Michael Wilson & Partners Ltd as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (trading) Trust & Temujin Services Limited v Emmott (No 3)

By a notice of motion dated 2 February 2024, the plaintiff, Michael Wilson & Partners Ltd (MWP), seeks discovery of the categories of documents set out in Annexure A to this judgment.

Before addressing the categories directly, it is necessary to say something about the proceedings and the circumstances in which the current application is made.

The proceedings are part of a long running dispute between MWP and relevantly the defendant, Mr John Emmott, arising from an agreement entered into in December 2001 between MWP and Mr Emmott by which Mr Emmott was to become a director of MWP and to obtain a 33 percent shareholding in it. MWP is controlled by Mr Michael Wilson. It carries on a law and consulting practice in Kazakhstan and the surrounding region.

In June 2006, Mr Emmott, together with two other employees of MWP, Mr Nicholls and Mr Slater, left MWP and established a number of entities, including Temujin International Limited (TIL) and Temujin Services Limited (TSL) (together, the Temujin Entities) through which they carried on a business in competition with MWP.

In accordance with the agreement between MWP and Mr Emmott, MWP commenced an arbitration against Mr Emmott in London. It also sued Mr Nicholls, Mr Slater and several Temujin Entities in New South Wales (NSW1) alleging, among other things, that they had breached contractual and fiduciary duties they owed MWP. Ultimately, MWP obtained judgment against Mr Nicholls, Mr Slater, TIL and TSL. It was successful in bankrupting Mr Nicholls and Mr Slater and winding up TIL and TSL. Mr Nicholls has since died. Before his death, MWP obtained an assignment of any rights Mr Nicholls, Mr Slater, TIL and TSL had against Mr Emmott. Relying on those assignments, MWP commenced these proceedings.

The list statement is complicated and convoluted. Originally, MWP sought to advance a number of claims against Mr Emmott. However, as a result of a decision of the Court of Appeal in Michael Wilson & Partners Ltd v Emmott [2021] NSWCA 315, MWP is only entitled to advance in New South Wales the claims for relief set out in paras 3 to 10 of the Further Amended Summons filed on 3 October 2018. Those paragraphs seek the following relief:

By an amended notice of motion filed on 2 October 2023, MWP sought discovery of a broad range of documents said to be relevant to the claim that Messrs Emmott, Nicholls and Slater were in partnership. That motion came before the Court on 16 November 2023. Following argument and discussion between the parties’ counsel, the Court made the following orders:

Paragraphs 1.21, 1.22 and 1.24 of the plaintiff’s Amended Notice of Motion filed 2 October 2023 were in the following terms:

At that time, Mr Neggo, who appeared for MWP, submitted that MWP may want additional discovery before serving its evidence, but he acknowledged that in that event it would be necessary to reformulate the categories for discovery. The effect of the orders made on 16 November 2023 was that if MWP sought additional discovery it would need to file a further notice of motion, which is what it has done.

Mr Emmott has produced 47 documents in accordance with the orders made on 16 November 2023.

In considering the current application, four other points should be mentioned.

First, since the Court of Appeal’s decision, MWP has filed what is described as a “Restated and Further Amended Summons” (RFAS) and a Further Amended Commercial List Statement (FACLS). There is a question whether those documents advance a case that goes beyond the leave given by the Court of Appeal, particularly insofar as they seek to advance a case that following dissolution of the partnership “there continued an arrangement, agreement and understanding between [Mr Emmott, Mr Nicholls and Mr Slater], and their delegates and nominees, whether acting directly or indirectly and which continues to date” (to quote from para 4 of the RFAS). However, for present purposes it is not necessary to consider that issue further. MWP does not seek to justify this application other than by reference to the allegation that Mr Emmott carried on business in partnership with Mr Nicholls and Mr Slater.

Second, neither the RFAS nor the FACLS identifies any facts or matters by reason of which a partnership is said to exist. The summons before the Court of Appeal did refer to paras 7, 31 and 32 of an Amended Commercial List Statement, which are now paras 7, 28 and 29 of the FACLS. They (including amendments but ignoring markups) are in the following terms:

As is apparent, those paragraphs do not plead any material facts that are said to give rise to a partnership.

The FACLS does refer to the decision of Einstein J in NSW1 (see Michael Wilson & Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033) and the appeals from that decision. It pleads that Mr Emmott is bound by the findings of fact in that case (notwithstanding that he was not a party) and, in particular, what is said to be a finding that Messrs Emmott, Nicholls and Slater were in partnership. WMP points to a number of passages in which that finding is said to have been made. Perhaps the clearest example is para [132] of the judgment of Einstein J in Michael Wilson & Partners Limited v Robert Colin Nicholls and Ors [2009] NSWSC 1033, where his Honour says:

The findings are said to be binding on Mr Emmott because he participated in those proceedings by, for example, giving evidence. It is MWP’s primary case that it can prove the existence of a partnership simply by tendering the judgments in that case. It is against the possibility that that argument will fail that MWP seeks discovery. However, because MWP has not pleaded any facts by reason of which it has said that a partnership existed, it is not possible to know whether MWP simply relies on the facts that caused Einstein J to conclude that there was a partnership or whether it relies on other facts and, if so, what they are.

Third, as pleaded in the FACLS, the thrust of MWP’s case is that Mr Emmott either directly or indirectly received benefits from projects or work that were taken from MWP for which he has not accounted to the partnership. Particulars of the various projects and work are given in the FACLS. However, no particulars are given of the benefits received by Mr Emmott or entities on his behalf for which he has not accounted to Mr Nicholls and Mr Slater.

Fourth, there can no longer be any doubt that Messrs Emmott, Nicholls and Slater left MWP, established one or more businesses together and took business opportunities belonging to MWP in establishing that business or those businesses. The question in this case is whether they did so as equal partners in a partnership and, if so, whether Mr Emmott received income or other benefits as a partner for which he has not accounted to the partnership. That is very much a live question in circumstances where it is common ground that the three of them established a number of corporate entities and apparently carried on business through those.

Against that background, it is possible to turn to the categories for discovery set out in Annexure A. In an affidavit sworn on 2 February 2024, Mr Wilson says that the categories for discovery are relevant to one of three issues. The first is whether Mr Emmott was in partnership with Mr Nicholls and Mr Slater. The second is the extent to which Mr Emmott was involved in NSW1, which is said to be relevant to the question whether findings in that case are binding on Mr Emmott. The third is when the partnership came to an end. In the FACLS, MWP pleads that the partnership came to an end in 2015 on the bankruptcy of Mr Nicholls and Mr Slater. In his list response, Mr Emmott says that if there was any such partnership, it came to an end in mid‑2008. Paragraph 20A of the list response gives the following particulars of that allegation:

I am prepared to assume for present purposes that there are “exceptional circumstances necessitating disclosure” before the service of evidence within the meaning of para 4 of Practice Note SC Eq 11 Disclosure in the Equity Division”. Those exceptional circumstances arise from the fact that MWP brings the partnership claim based on the assignment of rights from others and therefore has no direct knowledge of the facts said to give rise to the partnership. I am also prepared to accept that MWP is entitled to make an application for further discovery consistently with what happened when the matter was before the Court on the last occasion. However, I do not accept that it is entitled to discovery of any of the categories that it now seeks.

One difficulty with many of the categories now sought (and indeed the categories ordered to be discovered by the Court on 16 November 2023) is that they assume the existence of the Temujin Partnership when that is one of the principal issues in the case. That problem is not overcome by the defining the Temujin Partnership as “any relation between John Forster Emmott, and either or both Robert Colin Nicholls and David Ross Slater, carrying on business in common with a view of profit”. The categories assume that there was such a relationship.

Category 1 might be read as requiring disclosure of all documents evidencing a relationship between Messrs Emmott and either or both of Mr Nicholls and Mr Slater which involved them carrying on business in common with a view to profit. But if that is how the category is to be read, it is much too wide. It does not specify a date range. More significantly, it is for MWP to identify the facts and matters it relies on for the assertion that Mr Emmott was in partnership with either or both of Mr Nicholls and Mr Slater. Having identified those facts and matters, MWP may be entitled to discovery in relation to those facts and matters. So, for example, if it is alleged that Messrs Emmott, Nicholls and Slater reached an agreement in 2006 to form a partnership, MWP may be entitled to documents evidencing or recording that agreement. It appears that that is how Mr Emmott has interpreted the order for discovery made by the Court on 16 November 2023. If it is said that a partnership is to be inferred from certain facts, MWP may be entitled to documents that are relevant to the existence of those facts. However, MWP is not entitled to plead a conclusory allegation that there was a partnership and then seek discovery of all documents that might establish that there was.

The fact that Mr Emmott has not requested particulars of the allegation that there was a partnership does not alter the position. The onus is on MWP to particularise its case properly. It cannot use its failure to do so as a reason to obtain discovery which is overly broad.

Similar comments apply to categories 2, 3, 4 and 5. Each of those categories assumes the existence of a Temujin Partnership and then seeks documents relevant to it. Unless the existence of the partnership is assumed, it is not clear what documents are being sought. For example, what does it mean to ask for documents concerning the operation of the Temujin Partnership if the partnership is denied? It is undoubtedly true that Messrs Emmott, Nicholls and Slater established various entities and they together with those entities engaged in various activities, but that does not necessarily establish that there was a partnership, let alone its scope. Moreover, assuming that there was a partnership, a category that seeks all documents concerning the operation of the partnership appears to be a category that requires production of all business records of the partnership. Such a category is far too broad. No reason has been advanced for why MWP needs documents falling within such a broad category. The same comments apply to categories 3 and 5.1.

Category 4 appears to be addressed to the issue when the Temujin Partnership was dissolved. Again, it is for MWP to identify the facts and matters it relies on for the assertion that Messrs Emmott, Nicholls and Slater continued to carry on business with a view to profit up until the time that Mr Nicholls and Mr Slater were made bankrupt. The mere allegation that they continued in partnership up until that time is not sufficient to justify requiring Mr Emmott to give discovery of all documents that might indicate that that is the position.

The real issue between the parties is whether there was a partnership and, if so, whether it came to an end in 2008 for the reasons particularised in the list response. MWP does not need extensive discovery in relation to that issue.

The relevance of categories 5.2 and 6 is not apparent on the face of the categories or from the evidence given in Mr Wilson’s affidavit sworn on 2 February 2024. In connection with the previous application for discovery, Mr Wilson gave extensive, often argumentative, affidavit evidence concerning at least some of the entities listed in Appendix A and the properties listed in Appendix C (that form part of Annexure A). One thing that does emerge from that evidence is that Mr Wilson already has detailed information about many of the entities and properties.

It appears that categories 5.2 and 6 are said to be relevant to the claim that MWP may be entitled to trace and follow partnership property to property held by those entities or the property identified in Appendix C. Some of the documents may also be relevant to an account if the Court is persuaded that an account should be ordered. However, insofar as some of the documents may be relevant to an account, production of them now is premature. MWP must first persuade the Court to order an account. What documents need to be produced to enable the account to be taken is an issue to be addressed at the time the Court gives directions in relation to the account if one is ever ordered.

As to the issue of tracing (and following), before MWP is entitled to discovery in relation to that issue, it would need to satisfy the Court that Mr Emmott had received what was arguably partnership property and had converted it into other property or transferred it to another entity which, because of the circumstances in which the property transferred, arguably itself became liable to account for the property. MWP has made no attempt to do that. Instead, what it appears to have done is to identify every entity that has any connection with Mr Emmott and any property that apparently has any connection with him and to assert without any foundation that the entities are partnership entities, or the property is partnership property. It then seeks the broadest possible discovery in relation to the properties and the assets and liabilities of the identified entities.

To take one example, Mr Wilson, in one of two affidavits he swore on 30 June 2023, gives the following evidence in relation to the first property referred to in Appendix C:

Plainly, the unsubstantiated allegations in these paragraphs provide no basis for concluding that assets of the partnership could conceivably be traced into the Holm Farm property.

It is not necessary to address each of the other properties included in Appendix C. Two other examples suffice.

In relation to the property at Baringa Road, Northbridge, Mr Wilson gives this evidence in his affidavit sworn on 30 June 2023:

Mr Sinclair was a director of one or more clients of MWP who followed Messrs Emmott, Nicholls and Slater and who apparently at some stage lent money to Mr Emmott. Mr Sinclair has been bankrupted and MWP has taken an assignment from his trustee in bankruptcy of his rights relevantly against Mr Emmott. But how any of that establishes that the property “was purchased, financed and maintained using monies properly belonging to MWP and the Temujin Partnership” is unclear. Similarly, it is unclear what the relevance of the assertion that the monies belonged to MWP is, or how they could properly belong both to MWP and the Temujin Partnership, or why Mr Emmott could be expected to have documents relating to a property belonging to Ms Curtis, or what relief could be given in respect of the property given that Ms Curtis is not a party to the proceedings.

In relation to the property at Bella Vista, Mr Wilson gives this evidence in one of two affidavits he swore on 30 June 2023:

Mr Wilson does not state where such a finding was made. The Court of Appeal, summarising the findings of Einstein J in relation to one of the projects that Messrs Emmott, Nicholls and Slater took from MWP said in Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383 at [106-7]:

Again, it is difficult to see why Mr Emmott would have any documents relevant to the property owned by Ms Lighezzolo. In any event, before discovery would be ordered, MWP would need to establish at least an arguable connection between money or other benefits received by Mr Emmott as a partner for which he has not accounted to Messrs Nicholls and Slater and the money used to acquire the property owned by Ms Lighezzolo. It has made no attempt to do that. At most, the findings of the Court of Appeal might suggest that PJT, in which Mr Slater and Ms Lighezzolo had an interest, received money belonging to the partnership.

Similar observations can be made about the assets and liabilities of the various entities listed in Appendix A. It is unclear why Mr Emmott could be expected to have documents relating to the assets or liabilities of those entities or why historical and current assets and liabilities of those entities are relevant to the issues to be determined in this case.

Category 7 is said to be relevant to the question whether Mr Emmott is bound by the findings of fact in NSW1 (and presumably the proceedings referred to as the “ACT Proceedings”). Two points may be made about this category. First, it is unclear why all documents concerning Mr Emmott’s involvement in those proceedings are necessary to determine whether Mr Emmott is bound by the findings in those cases. Many of the documents sought are likely to be privileged. Again, the category is far too broad. Second, MWP was a party to the relevant proceedings. Consequently, it does have direct knowledge of Mr Emmott’s involvement. There is, therefore, no reason to grant discovery in advance of evidence in relation to this category.

The onus is on MWP to convince the Court that the discovery is “necessary for the resolution of the real issues in dispute in the proceedings” as required by para 5 of the Practice Note and to do so in a way that complies with its obligations under ss 56-60 of the Civil Procedure Act 2005 (NSW). Although the new categories for discovery are shorter than the earlier ones, they are no less broad. In order to discharge the onus it bears, MWP must explain in a clear and concise manner precisely what documents it requires and why those documents are necessary for the resolution of the real issues in the case. The affidavit sworn by Mr Wilson in support of the current application makes no attempt to do that. In support of the previous application, Mr Wilson swore several affidavits and exhibited a large volume of material which together took up most of a four-volume court book that was more than 3000 pages long. Those affidavits contained many irrelevant and often unsupported allegations. Again, they do not provide a proper foundation for an application for disclosure in advance of evidence.

It follows that the notice of motion dated 2 February 2024 must be dismissed with costs.

The matter is stood over for directions on 1 March 2024.