Michael Wilson & Partners Ltd v Emmott [2021] NSWCA 315 | Case summary

Court of Appeal (NSW)|2021-07-20|Before: Leeming JA, Brereton JA

Introduction

The question in the proceedings before this Court is whether Michael Wilson & Partners Limited (Wilson Partners) should be permitted to prosecute proceedings commenced in the Equity Division against Mr John Emmott (the Current Proceedings). By its further amended summons filed in the Current Proceedings, Wilson Partners claimed an order that Mr Emmott contribute towards the liability of certain judgment debtors (the Temujin Entities) under judgments obtained by Wilson Partners against the Temujin Entities in proceedings in the Commercial List heard by Einstein J (the Original Proceedings). The Temujin Entities are Mr David Slater, Mr Robert Nicholls, Temujin International Limited (TIL), both in its own right and as trustee of the Temujin International (Trading) Trust, and Temujin Services Limited (TSL). In the Current Proceedings, Wilson Partners also claimed damages and equitable compensation for various breaches of fiduciary and contractual duties owed as a shadow director and officer and controller of TIL, its trust, and TSL, although this was not pursued on appeal. Finally, Wilson Partners claimed declarations to the effect that Messrs Emmott, Nicholls and Slater had established a partnership upon leaving Wilson Partners (the Partnership), and sought an account of all benefits received by Mr Emmott as partner.
By notice of motion filed on 1 November 2018. Mr Emmott sought, relevantly, a stay of the Current Proceedings (the Stay Application). On 8 March 2019, for reasons published on that day, a judge of the Equity Division (the primary judge) ordered that the Current Proceedings be permanently stayed and that Wilson Partners pay Mr Emmott's costs of the motion. By notice of appeal filed on 31 May 2019, Wilson Partners appealed from those orders. Against the contention that the orders were interlocutory, Wilson Partners has also sought leave to appeal from the orders made by the primary judge.

Background

In the Original Proceedings, Wilson Partners sought judgment against the Temujin Entities. Ultimately, judgments were entered against all of those parties after appeals to this Court and to the High Court of Australia and a further hearing by this Court. [118] Sequestration orders were subsequently made in respect of the estates of Mr Slater and Mr Nicholls, and TIL and TSL have been wound up in insolvency. While Wilson Partners has received some payments from trustees in bankruptcy and liquidators, the judgments remain substantially unsatisfied.
Wilson Partners claims that Mr Emmott is liable to contribute to the liability that the Temujin Entities have to Wilson Partners or that the Temujin Entities are entitled to be indemnified by Mr Emmott in respect of that liability. Wilson Partners has taken assignments, from the trustees in bankruptcy of Messrs Slater and Nicholls and from the companies in liquidation, of all of their entitlements to contribution from or to be indemnified by Mr Emmott in respect of the judgments against them in the Original Proceedings. The assignments also include any entitlement to damages from Mr Emmott in respect of the Partnership.
The primary judge accepted that Wilson Partners, as assignee, may have a small claim for contribution against Mr Emmott in the order of USD$2,000, on the basis of equal apportionment among Messrs Emmott, Slater and Nicholls. His Honour considered that a claim that was unlikely to succeed for anything more than several thousand dollars did not meet the requirement that it has sufficient prospects of success to warrant putting a person served outside Australia to the time, expense and trouble of defending the claim. Mr Emmott asserted that, in circumstances where neither of Messrs Nicholls and Slater has satisfied the judgments against them, they have no entitlement to contribution or indemnity. The primary judge did not need to deal with that contention. Further, having found that all relevant events occurred outside Australia, his Honour concluded that Australia was not an appropriate forum for the determination of the claims in respect of the Partnership.
Thus, the proceedings involve two independent sets of claims. The first are concerned with contribution and indemnity. The second are concerned with the Partnership.

The Contribution Claims

Wilson Partners contends that each of Messrs Nicholls and Slater is entitled to indemnity from Mr Emmott in respect of their respective liabilities under the judgments in the Original Proceedings. It asserts that each is entitled to be indemnified because Mr Emmott was found to be principally responsible while Messrs Nicholls and Slater were liable only as having been knowingly concerned in the breaches by Mr Emmott.
It is difficult to see why, as a matter of principle, a person who is knowingly concerned in a breach of a fiduciary duty would be entitled to be indemnified by the person who perpetrated the breach of duty. Even if a knowing participant has a co-ordinate liability with the principal perpetrator, there is no reason, in the absence of something further, as a matter of principle, why the main perpetrator should be indemnified.
In ordinary circumstances, the only reason for pursuing a person who has been a knowing participant in a breach of fiduciary duty by another person who is the principal perpetrator is the impecuniosity of that principal perpetrator. The principal perpetrator clearly has a liability to the victim of the breach of duty for any loss or damage suffered as a consequence of the breach of duty or, in appropriate circumstances, to account for any benefit received by the principal perpetrator. It is only where the principal perpetrator cannot satisfy an obligation to make good the loss or to account for the benefit that there would be any need to pursue a knowing participant in the breach.
I have had the considerable advantage of reading in draft form the reasons of Brereton JA for concluding that the prosecution of the contribution and indemnity claims should not be permitted. In particular, I agree with his Honour that the contribution claim amounted to no more than about USD$2,000. That was sufficient basis for declining to grant leave in relation to the stay applicable to that aspect of the claims.
It may have been interesting, if the contribution and indemnity claims were to be pursued, to consider whether the Roman law treatment of contribution and indemnity in the context of co-ordinate liability of guarantors has any contribution to make to the common law. Under Roman law, where there were several guarantors, each was liable for the whole amount. Accordingly, the creditor could sue whichever guarantor he pleased. However, if an application was made before judgment, a guarantor had a defence that compelled the creditor to divide the burden of his claim under the guarantee among all of the guarantors who were solvent at the time when issue was joined. The effect was that, if one of the guarantors was insolvent, the burden on the other guarantors would be increased. However, if one of a plurality of guarantors failed, prior to joinder of issue, to invoke the right to have his liability limited to his proportionate share and the creditor succeeded in recovering judgment from that guarantor, that guarantor was required to bear the whole of the debt if the principal debtor was insolvent. However, if a guarantor paid anything to the principal creditor, he could bring an action against the debtor for indemnity in respect of the amount that he paid [119] .

The Partnership Claims

In the Current Proceedings, Wilson Partners made claims for inspection, disclosure, the carrying out of an inquiry, the taking of an account and proprietary tracing. Essentially, Wilson Partners sought the winding up and administration of the Partnership.
The primary judge considered that the agreement relating to the Partnership was not governed by Australian law or enforceable or cognizable in an Australian court. Accordingly, his Honour held, there was not sufficient connection with Australia to permit the Current Proceedings to be prosecuted in this Court. However, as Brereton JA has pointed out, his Honour appears to have overlooked that it was alleged that there are assets in Australia in respect of which the Partnership can possibly be wound up and accounts taken in Australia. That allegation appears at least arguable, although the submissions of the parties did not refer to it. The presence of property of the Partnership in Australia, in circumstances where it may be difficult to obtain relief in respect of that property elsewhere, indicates that Australia is not an inappropriate forum for the claims based on the Partnership, and that in all the circumstances the Court should assume jurisdiction. The asserted presence in Australia of assets of the Partnership provides ample "real and substantial connection" with Australia and, accordingly, there should have been no stay in respect of the claims based on the Partnership [120] .

Conclusion

I agree with the reasons of Brereton JA. I also agree with the orders proposed by his Honour.

Endnotes

See Nicholls v Michael Wilson & Partners Ltd (2011) 243 FLR 177; [2011] NSWCA 222.
See Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 ("HCA Appeal").
See Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 ("2012 CA Judgment").
See Emmott v Michael Wilson & Partners Ltd [2017] 2 All ER 569 (Comm); [2016] EWHC 3010 (Comm).
See Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51 ("2018 EWCA").
2018 EWCA at 749-750 [70] (Etherton MR; Jackson LJ and Underhill LJ agreeing).
Michael Wilson & Partners Ltd v Emmott [2019] NSWSC 218 ("Primary Judgment").
Before the primary judge, MWP did not rely on para (o).
Primary Judgment at [65]-[66].
2018 EWCA at 748 [62] (Etherton MR; Jackson LJ and Underhill LJ agreeing).
See Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 139.
See Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 245.
Tcpt, 20 July 2021, pp 3(39)-4(3).
Tcpt, 20 July 2021, p 3(7)-(12).
Tcpt, 20 July 2021, p 2(11)-(15).
[1911] 2 KB 705 ("St Thomas's Hospital").
Including pre-judgment interest.
Primary Judgment at [36]-[38].
Primary Judgment at [40], [49].
At [40].
2018 EWCA at 743 [26], 745 [43] (Etherton MR; Jackson LJ and Underhill LJ agreeing).
2018 EWCA at 747-748 [56]-[58] (Etherton MR; Jackson LJ and Underhill LJ agreeing).
Michael Wilson & Partners Ltd and Emmott (Second Interim Award, International Dispute Resolution Centre, 19 February 2010) at [4.110]-[4.129] ("SIA").
SIA at [4.129].
SIA at [4.132]-[4.135].
SIA at [4.134].
SIA at [4.136]-[4.144].
SIA at [4.144(h), (s)].
SIA at [4.144(s)].
SIA at [8.22].
Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1 at 12-13 (Lord Selborne LC); Craythorne v Swinburne (1807) 14 Ves Jun 160 at 169-170 (Lord Eldon LC); 33 ER 482; Dering v Earl of Winchelsea (1787) 1 Cox 318 at 321-322 (Lord Eyre CB); 29 ER 1184 ("Dering"); JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2002, LexisNexis Butterworths) at 398-399 [10-040] ("Meagher, Gummow & Lehane 5th ed"); J Story, Commentaries on Equity Jurisprudence (3rd ed, 1920, A Maxwell & Son) at ¶243.
Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351 (Kitto J; Windeyer J agreeing); [1969] HCA 55 ("Albion Insurance"), citing Davies v Humphreys (1840) 6 M & W 153 at 168-169 (Parke B); 151 ER 361.
Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 292 [14] (Gaudron ACJ and Hayne J); [2002] HCA 17 ("Burke"); Chillingworth v Chambers [1896] 1 Ch 685 at 698 (Lindley LJ), 707 (AL Smith LJ); Lingard v Bromley (1812) 1 V & B 114 at 117-118 (Grant MR); 35 ER 45 ("Lingard"); JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at 524-525 [21-18] ("Jacobs").
Burke at 292-293 [15]-[16] (Gaudron ACJ and Hayne J); Albion Insurance at 350 (Kitto J; Windeyer J agreeing); Smith v Cock [1911] AC 317 at 326 (Lord Mersey for Lord Macnaghten, Lord Atkinson, Lord Shaw of Dunfermline, Lord Mersey and Lord Robson).
Burke at 292-293 [15]-[16] (Gaudron ACJ and Hayne J); Albion Insurance at 345-6 (Barwick CJ, McTiernan and Menzies JJ), 352 (Kitto J, Windeyer J agreeing); Cornfoot v Holdenson [1932] VLR 4 at 7-8 (Mann J); (1932) 37 ALR 376; Ellesmere Brewery Co v Cooper [1896] 1 QB 75 at 80-81 (Lord Russell CJ for Lord Russell CJ and Cave J); Pendlebury v Walker (1841) 4 Y & C Ex 424 at 441-442 (Alderson B); 160 ER 1072.
Burke at 298-299 [38] (McHugh J), referring to Caledonian Railway Co v Colt (1860) 3 Macq 833 at 844 (Lord Chelmsford).
Burke at 292 [14] (Gaudron ACJ and Hayne J); Glenmont Investments Pty Ltd v O'Loughlin (No 2) (2001) 79 SASR 288 at 291 [18] (Doyle CJ; Nyland J and Martin J agreeing); [2001] SASC 88; Sky Channel Pty Ltd v Tszyu (No 2) [2000] NSWSC 1150 at [7]-[9] (Young J); Hanave Pty Ltd v LFOT Pty Ltd (1999) 168 ALR 318 at 328-330 [24]-[29] (Moore J); [1999] FCA 1568; Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 13 (Beaumont, Hill and Sundberg JJ); [1998] FCA 446; Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741 at 752 (Hodgson J); 13 ACLC 1244; Meagher, Gummow & Lehane 5th ed at 404 [10-090]. Kirby J expressed a contrary view in Burke at 324-326 [119]-[122].
Burke at 292 [14], 293 [17] (Gaudron ACJ and Hayne J); Dering at 320 (Lord Eyre CB).
Jacobs at 524-525 [21-18].
See Goodwin v Duggan (1996) 41 NSWLR 158 at 164-166 (Handley and Beazley JJA; Powell JA agreeing); Baynard v Woolley (1855) 20 Beav 583 at 585-586 (Romilly MR); 52 ER 729.
(1886) 31 Ch D 390 at 395 (Cotton LJ; Bowen LJ and Fry LJ agreeing). See also Selkirk v McIntyre [2013] 3 NZLR 265 at 269-270 [22]-[25] (Katz J); NZHC 575.
Tcpt, 20 July 2021, p 4(30)-(41).
Jacobs at 527 [21-20]; the corresponding passage in the 7th edition was approved in McNally v Harris (2008) 1 ASTLR 549 at 584 [150] (White J); [2008] NSWSC 659 ("McNally").
Burke at 293 [17] (Gaudron ACJ and Hayne J), citing Lane v Bushby (2000) 50 NSWLR 404 at 407 [11] (Dunford J); [2000] NSWSC 1029 and Thomas v Atherton (1878) 10 Ch D 185 at 199 (James LJ for James, Baggallay and Thesiger LJJ).
Burke at 293 [18] (Gaudron ACJ and Hayne J).
(2003) 57 NSWLR 670 at 701 [108] (Campbell J); [2003] NSWSC 159 ("Belan").
Lingard at 116-117 (Grant MR).
(1840) Cr & Ph 1; 41 ER 389 ("Wilson").
Wilson at 28 (Lord Cottenham LC).
Belan at 701 [110] (Campbell J).
G Spence, The Equitable Jurisdiction of the Court of Chancery (1846, V and R Stevens and GS Norton) at 664.
(1874) LR 9 Ch App 244.
McNally at 584 [150]-[152] (White J).
HCA Appeal at 456-457 [101] (Gummow ACJ, Hayne, Crennan and Bell JJ; Heydon J agreeing).
HCA Appeal at 455 [100] (Gummow ACJ, Hayne, Crennan and Bell JJ; Heydon J agreeing).
HCA Appeal at 457-458 [105]-[106] (Gummow ACJ, Hayne, Crennan and Bell JJ; Heydon J agreeing).
Mahoney v McManus (1981) 180 CLR 370 at 378 (Gibbs CJ; Murphy J and Aickin J agreeing); [1981] HCA 54 ("Mahoney"); Patterson v Arcade Buildings Ltd (1930) 31 GLR 312 at 315-316 (Reed J); Wolmershausen v Gullick [1893] 2 Ch 514 at 527-528 (Wright J) ("Wolmershausen"). See also Harpley Nominees Pty Ltd v Jeans [2006] NSWCA 176 at [36]-[40] (Basten JA; Handley JA and Beazley JA agreeing) ("Harpley").
St Thomas's Hospital at 710-711 (Cozens-Hardy MR), 714 (Fletcher Moulton LJ), 717 (Buckley LJ).
EH Scamell and RC I'Anson Banks, Lindley on the Law of Partnership (15th ed, 1984, Sweet & Maxwell) at 555. This passage does not appear in the most recent 20th edition.
(1912) 16 CLR 285 at 289-290 (Griffith CJ; Barton J and Isaacs J agreeing); [1912] HCA 95 ("Rankin").
St Thomas's Hospital at 713-714 (Fletcher Moulton LJ).
(1972) 126 CLR 212; [1972] HCA 5 ("Wren").
Wren at 225 (Barwick CJ; Windeyer J and Owen J agreeing).
Mahoney at 376 (Gibbs CJ; Murphy J and Aickin J agreeing).
(1992) 6 WAR 489 at 500-503 (Owen J) ("Bond").
(3rd ed, 1986, Sweet and Maxwell) at 278-279.
[1928] WN 266.
[1984] 2 NSWLR 242.
RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4th ed, 2002, LexisNexis Butterworths) at 405 [10-110].
(2009) 239 CLR 129 at 154 [60] (French CJ, Gummow, Hayne and Bell JJ); [2009] HCA 21 ("Friend").
Harpley at [41] (Basten JA; Handley JA and Beazley JA agreeing).
See, in the context of specific performance, the discussion in ICF Spry, Equitable Remedies (9th ed, 2013, Lawbook Co) at 93-94, 224-228.
Bond at 503-504 (Owen J); see also Harpley at [42]-[47] (Basten JA; Handley JA and Beazley JA agreeing).
Bond at 504 (Owen J); see also Harpley at [42]-[47] (Basten JA; Handley JA and Beazley JA agreeing).
UCPR, r 11.6(2)(c).
The claims for relief are at Further Amended Summons paras [3]-[9B].
Michael Wilson & Partners Ltd v Nicholls [2009] NSWSC 1033 at [132] (Einstein J) ("2009 NSWSC").
Michael Wilson & Partners Ltd v Emmott [2019] 4 WLR 53 at 3 [9] (Gross LJ; Peter Jackson LJ and Rose LJ agreeing); EWCA Civ 219.
Primary Judgment at [59]-[60].
Maunder v Lloyd (1862) 2 J & H 718 at 726 (Page-Wood V-C); 70 ER 1248 ("Maunder"); Carron Iron Co v Maclaren (1855) 5 HL Cas 416 at 449-450 (Lord St Leonards); 10 ER 961.
The NSW-1 proceedings.
As to which see [23] above.
2012 CA Judgment.
2009 NSWSC at [172], [183]-[186] (Einstein J).
2009 NSWSC at [187], [477]-[516] (Einstein J).
Michael Wilson & Partners Ltd v Nicholls [2008] NSWSC 501 at [85]-[88], [96]-[97] (Einstein J).
See the appellant's written submissions in chief of 6 September 2019 at [7.5]. The respondent's submissions of 4 October 2019 (relevantly at [78]) did not engage with this point, which was repeated in the appellant's written submissions in reply of 25 November 2019 at [78] and [106]; and the appellant's submissions as to the appeal of 6 April 2021 at [63], [66], [67] and [70]. The respondent's reply submissions of 7 June 2021 (relevantly at [59]) again did not engage with this point.
Drip World Pty Ltd v Dardy Touring Corp [2020] NSWSC 1772 at [60] (Stevenson J); Agar v Hyde (2000) 201 CLR 552 at 573-574 [50]-[51] (Gaudron, McHugh, Gummow and Hayne JJ); [2000] HCA 41; News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553 at 558 (Giles J) ("Lenfest"). To determine whether leave to proceed should be granted, a court should consider only the allegations made in the originating process, plus any affidavit or other evidence showing the grounds on which the application is made if the pleadings do not contain allegations necessary to establish that the claim is of one of the requisite kinds: Madden International Ltd v Lew Footwear Holdings Pty Ltd (2015) 50 VR 22 at 42 [24] (Mandie JA; Beach JA and John Dixon AJA agreeing); [2015] VSCA 90.
Maunder at 726-728 (Page-Wood V-C).
(2010) 268 ALR 377 at 405 [147] (Spigelman CJ; McColl JA and Young JA agreeing); [2010] NSWCA 7.
SIA at [8.22].
2018 EWCA at 748 [59], [61] (Etherton MR; Jackson LJ and Underhill LJ agreeing).
Primary Judgment at [69].
(1992) 34 FCR 287; [1992] FCA 71 ("Sterling Pharmaceuticals").
(1996) 185 CLR 571 at 590 (Dawson, Gaudron, McHugh and Gummow JJ); [1996] HCA 51.
Sterling Pharmaceuticals at 294 (Lockhart J).
Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538 at 543 [22]-[24] (Finkelstein J); [2009] FCA 868; Sterling Pharmaceuticals at 291 (Lockhart J); Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 210-211 (French J); [1987] FCA 64; Muller v Fencott (1981) 37 ALR 310 at 314-315 (Toohey J); [1981] FCA 147; Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 351-355 (Bowen CJ); [1978] FCA 105; L Grollo Darwin Management Pty Ltd v Victor Plaster Products Pty Ltd (1978) 19 ALR 621 at 628 (Smithers, St John and Fisher JJ); [1978] FCA 36. A non-exhaustive list of relevant considerations was provided by Lockhart J in Sterling Pharmaceuticals at 291, as follows: (1) which proceeding was commenced first; (2) whether the termination of one proceeding is likely to have a material effect on the other; (3) the public interest; (4) the undesirability of two courts competing to see which of them determines common facts first; (5) consideration of circumstances relating to witnesses; (6) whether work done on pleadings, particulars, discovery, interrogatories, and preparation might be wasted; (7) the undesirability of substantial wasted time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues; (8) how far advanced the proceedings are in each court; (9) the fact that the law should strive against permitting a multiplicity of proceedings in relation to similar issues; and (10) the general balancing of the advantages and disadvantages to each party.
Primary Judgment at [66].
Primary Judgment at [70].
(1980) 147 CLR 35 at 38 (Gibbs J; Mason J and Murphy J agreeing); [1980] HCA 41 ("Anshun (No 1)").
See also Leybourne v Habkouk [2012] NSWCA 212 at [13]-[16] (McColl and Meagher JJA) ("Leybourne"); Kermani v Westpac Banking Corporation (2012) 36 VR 130 at 151-152 [89]-[90] (Robson AJA; Neave JA and Harper JA agreeing); [2012] VSCA 42.
AB v New South Wales [2014] NSWCA 243 at [8]-[17] (Leeming JA); Macatangay v New South Wales (No 2) [2009] NSWCA 272 at [10]-[13] (Allsop P, Tobias JA and Handley AJA) ("Macatangay"); Re Luck (2003) 78 ALJR 177 at 178-179 [4]-[10] (McHugh ACJ, Gummow and Heydon JJ); [2003] HCA 70 ("Re Luck"); Little v Victoria [1998] 4 VR 596 at 597-602 (Callaway JA; Buchanan JA agreeing); Tampion v Anderson (No 2) [1973] VR 829 at 830-832 (Smith J; Pape J and Crockett J agreeing).
See National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) Pty Ltd (2001) 183 ALR 700 at 702-703 [4]-[11] (Cooper, Whitlam and Tamberlin JJ); [2001] FCA 237.
McGinn v Cranbrook School [2016] NSWCA 226 at [9], [20], [40] (Gleeson JA; Beazley P and Simpson JA agreeing); Macatangay at [11] (Allsop P, Tobias JA and Handley AJA); Page v McKensey [2004] NSWCA 437 at [30] (Mason P; Hodgson JA and Pearlman AJA agreeing); Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 30 ACSR 698 at 704 [22] (Whitlam J); [1999] FCA 218; Wickstead v Browne (1992) 30 NSWLR 1 at 11 (Handley and Cripps JJA; Kirby P agreeing); [1992] NSWCA 272.
Re Luck at 178 [6] (McHugh ACJ, Gummow and Heydon JJ).
Leybourne at [15] (McColl and Meagher JJA).
(2009) 263 ALR 522 at 526-530 [14]-[36] (McColl JA); [2009] NSWCA 401 ("Bracks").
(2007) 164 FCR 224 at 234-236 [39]-[44] (Finn, Kenny and Edmonds JJ); [2007] FCAFC 183 ("Egglishaw").
Egglishaw at 236 [44] (Finn, Kenny and Edmonds JJ).
Egglishaw at 236 [44] (Finn, Kenny and Edmonds JJ).
Bracks at 529 [32] (McColl JA).
Leybourne at [16] (McColl and Meagher JJA).
Leybourne at [8] (McColl and Meagher JJA).
See also Frigger v Lean (No 2) [2016] WASCA 212 at [74] (Martin CJ, Buss P and Murphy JA).
See, most recently, Melhem v Katter [2021] NSWCA 273 at [12] (Brereton JA; McCallum JA and Garling J agreeing).
UCPR, rr 11.5(5)(b)-(c).
Cf Lenfest at 576 (Giles J).
See Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Nicholls v Michael Wilson & Partners (2011) 243 FLR 177; [2011] NSWCA 222.
See P Birks and G McLeod (trs) and P Krueger (contrib), Justinian's Institutes (1987, Cornell University Press) at 3.20.4 and 3.20.6.
See UCPR, rr 11.5(5)(b)-(c). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 December 2021

(UK) Supreme Court Act 1970(NSW)

bution PRIVATE INTERNATIONAL LAW - Jurisdiction - Personal jurisdiction - Service outside of the jurisdiction - Connecting factors - Whether partnership formed or carried on business in Australia - Whether partnership agreement governed by Australian law or enforceable or cognizable in an Australian court - Nothing to indicate satisfaction of such requirements - Leave to serve required PRIVATE INTERNATIONAL LAW - Applicable law - Choice of law rules - Partnerships - Place where partnership formed or carries on business - Partnership formed and operated in Kazakhstan - Partnership not governed by Australian law PRIVATE INTERNATIONAL LAW - Jurisdiction - Personal jurisdiction - Service outside of the jurisdiction - Leave to serve - Real and substantial connection - Previous proceedings in Australia resulting in partnership liability, bankruptcy events, unsigned consultancy agreements, citizenship, and litigation funding all insufficient - Existence of partnership assets in Australia - Partnerships can, and possibly only can, be wound up and accounts taken in Australia - Real and substantial connection established - Australia an appropriate forum - Leave to serve granted PARTNERSHIPS AND JOINT VENTURES - Partnership property - Identification - Evidence that partnership has asset-owning and operating entities in Australia - Evidence in the form of engagement contracts, receipts, and Australian bank account APPEALS - Point not taken below - Conduct of trial - Existence of partnership assets not referred to in submissions below nor primary judgment but was in evidence and articulated in affidavit of solicitor - Raised in submissions on appeal and not contested by respondent - Radical effect upon outcome - Permissible to consider on appeal PRIVATE INTERNATIONAL LAW - Foreign judgments and orders - Effect of recognition and enforcement - Whether English courts mandated consideration of partnership claim by Australian courts - English courts merely ordered case management stay in context of lis pendens - Judgments say nothing about jurisdiction or appropriateness of Australian courts PRIVATE INTERNATIONAL LAW - Non-exercise of jurisdiction - Inappropriate forum - Existence of real and substantial connection makes Australia an appropriate forum and negates inappropriate forum conclusion APPEALS - Leave to appeal - Whether leave required - Interlocutory decisions - Appeal from permanent stay - No final determination of rights and obligations of parties - Distinction from final resolution by way of estoppel arising from earlier proceedings - Leave required - Decision nevertheless finally determined ability of appellant to litigate - Appeal heard concurrently and in full - Appeal meritorious - Leave to appeal granted CIVIL PROCEDURE - Time - Extension of time - Motion by appellant seeking extension of time to comply with orders for provision of transcripts, orders, and reasons of English courts - Material of relevance - Material said to already have been in possession of solicitor - Material not responsive and ought to have been obtained prior to hearing - Extension granted but appellant to pay costs of motion APPEALS - Further evidence - Evidence not available at hearing - Evidence of transcripts, orders, and reasons of English courts - Motion not required for Court to have regard to such evidence - No reason to permit other further evidence identified in motion - Motion dismissed with costs COSTS - Party/Party - Appeals - Equal measure of success and failure for each party on appeal - Appellant improved position but incurred and inflicted unnecessary costs - No order as to costs of appeal and primary proceedings Legislation Cited: Municipal Corporation Reform Act 1835 (UK) Supreme Court Act 1970 (NSW), s 101(2)(e) Uniform Civil Procedure Rules 2005 (NSW), rr 11.4, 11.5, 11.6, 13.4; Pt 11; Sch 6 Cases Cited: AB v New South Wales [2014] NSWCA 243 Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342; [1969] HCA 55 Attorney-General v Wilson (1840) Cr & Ph 1; 41 ER 389 Bahin v Hughes (1886) 31 Ch D 390 Barnes v Addy (1874) LR 9 Ch App 244 Baynard v Woolley (1855) 20 Beav 583; 52 ER 729 Belan v Casey (2003) 57 NSWLR 670; [2003] NSWSC 159 Bella Products Pty Ltd v Creative Designs International Ltd (2009) 258 ALR 538; [2009] FCA 868 Bialkower v Acohs Pty Ltd (1998) 83 FCR 1; [1998] FCA 446 Bond v Larobi Pty Ltd (1992) 6 WAR 489 Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193; [1987] FCA 64 Bracks v Smyth-Kirk (2009) 263 ALR 522; [2009] NSWCA 401 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Caledonian Railway Co v Colt (1860) 3 Macq 833 Carron Iron Co v Maclaren (1855) 5 HL Cas 416; 10 ER 961 Chillingworth v Chambers [1896] 1 Ch 685 Cornfoot v Holdenson [1932] VLR 4; (1932) 37 ALR 376 Craythorne v Swinburne (1807) 14 Ves Jun 160; 33 ER 482 Davies v Humphreys (1840) 6 M & W 153; 151 ER 361 Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184 Drip World Pty Ltd v Dardy Touring Corp [2020] NSWSC 1772 Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1 Egglishaw v Australian Crime Commission (2007) 164 FCR 224; [2007] FCAFC 183 Ellesmere Brewery Co v Cooper [1896] 1 QB 75 Emmott v Michael Wilson & Partners Ltd [2017] 2 All ER (Comm) 569; [2016] EWHC 3010 (Comm) Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 Frigger v Lean (No 2) [2016] WASCA 212 Glenmont Investments Pty Ltd v O'Loughlin (No 2) (2001) 79 SASR 288; [2001] SASC 88 Goodwin v Duggan (1996) 41 NSWLR 158 Hanave Pty Ltd v LFOT Pty Ltd (1999) 168 ALR 318; [1999] FCA 1568 Harpley Nominees Pty Ltd v Jeans [2006] NSWCA 176 Henry v Henry (1996) 185 CLR 571; [1996] HCA 51 Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346; [1978] FCA 105 Kent v Abrahams [1928] WN 266 Kermani v Westpac Banking Corporation (2012) 36 VR 130; [2012] VSCA 42 L Grollo Darwin Management Pty Ltd v Victor Plaster Products Pty Ltd (1978) 19 ALR 621; [1978] FCA 36 Lane v Bushby (2000) 50 NSWLR 404; [2000] NSWSC 1029 Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741; 13 ACLC 1244 Leybourne v Habkouk [2012] NSWCA 212 Lingard v Bromley (1812) 1 V & B 114; 35 ER 45 Little v Victoria [1998] 4 VR 596 Luck, Re (2003) 78 ALJR 177; [2003] HCA 70 Macatangay v New South Wales (No 2) [2009] NSWCA 272 Madden International Ltd v Lew Footwear Holdings Pty Ltd (2015) 50 VR 22; [2015] VSCA 90 Mahoney v McManus (1981) 180 CLR 370; [1981] HCA 54 Maunder v Lloyd (1862) 2 J & H 718; 70 ER 1248 McGinn v Cranbrook School [2016] NSWCA 226 McNally v Harris (2008) 1 ASTLR 549; [2008] NSWSC 659 Melhem v Katter [2021] NSWCA 273 Michael Wilson & Partners Ltd v Nicholls [2008] NSWSC 501 Michael Wilson & Partners Ltd v Nicholls [2009] NSWSC 1033 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 Michael Wilson & Partners Ltd and Emmott (Second Interim Award, International Dispute Resolution Centre, 19 February 2010) Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51 Michael Wilson & Partners Ltd v Emmott [2019] 4 WLR 53; EWCA Civ 219 Michael Wilson & Partners Ltd v Emmott [2019] NSWSC 218 Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 139 Michael Wilson & Partners Ltd v Emmott [2020] NSWCA 245 Muller v Fencott (1981) 37 ALR 310; [1981] FCA 147 Murakami v Wiryadi (2010) 268 ALR 377; [2010] NSWCA 7 National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) (2001) 183 ALR 700; [2001] FCA 237 News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553 Nicholls v Michael Wilson & Partners Ltd (2011) 243 FLR 177; [2011] NSWCA 222 Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 Page v McKensey [2004] NSWCA 437 Patterson v Arcade Buildings Ltd (1930) 31 GLR 312 Pendlebury v Walker (1841) 4 Y & C Ex 424; 160 ER 1072 Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35; [1980] HCA 41 Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95 Richardson, Re; Ex parte The Governors of St Thomas's Hospital [1911] 2 KB 705 Selkirk v McIntyre [2013] 3 NZLR 265; NZHC 575 Sky Channel Pty Ltd v Tszyu (No 2) [2000] NSWSC 1150 Smith v Cock [1911] AC 317 Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287; [1992] FCA 71 Tampion v Anderson (No 2) [1973] VR 829 Thomas v Atherton (1878) 10 Ch D 185 Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 30 ACSR 698; [1999] FCA 218 Wickstead v Browne (1992) 30 NSWLR 1; [1992] NSWCA 272 Wolmershausen v Gullick [1893] 2 Ch 514 Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242 Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 Texts Cited: EH Scamell and RC I'Anson Banks, Lindley on the Law of Partnership (15th ed, 1984, Sweet & Maxwell) R Goff & G Jones, The Law of Restitution (3rd ed, 1986, Sweet and Maxwell) G Spence, The Equitable Jurisdiction of the Court of Chancery (1846, V and R Stevens and GS Norton) ICF Spry, Equitable Remedies (9th ed, 2013, Lawbook Co) J Story, Commentaries on Equity Jurisprudence (3rd ed, 1920, A Maxwell & Son) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) P Birks and G McLeod (trs), with P Krueger (contrib), Justinian's Institutes (1987, Cornell University Press) RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4th ed, 2002, LexisNexis Butterworths) Category: Principal judgment Parties: Michael Wilson & Partners Ltd (Appellant) John Forster Emmott (Respondent) Representation: Counsel:

Duggan Legal (Respondent) File Number(s): 2019/103863; 2019/170998 Publication restriction: N/A Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division, Commercial List Citation: [2019] NSWSC 218 Date of Decision: 08 March 2019 Before: Ball J File Number(s): 2016/034380

As to the contribution claim: 3. The London arbitration did resolve, and the English anti-suit injunction ergo does extend to, the majority of the aspects of the contribution claim, including those brought "qua Mr Nicholls and Mr Slater". There was hence no error in the primary judge's conclusion that the claim only amounts to USD$2,000 and thus has insufficient prospects of success: [1] (Leeming JA), [40]-[53] (Brereton JA), [137] (Emmett AJA). Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51, followed. 4. Per Leeming JA and Emmett AJA: That the claim only amounts to USD$2,000 is a sufficient reason for this aspect of the appeal to fail: [1] (Leeming JA), [137] (Emmett AJA). 5. Per Leeming JA: If contribution is available, it is only to achieve an equal bearing of the burden of coordinate liabilities, and not indemnification: [4] Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17, applied. 6. Per Brereton JA: For there to be contribution between co-trustees, there must be a co-ordinate obligation of the same nature and extent. Further, while a trustee who has caused loss by personal fraud may be liable to indemnify his or her co-trustees, co-trustees who are knowing assistants under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 are not entitled to contribution. This reflects the general rule that a person guilty of fraud, illegality, wilful misconduct, or gross negligence does not have 'clean hands' and is not entitled to contribution. In the NSW-1 proceedings, the High Court foreshadowed both that the liabilities of Mr Nicholls and Mr Slater do not necessarily coincide in either nature or quantum with that of the respondent, and that Mr Nicholls and Mr Slater are liable as knowing assistants in a dishonest breach of trust. Consequently, the appellant, as assignee, is not entitled to claim contribution, let alone indemnity: [55]-[63], [121]. McNally v Harris (2008) 1 ASTLR 549; [2008] NSWSC 659; Belan v Casey (2003) 57 NSWLR 670; [2003] NSWSC 159; Attorney-General v Wilson (1840) Cr & Ph 1; 41 ER 389; Lingard v Bromley (1812) 1 V & B 114; 35 ER 45, applied; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17; Bahin v Hughes (1886) 31 Ch D 390, considered. 7. Per Emmett AJA: A person knowingly concerned in a breach of fiduciary duty is not entitled to indemnification by the main perpetrator, and would only need to be pursued if the main perpetrator is impecunious. Roman law may provide some guidance in this area: [135]-[136], [138]. 8. Per Leeming JA: Contribution will not be ordered unless the claimant has or is ready, willing, and able to pay more than its proportionate share. Presently, there is no basis for such a suggestion, and this is a further sufficient reason for this aspect of the appeal to fail: [5]-[7]. Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21, applied. 9. Per Brereton JA: Even if contribution is available in this case, and although it appears that the right to contribution accrues as soon as there is judgment against the claimant for contribution, unless the claimant has paid more than its just proportion of the debt he or she is generally only entitled to a declaration of his or her right to contribution, conditional upon making the further payment. Importantly, where there is no prospect of the claimant paying more than his or her just proportion, there is no utility in making such a declaration, and the proceedings may be stayed. Presently, Mr Nicholls and Mr Slater have not paid their proportions, and there is no prospect of them ever doing so; this, together with the other reasons above, provides a clear basis for concluding that the contribution claim has insufficient prospects of success and was rightly stayed pursuant to UCPR, r 11.6(2)(c): [64]-[79], [121]. Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21; Harpley Nominees Pty Ltd v Jeans [2006] NSWCA 176; Bond v Larobi Pty Ltd (1992) 6 WAR 489; Mahoney v McManus (1981) 180 CLR 370; [1980] HCA 54; Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5; Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95; Re Richardson; Ex parte The Governors of St Thomas's Hospital [1911] 2 KB 705, considered.

As to the partnership claim: 10. The partnership was neither formed nor carried on business in Australia, this being the choice of law rule that governs partnerships, and nothing else indicates that the alleged partners intended their agreement to be governed by Australian law or enforceable or cognizable in an Australian court. The primary judge therefore correctly held UCPR, Sch 6(b)(iv), to be inapplicable: [2] (Leeming JA), [88]-[89], [122] (Brereton JA), [140] (Emmett AJA). 11. None of the links to Australia relied upon before the primary judge - past proceedings (including NSW-1, a judgment of an Australian court which resulted in a partnership liability), bankruptcy events, unsigned consultancy agreements, citizenship, and litigation funding - suffice to establish a 'real and substantial connection' for the purposes of leave under UCPR, r 11.5: [2] (Leeming JA), [90]-[93], [122] (Brereton JA), [140] (Emmett AJA). 12. However, there is evidence of partnership assets in Australia, and if so, as appears sufficiently arguable, then the partnership can (and possibly can only) be wound up and accounts taken in Australia. Although this was understandably not considered by the primary judge, as no relevant submissions were made, the relevant evidence was adduced and not contradicted. This provides a 'real and substantial connection' for the purposes of UCPR, r 11.5(5)(a): [2] (Leeming JA), [94]-[98], [122] (Brereton JA), [140] (Emmett AJA). Murakami v Wiryadi (2010) 268 ALR 377; [2010] NSWCA 7; Maunder v Lloyd (1862) 2 J & H 718; 70 ER 1248, considered. 13. The appellant's contention that the English courts have mandated that the partnership claim be dealt with in Australia is misconceived. There has been merely a case-management stay, which says nothing as to jurisdiction or appropriate forum. Nevertheless, the presence of partnership assets in Australia dictates that Australia is an appropriate forum and that, in all the circumstances, the Court should assume jurisdiction. UCPR, rr 11.5(5)(b)-(c), are thus satisfied, and Australia is not an inappropriate forum for the purposes of r 11.6(2)(b). Leave to serve the proceedings ex juris should be granted, and this conclusion renders consideration of UCPR, Sch 6(o), unnecessary: [2] (Leeming JA), [99]-[112], [122]-[123] (Brereton JA), [140] (Emmett AJA). Michael Wilson & Partners Ltd v Emmott [2018] 2 All ER (Comm) 737; EWCA Civ 51; Henry v Henry (1996) 185 CLR 571; [1996] HCA 51; Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287; [1992] FCA 71, considered.

As to leave to appeal: 14. The cases where a permanent stay has been characterised as a final order are confined to those where there has been a final resolution of the issues by way of estoppel arising from earlier proceedings. In other cases, such as the present, where there has been no final determination of the rights and obligations of the parties, and where the decision appealed from is analogous to summary dismissal, a permanent stay is interlocutory and leave is required. However, the permanent stay in this case finally determined the appellant's ability to litigate the issues in this forum, and the appeal was heard in full and has merit. Leave to appeal should be granted: [1] (Leeming JA), [113]-[119], [124] (Brereton JA), [141] (Emmett AJA). Leybourne v Habkouk [2012] NSWCA 212; Bracks v Smyth-Kirk (2009) 263 ALR 522; [2009] NSWCA 401; Egglishaw v Australian Crime Commission (2007) 164 FCR 224; [2007] FCAFC 183; Re Luck (2003) 78 ALJR 177; [2003] HCA 70, applied; Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35; [1980] HCA 41, distinguished.

Judgment

LEEMING JA: I have had the very considerable advantage of reading the reasons for judgment of Brereton JA in draft. What follows uses the same abbreviations and presupposes familiarity with his judgment. I agree with the orders his Honour proposes. I agree with his Honour's reasons dealing with the fraught interlocutory history of these proceedings and with the conclusion that an appeal lies only with a grant of leave. I agree with his Honour's reasons concerning the conclusion by the primary judge that the contribution claim amounted to no more than about USD$2,000, and would go further and conclude that that was sufficient to warrant refusing leave in relation to the stay applicable to this aspect of the claim.
I also agree with Brereton JA's reasons that, on a point seemingly not argued before the primary judge, concerning the Australian assets of the partnership, the appeal should be allowed in part. I am conscious that that involves the grant of leave on a point not argued before the primary judge, and that it may be said that leave should not be granted to advance a point for the first time on appeal. But as Brereton JA points out, the claim that there were substantial assets was advanced without opposition in the written submissions supplied well in advance of the hearing in this Court, and the stay for practical purposes finally determines MWP's ability to litigate these issues in this Court.
I also agree with Brereton JA that there are additional reasons to refuse leave to appeal in relation to the availability of equitable contribution, although I would frame the position more narrowly than does his Honour. What follows is based on the rights said to have been acquired from the trustees in bankruptcy of Messrs Nicholls and Slater and the liquidators of TIL and TSL. I proceed on the basis, favourably to MWP, that the assignments (which were not in evidence) vested the entirety of those rights in it.
First, it was contended, seemingly for the first time in this Court, that the "contribution" sought in the Commercial List Summons should be regarded as an indemnity, on the basis that a person found to have been knowingly involved in a dishonest and fraudulent breach of fiduciary duty was entitled to shift the entirety of that person's liability to the fiduciary. No authority was advanced in support of that proposition. To the contrary, it is settled law that contribution is available to achieve an equal bearing of the burden of coordinate liabilities: see, for example, Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [14] and [38]; cf the dissenting view of Kirby J at [119]-[123]. MWP's submission is inconsistent with the principles underpinning the doctrine as explained by French CJ, Gummow, Hayne and Bell JJ in Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [38]-[40].

Michael Wilson & Partners Ltd v Emmott

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (85)

Cited By (15)