Michael Wilson & Partners Limited v Emmott

[2023] NZHC 2059

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2016-485-000722

[2023] NZHC 2059

BETWEEN

MICHAEL WILSON & PARTNERS LIMITED

Applicant

AND

JOHN FORSTER EMMOTT

Respondent

On the Papers
Counsel:	K P Sullivan for Applicant Respondent in person
Judgment:	4 August 2023

JUDGMENT OF ELLIS J

[1]    Michael Wilson & Partners Ltd (MWP), an English registered company, is a law firm with offices in Azerbaijan and Kazakhstan. Mr Emmott is a former employee and director of MWP, who is alleged to have diverted the clients and business of MWP to a partnership he had formed with two others, called the Temujin Partnership. As a result, there has been years of cross-jurisdictional litigation between the parties. It seems the overseas litigation continues, unabated.1

[2]    This judgment relates to the question of costs in relation to the New Zealand offshoot of that litigation.

1      A cursory search of reveals some 10 judgments issued involving the parties since the beginning of 2022.

MICHAEL WILSON & PARTNERS LTD v EMMOTT [2023] NZHC 2059 [4 August 2023]

The litigation in New Zealand

[3]    Following an arbitral award made in his favour in 2014, Mr Emmott obtained a judgment recognising the award in England and Wales (the Burton Order).2 Under the award MWP was obliged to pay to Mr Emmott £3,209,213 and USD$841,213.3

[4]    In 2016, Mr Emmott made an application under the Reciprocal Enforcement of Judgments Act 1934 (REJA) to have the order registered, and therefore recognised, in New Zealand. On 14 October 2016, Clark J ordered that the Burton Order and judgment be registered here.4

[5]    The significance of this was that  by  registering  the  Burton  Order  here,  Mr Emmott was then able to intervene in enforcement action being taken by MWP against Mr Thomas Sinclair in this country.

[6]    Mr Sinclair is a New Zealand chartered accountant who—as a result of various overseas’ judgments and orders—owed a judgment debt to MWP. MWP embarked on recognising and enforcing the judgments in New  Zealand  under  the  Judicature  Act 1908.5 Mr Sinclair was the owner of a large property in Roseneath, which MWP sought to liquidate and apply the net proceeds of sale to the debt owed.6 MWP obtained a Court order for the sale of this property.

[7]    As soon as the registration of the Burton Order was ordered by Clark J,     Mr Emmott lodged a caveat against the title to the Roseneath property. MVP then applied to have the caveat removed, which was ordered by Associate Judge Smith on 20 December 2016.7 Mr Emmott was ordered to pay costs as a result of this decision but has apparently not done so.8

2      The Original Order was as granted by Justice Burton of the Commercial Court, King’s Bench Division, of the High Court of Justice in England and Wales on 26 June 2015.

3      Interest on both sums running from 1 January 2014 was also payable.

4      Emmott v Michael Wilson & Partners Limited [2016] NZHC 2450.

5      The Judicature Act 1908 was still in force at the time of MWP’s initial applications. These judgments were registered by order of Clifford J in Michael Wilson & Partners Ltd v Sinclair [2017] NZHC 250.

6      Mr Sinclair was declared bankrupt in 2021.

7      Emmott v Michael Wilson & Partners Ltd [2016] NZHC 3155.

8      It seems Mr Emmott is claiming a set-off against costs awards made in the course of obtaining the Burton Order. MWP say that Mr Emmott is not eligible for any such set-off, but it is not possible to resolve that issue here.

[8]    The day after the caveat was removed (on 21 December 2016) MWP filed an originating application in these proceedings to:

(a)set aside the New Zealand registration of the Burton Order; or

(b)adjourn the application to set aside the registration of the Burton Order until after MWP “has exhausted its steps to challenge, appeal and/or set aside the awards” made by the English and Welsh High Court (the EWHC).

[9]    The setting aside application was made on a number of grounds, including that the Burton Order (and its registration in New Zealand) was procured by fraud, was not final and binding, and was under legal challenge in England. Numerous technical defects in the application under the REJA were also pleaded and it was said that the evidence provided to the Court by Mr Emmott was inaccurate or misleading.

[10]   Mr Emmott then applied for an interim charging order to prevent disbursement of the sale proceeds from the Roseneath property to MWP on the basis that he was a judgment creditor under the Burton Order. This interim charging order was declined by Clifford J in March 2017.9 Mr Emmott was again required to pay costs to MWP but has apparently not done so.10

[11]   The net proceeds of the sale of the Roseneath property were later distributed to MWP.

[12]   It was anticipated that, at this point, the proceedings would be at an end as there were no longer any assets in New Zealand against which Mr Emmott could try and enforce the Burton Order. Nonetheless, consecutive adjournments were sought to allow certain related matters to progress through the English courts.

[13]   Finally, on 17 April 2023, Edwards J directed that a formal proof hearing be set down to progress the matter. The hearing was set down for 8 June 2023, but on

9      Emmott v Michael Wilson & Partners [2017] NZHC 592.

10     Again, he asserts a set off.

that day, the parties issued a joint memorandum  advising  they  had  agreed  the  New Zealand Order could be set aside, and on that day Cull J made that order by consent, on the papers.

[14]   The parties could not, however, agree on costs. Justice Cull directed that submissions should be filed and that the issue could then also be dealt with on the papers. That is how the matter came before me, as Duty Judge. I have had no previous involvement with this matter.

Costs

[15]   MWP say costs should follow the event, but that an increased costs order (twice the amount of scale costs) should be made in this case because the attempt to recognise the Burton Order here caused it significant prejudice and cost.11 Counsel says scale costs are significantly less than  the  costs  MWP  has  incurred  litigating  against  Mr Emmott in New Zealand. MWP emphasises that Mr Emmott has not paid any previous costs orders and that his asserted right of set-off had no merit.

[16]   MWP argue Mr Emmott should never have applied for recognition of the Burton Order in New Zealand, and that he had no right to interfere in the enforcement steps being taken by MWP against Mr Sinclair.

[17]   Mr Emmott says he has consented to the setting aside of the registration Order simply because—now that the proceeds of the sale of the Roseneath property have been paid to MWP—there is no longer any point to its continuance. Mr Emmott contests many of MWP’s submissions on the merits but says these issues should be determined by the EWHC, not the New Zealand High Court. He submits that, in circumstances where the Burton Order itself has not been set aside, each party should bear its own costs. At most, scale costs should be ordered.

Discussion

[18]   I acknowledge that, by dint of the consent order, MWP’s application to set aside might be said to have succeeded. But I am not prepared to accept that this is

11     The scale 2B costs calculated by Mr Sullivan total $23,325, with disbursements of $590.

because Mr Emmott conceded any of the grounds asserted by MWP in its application to set aside or that it is obvious they would do so. To the contrary, Mr Emmott’s argument that there has simply been a material change of circumstances seems tenable. It seems plain that registration was sought only because Mr Emmott sought to be involved in the enforcement action being taken by MWP against Mr Sinclair, which has now ended.12 The fact that Mr Emmott did not ultimately succeed in this endeavour has no bearing (so far as I can see) on whether the Burton Order was properly registered here.

[19]   To the extent the submissions of Mr Sullivan for MWP in support of increased costs invite me to delve into the wider merits, and current status, of the various claims and cross-claims elsewhere, I decline to do so. I cannot possibly determine who owes what to whom or whether Mr Emmott has a right of set off. I cannot possibly determine whether the Burton Order (which remains in effect in England) was properly made. As will already be evident, the ongoing litigation between the parties is of epic proportions. I am simply not prepared to take one side’s account of any aspect of it at face value.

[20]   The need for caution in this regard is borne out by the EWHC’s recent criticism of MWP for issuing applications without merit and misleading the Court. In a footnote to a recent judgment (in which a civil restraint order was made against MWP),  Judge Pelling KC said:13

By an email containing Mr Wilson’s comments on this judgment, he stated that “The EWCA have set-aside the Order of 12.07.22 …” but Mr Wilson had not produced any order of the Court of Appeal to that effect. I requested a copy of the Order setting aside the Court of Appeal’s order on the morning fixed for the hand down of this judgment. It was not forthcoming from Mr Wilson.  Mr Emmott sent me a copy. It is the order sealed on 3 October 2022. That Order did indeed set aside the 11 July Order but it then again dismissed MWP’s application and marked it as totally without merit. It was seriously misleading of Mr Wilson to have said what he did in his email to the Court without providing the 3 October order or stating that the application to which the 11 July order related had been dismissed and marked as totally without merit by the 3 October order.

12     Costs in relation to those attempts are not presently in issue.

13     Michael Wilson & Partners, Limited v Emmott [2022] EWHC 2450 (Comm), at [2] (emphasis in original). It seems that Mr Wilson personally often acts for MWC in England.

[21]   Equally, MWP say that Mr Emmott has not, on occasion, complied with his duties of utmost good faith and of full and frank disclosure in the English proceedings. Again, I am simply unable to interrogate that here. I agree with Mr Emmott that the appropriate forum for resolving all wider issues is the EWHC.

[22]   In light of the matters discussed above, I consider costs should lie where they fall, and I make that order accordingly.

Rebecca Ellis J

Solicitors:

Langford Law, Wellington for Applicant