High Court of Australia Upheld Landmark Ruling of the Supreme Court of New South Wales: MWP wins Kazakhstan Fraud Case
On Thursday, 1 December 2011, the High Court of Australia issued a landmark judgement reinstating the Judgement of the New South Wales Supreme Court, which awarded Michael Wilson & Partners, Limited (“MWP”) damages in the amount of over A$13 million, including costs. This cancels the temporary victory the defendants had a year ago in the NSW Court of Appeal.
“Justice has been finally served” says Michael Wilson, managing director of MWP.
The New South Wales Supreme Court found that John Forster Emmott, an Australian lawyer who joined MWP in 2001 as a director and senior lawyer had, acting in conspiracy with Robert Colin Nicholls, a Sydney-based barrister and a former Freehills partner, and David Ross Slater a former in-house lawyer for Westpac, secretly entered into partnership and had created a competitor law firm Temujin International Ltd (Temujin), in order to steal and profit from MWP’s business, projects, opportunities and clients. For more than six months, Mr Emmott, whilst remaining as an MWP director, covertly worked with Messrs Nicholls and Slater from within MWP, as the “sleeper” in the fraud, to damage MWP by diverting business and profits to his new business enterprise.
Justice Clifford Einstein found in his judgment of 6 October 2009 that: “It is clear from the evidence before the court already referred to that one of the purposes of the conspiracy was to injure MWP”…although the predominant purpose of the defendants was to obtain financial advantage…”. He awarded MWP damages against Temujin and Messrs Nicholls and Slater, partly on the basis of their own breaches of contract and fiduciary duty, and also because they were accessories to the breaches of fiduciary and contractual duties by Mr Emmott, whom the judge found to be the “…backbone of the plot…” hatched against MWP. They were also found to be liable for the tort of conspiracy. Although an Australian, Mr Emmott refused to be joined into the Australian proceedings, so that MWP had to pursue its claims against him separately in a London-based arbitration, where he was later also found liable for serious gross dishonest breaches of his fiduciary duties over a sustained period of time, where he was found to have falsified documents, misled trustees and tax authorities, where his conduct in relation to MWP was found “…to have been disgraceful…”, and also for repudiatory and other breaches of contract, but with damages being awarded on a more limited basis than as against the Australian Defendants.
Despite the Court of Appeal Ruling of 15 December 2010, setting-aside the first instance judgement, the High Court unanimously determined that it was not an abuse of process for MWP to have obtained and held a judgement which was inconsistent with a foreign arbitral award delivered in an arbitration between different parties, regardless of whether there is an “…principal and accessory…” relationship involved. The majority (Acting Chief Justice Gummow, and Justices Hayne, Crennan and Bell) found that:
"Neither the institution nor the prosecution to judgement of the proceedings was an abuse of process of the Supreme Court of NSW. No abuse of that process emerged for the first time when the arbitrators reached conclusions that differed from those reached by Einstein J… The claims against Mr Slater and Mr Nicholls, as knowing assistants, were not dependent upon the claims made against Mr Emmott…"
The High Court further found that there was no basis for any finding a reasonable apprehension that the trial judge was biased.
Mr Michael Wilson, managing director of MWP commented:
“After a five year long ordeal, MWP has been truly vindicated. We are very pleased to have finally established beyond doubt the terrible fraud perpetrated, proven who is right and who is wrong, and to have put to rest the misinformation and false stories in the market-place circulated for so long now by Emmott, Nicholls, Slater, Temujin, and their funders Mr. Sinclair and Sokol Holdings…for many years now oil and mineral-rich Kazakhstan has been a true El Dorado for expatriate businessmen. Unfortunately, some, and even senior lawyers who should know better, such as Nicholls, Slater and Emmott, leave their ethics, morals and respect for laws behind on their airplane seats, but are now paying the price. In the BVI, MWP has freezing and disclosure orders over the world-wide assets of two of their (defendants) key vehicles, Temujin International Limited and Temujun Services Limited, in the amount of US$16 million, where PWC (PriceWaterhouseCoopers) was also appointed by the court as the supervising accountant because of their prior breaches and contempt, and MWP also has similar freezing and disclosure orders against Nicholls, Slater, personally and their Temujin entities in NSW. In due course, as the key Temujin Partner, this judgement will also be reciprocally enforceable against Emmott, personally, and his companies and their worldwide assets.”
See also:
www.mondaq.com
www.claytonutz.com/publications
www.timebase.com.au
www.businessinsider.com
www.newsline.kz
johnhelmer.net
www.commercialcourt.com.au
conflictoflaws.net
www.hcourt.gov.au
“Justice has been finally served” says Michael Wilson, managing director of MWP.
The New South Wales Supreme Court found that John Forster Emmott, an Australian lawyer who joined MWP in 2001 as a director and senior lawyer had, acting in conspiracy with Robert Colin Nicholls, a Sydney-based barrister and a former Freehills partner, and David Ross Slater a former in-house lawyer for Westpac, secretly entered into partnership and had created a competitor law firm Temujin International Ltd (Temujin), in order to steal and profit from MWP’s business, projects, opportunities and clients. For more than six months, Mr Emmott, whilst remaining as an MWP director, covertly worked with Messrs Nicholls and Slater from within MWP, as the “sleeper” in the fraud, to damage MWP by diverting business and profits to his new business enterprise.
Justice Clifford Einstein found in his judgment of 6 October 2009 that: “It is clear from the evidence before the court already referred to that one of the purposes of the conspiracy was to injure MWP”…although the predominant purpose of the defendants was to obtain financial advantage…”. He awarded MWP damages against Temujin and Messrs Nicholls and Slater, partly on the basis of their own breaches of contract and fiduciary duty, and also because they were accessories to the breaches of fiduciary and contractual duties by Mr Emmott, whom the judge found to be the “…backbone of the plot…” hatched against MWP. They were also found to be liable for the tort of conspiracy. Although an Australian, Mr Emmott refused to be joined into the Australian proceedings, so that MWP had to pursue its claims against him separately in a London-based arbitration, where he was later also found liable for serious gross dishonest breaches of his fiduciary duties over a sustained period of time, where he was found to have falsified documents, misled trustees and tax authorities, where his conduct in relation to MWP was found “…to have been disgraceful…”, and also for repudiatory and other breaches of contract, but with damages being awarded on a more limited basis than as against the Australian Defendants.
Despite the Court of Appeal Ruling of 15 December 2010, setting-aside the first instance judgement, the High Court unanimously determined that it was not an abuse of process for MWP to have obtained and held a judgement which was inconsistent with a foreign arbitral award delivered in an arbitration between different parties, regardless of whether there is an “…principal and accessory…” relationship involved. The majority (Acting Chief Justice Gummow, and Justices Hayne, Crennan and Bell) found that:
"Neither the institution nor the prosecution to judgement of the proceedings was an abuse of process of the Supreme Court of NSW. No abuse of that process emerged for the first time when the arbitrators reached conclusions that differed from those reached by Einstein J… The claims against Mr Slater and Mr Nicholls, as knowing assistants, were not dependent upon the claims made against Mr Emmott…"
The High Court further found that there was no basis for any finding a reasonable apprehension that the trial judge was biased.
Mr Michael Wilson, managing director of MWP commented:
“After a five year long ordeal, MWP has been truly vindicated. We are very pleased to have finally established beyond doubt the terrible fraud perpetrated, proven who is right and who is wrong, and to have put to rest the misinformation and false stories in the market-place circulated for so long now by Emmott, Nicholls, Slater, Temujin, and their funders Mr. Sinclair and Sokol Holdings…for many years now oil and mineral-rich Kazakhstan has been a true El Dorado for expatriate businessmen. Unfortunately, some, and even senior lawyers who should know better, such as Nicholls, Slater and Emmott, leave their ethics, morals and respect for laws behind on their airplane seats, but are now paying the price. In the BVI, MWP has freezing and disclosure orders over the world-wide assets of two of their (defendants) key vehicles, Temujin International Limited and Temujun Services Limited, in the amount of US$16 million, where PWC (PriceWaterhouseCoopers) was also appointed by the court as the supervising accountant because of their prior breaches and contempt, and MWP also has similar freezing and disclosure orders against Nicholls, Slater, personally and their Temujin entities in NSW. In due course, as the key Temujin Partner, this judgement will also be reciprocally enforceable against Emmott, personally, and his companies and their worldwide assets.”
See also:
www.mondaq.com
www.claytonutz.com/publications
www.timebase.com.au
www.businessinsider.com
www.newsline.kz
johnhelmer.net
www.commercialcourt.com.au
conflictoflaws.net
www.hcourt.gov.au