Michael Wilson & Partners Ltd v Emmott [2019] NSWSC 218 (8 March 2019)

Last Updated: 8 March 2019

Supreme Court New South Wales

Case Name:	Michael Wilson & Partners Ltd v Emmott
Medium Neutral Citation:	[2019] NSWSC 218
Hearing Date(s):	12 February 2019
Decision Date:	8 March 2019
Jurisdiction:	Equity - Commercial List
Before:	Ball J
Decision:	(1) Proceedings be permanently stayed. (2) The plaintiff pay the defendant’s costs of the notice of motion filed on 1 November 2018.
Catchwords:	CIVIL PROCEDURE – Service outside Australia – whether service of originating process should be set aside – whether local proceedings should be stayed on ground that New South Wales is inappropriate forum CONTRACT – breach of contract – whether partnership agreement existed – whether dispute falls within schedule 6 of UCPR – whether leave to serve outside Australia should be granted CORPORATIONS – Directors – claim based on breach of duties said to be owed by persons who were shadow directors – whether leave to serve outside Australia should be granted EQUITY – Contribution – whether court should refuse to assume jurisdiction over claim for contribution
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157; [2004] EWCA Civ 1316 Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Henry v Henry [1996] 185 CLR 571; [1996] HCA 51 Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033 Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1377 Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 305; [2011] HCA 48 Michael Wilson & Partners, Limited v Emmott [2018] EWCA Civ 51 Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222 Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383 Puttick v Tenon Limited (formerly called Fletcher Challenge Forests Limited) (2008) 238 CLR 265; [2008] HCA 54 Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55
Texts Cited:	A Briggs, Private International Law in English Courts, (Oxford University Press, 2014)
Category:	Procedural and other rulings
Parties:	Michael Wilson & Partners Ltd in its capacity as the assignee of the rights of Robert Colin Nicholls (a Bankrupt) and of certain of the rights of Temujin International Limited (acting both in its own right and as the Trustee of the Temujin International (Trading) Trust) and Temujin Services Limited (Plaintiff) John Forster Emmott (Defendant)
Representation:	Counsel: P Bolster (Plaintiff) J Baird (Defendant) Solicitors: ACA Lawyers (Plaintiff) John Forster Emmott (Defendant)
File Number(s):	2016/34380
Publication Restriction:	None

JUDGMENT

Introduction

1. By a notice of motion filed on 1 November 2018, the defendant, Mr John Emmott, seeks an order that service of an Amended Summons filed on 3 February 2016 and a Commercial List Statement filed on 2 February 2016 be set aside on the ground that they were served outside of Australia without leave and in circumstances not permitted by the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR). In the alternative, Mr Emmott seeks orders that the proceedings be stayed on the ground that New South Wales is not an appropriate forum or is a clearly inappropriate forum to determine the dispute. The proceedings are brought by Michael Wilson & Partners Ltd (MWP), a company incorporated in the British Virgin Islands. MWP is controlled by Mr Michael Wilson, an English solicitor who has practised law in Kazakhstan and surrounding regions through MWP since 1998.

Background

2. On 7 December 2001, MWP and Mr Emmott entered into a contract under which Mr Emmott was to become a director of MWP and to obtain a 33 per cent shareholding in MWP in exchange for agreeing to certain things, including “devoting his full time and attention to developing the practice and business of MWP” and relinquishing rights to share in the net profits of MWP up to an amount of £225,000. The parties also agreed that, notwithstanding the corporate structure, MWP was to operate as a quasi-partnership between them and that each would observe “the usual partnership obligations and duties to each other”. The agreement provided that, on its termination, Mr Emmott had to resign as a director of MWP and sell his shares in MWP to MWP or an entity nominated by it for a price agreed between the parties or, in the absence of an agreement, for a price determined by a panel of experts established in accordance with the agreement. The agreement states that it was to be governed by the laws of England and Wales. The parties agreed to refer all disputes between them to arbitration in London.
3. On 24 April 2004, MWP engaged Mr Robert Nicholls, an Australian barrister, as a senior associate and on 1 September 2005 it engaged Mr David Slater, an Australian solicitor, as an associate. The contracts by which Mr Nicholls and Mr Slater were engaged were both expressed to be governed by the laws of New South Wales.
4. By the end of June 2006, Messrs Emmott, Nicholls and Slater had left MWP and one or more of them had established a number of companies or other entities (the Temujin Entities) including Temujin International Limited (TIL) and Temujin Services Limited (TSL), both of which were incorporated in the British Virgin Islands and both of which are now in liquidation. Messrs Emmott, Nicholls and Slater, through the Temujin Entities, provided legal and corporate advisory services in Kazakhstan in competition with MWP and took a number of clients from it.
5. In accordance with the agreement between MWP and Mr Emmott, MWP commenced arbitration proceedings in London (the Arbitration) claiming damages and compensation for breach of contract and breach of fiduciary duties from Mr Emmott arising from Mr Emmott’s departure from MWP and involvement with the Temujin Entities. At about the same time, it commenced proceedings in New South Wales against Messrs Nicholls and Slater and a number of Temujin Entities including TIL and TSL alleging that Messrs Nicholls and Slater had breached their contractual and fiduciary duties, committed the tort of conspiracy, induced Mr Emmott to breach his contractual obligations to MWP and knowingly assisted him in the breach of his fiduciary duties. It brought ancillary claims against the Temujin Entities, including TIL and TSL.
6. On 19 February 2010, the arbitral tribunal (the Tribunal) delivered its Second Interim Award (SIA) dealing with liability. It found that Mr Emmott was liable for breach of fiduciary duties and breach of contract. It also concluded that Mr Emmott had satisfied the conditions of the contract to be entitled to 33 per cent of the shares in MWP before he had committed any breach of duty and that, as a consequence, he was entitled to be paid the value of the shares to which he was entitled. In its Third Award delivered on 5 September 2014 dealing with quantum, the Tribunal concluded that as at 31 December 2013, MWP was indebted to Mr Emmott in the sum of £3,209,613 together with USD2,003,315. The Tribunal also awarded amounts to MWP for the value of work taken by Mr Emmott when he left MWP. However, the Tribunal found that some of the clients taken from MWP would not have remained with it following the departure of Mr Emmott and refused to give relief in respect of the losses suffered as a consequence of the loss of those clients. In the result, it concluded that MWP was entitled to recover the sum of USD218,445. Consequently, it reduced the US dollar component of its award in favour of Mr Emmott to USD1,784,870. In a subsequent “Clarification” delivered on 30 October 2014, the Tribunal accepted that in calculating the value of MWP it had failed to take account of undrawn accumulated profits. Taking those into account, it reduced the US dollar component of its award by USD667,859.
7. Following the handing down of that award, Mr Emmott was successful in obtaining from the English Commercial Court worldwide freezing orders against MWP in the amount of £3,209,613 and USD841,213. It appears that the differences between those amounts and the amounts the subject of the award (as amended) are to be explained by the addition of interest and the deduction of amounts paid by MWP. In any event, nothing turns on the differences for the purposes of the current application.
8. In the meantime, MWP was successful in the New South Wales proceedings and obtained judgment against Messrs Nicholls and Slater for USD3,508,793.91, €555,258.94 and AUD4,000,000 (see Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033; Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1377). It also obtained judgment against TIL and TSL. The decision at first instance was overturned on appeal on the ground that the trial judge ought to have disqualified himself due to a reasonable apprehension of bias and on the ground that the institution of the proceedings was an abuse of process, since MWP had sought relief in the arbitral proceedings for substantially the same breaches of fiduciary duty: see Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222.
9. The Court of Appeal’s decision was reversed by the High Court (see Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 305; [2011] HCA 48), which remitted the case to the Court of Appeal to deal with a number of outstanding issues raised by the notice of appeal. In a second judgment of the Court of Appeal delivered on 28 November 2012 (Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383), the Court of Appeal held that MWP was entitled to equitable compensation from Messrs Nicholls and Slater, TIL and TSL in the sum of USD676,335.00 and €378,160.00 plus interest in respect of work lost from a number of clients including those clients in respect of whom the Tribunal had awarded compensation against Mr Emmott.
10. Following the Court of Appeal’s judgment, MWP was successful in bankrupting Messrs Nicholls and Slater and placing TIL and TSL into liquidation. Mr Nicholls has since died.
11. At some stage prior to 3 February 2016, MWP 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. Relying on those assignments, it commenced these proceedings. The proceedings were commenced by Summons filed on 2 February 2016. However, the Summons was amended the following day and subsequently the Amended Summons was served personally on Mr Emmott.
12. Broadly speaking, the Amended Summons claimed two types of relief. First, it claimed in para 1 contribution from Mr Emmott in respect of the liability of Messrs Nicholls and Slater, TIL and TSL pursuant to:
    • (a) The judgments arising from the earlier proceedings in Australia (NSW1);
    • (b) “all fees, costs, rights and benefits howsoever sought and obtained ... related to the legal, business consultancy and other services provided by the Temujin Entities [an expression undefined in the Summons but which apparently includes TIL and TSL]”;
    • (c) “all Shares and Other Benefits sought and received ... by Emmott, and his designates and nominees, whether acting directly or indirectly”.
13. Second, the Amended Summons sought declarations to the effect that on leaving MWP Messrs Emmott, Nicholls and Slater had established a partnership in equal shares which was subsequently dissolved. It also in effect sought an account of all benefits received by Mr Emmott as a partner as well as an account of benefits received by a number of entities said to be associated with him.
14. Following service of the Amended Summons and Commercial List Statement, Mr Emmott made an application in England for an anti-suit injunction to restrain MWP from pursuing the proceedings. That application was successful at first instance, but on 31 January 2018 the Court of Appeal of England and Wales delivered a judgment in which it concluded that the anti-suit injunction should not extend to the partnership claims advanced by MWP. It relevantly made orders in the following terms (the English Injunction):

[MWP, by its directors, servants, agents or otherwise, is injuncted against] advancing in NSW2 [these proceedings]: (1) claims which it lost in the arbitration; (2) matters contrary to findings in the arbitration which were adverse to MWP; and (3) claims for fraud or conspiracy. It is expressly recorded that this injunction does not extend to the Temujin partnership claims [defined to be the claims advanced in paras 3 to 9 of the Amended Summons].

On 31 July 2018, the United Kingdom Supreme Court refused permission to appeal from that decision.

15. On 8 October 2018, MWP served a proposed Further Amended Summons (FAS) and Amended Commercial List Statement (ACLS) advancing claims said not to be restrained by the anti-suit injunction granted by the English Courts, although, as I have said, it is service of the Amended Summons and Commercial List Statement that Mr Emmott seeks to set aside.
16. The FAS limits the claim for contribution to a claim for contribution in respect of NSW1. It adds a new claim seeking declarations that Mr Emmott was at all material times a shadow director and officer and controller of TIL, TSL, as well as a trust of which TIL is the trustee, and seeks damages and equitable compensation for various breaches of fiduciary and contractual duties in those capacities. It also seeks a declaration that Mr Emmott was a controller of a number of Temujin Entities and seeks an order that in that capacity he is liable “to disclose and bring to the account of [TIL and TSL] any and all revenues and assets” of those entities. Finally, the FAS retains the partnership claims, with some modifications which are not material to the issues currently before the Court.

Relevant legal principles

17. The rules relating to the service of proceedings outside of Australia are set out in Part 11 of the UCPR. That Part was amended following service of the Amended Summons. There is a question whether the current dispute should be determined by the reference to the amended rules or those as they existed at the time the Amended Summons was served. The parties accept that the answer to that question turns on whether the motion should be determined by reference to the Amended Summons or the FAS.
18. Mr Baird, who appeared for Mr Emmott, rightly pointed out that the only document issued by the Court that has been served on Mr Emmott is the Amended Summons; and it is to that document Mr Emmott’s Notice of Motion is directed. On the other hand, Mr Bolster, who appeared for MWP, submitted that there was no utility in determining the issues by reference to the Amended Summons when MWP has sought leave to file the FAS. He submitted that the application should be determined by reference to that document and the current rules. Mr Baird could see the sense of that approach but stated that he did not have instructions to agree to it.
19. In my opinion, it would be sensible to determine the question of service by reference to the FAS. That sets out the claims on which MWP wishes to proceed. There seems little point in deciding the issues by reference to a version of the summons that MWP no longer seeks to rely on. On the other hand, it seems likely that it will be necessary to determine the issues by reference to the FAS at some stage. The most sensible course would be to do so in the context of the present motion.
20. UCPR r 11.4(1) provides (in its current form):

Originating process may be served outside of Australia without leave in the circumstances referred to in Schedule 6.

21. Schedule 6 relevantly provides:

An originating process may be served outside of Australia without leave in the following cases:
....
(b) when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which:
(i) ...
(ii) ...
(iii) ...
(iv) was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court,
...
(h) when any person outside of Australia is:
(i) ...
(ii) a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court,

22. UCPR r 11.5 provides that in cases not permitted under Schedule 6 an originating process may be served outside of Australia with the leave of the Court. An application for leave “must be supported by an affidavit stating any facts or matters relating to the desirability of the court assuming jurisdiction, including the place or country in which the person to be served is or possibly may be found, and whether or not the person to be served is an Australian citizen”. UCPR r 11.5(5) provides:

The court may grant an application for leave if satisfied that:
(a) the claim has a real and substantial connection with Australia, and
(b) Australia is an appropriate forum for the trial, and
(c) in all the circumstances the court should assume jurisdiction.

23. UCPR r 11.6 provides:

Court's discretion whether to assume jurisdiction
(1) On application by a person on whom an originating process has been served outside of Australia, the court may dismiss or stay the proceeding or set aside service of the originating process.
(2) Without limiting subrule (1), the court may make an order under this rule if satisfied:
(a) that service of the originating process is not authorised by these rules, or
(b) that the court is an inappropriate forum for the trial of the proceeding, or
(c) that the claim has insufficient prospects of success to warrant putting the person served outside Australia to the time, expense and trouble of defending the claim.

24. Section 67 of the Civil Procedure Act 2005 (NSW) provides:

Stay of proceedings
Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.

25. In so far as UCPR r 11.6 gives the Court power to stay proceedings otherwise properly served outside of Australia on the ground that the Court is an inappropriate forum for the trial of the proceedings, it mirrors, with one exception, the principles stated by the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55 for the stay of proceedings on forum non conveniens grounds. The exception is that the principles applicable to the stay of proceedings on forum non conveniens grounds require the local forum to be “clearly” inappropriate. As French CJ, Gummow, Hayne and Kiefel JJ explained in Puttick v Tenon Limited (formerly called Fletcher Challenge Forests Limited) (2008) 238 CLR 265; [2008] HCA 54 at 27:

In Voth v Manildra Flour Mills Pty Ltd, the Court held that a defendant will ordinarily be entitled to a permanent stay of proceedings instituted against it and regularly served upon it within the jurisdiction, if the defendant persuades the local court that, having regard to the circumstances of the particular case, and the availability of an alternative foreign forum to whose jurisdiction the defendant is amenable, the local court is a clearly inappropriate forum for determination of the dispute. The reasons of the plurality in Voth pointed out that the focus must be "upon the inappropriateness of the local court and not the appropriateness or comparative appropriateness of the suggested foreign forum". [Footnotes omitted]

26. The use of the word “clearly” serves to add emphasis to the requirement imposed by both tests. In both cases, the question is whether the continuation of the proceedings will bring about injustice because they “would be oppressive, in the sense of ‘seriously and unfairly burdensome, prejudicial or damaging’, or, vexatious, in the sense of ‘productive of serious and unjustified trouble and harassment’”: Henry v Henry [1996] 185 CLR 571; [1996] HCA 51 at 587 per Dawson, Gaudron, McHugh and Gummow JJ. See Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10 at [24]- [25] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
27. In the present case, Mr Emmott submits that service outside of Australia on him of the FAS would not be permitted by any of the criteria set out in Schedule 6. Alternatively, he submits that the proceedings should be stayed under UCPR r 11.6(2)(b), or under s 67 of the Civil Procedure Act on forum non conveniens grounds. On the other hand, MWP submits that, even if service is not authorised under Schedule 6, the Court should give leave under UCPR r 11.5.
28. It is convenient to consider these issues by reference to the different claims that MWP seeks to bring.

The claim for contribution

29. In considering the claim for contribution contained in para 1 of the FAS, it is important to understand the basis of the claim. As originally put, the claim for contribution appears to be a claim that Mr Emmott was liable to pay contribution because he, like Messrs Nicholls and Slater, had breached his fiduciary duties to MWP and he was liable in respect of the same losses as they were arising from those breaches of duty. This aspect of the claim did not depend on any partnership between Messrs Nicholls, Slater and Emmott. Rather, it depended on a liability for the same loss and damage suffered by MWP. Following the decision of the English Court of Appeal in relation to the anti-suit injunction and the proposed amendment to the summons, what must be asserted is that Mr Emmott is liable to contribute to the judgment obtained in NSW1 because he is liable in respect of the same loss for which Messrs Nicholls and Slater (and TIL and TSL) were held to be liable.
30. Plainly, that claim for contribution falls within para (h)(ii) of Schedule 6.
31. The question, however, is whether the Court should refuse to assume jurisdiction under UCPR r 11.6 in respect of that claim. I have concluded that it should.
32. It was not suggested that the proposed amended claim for contribution sought to bring a claim in breach of the English Injunction. The claim was specifically amended to avoid that result; and paragraph 6B of the ACLS specifically records that it is not the intention of MWP to assert a claim in these proceedings contrary to the English Injunction. The relevant paragraphs of the FAS must be interpreted in that light.
33. The English Injunction restrains MWP, among other things, from asserting any claim in these proceedings that it lost in the Arbitration. The effect of that injunction is to restrain MWP from asserting as assignee any claim for contribution in respect of liabilities that Mr Emmott was held not to have to MWP in the Arbitration. For MWP to assert such a claim would involve an assertion that Mr Emmott is liable (together with one or more of the defendants in NSW1) to MWP for a loss for which he was held not to be liable in the Arbitration.
34. It follows that, consistently with the English Injunction, MWP could only make a claim for contribution in respect of losses arising from the loss of work for which Mr Emmott was also held to be liable or were not the subject of a finding of liability on the part of Mr Emmott.
35. The losses for which one or more of Messrs Nicholls and Slater and TIL and TSL were ultimately held liable in NSW1, and in respect of which any claim for contribution must be made, were:

Project	Court of Appeal Award
Chilisai (Lost Fees)	USD 284,218.00
Chilsai (Success Fee)	USD 140,000.00
Urals Gold	USD 98,363.00
Roxi	€351,205.00
Project X	€26,955.00
Eragon and ADA	USD 15,000.00
Benkala Copper	USD 53,280.00
Project Ablai	USD 28,764.00
Maersk	USD 16,960.00
Kangamiut Seafoods	USD 39,750.00

To those amounts needs to be added interest.

36. Of those losses, the first seven were the subject of claims against Mr Emmott in the Arbitration, but no amount in respect of them was awarded by the Tribunal.
37. The position appears to be that no claim was made in the Arbitration against Mr Emmott in respect of Project Ablai. On the other hand, Mr Emmott was held liable in the Arbitration in respect of losses claimed in respect of Maersk (described by the Tribunal as the Lancaster Group claim) (USD10,190 and with interest USD16,518)) and Kangamiut Seafoods (USD16,395 and with interest USD27,742). Mr Emmott must be taken to have paid those amounts (including interest) because they were deducted from the amount that MWP owed him.
38. In those circumstances, it is difficult to see how MWP (as assignee) has any significant claim for contribution in respect of the judgments it obtained against Messrs Nicholls and Slater and TIL and TSL. Consistently with the English Injunction, no claim for contribution can be made in respect of the first seven claims that succeeded in NSW1, since the Tribunal determined that Mr Emmott is not liable in respect of those claims. It must follow from what was said earlier that MWP no longer asserts a claim for contribution in respect of those amounts.
39. In supplementary written submissions filed after the motion was heard, Mr Emmott takes issue with the proposition that any claim for contribution could succeed against him. In his submission, his liability could not be described as co-ordinate with that of Messrs Nicholls and Slater. Mr Emmott was held liable in the Arbitration for breach of his fiduciary duties to MWP whereas Messrs Nicholls and Slater were held liable as knowing assistants for different amounts. In addition, they were also held liable for the torts of conspiracy and inducing breach of contract. Mr Emmott also submits that Messrs Nicholls and Slater have not paid the judgment against them, with the result that they are not entitled to make a claim for contribution.
40. In my opinion, it is not necessary to form a view on the strength of those defences. At most, the total amount in respect of which a claim for contribution could be made is USD85,474 (that is, USD28,764.00 plus USD16,960 plus USD39,750) plus interest. However, the total amount Mr Emmott must be taken to have paid in respect of those claims is USD26,585 plus interest. In other words, Mr Emmott has already paid, or should be taken to have paid, close to a third of the amount in respect of which the claim for contribution might be made. No reason was advanced for why Mr Emmott should be liable to contribute more than a third of the amount claimed. That is, no reason was advanced for why Messrs Emmott, Nicholls and Slater should not bear the amounts for which they have been held to be liable equally. In any event, it is doubtful whether the general law of contribution permits contribution except equally, or proportionately to their liability where the amount of their liability differs: see Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 13; 154 ALR 534 at 546 per Beaumont, Hill and Sundberg JJ; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [14] per Gaudron ACJ and Hayne J; cf per Kirby J at [119]-[120]. Even if the Court did have power to apportion liability according to the parties’ culpability, the finding of the Tribunal was that Mr Slater was the instigator and leading spirit behind the establishment of Temujin. If liability were apportioned according to culpability, the likelihood is that Mr Slater would bear a greater proportion of the liability.
41. In supplementary written submissions filed by MWP after the hearing of the motion, MWP sought to resist the conclusions of the previous paragraphs. It submitted that the Tribunal’s awards on liability and quantum are “partial” awards that did not finalise the issues in dispute between it and Mr Emmott. In particular, it characterises the claims that succeeded in NSW1 as “diversion claims” – that is, claims that Mr Emmott diverted work and opportunities from MWP to Temujin – and submits that the Tribunal was not able to and did not finally deal with those claims, for three reasons.
42. First, and most importantly, it relies on the following passage taken from para 4.144(s) of the SIA:

[4.144(s)] Subsequently ROXI was admitted to AIM on 22 May 2007. Whilst we recognise that ROXI was a different vehicle from RCP, UMC and Pinegrove, who were all earlier clients of MWP, our view is that the ROXI 1 transaction was obtained by Temujin through Mr Emmott informing Mr Schoonbrood that he was not available to do the work and was leaving MWP. Mr Emmott passed on Mr Nicolls' contact details rather than referring Mr Schoonbrood to Mr Wilson, further, Mr Slater had wrongly misappropriated copies of the documents from MWP and sent them to his personal g-mail account. Further, from Temujin documents disclosed in the New South Wales proceedings, it had been agreed that Temujin were to receive "founder's shares"; namely that IPO shares in ROXI would be issued to Temujin in light of their contribution to the transaction. Temujin had a share of the "uplift of 17 million ROXI shares". When cross examined Mr Emmott did not dissent from the suggestion that the benefits were paid to Temujin. He maintained that all he enjoyed was a mere expectation in any participation on the basis that all the shares in Temujin were beneficially owned by Mr Slater. We find that Mr Emmott did not receive a secret profit directly from this transaction. We have read the Judgment of Justice Einstein in the Supreme Court of New South Wales of 6 October 2008. Whilst that Judgment is not binding upon us, and we understand is under appeal, in light of the remedies awarded in that Judgment against Temujin in respect to the diversion of work we make no separate award in respect to this part of the claim. If Mr Emmott is a partner in Temujin, he and Temujin will be liable to account in those proceedings but not before us.

43. Second, MWP points to findings of the Tribunal that Mr Emmott had deliberately sought to wipe and delete the hard drive of his MWP laptop computer and had deliberately resisted Temujin disclosure.
44. Third, it points to the fact that no witness statement was served from Mr Slater in the Arbitration.
45. I do not accept MWP’s submissions. It is not easy to see how they sit with the judgment of the English Court of Appeal and the anti-suit injunction it granted. Leaving that point aside, and leaving aside for the moment the Tribunal’s comments in relation to the claim in respect of the work done for ROXI, it is plain that the Tribunal considered the first seven claims referred to above. In respect of each of them, it concluded that the relevant business opportunity was not diverted to any Temujin entity as a consequence of a breach of duty by Mr Emmott. Ultimately, it concluded the SIA relevantly by ordering “inquiries as to the value of the loss of opportunity by MWP to obtain instructions from Kangamui [sic] Seafoods, and from Lancaster Group Kazakhstan” (para 8.24). Implicit in that order is a conclusion that no amount should be awarded in respect of the other diversion claims considered by the Tribunal. Subsequently, in its quantum award, the Tribunal awarded MWP specific amounts in respect of those two lost opportunities. That award was registered as a judgment of the High Court of Justice on 26 June 2015. It must follow that the Tribunal dealt with and made final determinations in relation to each of the claims that succeeded before the Court of Appeal apart from the one in relation to Project Ablai.
46. That conclusion cannot be affected by the points made by MWP about the evidence before the Tribunal. The finality of the Tribunal’s determination follows from what is said in the awards and the judgment based on it, not the evidence on which the awards were based.
47. I accept that the reasoning in para 4.144(s) of the SIA is not entirely clear. However, two points can be made about that paragraph. First, the reference to “this part of the claim” is a reference to the ROXI claim, not a reference to claims based on the diversion of work generally. The Tribunal plainly deals with other diversion claims in other paragraphs of its award and reaches separate conclusions in relation to those.
48. Second, it appears that the Tribunal made no award against Mr Emmott in respect of the ROXI claim because he “did not receive a secret profit directly from the transaction”. Rather, any benefit was received by “Temujin”, which the Tribunal defines in para 1.2 of the SIA as “The professional practice operating in Kazakhstan under the title Temoujin, whether by Temoujin Services Ltd., Temoujin International Ltd., Temoujin International or Temoujin Holdings Ltd. (or howsoever)”. There may be a question whether that reasoning is correct. However, it does not alter the fact that the Tribunal concluded that the claim against Mr Emmott in respect of the ROXI opportunity failed, leaving it open whether a claim against “Temujin” might succeed and, if it did, whether Mr Emmott would be liable to contribute to that claim as a partner of that entity.
49. It is true that on the analysis set out above, MWP (as assignee) may have a small claim for contribution against Mr Emmott on the basis of equal apportionment. That claim appears to be in the order of USD2,000. However, in my opinion, the phrase “insufficient prospects of success” in UCPR r 11.6(2)(c) must include a reference to the quantum of any claim as well as its likelihood of success. To put the test in the affirmative, the question is whether the claim has sufficient prospects of success to warrant putting the person served outside Australia to the time, expense and trouble of defending it. A claim that is unlikely to succeed for anything more than several thousand dollars does not meet that requirement, even if it is likely to succeed for that amount. The amount of the claim does not justify the time, expense and trouble of defending it from overseas. In any event, having regard to the quantum of the claim, in my opinion, the claim should be dismissed or stayed in exercise of the general power conferred by UCPR r 11.6(1).
50. MWP also takes issue with the conclusions of the previous paragraph because in its submission it overlooks the fact that MWP (as assignee) also seeks contribution in respect of various costs awards against Messrs Nicholls and Slater and TIL and TSL. However, it is difficult to see how that submission is relevant in the current context. There is no co-ordinate liability between Mr Emmott and any of Messrs Nicholls and Slater and TIL and TSL in respect of those liabilities arising from the judgments against them. It may be that, to the extent that those liabilities are liabilities of a partnership of which Mr Emmott is a partner, Mr Emmott will be liable to contribute to them. But any such liability is relevant to MWP’s partnership claim, not its claim for contribution based on the judgment and a co-ordinate liability based on the fact that Mr Emmott was a wrongdoer liable in respect of the same loss as the defendants in NSW1.

The claim for breach of directors’ duties

51. It is not suggested that the claim based on a breach of duties said to be owed by Mr Emmott as a shadow director of TIL and TSL falls within any of the paragraphs of Schedule 6. Rather, it is said that the Court should nonetheless grant leave under UCPR r 11.5. Leave may only be granted if the Court is satisfied of the requirements set out in r 11.5(5).
52. In my opinion, none of those requirements is satisfied in this case.
53. The claim in respect of which leave is sought is a claim brought on behalf of TIL and TSL that Mr Emmott was a shadow director of each of those companies, that in that position he owed fiduciary duties to those companies and that he breached those fiduciary duties by appropriating benefits belonging to those companies to himself.
54. As I have said, both companies were incorporated in the British Virgin Islands. It is conceded that Mr Emmott is a resident of the United Kingdom or Kazakhstan. None of the conduct which is said to involve a breach of duty occurred in Australia. The likelihood is that the laws of the British Virgin Islands apply to the determination of the question whether Mr Emmott owed fiduciary duties to TIL and TSL as a shadow director of those companies: see Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157; [2004] EWCA Civ 1316 at [56] per Tuckey LJ; [69] per Arden LJ. Certainly, no reason was advanced for why the laws of New South Wales should apply to the determination of those questions.
55. MWP submitted that the claim has a real and substantial connection with Australia because it raises similar issues to those raised in NSW1. However, that itself cannot count as a real and substantial connection with Australia. The connection must arise from the facts of the case itself, not the fact that those facts are interwoven with facts that were in issue in some other case brought in Australia. In the present case, apart from an overlap in the factual matrix, MWP cannot point to any aspect of the claim that has a real and substantial connection with Australia. The claim concerns foreign companies that do not trade in Australia. It concerns conduct that occurred outside of Australia by a person who is resident outside of Australia. The most that could be said is that Mr Emmott is an Australian citizen. However, citizenship is not normally regarded as a connecting factor under the common law: see A Briggs, Private International Law in English Courts, (Oxford University Press, 2014) 131 para [3.121]; and no reason was advanced for why it should be regarded as a connecting factor in this case.
56. For similar reasons, Australia is not an appropriate forum for the trial. Australian law will not apply to the resolution of the issues in the case. There are no witnesses in Australia. It is not suggested that there are any original documents in Australia that are relevant to the dispute. The fact that this Court has determined proceedings arising out of related facts, will not facilitate the resolution of the current dispute.
57. For those reasons, I would refuse leave to serve the FAS outside of Australia insofar as it makes a claim against Mr Emmott for a breach of duty as a shadow director.

The partnership claims

58. MWP submits that the partnership claims fall within para (b)(iv) of Schedule 6 – that is, they are claims for a breach of contract which “was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court”. Alternatively, MWP submits it is entitled to leave under UCPR r 11.5.
59. I do not accept that para (b)(iv) of Schedule 6 applies. There is no written partnership agreement. Paragraph 31 of the ACLS contains the bald assertion that Messrs Nicholls, Slater and Emmott “formed a partnership, contract, arrangement, understanding or enterprise” (defined in the pleading as the “Temujin Partnership”) that involved “creating a legal practice, and a business of arrangers, advisors and agents” and “diverting legal consultancy work, developments, projects and opportunities from MWP to the legal practice, and the business of arrangers, advisors and agents”, among other activities.
60. No particulars are given of how the partnership was formed. However, it is not suggested that any act relating to its formation or its activities (assuming it was formed) occurred in Australia. The parties did sign a “Cooperation Agreement” relating to a “consultancy business” to be owned by TIL. But that agreement was expressed to be governed by the laws of England and Wales and the parties agreed to resolve any dispute by arbitration in London. There is nothing else which suggests by implication that the alleged parties to any partnership agreement intended the agreement to be governed by Australian law or to be enforceable or cognizable in an Australian court.
61. MWP advances two broad reasons why the Court should give leave to serve the FAS outside of Australia insofar as it advances the partnership claims. First, MWP points to a number of matters which it submits demonstrate that the claims have a real and substantial connection with Australia and that Australia is an appropriate forum to hear them. Second, it submits that both the English Court of Appeal and the Tribunal contemplated that those claims would be brought in Australia.
62. As to the first point, MWP points to the following factors:
    • (a) Messrs Slater and Nicholls were defendants to proceedings in Australia and were the subject of orders here;
    • (b) Mr Nicholls was bankrupted in Australia and Mr Slater’s bankruptcy (which occurred in the UK) is recognised here;
    • (c) This Court has exercised jurisdiction over and applied Australian law to the underlying dispute;
    • (d) Unsigned consultancy agreements between Mr Emmott and TIL were expressed to be governed by Australian law;
    • (e) Mr Nicholls before his death was and Messrs Slater and Emmott are Australian citizens;
    • (f) It is said that there is evidence that Messrs Emmott, Slater and the Temujin Partnership were or are being funded by an Australian Corporation;
    • (g) Mr Emmott has given evidence in Australia.
63. It is difficult to understand the relevance of most of these matters. The fact that Messrs Nicholls and Slater were defendants in other proceedings does not mean that the current claim has any connection with Australia. The same is true of the facts relating to Messrs Nicholls and Slater’s bankruptcies. There is no evidence that the unsigned consultancy agreements ever came into effect. Consequently, their provisions are irrelevant. Citizenship may not be wholly irrelevant to the question whether the Court should assume jurisdiction, since it is one of the matters required to be disclosed in an affidavit filed in support of an application for leave: see UCPR r 11.5(4). But, as I have said, citizenship of the parties is not normally regarded as a connecting factor at common law and no reason was advanced that would justify an exception in this case. There is no evidence that the defence of the current claim is being funded by an Australian corporation; and even if it is, it is difficult to see why that would be relevant. The funding of the plaintiff may be important because it may be relevant to the question of costs. The same is not true of the funding of the defendants. Finally, the fact that Mr Emmott has given evidence in Australia previously does not of itself mean that there is a connection between the current claim and Australia.
64. That leaves what appears to be MWP’s principal point, namely that the current case arises from an underlying dispute which has already been dealt with by Australian courts applying Australian law. This submission appears to have the following steps: (1) MWP made claims against Messrs Nicholls, Slater and Emmott (the “underlying dispute”); (2) at least some of those claims were decided by Australian courts applying Australian law; (3) the current dispute involves, among other things, a working out between Messrs Nicholls, Slater and Emmott of their respective responsibilities for those claims and the costs orders that were made in respect of them; (4) therefore, there is a real and substantial connection between the current (partnership) claims and Australia.
65. However, in my opinion, the connection with Australia largely ceased once final judgment was given by the Court of Appeal. The fact that judgment was obtained against two alleged partners in an Australian court in respect of what is said to be a partnership debt or liability is not itself sufficient to mean that there is a real and substantial connection between Australia and a claim brought to recover contribution in respect of that judgment and related costs orders from someone said to be liable to contribute to that debt or liability as a partner. It is true that the debt arises as a consequence of the judgment of an Australian court. But the relevant claim is a claim for contribution arising from a partnership, and that claim depends on the existence and terms of the partnership and whether the judgment can properly be characterised as a liability of the partnership. In the present case, it is difficult to see how the resolution of any of those issues has a connection with Australia. As I have said, all the conduct said to give rise to the partnership and to the liability to contribute to the judgment debt occurred outside of Australia between persons who were not residents of Australia.
66. For similar reasons, I do not accept that Australia is an appropriate forum to hear the dispute. Apart from the judgment and costs orders themselves, all the events occurred, and all the persons concerned in those events reside, outside of Australia.
67. MWP points to comments of the English Court of Appeal and the Tribunal which it is submitted demonstrate that both contemplated that the partnership claims would be determined in Australia. In particular, it points to the following statement of the Tribunal in para 8.22 of the SIA:

Temujin has been found liable in damages by the Australian Court, and if Mr Emmott is a partner in that firm (as to which we have insufficient evidence to form an opinion) he will be liable jointly and severally for Temujin’s debts.

68. MWP also points to the following statement of the Master of the Rolls (with whom Jackson and Underhill JJA agreed) in the appeal relating to the anti-suit injunction (Michael Wilson & Partners, Limited v Emmott [2018] EWCA Civ 51) at [59]:

It is clear that the arbitrators envisaged that the Australian courts, rather than the arbitrators, would decide whether or not Mr Emmott was a partner with Mr Nicholls and Mr Slater in the Temujin business and, if he was, would determine what would be Mr Emmott's liability in his capacity as a partner. In paragraph 4.144(s) of the SIA, for example, the arbitrators said, in relation to "Pinegrove/Roxi":

"We have read the judgment of Justice Einstein in the Supreme Court of New South Wales of 6 October 2008. Whilst that judgment is not binding upon us, and we understand is under appeal, in light of the remedies awarded in that judgment against Temujin in respect to the diversion work, we make no separate award in respect to this part of the claim. If Mr Emmott is a partner in Temujin, he and Temujin will be liable to account in those proceedings but not before us."

And later at [61]:

It will be a matter for the Australian courts to decide in NSW2 [ie, these proceedings] whether or not it would be an abuse or unjust or unconscionable for MWP to recover, by means of the assigned rights of Mr Nicholls and Mr Slater in respect of the Temujin partnership claims, a contribution to damages or equitable compensation owed by Temujin to MWP under NSW1 insofar as such damages and compensation are based on matters consciously not advanced by MWP in the arbitration or on which it lost in the arbitration or for which Mr Emmott has already compensated MWP pursuant to the SIA and the TQA.

69. However, two points may be made about these passages. First, the comments of the Tribunal and the English Court of Appeal are not binding on this Court. Second, none of the passages should be understood as expressing a view on whether this Court has jurisdiction and is an appropriate forum for determining the partnership claims. The point made by the Tribunal was simply that it was not considering any claim arising from the alleged partnership. Although the Master of the Rolls interpreted those statements as an indication that the Tribunal thought those issues would be dealt with by an Australian court, he made it quite clear that he was not expressing any view on the question whether Australia was an appropriate forum in the following passage (at [62]), which follows those relied on by MWP:

It would also be a matter for the Australian courts to decide whether, as was contended on behalf of Mr Emmott, there is no relevant connection between New South Wales and the Temujin partnership claims and, if so, whether that carries any consequences as to the jurisdiction of New South Wales.

70. There has been extensive litigation between MWP and Messrs Nicholls, Slater and Emmott both here and in England, as well as other jurisdictions, relating to events that primarily took place in Kazakhstan. The only real connection that the underlying disputes have with Australia is that Mr Nicholls and Mr Slater’s employment contracts with MWP were governed by New South Wales law and both were at times residents of Australia, although not at the time of the events giving rise to any of the claims sought to be advanced in these proceedings. The proceedings between Messrs Nicholls and Slater and MWP have been resolved; and with the resolution of that dispute, the principal connections the underlying dispute had with Australia no longer exist or at least are not relevant. Those with an interest in the current dispute reside either in the United Kingdom or Kazakhstan. All the relevant events occurred in Kazakhstan and relate to legal and consulting firms operating there. Having regard to those matters, it could not be said that in all the circumstances this Court should assume jurisdiction over what remains of the dispute.

Orders

71. It follows that the proceedings should be permanently stayed. The plaintiff should pay the defendant’s costs of the motion filed on 1 November 2018.

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