Sydney Supreme Court Issues Landmark Ruling: MWP wins Kazakhstan Fraud Case
John Forster Emmott, an Australian lawyer who joined Michael Wilson & Partners in 2001 as a director and senior lawyer, was found to have committed breaches of contract and flagrant breach of fiduciary duties (equitable fraud) linked with his foundation of and work at Temujin International Ltd (Temujin), a Kazakhstan-based law firm. Justice Einstein found that Mr Emmott secretly established Temujin in December 2005 in partnership with Robert Colin Nicholls, a Sydney-based barrister and a former Freehills partner, and David Ross Slater a former in-house lawyer for Westpac because the Cooperation Agreement concluded by them personally on 20 December 2005 was “an immediate partnership involving each of Messrs Nicholls, Slater and Emmott” and “…was intended to and in fact established a partnership between the four gentlemen [Messrs Nicholls, Slater, Emmott and Shaikenov]”. Slater and Nicholls had earlier worked for MWP. Mr Emmott improperly transferred legal documents and clients from MWP to Temujin, enabling the latter to illegally earn millions of US Dollars in fees and share-based payments while advising MWP’s clients on the purchase of formerly State-owned oil, gas, gold and mineral companies, and their listing and raising of monies on the London Alternative Investment Market (AIM).
In his judgment of 6 October 2009, Justice Einstein ruled that Mr Emmott had fraudulently and unlawfully conspired with Mr Nicholls and Mr Slater to injure MWP and to steal and profit from MWP’s clients: “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…”. Mr Emmott remained at MWP for 6 months after secretly joining Temujin as a partner, and, like the proverbial cuckoo-in-the-nest, diverted to Temujin, MWP’s clients whose transactions he was leading. Justice Einstein said Mr Emmott had been ''the backbone of the plot'' and had ''likely played the dominant role in every step'' of Temujin's work and that Mr Emmott’s activities included “…his having one foot in his employer’s camp and the other foot squarely planted in the business activities in which [unknown to MWP] he already had an interest and to which he could migrate once he left MWP…”.
The Judge referred to the “…murky world of Temujin…” and found that Mr Nicholls and Mr Slater breached their contracts, committed breaches of their fiduciary duties (equitable fraud), participated as ''accessories'' in the fraudulent conspiracy to injure MWP- knowing that Mr Emmott was breaking the law by defrauding MWP and stealing its projects and clients, they assisted him in his wrongdoing and themselves unlawfully interfered with Mr Emmott’s contract with MWP. They also stole documents, confidential information and know-how from MWP and “…after these emails and documents were dispatched by Mr Slater he proceeded systematically to delete the emails from MWP's computer system in an obvious attempt to conceal this activity from his employer. These were not the actions of an honest man…”. The Judge further noted that “…the combination of the Mr Slater's forwarding of MWP documents to his private Gmail address, the deletion of the emails from MWP's servers and the forecast of immediate profits arising from Temujin indicate in the strongest terms that the defendants intended to secretly deploy MWP's clients in their own interests..”. As to Mr Nicholls the Judge concluded that he “…was a very difficult witness…the evidence given by Mr Nicholls requires to be very carefully checked and …on a number of occasions the evidence which he gave is rejected…” In contrast the Judge found that Mr Wilson of MWP was “…a witness of truth…”.
The Judge totally rejected the expert evidence of Mr Viktor Mokrousov, a partner and the most senior Kazakh lawyer of Chadbourne & Parke, whose work he described as “…both confused and confusing…”. Accordingly, Temujin and Messrs Slater and Nicholls personally have been found liable by the Judge to account to MWP for their “tainted” profits by giving MWP an account of profits or equitable compensation (at MWP’s choice), for profits earned by advising foreign resource companies on four separate transactions. These include the Roxi Petroleum Plc AIM Admission transactions, Chilisai Phosphour and the Sunkar Resources Plc AIM Admission transactions, as well as those in which Frontier Mining Limited was involved, namely the Urals Gold/Maminskoye and Project Ablai transactions.
According to Mr. Wilson, the founder of MWP, a leader in the profession in the Central Asia and Caucasus Region:
“… 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 mis-information 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”.
An appeal from the Supreme Court's Judgment has been allowed and the Court of Appeal has directed that there be a further hearing of the proceedings.
MWP is pleased to announce and confirm that, on 11 February 2011 in Sydney, Australia, the High Court (being the ultimate Court of Appeal) has granted MWP Special Leave on all 3 issues appealed against (abuse of process, apprehended bias and waiver). Tom Bathurst Q.C., the leader of the NSW Bar, Mathew Walton SC and David Thomas appeared as Counsel for MWP, together with Messrs. Clayton Utz as Solicitors. Lindsay SC, McGrath SC and Mr. Fox appeared as Counsel, and Henry Davis York for all of Messrs Nicholls, Slater, and the Temujin Partnership (of which Mr. Emmott is a partner) entities. The two High Court Judges on the hearing were French CJ and Heydon J. who, thus, comprised a very senior and experienced High Court bench. The appeal will be heard at the High Court in Canberra on 31 May - 1 June 2011.
Meanwhile, on Friday 25th March 2011, the NSW Supreme Court, Commercial Division in Equity, rejected the application of Mr. Nicholls to vary and lift the worldwide freezing and disclosure orders in place against him. It will be recalled that such freezing and disclosure orders are also in place against Mr. Slater, personally, as the second Temujin Partner, alongside Mr. Emmott, as well as their vehicles involved in the fraud: Temujin International Limited (both in it’s own right and in its capacity as the Trustee of the Temujin Trust), Temujin Services Limited, Temujin International FZE, Temujin Holdings Limited, PJT International Pty., Limited, (both in it’s own right and in its capacity as the Trustee of the PJT Trust), and PJT Corporate Services Pty., Limited in the amount of A$16m, and which freezing orders have captured their personal assets and homes in Sydney and Canberra, Australia, respectively.
For further references, please see the following newswire links:
The Sydney Morning Herald
The New Lawyer
LexisNexis, the Lawyers Weekly
The Mining Journal or contact us for an unabridged headline article
The Brisbane Times
The Kazakhstan Newsline or contact us for an unabridged version
The Trainee Solicitor
The Business Spectator under the "Gold Consolidation and Expats in Kazakhstan" subheading
The Practice Source
The WA Today
The John Helmer
In his judgment of 6 October 2009, Justice Einstein ruled that Mr Emmott had fraudulently and unlawfully conspired with Mr Nicholls and Mr Slater to injure MWP and to steal and profit from MWP’s clients: “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…”. Mr Emmott remained at MWP for 6 months after secretly joining Temujin as a partner, and, like the proverbial cuckoo-in-the-nest, diverted to Temujin, MWP’s clients whose transactions he was leading. Justice Einstein said Mr Emmott had been ''the backbone of the plot'' and had ''likely played the dominant role in every step'' of Temujin's work and that Mr Emmott’s activities included “…his having one foot in his employer’s camp and the other foot squarely planted in the business activities in which [unknown to MWP] he already had an interest and to which he could migrate once he left MWP…”.
The Judge referred to the “…murky world of Temujin…” and found that Mr Nicholls and Mr Slater breached their contracts, committed breaches of their fiduciary duties (equitable fraud), participated as ''accessories'' in the fraudulent conspiracy to injure MWP- knowing that Mr Emmott was breaking the law by defrauding MWP and stealing its projects and clients, they assisted him in his wrongdoing and themselves unlawfully interfered with Mr Emmott’s contract with MWP. They also stole documents, confidential information and know-how from MWP and “…after these emails and documents were dispatched by Mr Slater he proceeded systematically to delete the emails from MWP's computer system in an obvious attempt to conceal this activity from his employer. These were not the actions of an honest man…”. The Judge further noted that “…the combination of the Mr Slater's forwarding of MWP documents to his private Gmail address, the deletion of the emails from MWP's servers and the forecast of immediate profits arising from Temujin indicate in the strongest terms that the defendants intended to secretly deploy MWP's clients in their own interests..”. As to Mr Nicholls the Judge concluded that he “…was a very difficult witness…the evidence given by Mr Nicholls requires to be very carefully checked and …on a number of occasions the evidence which he gave is rejected…” In contrast the Judge found that Mr Wilson of MWP was “…a witness of truth…”.
The Judge totally rejected the expert evidence of Mr Viktor Mokrousov, a partner and the most senior Kazakh lawyer of Chadbourne & Parke, whose work he described as “…both confused and confusing…”. Accordingly, Temujin and Messrs Slater and Nicholls personally have been found liable by the Judge to account to MWP for their “tainted” profits by giving MWP an account of profits or equitable compensation (at MWP’s choice), for profits earned by advising foreign resource companies on four separate transactions. These include the Roxi Petroleum Plc AIM Admission transactions, Chilisai Phosphour and the Sunkar Resources Plc AIM Admission transactions, as well as those in which Frontier Mining Limited was involved, namely the Urals Gold/Maminskoye and Project Ablai transactions.
According to Mr. Wilson, the founder of MWP, a leader in the profession in the Central Asia and Caucasus Region:
“… 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 mis-information 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”.
An appeal from the Supreme Court's Judgment has been allowed and the Court of Appeal has directed that there be a further hearing of the proceedings.
MWP is pleased to announce and confirm that, on 11 February 2011 in Sydney, Australia, the High Court (being the ultimate Court of Appeal) has granted MWP Special Leave on all 3 issues appealed against (abuse of process, apprehended bias and waiver). Tom Bathurst Q.C., the leader of the NSW Bar, Mathew Walton SC and David Thomas appeared as Counsel for MWP, together with Messrs. Clayton Utz as Solicitors. Lindsay SC, McGrath SC and Mr. Fox appeared as Counsel, and Henry Davis York for all of Messrs Nicholls, Slater, and the Temujin Partnership (of which Mr. Emmott is a partner) entities. The two High Court Judges on the hearing were French CJ and Heydon J. who, thus, comprised a very senior and experienced High Court bench. The appeal will be heard at the High Court in Canberra on 31 May - 1 June 2011.
Meanwhile, on Friday 25th March 2011, the NSW Supreme Court, Commercial Division in Equity, rejected the application of Mr. Nicholls to vary and lift the worldwide freezing and disclosure orders in place against him. It will be recalled that such freezing and disclosure orders are also in place against Mr. Slater, personally, as the second Temujin Partner, alongside Mr. Emmott, as well as their vehicles involved in the fraud: Temujin International Limited (both in it’s own right and in its capacity as the Trustee of the Temujin Trust), Temujin Services Limited, Temujin International FZE, Temujin Holdings Limited, PJT International Pty., Limited, (both in it’s own right and in its capacity as the Trustee of the PJT Trust), and PJT Corporate Services Pty., Limited in the amount of A$16m, and which freezing orders have captured their personal assets and homes in Sydney and Canberra, Australia, respectively.
For further references, please see the following newswire links:
The Sydney Morning Herald
The New Lawyer
LexisNexis, the Lawyers Weekly
The Mining Journal or contact us for an unabridged headline article
The Brisbane Times
The Kazakhstan Newsline or contact us for an unabridged version
The Trainee Solicitor
The Business Spectator under the "Gold Consolidation and Expats in Kazakhstan" subheading
The Practice Source
The WA Today
The John Helmer