Nicholls v Michael Wilson & Partners Ltd

The appeal concerned proceedings in the Supreme Court of New South Wales brought by the respondent against the appellants, who were alleged accessories to wrongdoing by a principal wrongdoer. The respondent had also commenced arbitration proceedings in London against the principal wrongdoer. Judgments and orders were made at trial in the Supreme Court against the appellants. Subsequently, the principal wrongdoer was found liable in the London arbitration, but only on a limited basis. The appellants argued that it was an abuse of process for the respondent to seek on appeal to maintain the enforceability of the Supreme Court judgment and orders in light of the inconsistent arbitration award.

The court was required to determine several legal issues. These included whether the trial judge’s conduct in hearing ex parte applications over a lengthy period, including making confidentiality orders and holding closed court hearings, gave rise to a reasonable apprehension of bias. Specifically, the court had to consider whether a fair-minded bystander might consider that the trial judge might not bring to bear a mind free of prejudice against a party who became aware of these applications and orders late in the proceedings. The court also had to determine whether the trial judge erred in applying New South Wales law to the respondent's claims in contract, tort, and for breach of fiduciary duty, considering the employees were incorporated in the British Virgin Islands and employed in Kazakhstan. Finally, the court considered issues relating to remedies, including whether exemplary or punitive components could be included in equitable compensation and the appropriateness of certain declarations.

The Court of Appeal allowed the appeal from the judgments and orders of the Equity Division. It found that the trial judge’s conduct in hearing ex parte applications and making confidentiality orders, without the other party's knowledge until late in the proceedings, could lead to a reasonable apprehension of bias. The court also set aside the declarations and orders made by the trial judge. The court directed a further hearing of the proceedings in the Equity Division, but stipulated that this hearing should not commence until the determination of the appeal against the second interim award of the London Arbitral Tribunal, or its redetermination if required. The cross-appeal was dismissed. The respondent was ordered to pay the appellants’ costs in the Court of Appeal, with costs in the Equity Division to abide the outcome of the further hearing.