Michael Wilson and Partners Ltd v Nicholls
[2009] NSWSC 1377
•11 December 2009
CITATION: Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1377 HEARING DATE(S): 15/6/09, 16/6/09, 23/6/09, 24/06/09, 29/06/09, 30/06/09, 13/07/09, 14/07/09, 23/07/09, 24/07/09, 27/07/09 - 30/07/09,6/08/09, 10/08/09, 11/08/09, 13/08/09, 17/08/09- 20/08/09, 24/08/09 - 28/08/09, 1/09/09, 2/09/09, 7/09/09, 9/09/09, 10/09/09
JUDGMENT DATE :
11 December 2009JURISDICTION: Equity Division
Commercial ListJUDGMENT OF: Einstein J DECISION: Joint and several liability of defendants in the sums of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00 . CATCHWORDS: Practice and procedure-Equitable compensation - ‘Nullus commodum capere potest de injuria sua propria’ - Harris v Digital Pulse - The engaging of the principle that no man can take advantage of his own wrong stands well apart from an attempt to award punitive-exemplary damages for breach of fiduciary duty - Precise form of relief must be moulded to satisfy the demands of justice and good conscience in the particular case - Co-existence of remedies - Notwithstanding the conspiracy allegations having been upheld plaintiff disentitled to any separate relief - Findings in relation to tort of conspiracy tightly intertwined with the findings in relation to the breaches of fiduciary duty and similar - Costs - Indemnity costs - Declaratory orders are non executory and cannot be stayed LEGISLATION CITED: Civil Procedure Act 2005 CATEGORY: Consequential orders CASES CITED: ADC v White [1999] NSWSC 43
Alghussein Establishment v Eton College [1988] 1 WLR 587
Armory v Delamirie (1722) 1 Stra 505
Arnheim Land Aboriginal Land Trust v Northern Territory of Australia [2007] FCAFC 31
Barnes v Addy (1874) LR9 Ch App 244; (1874) 43 LJ Ch 513
Beatty v Guggenheim Exploration Co 122 NE 378 (1919); 225 NY 380
Bunnings Forest Products v Bullen (1994) 54 FCR 342
Chalmers v Pardoe [1963] 1 WLR 677, [1963] 3 All ER 552
Degmam Pty Limited (in liq) v Wright (no 2) [1983] 2 NSWLR 354
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Harris v Digital Pulse Pty Ltd [2003] NSWCA 10
Holmes v Walton [1961] WAR 96
Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46
Huntsman Chemical Company Australia Ltd v International Pools Australia Limited (1995) 36 NSWLR 242
Idoport Pty Limited v National Australia Bank Limited [2006] NSWSC 895
Jago v District Court of NSW (1989) 168 CLR 23
LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (No 2) (1990) 24 NSWLR 499
McKenzie v McDonald [1927] VLR 134
New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 14 IPR 75
Nocton v Lord Ashburton [1914] AC 932
O'Keeffe Nominees Pty Ltd v BP Australia Ltd (No 2) (1995) 55 FCR 591
Oshlack v Richmond River Council (1998) 193 CLR 72
Rooster Club Inc v Northern Tavern Pty Ltd (No 2) [2003] SASC 143
Seager v Copydex Ltd [1967] 1 WLR 923; [1967] 2 All ER 415; [1969] 1 WLR 809; [1969] 2 All ER 718
Stellar Call Centres Pty Ltd v Community and Public Sector Union [1999] FCA 1236
Surf Road Nominees Pty Ltd v James [2004] NSWSC 223
Theo, Re; Ex parte Theo and Official Trustee in Bankruptcy [1996] FCA 787; 70 FCR 317
United States Surgical Cooperation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766
Waters v P C Henderson (Australia) Pty Ltd (1994) 254 ALR 328
Westminster City Council v Porter [2003] Ch 436TEXTS CITED: I E Davidson, “The Equitable Remedy of Compensation”, 13 Melbourne University Law Review 349
Meagher Gummow and Lehane’s Equity Doctrine and Remedies, Fourth edition, Butterworths by Meagher RP, Heydon JD & Leeming MJ. 2002
Broom’s Legal Maxims, 10th edition, Pakistan Law House, 1989PARTIES: Michael Wilson & Partners (Plaintiff)
Robert Colin Nicholls (First Defendant)
David Ross Slater (Second Defendant)
Temujin Services Limited (Third Defendant)
Temujin International Limited (Fourth Defendant)
Temujin International FZE (Fifth Defendant)
Shaikenov & Partners, LLP (Sixth Defendant)
Temujin Holdings Limited (Seventh Defendant)FILE NUMBER(S): SC 50151/06 COUNSEL: Mr M Walton SC, Mr J Carney (Plaintiff)
Mr G McGrath, Mr A Fox (First Defendants)
Mr G Lindsay SC, Mr A Fox, Mr S Adair (Second to Fifth Defendants)SOLICITORS: Clayton Utz (Plaintiff)
Henry Davis York (First to Fifth Defendants)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST
Einstein J
Friday 11 December 2009
50151/06 Michael Wilson & Partners Limited v Robert Colin Nicholls & Ors
JUDGMENT
The state of these proceedings
The reserved judgment
1 The reserved judgment in these proceedings was delivered on 6 October 2009. Bearing in mind the extensive causes of action and defences relied upon the Court reserved to the party's liberty, should either wish to contend that the reasons had omitted to deal with a pleaded course of action or defence, to make submissions accordingly.
MWP's rights to elect as between remedies
2 Additionally paragraph 649 dealt with MWP's rights to elect as between remedies:
Outside of the finding against MWP that it is disentitled to the remedy of a constructive trust, the Court will permit MWP to address on the remedies in respect of which it contends that it is entitled to an election. That will include its entitlement to address on the so-called 'split election' option. Naturally the defendant will also be entitled to make submissions on these matters. At the same time the parties will be permitted to address on questions relating to the propriety of provision being made for just allowances.
3 Both parties have now sought to take advantage of those observations.
Relief-overview
4 Before moving on it is appropriate to repeat paragraphs 371, 374 and 375 of the reasons:
371 In the area of relief [against what used to be called equitable fraud], of which profiting from a fiduciary position is one example, the precise form of relief must be moulded to satisfy the demands of justice and good conscience in the particular case:
- “the court must look at the circumstances in each case to
decide in what way the equity can be satisfied” ( Chalmers v Pardoe [1963] 1 WLR 677, at p 682; [1963] 3 All ER 552, at p 555; “the equity of the transaction must shape the measure of the relief”: Beatty v Guggenheim Exploration Co 122 NE 378 (1919), at p 381; 225 NY 380, at p 389.
[Per McClelland J United Surgical Corporation v Hospital Products at 815]…
375 This remedy differs from an account of profits in that the loss to the plaintiff rather than the gain to the defendant is the measure of relief. The principles of assessment of equitable compensation do not necessarily coincide with those applicable to common law damages.
374 Apart from the limited power to award damages in addition to or in substitution for equitable relief, the court has an inherent power to grant relief by way of monetary compensation for breach of a fiduciary or other equitable obligation: see Nocton v Lord Ashburton [1914] AC 932, at pp 946, 956, 957; McKenzie v McDonald [1927] VLR 134, at p 146; Holmes v Walton [1961] WAR 96; cf Seager v Copydex Ltd [1967] 1 WLR 923; [1967] 2 All ER 415; [1969] 1 WLR 809; [1969] 2 All ER 718. The nature and extent of this remedy have been discussed by I E Davidson in an illuminating article entitled “The Equitable Remedy of Compensation” in 13 Melbourne University Law Review 349.
The plaintiff’s submissions
5 MWP has produced in excess of 46 pages of close further submissions. Certain of those submissions are unexceptional as for example seeking clarification of the meaning of certain phrases in the reasons. Other of those submissions are more substantive.
Paragraph 282
6 MWP has sought clarification of paragraph 282 iii. That sub-paragraph was intended to read:
iii Work done for both Pinegrove and Roxi on the Roxi AIM admission.
Minor Corrections to the published reasons
7 There are a small number of errors of a minor nature in the reasons for judgment. These matters will be corrected in the principal judgment by way of corrigendum.
Approach to dealing with the plaintiff’s submissions
8 I intend to deal with the plaintiff’s submissions reasonably shortly and where practicable, to follow the order in which those submissions were put forward.
9 There were large sections of the submissions which simply repeated sections from the reasons and of course it is generally unnecessary to repeat those.
Paragraph 578 of the reasons
10 MWP has taken issue with this paragraph in the reasons. The contention is that the matter referred to was not raised against MWP at the hearing, either orally or in written submissions.
11 With respect to this contention the following matters should be noted:
(ii) to suggest that the issue was not dealt with in the proceedings where Mr Wilson was examined and re-examined for weeks is incorrect. One only example of his cross-examination in this regard may be found at transcript 683.1, a subject generally commenced at transcript 626. See also the reasons at 599.
(i) the matter referred to in the subject paragraph was by no means an essential factor in relation to the decision that MWP had not made good any entitlement to a constructive trust: cf the other factors referred to in the reasons [at 570-576; 579-580];
Breaches of duties by Mr Nicholls
12 The initial submissions dealt with the various parameters of breaches of duties found in the reasons concerning Mr Nicholls.
13 In this regard it is important to tread carefully. One must not overlook of the fact that where alternative remedies for the same wrongful conduct are available, it would be inequitable to grant more than one of them. MWP’s submissions from time to time fall into this error. [cf United States Surgical Cooperation v Hospital Products International PtyLtd [1982] 2 NSWLR 766 [at 819] per McLelland J; see also Meagher Gummow and Lehane’s Equity Doctrine and Remedies, fourth edition, Butterworths by Meagher RP, Heydon JD & Leeming MJ at [5-208] observing as follows in relation to co-existence of remedies:
It must be remembered… that a fiduciary relationship may co-exist with contract, and a fiduciary may owe its principal, duties breach of which sound in damages in tort or gives rise to other common law remedies.
"that the claims were claims in respect of the same essential loss based on the same conduct giving rise to that loss and that accordingly, the basic principles of compensation applicable to each of the claims was the same": referred to in the footnote at 437.Cf Westminster City Council v Porter [2003] Ch 436 [at 452] where Hart J observed :
14 As the principal reasons make clear [cf paragraphs 271-283] there were sundry breaches of the second limb of the rule in Barnes and Addy (1874) LR9 Ch App 244; (1874) 43 LJ Ch 513; treated with in relation to accessorial liability. Hence the findings concerning the breaches of duty by Mr Nicholls [and also concerning Mr Slater] identified those breaches by reference to the so-called 'no profit' and 'no conflict' rules.
15 However using those labels as a mantra does not convert, what was in truth one form of wrongdoing, into more than one such form. Hence to my mind what the plaintiff has set out to achieve in its written submissions is largely:
ii. to then seek to have the Court fix a disparate monetary sum to each such breach.
i. to pick up every reference to the no profit and no conflict rules found to have been breached;
Further discovery orders
16 MWP has observed that there is no evidence as to what profits Nicholls received as a result of the breaches of the 'no profit' duty, apart from the amounts which he received as a 'consultant'. MWP contends that equitable compensation should be awarded on the basis that the findings made should exceed the amount of profits. MWP contends that it should not be forced to make any election until a finding has been made as to what profits Nicholls did in fact receive as a result of the breaches of duty had been made, and a finding as to the amount of equitable compensation payable had been made.
17 I disagree. In these particular proceedings the spectre of an interminable continuance of the litigation into the future looms large, is inappropriate and does not accord with the overriding purpose rule. A very extensive period of Court time has been taken during the hearing. There is no indication that there would be any utility in the making of further orders for the provision of information or for further discovery.
18 Not to be overlooked is that section of the cross-examination of Mr Wilson [commencing at transcript 626] and continuing through many pages of close questioning as to the many sets of proceedings which had been or might still be commenced. In relation to one of the answers the question and answer went as follows:
Question: "But the plaintiff has not commenced any proceedings against any of those parties asserting its entitlement
Answer: No, not yet".
19 In circumstances where the overriding purpose rule provides the template for the principled exercise of the sundry discretions which require to be exercised, this litigation [at least at first instance] requires to be closed off. The Court is able by moulding its appropriate orders, to cope with the circumstance where the commercial activities of the defendants left so very much to be desired in terms of the information imparted concerning their joint activities.
20 In fairness to the plaintiff, Mr Walton SC accepted during argument that the question [of whether or not MWP should or should not be forced to make any election until a finding had been made as to what profits Nicholls did in fact receive as a result of the breaches of duty had been made] was a matter for the Court.
MWP's election
21 Furthermore MWP positively elected for an award of equitable compensation as opposed to an account of profits.
22 The principled approach in this particular circumstance is for the Court, doing the best that it can using the benefit of hindsight and notwithstanding the particular difficulties in doing so, to make findings as to the amount of equitable compensation payable to the plaintiff.
23 The orders to be made in this regard draw their source from the principle ‘Nullus commodum capere potest de injuria sua propria’.
24 The reasons [at 555-557] bear repeating:
In an affirmation of that principle in which the actions of the defendant had made it “difficult to assess the compensation due to the plaintiff”, Handley JA put the matter as follows:
[cf ADC v White [1999] NSWSC 43 at [89] et seq. There is a long line of authority to this effect [Cf. Broom’s Legal Maxims , 10th edition, Pakistan Law House, 1989 at 191 et seq., noting that this maxim, being ‘based on elementary principles, is fully recognised in Courts of law and equity, and indeed, admits of illustration from every branch of legal procedure’.]“In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party ‘whose actions have made an accurate determination so problematic’”: Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46, per Handley JA at 59.
The principle is applicable to ‘various and dissimilar circumstances’ [per Broom at page 195].
The principle and its application to several areas of law was discussed in the House of Lords by Lord Jauncey of Tullichettle in Alghussein Establishment v Eton College [1988] 1 WLR 587, with whose reasons Lord Bridge, Lord Elwyn-Jones, Lord Ackner and Lord Goff agreed. (at page 591).
25 This matter is dealt with below.
Equitable compensation payable in respect of Mr Nicholls breach of the no- profit duty in respect of a number of disparate matters
26 The summary table concerning elective rights [set out in the primary judgment at 653] is generally the subject of MWP's election in favour of equitable compensation as opposed to an account of profits.
Summary of claim for equitable compensation
27 Shown below is a table comparing the plaintiff’s claim for equitable compensation (which were largely based on Mr Schilling’s expert report) against the baseline figures disclosed by legal invoices discovered by the defendants. Note that from this point forward, all dollar amounts are denoted in US dollars unless stated otherwise.
| Project | Plaintiff’s claim | Baseline figure |
| Chilisai (legal fees) | $1,652,429.00 | $218,630.00 |
| Chilisai (Sunkar shares) | £9,590,000.00 | £0.00 |
| Urals Gold | $398,322.00 | $109,292.00 |
| Roxi Petroleum (Schilling) | $250,000.00 | $250,000.00 |
| Karamandybas | €163,992.00 | €163,992.00 |
| Ravinnoye | €124,419.00 | €124,419.00 |
| Beibars Munai | €101,817.00 | €101,817.00 |
| Ablai | $500,000.00 | $31,959.00 |
| Lancaster | $19,504.00 | $19,504.00 |
| Kangamiut Seafoods | $167,500.00 | €39,750.00 |
28 In this regard their are a number of matters which required to be taken into account:
(a) The Chilisai (Sunkar shares) column has a baseline figure of zero. The Sunkar shares will be dealt with below.
(c) Notably, the plaintiff has omitted any election regarding the Karamandybas transaction (the face value of invoices being €163,992.00. There is a presumption that an election has been made regarding those invoices in line with the other transactions.(b) Regarding the Roxi Petroleum transaction, the plaintiff has contended that it is entitled to the face value of the receipts for the Ravinnoye and Beibars Munai transactions in addition to an amount of $250,000.00 set out by Mr Schilling.
Dealing with the claims regarding Sunkar shares
29 The reasons in the principal judgment are to be found between paragraphs 397 and 427.
30 It is strictly unnecessary to repeat those reasons. The essence of the matter is that the defendants concealed these continuing activities from the plaintiff.
31 In consequence the plaintiff was not in a position to do otherwise than to satisfy the court that there was strong evidence to suggest that Temujin received Sunkar shares from the pre- IPO placing.
32 This is a paradigm example of the need for the nullus principle to be engaged.
Roxi Petroleum project
33 Regarding the Roxi Petroleum project and its three sub-transactions, the principled approach is to allow the plaintiff to claim the Euro amounts that reflect the face value of the invoices for the Karamandybas, Ravinnoye and Beibars Munai transactions.
34 However, to allow the $250,000.00 in Mr Schilling’s report in addition to the face value of the invoices would effectively mean that the plaintiff is compensated twice. This is not an appropriate course.
Unexceptional figures
35 There are some figures in the MWP’s claim for equitable compensation that are uncontroversial. These are as follows:
b) The amount claimed by the plaintiff for the Lancaster matter is identical to the amount discovered in invoices for legal fees of $19,504.00.
a) The Roxi Petroleum transaction invoices yielded a total face value of €390,228.00. As such receipts are concrete evidence of benefits obtained by the defendants, the plaintiff can be compensated for this amount (plus interest) accordingly.
Discounted figures
36 The balance of the claim by the MWP to be dealt with requires a discount factor. The appropriate discount figure in all of the circumstances is 10%.
37 Insofar as MWP has contended that the strict liability approach for breach of the no conflict duties might have been departed from in the reasons, that was certainly not intended. However that is not to say that there can never be a circumstance in which contingencies may not be accounted for. As was observed by the learned authors of Meagher, Gummow and Lehane - Equity Doctrine and Remedies 4th edition [at 41-040]
“equitable remedies are susceptible of adjustment to the particular case in a way which the law does not envisage”.
38 To an extremely limited extent these proceedings permit such an approach.
39 The discounted amounts are shown below:
| Transaction | Gross figure | Discounted figure |
| Chilisai (legal fees) | $1,652,429.00 | $1,487,186.10 |
| Urals Gold | $398,322.00 | $358,489.80 |
| Ablai | $500,000.00 | $450,000.00 |
| Kangamiut Seafoods | $167,500.00 | $150,750.00 |
Interest calculations
40 The plaintiff has requested the court to assess the interest on its claim for equitable compensation from 20 December 2005 up to and including 10 December 2009. For the amounts that interest has accrued, presented below are schedules that quantify the interest.
41 Schedule A: Interest periods and rates
| Start Date | End Date | Days | Rate (% p.a) |
| 20/12/2005 | 31/12/2006 | 377 | 9.00% |
| 01/01/2007 | 05/03/2009 | 795 | 10.00% |
| 06/03/2009 | 10/12/2009 | 280 | 9.00% |
42 Schedule B: Interest calculation formula
Principal at 10/12/2009 = Principal at 20/12/2005 * (1 + 9.00% * 377/365) * (1 + 10.00% * 795/365) * (1 + 9.00% * 280/365)
43 Schedule C: Post-interest Amounts
| Project | Principal at 20/12/2005 | Principal at 10/12/2009 |
| Chilisai | $1,487,186.10 | $2,116,130.52 |
| Urals Gold | $358,489.80 | $510,098.37 |
| Ablai | $450,000.00 | $640,309.06 |
| Lancaster | $19,504.00 | $27,752.42 |
| Kangamiut Seafoods | $150,750.00 | $214,503.54 |
| $US Total | $US2,465,929.90 | $US3,508,793.91 |
| Karamandybas | €163,992.00 | €233,345.70 |
| Ravinnoye | €124,419.00 | €177,036.92 |
| Beibars Munai | €101,817.00 | €144,876.33 |
| Euro Total | €390,228.00 | €555,258.94 |
44 The bolded figures of $US3,508,793.91 and €555,258.94 will therefore form part of the defendants’ liabilities to the plaintiff.
The non-conflict duty: remedies
45 MWP is not entitled under the second limb of the rule in Barnes v Addy [in respect of the "no profit duty", "duty of loyalty", "no harm" duty and "duty of confidence] to an entirely disparate and separate form of equitable compensation to that referred to earlier in these reasons. The reference to United States Surgical has already been quoted.
46 The same misconception follows in MWP's submissions where in similar fashion it seeks to now focus upon the alleged remedies in relation to be 'no conflict' duty.
Treating with the issue
47 The simplest approach is to commence with identifying the areas in respect of which the Court rejects particular claims put forward by MWP namely the claim with respect to the Benkala Copper losses is rejected.
Conspiracy
48 In the course of the reserved judgment the Court observed [at 582] that it was difficult to see what additional remedy, if any, might be applicable apropos the findings concerning the tort of conspiracy.
49 Following the further submissions received from both parties the finding is that MWP is not entitled to any separate relief by reason of its success in having the conspiracy allegations upheld. The findings concerning the tort of conspiracy were totally intertwined with the findings in relation to the breaches of fiduciary duty and similar.
50 Not only is there no principled way for the court to give additional damages for the conspiracy holding; but even if that was not the case, the majority decision of the New South Wales Court of Appeal in Harris v Digital Pulse Pty Ltd [2003] NSWCA 10 makes clear that the New South Wales Supreme Court has no power to make a punitive monetary award for breach of fiduciary duty where that duty arises in the context of a contractual relationship. Further as Heydon J [albeit obiter] observed, the New South Wales Supreme Court has no power to award exemplary damages for equitable loss.
51 In passing I accept the defendants’ contention that MWP's third further amended commercial list statement filed on 26 June 2009 did not seek exemplary damages in respect of the conspiracy count. It is inappropriate at this late stage for the Court to grant leave to seek such exemplary damages. That application is refused.
Returning to the ‘Nullus commodum capere potest de injuria sua propria’ principle
52 I do not understand anything in Harris v Digital Pulse to be inconsistent with the court's power in an appropriate case to engage the nullus commodum capere potest principles set out in what follows. Harris was concerned with the rejection of the power to make a punitive monetary award in a context in which fiduciary obligations arose because of the existence of a contractual relationship of a particular character.
53 As the Chief Justice observed [at 47] in certain contexts it is perfectly understandable that the conduct of the fiduciary is a relevant consideration in determining where, within the relevant range, justice between the parties indicates that a particular choice should be made. That process offered no analogy with the award of a separate and discrete remedy over and above any damage to the beneficiary or profit to the fiduciary.
54 The engaging of the principal that no man can take advantage of his own wrong stands well apart from an attempt to award exemplary damages for breach of fiduciary duty. As Heydon J observed [at 441]:
“the plaintiff's argument in Harris was that equity already possessed the power to award exemplary damages, or that if it did not it ought to, by fashioning or moulding its relief so as to conform to the common-law power to award exemplary damages where the factual circumstances were similar to those in which, had the plaintiff sued in tort, exemplary damages would be available”.
55 This is far removed from the jurisprudence which informs the principle that no man can take advantage of his own wrong.
56 The reasons [at 554] made clear that these proceedings constituted an area where this maxim required to be borne in mind:
This principle which is enlivened by way of a presumption against the wrongdoer may be invoked for the purpose of quantifying damages
57 That finding was of course equally apt to permit the wrongdoer principle to be invoked for the purpose of quantifying equitable compensation.
58 In Houghton v Immer (No 155) 1997 44 NSWLR 46 the Court of Appeal had occasion to apply this principle. As the headnote [at 47] makes clear:
Because there was no direct evidence of the cost of improvements and the assessment of compensation had been made difficult by the failure of the partnership to keep accounts, the Court should assess compensation robustly, relying on the presumption against wrongdoers and resolving doubts against those whose actions had made the determination problematic.
[Reference was made to Armory v Delamirie as well as to LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (No 2) (1990) 24 NSWLR 499.
[cf Black and Kellner 343 Family Law Reports as to circumstances in which those who fail to make full and substantial disclosure of relevant affairs are unable to rely on an absence of evidence to prevent the making of orders]In the well-known case, Armory v Delamirie (1722) 1 Stra 505 , the plaintiff chimney sweepers boy found a jewel and carried it to the defendant’s shop (who was a goldsmith) to know what it was and delivered it into the hands of an apprentice, who under pretence of weighing it, took out the stones. The apprentice denying his wrongdoing delivered back to the plaintiff the socket without the stones. As to the value of the jewel, several of the trade were examined to prove what a jewel of the finest water that would fit the socket would be worth; and the Chief Justice directed the jury, that unless the defendant did produce the jewel and show it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages.]
59 The current circumstances and findings amply justify the Court in assessing the equitable compensation sought robustly relying on the aforesaid presumption against wrongdoers and resolving doubts against those whose actions had made the determination problematic.
60 In all of the circumstances the defendants in addition to the other orders reflected in these reasons will be required to pay equitable compensation to MWP in the sum of $AUS4,000,000.00.
The second defendant (“Slater”)
61 Slater stands in almost all respects in the same position as Nicholls and the orders made against Slater will be in exactly the same form as those against Nicholls.
62 The sole exception is in relation to breach of Slater’s contractual duties, where the period of breach in relation to the terms implied into his contract (see paragraph 41 of the pleading which replicates the plea against Nicholls) concludes on 9 January 2006 and there is no notice period in respect of Slater’s contract as is the case with Nicholls.
The third defendant (“TSL”), the fourth defendant (“TIL”) and the fifth defendant (“TFZE”)
63 Save for conspiracy, where a general finding is made in respect of all the defendants at paragraph 289 of the Reasons, no express findings of liability are made in respect of any of the corporate defendants.
64 However:
(i) Findings are made at paragraphs 27, 52, 122, 124, 125, 127, 134, 189- 190, 280 iv (where TIL is equated to Slater), 281, 282, 283, 412-6, 422 and 426 of the Reasons in relation to TIL;
(ii) At paragraphs 51, 242-3, 280 i of the Reasons in relation to TSL. (See in particular the finding at paragraph 280 i, where there is a finding that Nicholls and Slater acted in breach of the “no profit” rule in establishing TIL and TSL.)
(iii) The above findings implicate both TIL and TSL in breaches of fiduciary duty and the inducement of breaches of Emmott’s contract.
(iv) No express finding of liability under Barnes v Addy is made in relation to TSL, TIL or TFZE.
(v) The evidence yields to the propriety of making a finding that all of the corporate defendants were creatures of the partnership found by the Court to have been established by Nicholls, Slater and Emmott at paragraphs 132-3 and 224 of the Reasons.
(vii) That further finding is made.(vi) Although this contention is in fact noted at paragraph 28 of the Reasons no positive finding was made in respect of it.
65 Accordingly, on the above basis, the liability of TSL, TIL and TFZE in relation to accessorial liability in equity and in tort is appropriate to be made on the basis that the liability of those companies follows the liability of Slater and Nicholls, their effective controllers.
The seventh defendant (“THL”)
66 Findings are made with respect to THL at paragraphs 57 and 58 of the Reasons. This company operated a bank account on behalf of TIL in circumstances that were entirely unexplained. It was not, on the evidence, a company controlled by Mr Slater or Mr Nicholls.
67 During argument Mr Walton SC conceded that THL had played virtually no part in the proceedings. It is to be recalled that no appearance had been filed for THL but leave to proceed against that entity was granted by the Court in May 2008.
68 In my view the paucity of evidence in relation to THL is such that it is simply inappropriate to grant any relief against it. Nor is it appropriate to do otherwise than to order that as between WMP and THL there is to be no orders made as to costs.
Costs
69 Save as regards the approach to costs of the defendants 'abuse of process' application, the principled exercise of the relevant discretion is to order that the defendants pay the plaintiff’s costs of pursuing its claims against the defendants. The plaintiff has succeeded in almost every aspect of its pleaded case against the defendants. The usual rule as to costs, that they follow the event, should apply: UCPR r.42.1.
70 The principled exercise of the relevant discretion requires that any existing costs orders in the defendants’ favour should be set off against the far greater liability that the defendants have to the plaintiff in terms of costs. This has significance for the plaintiff’s application [dealt with below] to have the security it has provided for the defendants’ cost released.
Reserved Costs
71 MWP has produced a schedule of those occasions on which costs have been reserved over time in respect of various applications in the matter. That schedule is reproduced below.
Michael Wilson & Partners Ltd v Robert Colin Nicholls & Ors
Supreme Court of NSW Proceedings No. 50151 of 2006
Summary of Reserved Costs Orders
Note: The Freezing Order was made on 9 October 2006 but pursuant to Order 5 of 9 October 2006, the proceeding was stood over for hearing on 20 October 2006 (the return date)13. The costs of this application are reserved to the judge hearing the application on the return day (20 October 2006).
Note: Hearing held on 20 October 2006 ordered that the Freezing Orders made on 9 October 2006 are to continue. Order 10(a1) of the Freezing Orders made on 9 October 2006 to continue up to and including 5pm on 27 October 2006 (Order 3 of 20 October 2006).5. The Defendants' costs of and incidental to MWP's Notice of Motion filed on 9 October 2006 are reserved.
Note: Order 10(a1) of the Freezing Orders made on 9 October 2006 was to continue until 27 October 2006 (Order 3 of 20 October 2006). By Order 1 made 27 October 2006, Order 10(a1) of the Orders made on 9 October 2006 is continued.2. The parties' costs of and incidental to today's court appearance are reserved. 2. Costs of MWP's motion filed 14 September 2007 are reserved.
Defendants' Notice of Motion dated 20 March 2008 re freezing Orders and the Defendants' Notice of Motion for MWP to disclose its directors, officers and shareholders dated 27 February 2008.
Note: the Orders grant leave to file the(Amended) Notice of Motion dated 16 April and the Affidavit of Sidney Wang dated 15 April 2009 and outlines that all interlocutory disputes will be dealt with on 12 May 2008. The proceedings were stood over till 17 April 2009 .4. I reserve the costs of today.
Defendants' Notice of Motion dated 20 March 2008 re freezing Orders and the Defendants' Notice of Motion for MWP to disclose its directors, officers and shareholders dated 27 February 2008.
Note: the Orders grant leave to file the[Amended] Notice of Motion dated 16 April and the Affidavit of Sidney Wang dated 15 April 2009 and outlines that all interlocutory disputes will be dealt with on 12 May 2008. The proceedings were stood over till 17 April 2009 .
Note: Orders made by the court on 17 April 2008 in relation to matters before the court on that day which stood proceedings over till 12 May 2008 for all outstanding interlocutory applications.
Note: On 12 May 2008 the interlocutory applications presently before the court or which may be commenced pursuant to these orders are listed for hearing namely: (a) MWP's application for orders re Amended Notice of Motion filed and served 16 April 2008; (b) MWP's Notice of Motion filed 16 April 2008 seeking to vary the freezing Orders; (c) Any Notice of Motion to be made by MWP seeking freezing orders against PJT and Temujin; (d) Any Notice of Motion to be made by MWP seeking leave to amend its Further Amended Commercial List Statement; (e)The Defendants' application for further Security for Costs pursuant to paragraph 2(a) of its Notice of Motion filed 20 March 2008; and (f) The Defendants' application for MWP to disclose its directors, officers and shareholders filed 27 February 2008.16. The parties costs of and incidental to the interlocutory hearing on 16 April 2008 and today's court appearance are reserved. 5. Costs of the application by Mr Nicols, solicitor, today are reserved.
Note: 2 judgments were delivered by Einstein J on 23 May 2008, namely [2008] NSWSC 501 and [2008] NSWSC 521
Note: Judgment and Orders given today re leave granted for use of certain documents in the BVI. Judgment was given on other issues, but Orders were stood over until 26 May 2008. Short Minutes of Order were prepared for 26 May which were made by Einstein J on 28 May 2008.5. Costs of today are reserved.
Note: these orders relate to [2008] NSWSC 501
Defendants' Notices of Motion dated 27 February 2008, 20 March 2008 and 12 May 2008
Note: In Short Minutes of Order dated 26 May 2008 made by Einstein J 28 May 2008, liability and quantum are to be heard together, leave is granted to amend the Commercial List Statement, leave is granted to rely on further evidence in chief, confidentiality regime implemented, orders made re discovery of documents, freezing order varied, the Defendant's Motion for discharge of the freezing order is dismissed and additional security for costs is granted, judgement re disclosure of MWP's shareholders reserved15. The parties' costs of and incidental to the hearing of the motions of MWP and Defendants heard on 12, 13 and 20 May 2008 are reserved to be dealt with following the final hearing. 13. The costs of this application are reserved to the judge at the final hearing.
Note: the Motion dated 20 May 2008 came before the Court on 20 May 2008 and 23 May 2008. On 23 May 2008 MWP was granted leave to use documents produced by PJT Corporate Services Pty Ltd, with the balance of the Motion stood over to 26 May 2008. On 26 May 2008 MWP was ordered not to used the documents produced by Brian Weir and Debra Lighazzolo in the BVI proceedings. On 30 May 2008 Orders were made granting MWP leave to use the documents produced by Brian Weir in the BVI proceedings. On 6 June 2008 leave was granted to MWP to use the document produced by Debra Lighazzolo in the BVI proceedings. Leave was also granted on 6 June 2008 to use the documents produced under subpoena by PJT Corporate Services Pty Ltd, Brian Weir and Debra Ligazzolo in the UK Arbitration and any ancillary proceedings.3. The First to Fifth Defendants pay MWP's costs of today and in relation to the previous occasions when the motions have been before the Court, otherwise costs remain reserved. 5. Costs Reserved. 2. I reserve the question of costs. 3. Costs of the application made by Mr Nicholls are reserved. 4. Reserve costs.
Dealing with the issue
72 I accept that the costs associated with these applications should form part of the general costs order in favour of MWP, being the successful party in the proceedings.
73 Since the commencement of these proceedings in October 2006, fifteen separate orders have been made that costs of applications made in the proceedings be reserved.
74 UCPR r.42.7(1) provides that unless the Court orders otherwise, the costs of any interlocutory application, including costs that are reserved, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.
75 This means that the successful party to the proceedings is entitled to the reserved costs of the interlocutory hearing: Idoport Pty Limited v National Australia Bank Limited [2006] NSWSC 895 at [15].
76 The relevant principles are set out in Idoport at [14]:
(i) subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. If the litigation had not been brought by the unsuccessful party, the successful party would not have incurred the expense which it did: Oshlack v Richmond River Council (1998) 193 CLR 72, per McHugh J at 97; see also Surf Road Nominees Pty Ltd v James [2004] NSWSC 223 per Einstein J at [48].
- (ii) “the event” which costs ordinarily follow can be considered as the commercial result, so that a successful party may recover all its costs where the objective sought by the litigation is achieved, even though the party does not succeed on every issue in the litigation: see for example New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 14 IPR 75 at 79; and
- (iii) an analogy may be drawn with matters involving multiple issues. In these cases it is generally not appropriate for the Court to attempt to determine which issues were won by particular parties, to what extent they were won, and what was the amount of time spent on each of the issues so as to apportion costs accordingly. Such an approach would be contrary to the trend of decisions in relation to the exercise of discretion as to costs: Waters v P C Henderson (Australia) Pty Ltd (NSWCA 6 July 1994 unreported, per Mahoney JA at 5) (with whom Priestley JA and Kirby P agreed). In the same way, the costs of these interlocutory hearings should be determined by the result of the principal litigation of which these interlocutory hearings form but a part. As such, it is not necessary for the Court to consider the issues that arose in each of the interlocutory hearings in an attempt to apportion the costs of each of the various interlocutory hearings. In O’Keeffe Nominees Pty Ltd v BP Australia Ltd (No 2) (1995) 55 FCR 591 Spender J at 598 to 599 said:
- It is not necessarily just that the costs of an interlocutory application should follow the result of that interlocutory application but rather should be determined by the result of the principal litigation of which the interlocutory application forms but a part. (Emphasis added);
77 I accept that it would be artificial in the present case to isolate each of the interlocutory hearings and to apply any different test from that which applies to the costs of the proceedings generally: Idoport at [6]. The interlocutory hearings concerned, amongst other things, freezing orders, confidentiality undertakings, applications for leave to amend the pleadings, applications in relation to discovery and leave to rely on documents discovered and produced under Subpoenas and Notices to Produce in related proceedings.
78 There are no special circumstances in this case to disturb the operation of the usual rule, such that the plaintiff is entitled to the reserved costs of the interlocutory hearings.
The notice of motion for abuse of process: indemnity costs against the defendants
79 The notice of motion filed by the first to fifth defendants on 10 July 2009 relating to the defendants’ claim that these proceedings were an abuse of process by the plaintiff, consistently with paragraphs 583 to 644 of the reasons for judgment, must be dismissed.
80 Independently of any entitlement to costs of the proceedings generally the plaintiff is entitled to costs occasioned by the defendants’ notice of motion. The plaintiff however seeks an order under s. 98(1) Civil Procedure Act 2005 that those costs be paid on an indemnity basis for the following reasons.
(ii) The plaintiff opposed the application at the outset. The application proceeded over the plaintiff’s objection when the Court decided that it would be heard in conjunction with the plaintiff’s proceedings and would be determined at the conclusion of those proceedings.
(i) The relief sought in the defendants’ application was that the plaintiff’s proceedings be struck out in limine.
81 Paragraph 601 of the reasons made plain that without exception the grounds relied upon by the defendants in relation to the so-called abuse of process case failed.
82 Paragraph 590 of the reasons referred to Dey v Victorian Railways Commissioners (1949) 78 CLR 62 where Dixon J said at 91:
A case must be very clear indeed to justify the summary intervention of the Court ... [O]nce it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action as frivolous and vexatious and an abuse of process.
83 In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Barwick CJ, in a similar vein, said at 130:
See also Jago v District Court of NSW (1989) 168 CLR 23 per Gaudron J at 76.
….great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.
84 I accept that there was never any reasonable basis for the making of the application nor was there ever any reasonable prospect of it succeeding.
85 The deliberate pursuit of the application added very substantially to the time taken in the conduct of the proceedings. For example almost all of the cross-examination of Mr Wilson went to this issue as did all the attempts to lead otherwise irrelevant evidence concerning the so-called Swiss prosecution, including the cross-examination of Mr Radosavljevic. All this added significantly to the costs incurred by the plaintiff in conducting the case.
86 As MWP has contended that these factors enliven the jurisdiction for indemnity costs.
See also in relation to the raising of deliberately false defences or allegations of fact Degmam Pty Limited (in liq) v Wright (no 2) [1983] 2 NSWLR 354 (Holland J).
See in particular, in relation to arguments that were self-evidently hopeless or bound to fail, the Court of Appeal’s decision in Huntsman Chemical Company Australia Ltd v International Pools Australia Limited (1995) 36 NSWLR 242 (per Kirby P at 249-250).
Conclusion
87 For those reasons the costs orders which are to be made will be as follows :
(i) The Court orders that the notice of motion filed by the first to fifth defendants on 10 July 2009 be dismissed.
(iii) Subject to the above order the Court also orders that the defendants are to pay the plaintiff’s costs of the proceedings including reserved costs.(ii) The Court orders that pursuant to s. 98(1) Civil Procedure Act 2005 the first to fifth defendants are to pay the plaintiff’s costs of the notice of motion on an indemnity basis.
Security for costs
88 The plaintiff seeks an order releasing it from any continuing obligation to provide security for the defendants’ costs of the proceedings. Security has been provided in the form of bank guarantees. This security was ordered pursuant to:
(i) paragraph 1 of the orders of 9 February 2007;
(iii) paragraph 13 of the orders of 28 May 2008.(ii) paragraphs 1 and 2 of the orders of 7 December 2007; and
89 The plaintiff has succeeded in its claims against the defendants. The defences have all been rejected. There is no reason for the defendants to continue to enjoy orders for security for costs in proceedings they have lost, particularly once final orders have been entered in favour of the plaintiff.
90 I accept that the natural order on the successful conclusion for the plaintiff of the hearing is for any security it has provided for the costs of the defendants to be released. There is nothing left for the guarantees properly to secure.
91 The form of the order will be:
The Court orders that the plaintiff be released from the obligation to provide security for the defendants’ costs of the proceedings pursuant to:
(a) paragraph 1 of the orders of 9 February 2007;
(c) paragraph 13 of the orders of 28 May 2008.(b) paragraphs 1 and 2 of the orders of 7 December 2007; and
Application for a stay of orders pending appeal by the defendants
92 The defendants have made clear that they have instructions to appeal from the decision in these proceedings. In that regard they have strongly contended that the appropriate way forward is for the court to stay its relevant orders until the commencement of term next year when the defendants would be required to seek a further stay from the Court of Appeal.
93 The plaintiff has vehemently opposed this course especially by reason of its claim to be now entitled to be released from the obligation to provide security for the defendants’ costs of the proceedings pursuant to the orders described above. It contends that bearing in mind the period of time which has expired since the principal judgment was handed down, and in the light of the proceedings having been set down for trial on issues of both quantum and liability, it has every entitlement to be released from the above described obligation to provide security for the defendants costs.
94 In my view it is appropriate for the court to stay the operative orders to 5.00pm on 16 December 2009. However there is ample authority to the effect that a declaration cannot be stayed. A declaratory order is non-executory, it cannot be enforced.
[cf: Bunnings Forest Products v Bullen (1994) 54 FCR 342; Rooster Club Inc v Northern Tavern Pty Ltd (No 2) [2003] SASC 143; Stellar Call Centres Pty Ltd v Community and Public Sector Union [1999] FCA 1236; Re Theo; Ex parte Theo and Official Trustee in Bankruptcy [1996] FCA 787; Arnheim Land Aboriginal Land Trust v Northern Territory of Australia [2007] FCAFC 31]
Orders – In these orders ‘the Reasons for decision’ refer to the Reasons published on 6 September 2009
95 The Orders of the Court are as follows:
Nicholls
- 1. The Court declares that the first defendant acted in breach of his “no profit” fiduciary duties as set out in paragraphs 279 and 280 of the Reasons.
- 2. The Court declares that the first defendant acted in breach of his “no conflict” fiduciary duties as set out in paragraph 283 of the Reasons.
- 3. The Court declares that the first defendant is liable under the second limb of the rule in Barnes v Addy in respect of the Emmott’s breaches of “no profit duty”, “duty of loyalty”, “no harm” duty and “duty of confidence” referred to in paragraphs 180 and 182 of the Reasons.
- 4. The Court declares that the first defendant is liable under the second limb of the rule in Barnes v Addy in respect of the Emmott’s breaches of the “no conflict” duty referred to in paragraphs 180 and 182 of the Reasons.
- 5. The Court declares that the first defendant between 1 November 2005 and 31 March 2006 acted in breach of his contractual duties to the plaintiff to:
(i) act with fidelity in carrying out his duties as an employee of the plaintiff;
(ii) act in good faith in carrying out his duties as an employee of the plaintiff;
(iii) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
(iv) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff;
(v) give three (3) month's prior written notice of resignation from his employment with the plaintiff;
(vii) not, following the termination of his employment at the plaintiff, approach, solicit or make offers to any of the plaintiff’s contacts, clients or staff and would not seek to work on any projects or developments in which the plaintiff is involved, without the plaintiff’s prior consent.(vi) respect and maintain strict confidentiality as to all matters, especially dealings which the plaintiff has as to projects, clients and with Government and State Agencies;
(i) observe the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits;
(ii) keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship;
(iii) act with fidelity in carrying out his duties as an employee of the plaintiff;
(iv) act with fidelity in carrying out his duties as an employee of the plaintiff;
(v) act in good faith in carrying out his duties as an employee of the plaintiff;
(vii) dedicate all of his time in the course of his employment with MWP in furtherance of the interests of the plaintiff;(vi) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
- 7. The Court declares that the first defendant is liable for conspiracy to injure the plaintiff by unlawful means.
- 8. The Court orders that in consequence of:
(i) the aforesaid breaches by the first defendant of equitable obligations owed to the plaintiff;
(iii) commission by the first defendant of the aforesaid the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties;(ii) the aforesaid breaches by the first defendant of contractual duties owed to the plaintiff;
- the first defendant is jointly and severally liable with each of the second to fifth defendants to pay to the plaintiff the sums of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00.
Slater
- 9. The Court declares that the second defendant acted in breach of his “no profit” fiduciary duties as set out in paragraphs 279 and 280 of the Reasons.
- 10. The Court declares that the second defendant acted in breach of his “no conflict” fiduciary duties as set out in paragraph 283 of the Reasons.
- 11. The Court declares that the second defendant is liable under the second limb of the rule in Barnes v Addy in respect of the Emmott’s breaches of “no profit duty”, “duty of loyalty”, “no harm” duty and “duty of confidence” referred to in paragraphs 180 and 182 of the Reasons.
- 12. The Court declares that the second defendant is liable under the second limb of the rule in Barnes v Addy in respect of the Emmott’s breaches of the “no conflict” duty referred to in paragraphs 180 and 182 of the Reasons.
- 13. The Court declares that the second defendant between 1 November 2005 and 9 January 2006 acted in breach of his contractual duties to the plaintiff to:
(i) act with fidelity in carrying out his duties as an employee of the plaintiff;
(ii) act in good faith in carrying out his duties as an employee of the plaintiff;
(iii) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
(iv) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff.
(v) give three (3) month's prior written notice of resignation from his employment with the plaintiff;
(vii) not, following the termination of his employment at the plaintiff, approach, solicit or make offers to any of the plaintiff’s contacts, clients or staff and would not seek to work on any projects or developments in which the plaintiff is involved, without the plaintiff’s prior consent.(vi) respect and maintain strict confidentiality as to all matters, especially dealings which the plaintiff has as to projects, clients and with Government and State Agencies;
- 14. The Court declares that the second defendant committed the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties to the plaintiff to:
(i) observe the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits;
(ii) keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship;
(iii) act with fidelity in carrying out his duties as an employee of the plaintiff;
(iv) act with fidelity in carrying out his duties as an employee of the plaintiff;
(v) act in good faith in carrying out his duties as an employee of the plaintiff;
(vii) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff.(vi) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
- 15. The Court declares that the first defendant is liable for conspiracy to injure the plaintiff by unlawful means.
- 16. The Court orders that if in consequence of:
(i) the aforesaid breaches by the first defendant of equitable obligations owed to the plaintiff;
(iii) commission by the first defendant of the aforesaid the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties(ii) the aforesaid breaches by the first defendant of contractual duties owed to the plaintiff;
- the second defendant is jointly and severally liable with each of the first to fifth defendants to pay to the plaintiff the sum of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00.
- 17. The Court declares that the third defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of fiduciary duty of Nichols and Slater and Emmott’s breaches of “no profit duty”, “duty of loyalty”, “no harm” duty and “duty of confidence” referred to in paragraphs 180 and 182 of the Reasons.
- 18. The Court declares that the third defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of what it should duty of Nichols and Slater and Emmott’s breaches of the “no conflict” duty referred to in paragraphs 180 and 182 of the Reasons.
- 19. The Court declares that the third defendant committed the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties to the plaintiff to:
(i) observe the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits”;
(ii) keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship;”
(iii) act with fidelity in carrying out his duties as an employee of the plaintiff;
(iv) act with fidelity in carrying out his duties as an employee of the plaintiff;
(v) act in good faith in carrying out his duties as an employee of the plaintiff;
(vii) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff.(vi) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
- 20. The Court orders that in consequence of the knowing participation of the third defendant in the breaches of duty owed to the plaintiff by the first and second defendants, the third defendant is jointly and severally liable with each of the first, second, fourth and fifth defendant to pay to the plaintiff the sum of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00.
- The fourth defendant (“TIL”)
- 21. The Court declares that the fourth defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of fiduciary duty of Nichols and Slater and Emmott’s breaches of “no profit duty”, “duty of loyalty”, “no harm” duty and “duty of confidence” referred to in paragraphs 180 and 182 of the Reasons.
- 22. The Court declares that the fourth defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of fiduciary duty of Nichols and Slater and Emmott’s breaches of the “no conflict” duty referred to in paragraphs 180 and 182 of the Reasons.
- 23. The Court declares that the fourth defendant committed the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties to the plaintiff to:
(i) observe the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits;
(iii) act with fidelity in carrying out his duties as an employee of the plaintiff;(ii) keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship;
(iv) act with fidelity in carrying out his duties as an employee of the plaintiff;
(v) act in good faith in carrying out his duties as an employee of the plaintiff;
(vii) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff.(vi) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
- 24. The Court orders that in consequence of the knowing participation of the fourth defendant in the breaches of duty owed to the plaintiff by the first and second defendants, the fourth defendant is jointly and severally liable with each of the first, second, third and fifth defendants to pay to the plaintiff the sum of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00.
The fifth defendant (“TFZE”)
- 25. The Court declares that the fifth defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of fiduciary duty of Nichols and Slater and Emmott’s breaches of “no profit duty”, “duty of loyalty”, “no harm” duty and “duty of confidence” referred to in paragraphs 180 and 182 of the Reasons.
- 26. The Court declares that the fifth defendant is liable under the second limb of the rule in Barnes v Addy in respect of the breaches of fiduciary duty of Nichols and Slater and Emmott’s breaches of the “no conflict” duty referred to in paragraphs 180 and 182 of the Reasons.
- 27. The Court declares that the fifth defendant committed the tort of inducement of breach of contract with respect to Emmott’s breaches of his contractual duties to the plaintiff to:
(i) observe the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits;
(ii) keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship;
(iii) act with fidelity in carrying out his duties as an employee of the plaintiff;
(iv) act with fidelity in carrying out his duties as an employee of the plaintiff;
(v) act in good faith in carrying out his duties as an employee of the plaintiff;
(v) dedicate all of his time in the course of his employment with the plaintiff in furtherance of the interests of the plaintiff.(vi) act in the plaintiff’s interest in carrying out his duties as an employee of the plaintiff;
- 28. The Court orders that in consequence of the knowing participation of the fifth defendant in the breaches of duty owed to the plaintiff by the first and second defendants, the fifth defendant is jointly and severally liable with each of the first, second, third and fourth defendant to pay to the plaintiff the sum of $US3,508,793.91, €555,258.94 and $AUS4,000,000.00.
The Seventh Defendant (“THL”)
- 29. The proceedings are dismissed against the seventh defendant. The order is that there be no order as to costs as between the plaintiff and the seventh defendant.
The Orders of the Court as to Costs are as follows:
Costs
- 30. that the notice of motion filed by the first to fifth defendants on 10 July 2009 be dismissed.
- 31. that pursuant to s. 98(1) Civil Procedure Act 2005 the first to fifth defendants are to pay the plaintiff’s costs of the notice of motion on an indemnity basis.
- 32. Subject to the above order the Court also orders that the first to fifth defendants are to pay the plaintiff’s costs of the proceedings including reserved costs.
- 33. that the plaintiff be released from the obligation to provide security for the defendants’ costs of the proceedings pursuant to:
(a) paragraph 1 of the orders of 9 February 2007;
(c) paragraph 13 of the orders of 28 May 2008.(b) paragraphs 1 and 2 of the orders of 7 December 2007; and
Stay Orders
- 34. Orders 8, 16, 20, 24, 28 and costs orders 30, 31, 32 and 33 are stayed until 5.00pm on 16 December 2009.
- 35. these orders are to be entered forthwith.
Tabulation of joint and several liability of defendants
96 The joint and several liability of the first to fifth defendants including interest up to and including 10 December 2009 has been tabulated below:
| Transaction | Compensation Awarded |
| Chilisai | $2,116,130.52 |
| Urals Gold | $510,098.37 |
| Project Ablai | $640,309.06 |
| Lancaster | $27,752.42 |
| Kangamiut Seafoods | $214,503.54 |
| Total ($US) | $US3,508,793.91 |
| Karamandybas | €233,345.70 |
| Ravinnoye | €177,036.92 |
| Beibars Munai | €144,876.33 |
| Total (€) | €555,258.94 |
| Nullus principle | $AUS 4,000,000.00 |
| Total ($AUS) | $AUS 4,000,000.00 |
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