Michael Wilson & Partners Limited as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (Trading) Trust & Temujin Services v Emmott (No 2)

[2023] NSWSC 308

Supreme Court

New South Wales

Medium Neutral Citation:

Michael Wilson & Partners Limited as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (Trading) Trust & Temujin Services v Emmott (No 2) [2023] NSWSC 308

Hearing dates:

On the papers

Decision date:

31 March 2023

Jurisdiction:

Equity - Commercial List

Before:

Ball J

Decision:

(1)   The relief sought in paragraphs 1 and 2 of the Plaintiff’s notice of motion dated 30 September 2022 be dismissed with costs.

(2)   Matter listed for directions on 21 April 2023.

Catchwords:

CIVIL PROCEDURE — Separate determination of questions — Where appropriate — Whether evidence of judgments admissible to prove findings of fact — Where ordering separate question may not save costs and time

Legislation Cited:

Evidence Act 1995 (NSW)

Category:

Procedural rulings

Parties:

Michael Wilson & Partners Ltd as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (trading) Trust & Temujin Services Limited (Plaintiff | Applicant)
John Forster Emmott (Defendant | Respondent)

Representation:

Counsel:
DM Bennett KC with Richard Thomas (Plaintiff | Applicant)
J Baird (Defendant | Respondent)

Solicitors:
Michael Wilson & Partners, Ltd (Plaintiff | Applicant)
Duggan Legal (Defendant | Respondent)

File Number(s):

2016/34380

Publication restriction:

None

JUDGMENT

1. By a notice of motion dated 30 September 2022, the plaintiff, Michael Wilson & Partners Ltd (MWP), relevantly seeks the following orders:

1.    Order that the following question be determined as a preliminary question:-

1.1    Is the Defendant precluded by the doctrines of res judicata, issue estoppel and/or abuse of process from disputing the findings of fact, credit and liability made, as set out in and recorded in all or the following (without limitation):-

1.1.1    the Second (Interim) Arbitral Award, the Third (Quantum) Award, and of various of the judgments and orders of the English High Court, the English Court of Appeal, the UKSC, and also of the BVI High Court;

1.1.2    the various judgments, declarations and orders of Einstein J, the Court of Appeal, the High Court of Australia, the second Court of Appeal on remitter;

1.1.3    the various judgments and orders of the Federal Circuit Court of Australia, the QBD of the English High Court, the Croydon County Court, the Federal Court of Australia, the ACT SC, where the defendant was the principal witness; and

1.1.4   all of the above of which are, hereinafter, collectively referred to as the "Judgments''.

2. Order, pursuant to s. 190(3)(b) of the Evidence Act 1995, that s. 91 of that Act not apply to the tender by the plaintiff of, and reliance upon the Judgments.

2. The dispute of which this proceeding forms part has a long and complicated history. It is not necessary to go into that history in any detail for the purposes of this judgment. It is sufficient to say that MWP carries on a legal practice based in Kazakhstan. The defendant, Mr John Emmott, and Mr Robert Nicholls and Mr David Slater worked in that practice for a time. In late 2006, they set up a rival practice which they carried on through a number of separate entities (together, the Temujin Entities) including Temujin International Limited (TIL) and Temujin Services Limited (TSL).

3. In response to those events, MWP commenced an arbitration against Mr Emmott in London and court proceedings (NSW1) against Mr Nicholls, Mr Slater and a number of Temujin entities including TIL and TSL in New South Wales claiming, among other things, that each had breached contractual and fiduciary duties they owed to MWP. The arbitration in London was brought in accordance with an agreement by which Mr Emmott was to become a director of MWP and to obtain a 33 per cent shareholding in MWP and by which the parties agreed to refer all disputes between them to arbitration in London. The disputes between MWP on the one hand and Messrs Emmott, Nichols and Slater and the Temujin Entities on the other spawned a number of satellite proceedings about which nothing more needs to be said in this judgment.

4. Relying on a judgment it obtained in NSW1, MWP bankrupted Messrs Nicholls and Slater and placed a number of Temujin entities, including TIL and TSL, into liquidation. At some stage prior to 3 February 2016, it took an assignment of the rights that the trustees in bankruptcy of Messrs Nicholls and Slater and the liquidators of TIL and TSL had against Mr Emmott. Mr Nicholls has since died. Relying on those assignments, MWP commenced these proceedings. Relevantly, it claims that Messrs Emmott, Nicholls and Slater conducted the rival legal practice through a partnership in which they held equal shares and that Mr Emmott is liable to account for the benefits he received as a partner as well as benefits said to have been received by a number of entitles associated with him. Mr Emmott denies that he was in partnership with Messrs Nicholls and Slater.

5. MWP contends that the question whether Messrs Emmott, Nicholls and Slater were in partnership was the subject of findings in other proceedings, including NSW1 and the London arbitral proceedings and that Mr Emmott is bound by those findings as a result of an issue estoppel or on the basis that it would be an abuse of process for Mr Emmott to relitigate those issues. It submits that if the separate question is determined in its favour that would greatly shorten the hearing since it would be unnecessary for it to lead evidence or for the Court to hear evidence (apart from evidence of the awards and judgments on which MWP relies).

6. The notice of motion first came on for hearing before me on 30 January 2023. At that time, Mr Emmott opposed the separate question on the basis that it would be difficult to separate evidence relevant to the separate question from evidence relevant to the issues in dispute and that, in any event, the separate question was unlikely to save substantial costs and time. That was because Mr Emmott is not a party to many of the proceedings said to give rise to an issue estoppel or an abuse of process and he would want to lead evidence concerning the way in which the relevant proceedings were conducted, his involvement in them and the nature of the evidence that could have been led in those proceedings on the question of the existence of a partnership but was not because it was not an issue in the case or he was not a party to the proceedings.

7. During the course of the hearing, I indicated to the parties that, although the motion was framed as an application for a separate question, it appeared to be more akin to an application for a ruling on evidence in advance of the hearing under s 192A of the Evidence Act 1995 (NSW) — that is, a ruling on whether parts of the judgments could be admitted into evidence on the question whether a partnership existed notwithstanding s 91 of the Evidence Act, which provides that evidence of a decision, or a finding of fact, in an Australian or overseas proceedings is not admissible to prove the existence of a fact that was in issue in that proceeding.

8. I also indicated that I could see considerable advantage in making rulings of that type since it was likely to have a substantial bearing on what other evidence the parties and particularly MWP might wish to lead on the question of whether there was a partnership. I indicated, however, that if that was the approach the Court took it would be necessary for MWP to identify with precision what evidence it sought to rely on. Mr Baird, who appeared for Mr Emmott, without necessarily accepting that that was an appropriate approach conceded that it had considerable merit. However, he submitted that if the Court was to adopt that approach his client would still need to prepare some evidence addressing the two broad issues referred to earlier — that is, evidence concerning Mr Emmott’s involvement in the proceedings in which the findings sought to be relied on by MWP were made and evidence that could have been lead by Mr Emmott on the issue the subject of the finding.

9. In result, I set the application down for hearing for 2 days commencing on 3 April 2023 and gave the following directions:

4.    HH directs that within 7 days of today’s date the plaintiff provide the defendants a document setting out the material from judgments or awards that they rely on as evidence in these proceedings of the facts found in those judgments or awards or as matters giving rise to a res judicata issue estoppel or a claim of abuse of process.

5.    HH directs that the defendants serve and provide to HH’s Associate by 28 February 2023 any evidence on which the defendants rely in relation to the plaintiff’s application.

10. In purported compliance with direction 4, on 6 February 2023, MWP filed and served a document variously described as “Plaintiff’s Outline of Submissions” and “MWP Paper on Why Emmott is Bound by the Prior Decisions”. That document lists all the judgments and orders delivered or made in connection with the dispute between MWP and Messrs Emmott, Nicholls and Slater and the Temujin entities. In all, 27 judgments are identified. Out of an abundance of caution the document states:

MWP reserves the right to refer and to rely upon the other judgments, orders and rulings in its favour in the various proceedings, as set out in the current list attached hereto summarising and providing the dates, claim numbers, citations and a brief summary of the same. In the limited time available, since the hearing concluded, on 30.01.23, MWP has not had time to more specifically check and identify the same and the relevant paragraphs therein with precision.

The reference to “the current list attached hereto” is a reference to a list containing 378 items identifying various judgments, orders and costs certificates in a broad range of proceedings.

11. The purpose of the original directions was to seek to identify with precision the matters that were said to give rise to an issue estoppel or an abuse of process so that Mr Emmott would be in a position to address that material. Instead, MWP used the direction to provide a comprehensive list of all possible findings that have been made. Far from seeking to narrow the issues to be determined, it greatly expanded them.

12. Service of MWP’s document unsurprisingly prompted Mr Emmott to relist the matter on 24 February 2023. Necessarily, proper compliance with the directions required a degree of co-operation on the part of MWP in seeking to simplify the proceedings and to narrow the issues in dispute. It was quite apparent from the approach that MWP had taken that it was unwilling to do that. Accordingly, I concluded that the best approach was to vacate the directions and to determine the motion as originally filed. I had heard some oral argument on the motion on 30 January 2023. It was my view that further oral submissions were unnecessary. However, I thought it was appropriate to give each party an opportunity to put further supplementary written submissions before the Court before deciding the issue. I therefore vacated directions 4 and 5 and directed that by 10 March 2023 the parties file any supplementary written submissions not exceeding ten pages in relation to the motion dated 30 September 2022 and directed that the motion be determined on the papers.

13. Neither party complied with that direction. MWP did file supplementary written submissions on 10 March 2023. The submissions themselves were less than ten pages but they attached other material said to be relevant to the application which exceeded the ten-page limit. Mr Emmott did not file supplementary written submissions on that day. He sought an extension, which MWP opposed but which I granted. Mr Emmott’s submissions were filed on 15 March 2023. On the same day, MWP filed further written submissions in reply.

14. Having received the parties’ supplementary submissions, I have concluded that it is not appropriate to order the separate question sought by MWP.

15. It is by no means obvious that the separate question will be answered in a way contended for by MWP. Mr Emmott was not a party to NSW1, and there was no pleading in those proceedings that he was in partnership with Messrs Nicholls and Slater. The issue between him and MWP in the arbitration was whether he breached the contractual and fiduciary duties he owed MWP, not whether the legal practice carried on by him and Messrs Nichols and Slater through the Temujin Entities was carried on in partnership and, if it was, whether Mr Emmott has accounted to Messrs Nichols and Slater for all the benefits he received from the partnership.

16. Ordering the separate question is unlikely to save time if it is answered adversely to MWP. Indeed, in that event it is likely to add to the costs of the proceeding and to delay. That is because the hearing of the separate question itself will take time, particularly since it appears that it will be necessary to examine a large amount of material to determine whether that material gives rise to an issue estoppel or an abuse of process relevant to the issues in this proceeding, but if it is answered adversely to MWP it is unlikely to have a significant effect on the length or costs of the final hearing.

17. Even if the separate question is answered in the way for which MWP contends, it is unclear whether it will bring about a substantial saving in overall costs and hearing time. MWP submits that the final hearing will be greatly shortened if Mr Emmott is bound by findings that a partnership existed between him and Messrs Nichols and Slater. But how significant the savings in time and costs will be is unclear. The hearing of the separate question will itself involve substantial time and costs. As part of that hearing, Mr Emmott is likely to adduce evidence concerning his involvement in each proceeding and the material he could have led on the question of the existence of a partnership. Instead of focussing on the substantive question of whether a partnership existed, the Court will be required to examine a large number of proceedings which stretched over a number of years and the findings made in them and the circumstances in which those findings were made. On the other hand, there is no real evidence before the Court on how extensive the evidence would be on the substantive question of whether Messrs Emmott, Nichols and Slater were in partnership. Moreover, there will be other issues in the case apart from the existence of the partnership, including whether any partnership was dissolved and if so when and whether and what benefits Mr Emmott received for which he would have to account to the partnership if there was one.

18. Consequently, the position appears to be that if the separate question is answered adversely to MWP, the effect of ordering the separate question is likely to be that the overall proceeding will be lengthened and made more costly. If it is answered in the way for which MWP contends, it may shorten the length of the overall proceeding and reduce its costs, but by how much is unclear.

19. Moreover, if a separate question is ordered, having regard to the history of the dispute, it seems likely that there will be an application for leave to appeal from the decision on the separate question, which will cause further delay.

20. Taking those matters into account, I have concluded that the relief sought in paragraphs 1 and 2 of MWP’s notice of motion dated 30 September 2022 should be dismissed with costs.

21. The matter is listed for directions on 21 April 2023.

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Decision last updated: 31 March 2023