Nicholls v Michael Wilson & Partners Ltd

The case of *Nicholls v Michael Wilson & Partners Ltd* concerned a dispute between a legal and consulting firm, Michael Wilson & Partners Ltd (MWP), and its former employees and consultants. MWP alleged that these individuals had deliberately breached their fiduciary duties by diverting opportunities for legal work to their own newly established firm and by knowingly assisting in other breaches of fiduciary duty. The matter came before the Court of Appeal after a remitter from the High Court.

The central legal issues before the Court of Appeal were the principles governing the assessment of equitable compensation for the loss of opportunities to perform legal work and to receive financial rewards. The court was required to determine the extent to which causation needed to be established, the significance of the fiduciaries' resignation from MWP to further their wrongful conduct, and the degree to which MWP could rely on the presumption against wrongdoers in the face of evidentiary gaps. Additionally, the admissibility and probative weight of an expert report, which estimated the legal work and fees likely to be derived from particular projects, were in question, specifically in relation to the requirements of section 79 of the *Evidence Act 1995*.

The court considered the principles of equitable compensation for breach of fiduciary duty, particularly in the context of lost opportunities. It was noted that the fiduciaries' deliberate breaches and their subsequent resignation to pursue their own interests were significant factors. The court also addressed the admissibility of the expert report, assessing whether the expert's opinions were based on specialised knowledge and met the statutory requirements for admissibility. The court acknowledged that where fiduciaries have deliberately acted to conceal or obscure the extent of their wrongdoing, the plaintiff may be entitled to rely on presumptions against the wrongdoers to fill evidentiary gaps.

Ultimately, the court determined that MWP was disentitled to relief by way of a constructive trust. However, MWP was entitled to elect between various forms of relief, including an equitable account of profits or equitable compensation, in consequence of the liability judgment.