruptcy and liquidators, the judgments remain substantially unsatisfied.

    118. See Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Nicholls v Michael Wilson & Partners (2011) 243 FLR 177; [2011] NSWCA 222.

  2. Wilson Partners claims that Mr Emmott is liable to contribute to the liability that the Temujin Entities have to Wilson Partners or that the Temujin Entities are entitled to be indemnified by Mr Emmott in respect of that liability. Wilson Partners has taken assignments, from the trustees in bankruptcy of Messrs Slater and Nicholls and from the companies in liquidation, of all of their entitlements to contribution from or to be indemnified by Mr Emmott in respect of the judgments against them in the Original Proceedings. The assignments also include any entitlement to damages from Mr Emmott in respect of the Partnership.

  3. The primary judge accepted that Wilson Partners, as assignee, may have a small claim for contribution against Mr Emmott in the order of USD$2,000, on the basis of equal apportionment among Messrs Emmott, Slater and Nicholls. His Honour considered that a claim that was unlikely to succeed for anything more than several thousand dollars did not meet the requirement that it has sufficient prospects of success to warrant putting a person served outside Australia to the time, expense and trouble of defending the claim. Mr Emmott asserted that, in circumstances where neither of Messrs Nicholls and Slater has satisfied the judgments against them, they have no entitlement to contribution or indemnity. The primary judge did not need to deal with that contention. Further, having found that all relevant events occurred outside Australia, his Honour concluded that Australia was not an appropriate forum for the determination of the claims in respect of the Partnership.

  4. Thus, the proceedings involve two independent sets of claims. The first are concerned with contribution and indemnity. The second are concerned with the Partnership.

The Contribution Claims

  1. Wilson Partners contends that each of Messrs Nicholls and Slater is entitled to indemnity from Mr Emmott in respect of their respective liabilities under the judgments in the Original Proceedings. It asserts that each is entitled to be indemnified because Mr Emmott was found to be principally responsible while Messrs Nicholls and Slater were liable only as having been knowingly concerned in the breaches by Mr Emmott.

  2. It is difficult to see why, as a matter of principle, a person who is knowingly concerned in a breach of a fiduciary duty would be entitled to be indemnified by the person who perpetrated the breach of duty. Even if a knowing participant has a co-ordinate liability with the principal perpetrator, there is no reason, in the absence of something further, as a matter of principle, why the main perpetrator should be indemnified.

  3. In ordinary circumstances, the only reason for pursuing a person who has been a knowing participant in a breach of fiduciary duty by another person who is the principal perpetrator is the impecuniosity of that principal perpetrator. The principal perpetrator clearly has a liability to the victim of the breach of duty for any loss or damage suffered as a consequence of the breach of duty or, in appropriate circumstances, to account for any benefit received by the principal perpetrator. It is only where the principal perpetrator cannot satisfy an obligation to make good the loss or to account for the benefit that there would be any need to pursue a knowing participant in the breach.

  4. I have had the considerable advantage of reading in draft form the reasons of Brereton JA for concluding that the prosecution of the contribution and indemnity claims should not be permitted. In particular, I agree with his Honour that the contribution claim amounted to no more than about USD$2,000. That was sufficient basis for declining to grant leave in relation to the stay applicable to that aspect of the claims.

  5. It may have been interesting, if the contribution and indemnity claims were to be pursued, to consider whether the Roman law treatment of contribution and indemnity in the context of co-ordinate liability of guarantors has any contribution to make to the common law. Under Roman law, where there were several guarantors, each was liable for the whole amount. Accordingly, the creditor could sue whichever guarantor he pleased. However, if an application was made before judgment, a guarantor had a defence that compelled the creditor to divide the burden of his claim under the guarantee among all of the guarantors who were solvent at the time when issue was joined. The effect was that, if one of the guarantors was insolvent, the burden on the other guarantors would be increased. However, if one of a plurality of guarantors failed, prior to joinder of issue, to invoke the right to have his liability limited to his proportionate share and the creditor succeeded in recovering judgment from that guarantor, that guarantor was required to bear the whole of the debt if the principal debtor was insolvent. However, if a guarantor paid anything to the principal creditor, he could bring an action against the debtor for indemnity in respect of the amount that he paid [119] .

    119. See P Birks and G McLeod (trs) and P Krueger (contrib), Justinian’s Institutes (1987, Cornell University Press) at 3.20.4 and 3.20.6.

The Partnership Claims

  1. In the Current Proceedings, Wilson Partners made claims for inspection, disclosure, the carrying out of an inquiry, the taking of an account and proprietary tracing. Essentially, Wilson Partners sought the winding up and administration of the Partnership.

  2. The primary judge considered that the agreement relating to the Partnership was not governed by Australian law or enforceable or cognizable in an Australian court. Accordingly, his Honour held, there was not sufficient connection with Australia to permit the Current Proceedings to be prosecuted in this Court. However, as Brereton JA has pointed out, his Honour appears to have overlooked that it was alleged that there are assets in Australia in respect of which the Partnership can possibly be wound up and accounts taken in Australia. That allegation appears at least arguable, although the submissions of the parties did not refer to it. The presence of property of the Partnership in Australia, in circumstances where it may be difficult to obtain relief in respect of that property elsewhere, indicates that Australia is not an inappropriate forum for the claims based on the Partnership, and that in all the circumstances the Court should assume jurisdiction. The asserted presence in Australia of assets of the Partnership provides ample “real and substantial connection” with Australia and, accordingly, there should have been no stay in respect of the claims based on the Partnership [120] .

    120. See UCPR, rr 11.5(5)(b)-(c).

Conclusion

  1. I agree with the reasons of Brereton JA. I also agree with the orders proposed by his Honour.

**********

Endnotes

Decision last updated: 17 December 2021

Most Recent Citation
Cases Citing This Decision

31

Michael Wilson & Partners Ltd v Nicholls (No 6) [2022] ACTCA 41
Michael Wilson and Partners Ltd v Nicholls (No 3) [2022] ACTCA 10
Michael Wilson & Partners Ltd v Emmott (No 5) [2025] NSWCA 206
Cases Cited

58

Statutory Material Cited

3

AB v State of New South Wales [2014] NSWCA 243
Agar v Hyde [2000] HCA 41
Agar v Hyde [2000] HCA 41