Michael Wilson & Partners Ltd v Emmott

LEEMING JA: I have had the very considerable advantage of reading the reasons for judgment of Brereton JA in draft. What follows uses the same abbreviations and presupposes familiarity with his judgment. I agree with the orders his Honour proposes. I agree with his Honour’s reasons dealing with the fraught interlocutory history of these proceedings and with the conclusion that an appeal lies only with a grant of leave. I agree with his Honour’s reasons concerning the conclusion by the primary judge that the contribution claim amounted to no more than about USD$2,000, and would go further and conclude that that was sufficient to warrant refusing leave in relation to the stay applicable to this aspect of the claim.

I also agree with Brereton JA’s reasons that, on a point seemingly not argued before the primary judge, concerning the Australian assets of the partnership, the appeal should be allowed in part. I am conscious that that involves the grant of leave on a point not argued before the primary judge, and that it may be said that leave should not be granted to advance a point for the first time on appeal. But as Brereton JA points out, the claim that there were substantial assets was advanced without opposition in the written submissions supplied well in advance of the hearing in this Court, and the stay for practical purposes finally determines MWP’s ability to litigate these issues in this Court.

I also agree with Brereton JA that there are additional reasons to refuse leave to appeal in relation to the availability of equitable contribution, although I would frame the position more narrowly than does his Honour. What follows is based on the rights said to have been acquired from the trustees in bankruptcy of Messrs Nicholls and Slater and the liquidators of TIL and TSL. I proceed on the basis, favourably to MWP, that the assignments (which were not in evidence) vested the entirety of those rights in it.

First, it was contended, seemingly for the first time in this Court, that the “contribution” sought in the Commercial List Summons should be regarded as an indemnity, on the basis that a person found to have been knowingly involved in a dishonest and fraudulent breach of fiduciary duty was entitled to shift the entirety of that person’s liability to the fiduciary. No authority was advanced in support of that proposition. To the contrary, it is settled law that contribution is available to achieve an equal bearing of the burden of coordinate liabilities: see, for example, Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [14] and [38]; cf the dissenting view of Kirby J at [119]-[123]. MWP’s submission is inconsistent with the principles underpinning the doctrine as explained by French CJ, Gummow, Hayne and Bell JJ in Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [38]-[40].

Secondly, such rights as vested by reason of the assignments were the rights of contribution enjoyed by the trustees in bankruptcy and the liquidators. The evidence of the facts underlying the claimed entitlement to contribution was scant. Mr Bennett QC, who had not appeared at first instance, addressed the difficulties thus:

I do not accept the submission. The claim was for equitable relief. Contribution would not be ordered unless either there had been payment of more than a proportionate share of the liabilities, or else it were established that the trustees or liquidators were ready, willing and able to do so. This was the obstacle identified by the joint judgment in Friend v Brooker at [60]:

This gap in the case sought to be advanced by MWP is not merely evidentiary. That is because the evidence was that “MWP has successfully pursued bankruptcy proceedings against Messrs Slater and Nicholls ... and liquidation proceedings against TIL and TSL”. That is to say the plaintiff which as assignee sought to assert rights of contribution against Mr Emmott was the same petitioning creditor who had sought and obtained sequestration and winding up orders against Mr Emmott’s co-obligees. In those circumstances, there is no basis for suggesting that the trustees or the liquidators had any entitlement to contribution on the basis that they had paid more than their proportionate share of a coordinate liability (and to be fair, I did not understand any such submission to have been made). That is sufficient to affirm by a separate route the conclusion of the primary judge that the claim for contribution had insufficient prospects of success.

BRERETON JA:

In 2004 and 2005, MWP engaged two additional lawyers, Mr Robert Colin Nicholls and Mr David Ross Slater, as associates, under contracts which were expressed to be governed by the law of New South Wales. However, by June 2005, Messrs Emmott, Nicholls, and Slater had left MWP and set up in competition with it in Kazakhstan, through a number of vehicles styled ‘Temujin’. MWP commenced proceedings, against Mr Emmott before an arbitral tribunal in London (“the London Arbitration”), and against Mr Nicholls, Mr Slater, and various Temujin entities in New South Wales (“the NSW-1 proceedings”), for breach of contract, breach of fiduciary duty, and conspiracy.

In 2010, in the London Arbitration, Mr Emmott was held liable for breach of contract and fiduciary duty and to account for the value of work taken by him upon leaving MWP, but it was also held that he was entitled to be paid for his one-third shareholding and his undrawn accumulated profits. After setting off the respective liabilities and entitlements, there was a net award in favour of Mr Emmott for USD$667,859 and £3,209,613 (“the London Award”). Mr Emmott consequently obtained worldwide freezing orders against MWP in the Commercial Court of the High Court of England and Wales

Meanwhile, the NSW-1 proceedings against Mr Nicholls and Mr Slater ultimately resulted, after appeals to this Court [1] and then to the High Court of Australia [2] and ultimately remitter to this Court, in judgments in favour of MWP in the principal sums of USD$666,335 and €378,160 which, together with pre-judgment interest, amounted to USD$1,106,090 and €618,449 (“the NSW-1 judgment”). [3] Consequently, Mr Nicholls (who is since deceased) and Mr Slater were made bankrupt, and two of the Temujin entities, Temujin Ltd (“TIL”) and Temujin Services Ltd (“TSL”), were wound up.

In 2016, MWP took an assignment of the rights of the trustees in bankruptcy of Mr Nicholls and Mr Slater and the liquidators of TIL and TSL against Mr Emmott, and in February 2016, in its capacity as assignees (“qua Mr Nicholls and Mr Slater”) commenced the present proceedings (“the NSW-2 proceedings”), by Summons and Commercial List Statement, in which they initially sought (1) contribution from Mr Emmott in respect of the liability of Mr Nicholls, Mr Slater, TIL, and TSL under the NSW-1 judgment (“the contribution claim”); and (2) declarations to the effect that Messrs Emmott, Nicholls, and Slater had established a partnership (“the Temujin Partnership”), and an account of all benefits received by Mr Emmott (and related entities) as a partner (“the partnership claims”). The Summons and Commercial List Statement was amended, in a manner not presently material, on the day after it was filed, and the Amended Summons was served ex juris on Mr Emmott in England, without leave. Mr Emmott sought an anti-suit injunction in England to restrain MWP from pursuing the NSW-2 proceedings, and at first instance succeeded, [4] but on MWP’s appeal the injunction was, on 31 January 2018, modified by the Court of Appeal of England and Wales, which concluded that the injunction should not extend to the partnership claims, and should restrain MWP only from prosecuting claims concluded by the London Arbitration and claims for fraud or conspiracy. [5] It was relevantly ordered that (“the EWCA injunction”) (emphasis added): [6]

An application by Mr Emmott for permission to appeal to the Supreme Court of the United Kingdom was refused on 31 July 2018.

By a Further Amended Summons and Commercial List Statement filed in October 2018, MWP amended its claim in these proceedings, so as to (1) exclude those claims which were caught by the EWCA injunction (“the excluded claims”), and (2) add claims by TIL, TSL, and a related trust (“the Temujin entities”) against Mr Emmott for alleged breach of his duties said to be owed to them as a shadow director, officer, and controller (“the director duties claims”).

By Notice of Motion filed on 1 November 2018, Mr Emmott sought an order setting aside the service of the Amended Summons and Commercial List Statement, on the basis that they were served outside Australia without leave and in circumstances not permitted by the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”); and alternatively, a permanent stay, on the basis that NSW is an inappropriate forum. The primary judge determined the issues by reference to the Further Amended Summons, as distinct from the Amended Summons referred to in the motion, on the basis that it was the Further Amended Summons that would be the foundation of the proceedings going forward, if they did. This also meant that the applicable rules were the current, amended UCPR, Pt 11, and not the earlier version which had been in effect when Mr Emmott was initially served in 2016. No complaint was made about this approach.

On 8 March 2019, Ball J permanently stayed the proceedings. [7] MWP appeals to this Court.

Provision for service ex juris without leave is made by UCPR, r 11.4(1), which (in its current form, as applied by the primary judge) is as follows:

The following provisions of Schedule 6 are potentially relevant:

If a matter cannot be brought within UCPR, r 11.4, via one of the provisions of Sch 6, leave under r 11.5 – which may be granted prospectively or retrospectively – is required for service of an originating process outside Australia. UCPR r 11.5(5) provides:

Rule 11.6, empowers the Court to stay proceedings if service ex juris is not authorised, or if the Court is an inappropriate forum, or if the claim has insufficient prospects of success:

The primary judge dealt discretely with the contribution claim, the director duties claims, and the partnership claims. As to the contribution claim, his Honour found that service ex juris was authorised by UCPR, Sch 6 para (h)(ii), Mr Emmott being a defendant to a claim for contribution or indemnity in respect of a liability enforceable by the NSW-1 proceedings, which is a proceeding in the Court. However, his Honour found that nine of the ten heads of claim were “excluded claims” covered by the London Award, leaving only a claim which, after allowing credit for payments made by Mr Emmott, appeared likely to be for about USD$2,000 net. Construing the reference in UCPR, r 11.6(2)(c), to “insufficient prospects of success” as including a reference to the quantum of a claim within the concept of “sufficient prospects of success”, his Honour concluded that the contribution claim was insufficient, for the purposes of r 11.6(2)(c), to warrant putting Mr Emmott to the time, expense, and trouble of defending it from overseas, and in any event, having regard to its quantum, ought to be dismissed or stayed in exercise of the general power conferred by r 11.6(1).

As to the director duties claims, it was not suggested that there was any authority for service ex juris under UCPR, Sch 6, thus leave under r 11.5 was required. His Honour found no basis for granting leave, having regard to the requirements in r 11.5(5), as:

As to the partnership claims, MWP invoked Sch 6, para (b)(iv), on the basis that they were claims “for the … dissolution … of, or for damages or other relief in respect of a breach of, a 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”. [8] His Honour rejected this, on the grounds that, there being no written partnership agreement, it was not suggested that any partnership was formed in Australia or performed activities in Australia; and while there was a “Cooperation Agreement” relating to a consultancy business to be owned by TIL, it was expressed to be governed by the law of England and Wales, and contained an agreement to refer all disputes to arbitration in London. Thus service ex juris depended on leave under r 11.5. In that respect, relevant connecting factors were said to be that:

The primary judge observed that while citizenship was not irrelevant, it is not usually a significant connecting factor; that unsigned agreements, not shown ever to have come into effect, were irrelevant; that there was no evidence that the defence of the current proceedings was being funded by an Australian corporation, and that even if there was it was not apparent why it was relevant; and that the fact that Mr Emmott had previously given evidence in Australia did not create a connecting factor between the current (partnership) claims and Australia. That left what his Honour regarded as MWP’s principal point, namely that the current claim arises from an underlying dispute which has already been dealt with by Australian courts applying Australian law, and involves working out between Messrs Nicholls, Slater, and Emmott their respective responsibilities for those claims and associated costs. However, his Honour was of the view that the connection with Australia ceased upon the Court of Appeal giving final judgment in the NSW-1 proceedings, and was in any event insufficient when compared to the core substance of the partnership in question, which was all situated outside of Australia. As to this, his Honour said (emphasis added): [9]

As to what became a major plank of MWP’s argument in this Court, namely that the London Award, and the England and Wales Court of Appeal, had contemplated that the partnership claims might be determined in the NSW-2 proceedings, the primary judge held that such comments were not binding on him, and in any event were not to be understood as expressing a view as to whether the NSW courts have jurisdiction or are an appropriate forum, as the Master of the Rolls had explicitly acknowledged. [10]

His Honour therefore permanently stayed the proceedings.

The proceedings in this Court have an unhappy procedural history. The appeal was initially listed for hearing on 25 November 2019, but was that day vacated on the application of MWP, when orders as to costs, and for additional security for costs of the appeal, were also made. MWP did not pay those costs nor provide the additional security in compliance with those orders, with the result that the appeal was stayed pending compliance. MWP filed two Notices of Motion, seeking to set aside or vary, extend time for compliance with, or stay those orders; and Mr Emmott filed a motion for dismissal of the appeal. MWP also served a Notice to Produce, dated 12 April 2020; and Mr Emmott then filed a Notice of Motion on 30 April 2020, seeking to set aside that Notice to Produce.

In a judgment given on 10 July 2020, McCallum JA dismissed the application for a stay, holding that neither an application on foot in the United Kingdom to vary the freezing orders made against MWP, nor the COVID-19 pandemic, provided a sufficient reason. Her Honour further ordered that until further order, Mr Emmott was not obliged to comply with MWP’s Notice to Produce. [11] On 2 October 2020, the Full Court (Emmett AJA; Meagher JA and White JA agreeing) dismissed the balance of MWP’s motion, and also dismissed MWP’s motion for review of the orders of McCallum JA; extended time for MWP to comply with the 25 November 2019 orders for costs and security for costs until 16 October 2020; and made an order that the appeal be dismissed if that order were not complied with, but otherwise dismissed Mr Emmott’s motion for dismissal of the appeal. [12]

The appellant filed two further Notices of Motion, one dated 7 December 2020 (filed 10 December 2020) and one dated 11 April 2021. The first sought leave to file an elaborate Amended Notice of Appeal. Ultimately, however, the grounds of appeal were much narrowed, and this application was not pressed. The second sought leave ‘in so far as is necessary’ to argue that the claims were within UCPR, Sch 6 para (g) (person to be served outside Australia is domiciled or habitually resident in Australia) – a basis for extraterritorial jurisdiction which had not been relied on at first instance. This application too was not pressed at the hearing.

The appeal was heard on 20 July 2021. Although many pages of elaborate, extensive, and discursive written submissions had been lodged at earlier stages, addressing other issues, ultimately Mr DMJ Bennett QC, who appeared for MWP, presented the appeal in a focussed and relatively narrow scope. In the course of the hearing, the director duties claims were expressly abandoned. [13] It was clarified that the application to rely on domicile was not pressed; [14] nor was the application to adduce fresh evidence [15] – though subsequently it was sought to rely on evidence of events in proceedings in the United Kingdom since the primary judgment, which is further addressed below. Essentially, it was submitted that:

At the conclusion of the hearing, after Mr Bennett had addressed in reply, Mr Wilson was granted leave to address the Court, purportedly as to the quantum of the contribution claim, but in fact his address roamed much further. An issue arose as to whether, as Mr Wilson claimed, the Commercial Court had “deferred” the partnership claims to the courts of this State. Some of the orders relied on for that submission were not included in the appeal papers, or were incomplete. At the conclusion of the hearing on 20 July 2021, in response to a request on behalf of MWP, the Court made orders granting leave to both parties to supply:

Although when those orders were made Mr Wilson informed the Court that MWP had already ordered transcripts of the 7 October 2020 and 27 May 2021 hearings, and that the ex tempore judgment of the 7 October 2020 hearing had been prepared and was with the judge for approval, on 19 August 2021, MWP Wilson filed a motion seeking an extension of time to exercise the leave referred to in order 1 of 20 July 2021. Initially, the motion was not accompanied by any supporting affidavit, but when this omission was drawn to MWP’s attention, an affidavit of Mr Wilson of 30 August 2021, comprising 87 paragraphs and 51 pages of annexures, much of which was entirely superfluous repetition and reproduction, was filed. In accordance with directions made by the Court, MWP lodged submissions on 1 September 2021, and Mr Emmott on 3 September 2021. On 6 September 2021, the Court made the following orders:

These are the reasons so reserved. The first section of Mr Wilson's affidavit of 30 August 2021 (paras [5]-[12]) was addressed to a new basis for claiming standing and substantive relief, namely an assignment of rights from another person in addition to Mr Slater, Mr Nicholls, TIL, and TSL – one Mr Sinclair. This has nothing to do with the motion for an extension of time, and is entirely outside the scope of the leave granted. No further regard was had to it by the Court.

The leave granted related to transcripts of proceedings resulting in the orders of 7 October 2020 and 27 May 2021, the orders of 27 May 2021, and any reasons of 7 October 2020 and 27 May 2021. Contrary to the supposition in [16] of Mr Wilson’s affidavit, time ran from when the order was made in the (virtual) presence of the parties on 20 July 2021 – not when it was subsequently confirmed in writing on 23 July 2021.

All of these transcripts, orders, and reasons represent material on which Mr Wilson wishes to rely in his case in chief, to support the contention that the English courts have “deferred” the partnership claims to New South Wales; it is not responsive, and if relevant and important it ought to have been obtained before the hearing. Any leave to provide it after the hearing is an indulgence. According to the table at [44] of his affidavit, Mr Wilson was, by the time he swore his affidavit, already in possession of all the items for which leave was granted (being items 9, 17, 18, and 19 in that table), other than the transcript of proceedings resulting in the order of 7 October 2020 (being item 8). As he had the reasons for that order (item 9), it did not appear that the transcript (item 8) could add much if anything.

In those circumstances, the Court was of the view that Mr Wilson should be allowed a further seven days to exercise the leave he was given, which would permit him to provide such material as he already had, and any more that was received in the meantime. As Mr Wilson required an indulgence, and unnecessarily expanded the scope of the exercise of seeking it, he was ordered to pay the costs of the motion.

On 14 September 2021, Mr Wilson filed an affidavit of that date (“9th Wilson Affidavit”), of 48 paragraphs, accompanied by a bundle of documents of 2002 pages, comprising “Part A: Judgments, Orders, Transcripts and other documents in the UK” (725 pages, being 29 separate documents including those referred to in order 1 of 20 July 2021, but also many others) and “Part B: Relevant Judicial Acts (Judgments, Orders, Transcripts and other documents) in Australia, NZ & the UK, which form part of the Record, and arise out of the NSW-1 proceedings” (1277 pages, being 66 separate documents, none of which were the subject of the directions made on 20 July 2021), together with a motion seeking an order “To the extent necessary and required, leave is sought to file, refer to and rely upon all of the judicial acts (and related material) as is set out in Mr Wilson’s 9th Affidavit of 14 September 2021, given that all of the same arise out of the final judgments, orders and declarations made as a result of the proceedings before this Court, and the plurality of the High Court of Australia from 9 October 2006 to 31 May 2013”. On 16 September 2021, Mr Emmott’s counsel informed the Court that the respondent objected to the whole of that affidavit on the grounds that it was outside the leave granted by the Court. On 16 September 2021, the Court informed the parties that:

Mr Emmott lodged submissions on 27 September 2021, and MWP were permitted to lodge submissions in reply, the ultimate version of which was received on 12 October 2021.

Save insofar as it is within the scope of the directions made on 20 July 2021, there is no apparent reason to permit MWP to adduce further evidence. Insofar as the material conveniently assembles relevant “judicial acts” which form part of the record, the Court may have regard to them. This does not make them matters for “evidence”, let alone at this stage of the proceedings. MWP’s motion of 14 September 2021 should be dismissed with costs.

MWP, qua Mr Slater and Mr Nicholls, claimed to be entitled to contribution from Mr Emmott in respect of their liability to MWP under the NSW-1 judgment, which is said to amount to a total of USD$1,839,997 and €1,028,800, being the judgment sums (inclusive of pre-judgment interest) of USD$1,106,090 and €618,449, together with post-judgment interest amounting to USD$733,907 and €410,350. The judgment comprises amounts in respect of ten matters, the benefit of which was taken by the Temujin partnership upon Messrs Emmott, Slater, and Nicholls leaving MWP, as summarised in the following table:

In addition, MWP submits that Mr Slater and Mr Nicholls have associated liabilities to it, in respect of which Mr Emmott is liable to contribute, for costs – under orders of this Court in the NSW-1 proceedings totalling AUD$10,234,283 and interest thereon of AUD$9,642,457, a total of AUD$19,876,740; under an order of the High Court on the appeal to it in the NSW-1 proceedings of AUD$247,291 and interest of AUD$170,839, a total of AUD$418,130; and under an order of the Federal Circuit Court in bankruptcy proceedings against Mr Nicholls of AUD$84,000 with interest of AUD$39,487, a total of AUD$123,487.

At least some of the claims referred to in the above table were also referred to in the London Arbitration. In this respect, the primary judge said: [18]

Then, after referring to issues raised by Mr Emmott which are the subject of the Notice of Contention referred to below, his Honour continued: [19]

Thus, as has been noted, while his Honour found that in respect of the contribution claim service ex juris was authorised by UCPR, Sch 6 para (h)(ii) (person served outside of Australia is a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court), the claim appeared likely to be for only about USD$2,000 net, which was insufficient, for the purposes of r 11.6(2)(c), to warrant putting Mr Emmott to the time, expense, and trouble of defending it from overseas. His Honour also found that in any event, having regard to its quantum, the contribution claim ought to be dismissed or stayed in exercise of the general power conferred by r 11.6(1).

On appeal, MWP contends that his Honour erred in finding that any maintainable claim was for only in the order of USD$2,000, and that it should be dismissed or stayed for that reason. Although MWP submitted that it was “at least tens or even hundreds” of thousands of dollars, and possibly “millions”, its quantum was not more clearly refined.

In this respect, the appellant first submitted that Mr Emmott’s liability to contribute was not limited to one-third, but extended to a full indemnity. Although (as the primary judge observed) in the London Arbitration it was found that Mr Slater was the instigator, that was not so in the NSW-1 proceedings which founded the contribution claim, in which he and Mr Nicholls were held liable as accessories to Mr Emmott as the principal. However, as appears from the primary judgment, [20] no such argument was advanced below. Moreover, for reasons elaborated later, it is misconceived. In any event, of itself it would only serve to increase the quantum of the claim to USD$6,000, which would not warrant a different outcome.

The appellant also submitted that the EWCA injunction did not extend to all nine claims (other than Ablai, which the primary judge accepted was not caught), in whole or in part. This was put on several bases.

One was that the EWCA injunction did not extend to the “derivative” claims, brought “qua Mr Nicholls and Mr Slater” but only to claims brought by MWP in its own right. However, this cannot be correct. The proceedings in respect of which an anti-suit injunction was sought, and in respect of which the EWCA injunction was granted, were entirely “derivative”, being brought by MWP “qua Mr Slater and Mr Nicholls”. The EWCA judgment explicitly refers to the claims being prosecuted in the NSW-2 proceedings, the subject of the application before it, as being brought by MWP in its capacity as assignee. [21] There is no reason whatsoever to suppose that the England and Wales Court of Appeal intended to restrain the prosecution of claims which had been neither brought nor contemplated, as distinct from those which had been brought. To the contrary, the rationale for the EWCA injunction was that the NSW-2 proceedings were an abuse of process insofar as MWP sought to relitigate claims which it had not pursued, or had lost, in the London Arbitration, as Etherton MR explained (emphasis added): [22]

Another way in which the submission that the EWCA injunction did not extend to all nine claims was put was that the London Award did not resolve all the claims. While it appears from the above passage from the judgment of the England and Wales Court of Appeal that it was not disputed that MWP lost in the Arbitration on claims relating to Project X, Eragon and ADA, and Benkala Copper (though it succeeded on them in NSW-1), it was left open whether MWP had lost in the Arbitration on the first four claims (Chilisai x 2, Urals, and ROXI). MWP made a claim against Mr Emmott in respect of the Chilisai matter in the Arbitration, which was considered in the Second Interim Award. [23] The Arbitrators found that Mr Emmott was not responsible for the diversion of the Chilisai matter. [24] As a result, the London Award included no amount in respect of Chilisai. It follows that MWP lost the Chilisai claim in the Arbitration. MWP also made a claim against Mr Emmott in respect of the Urals matter in the Arbitration, which was considered in the Second Interim Award. [25] The Arbitrators found that Mr Emmott was relevantly in breach of his fiduciary duties. [26] However, the London Award included no amount in respect of Urals. It follows that the Arbitration concluded that Mr Emmott was not liable to MWP in respect of Urals, and thus that MWP lost the Urals claim in the Arbitration. Finally, MWP also made a claim against Mr Emmott in respect of the ROXI matter in the Arbitration, which was considered in the Second Interim Award. [27] The Arbitrators found that although Mr Emmott was relevantly in breach of his fiduciary duties, his conduct did not cause a loss to MWP, and he did not receive a secret profit. [28] The London Award included no amount in respect of ROXI. It follows that the Arbitration concluded that Mr Emmott was not liable to MWP in respect of ROXI, and thus that MWP lost the ROXI claim in the Arbitration. MWP naturally emphasise the statement of the Arbitrators (emphasis added): [29]

That passage immediately follows the statement: “We find that Mr Emmott did not receive a secret profit directly from this transaction.” The Arbitrators thus held that Mr Emmott did not have a direct personal liability to MWP in this respect, but that if he is a partner in Temujin he might be liable to account in that capacity. That does not alter the position that MWP lost the ROXI claim in the Arbitration. The Arbitrators were contemplating that he might be liable, not to contribute as a co-obligor, but to account as a partner in the context of claims such as those involved in the partnership claims. Similarly, in another passage at the conclusion of the Second Interim Award, the Arbitrators state: [30]

Again, that contemplates liability as a partner – not liability to contribute as a co-obligor.

It was also put that in respect of those claims which were resolved by the Arbitration, it remained open to MWP, qua Mr Slater and Mr Nicholls, to claim contribution where the period in respect of which they were held liable to account was different from that for which claims were made against Mr Emmott in the Arbitration. There is nothing in the order or reasons of the England and Wales Court of Appeal which would support so narrow an approach. It is plain, from the passages set out above, that the intent of the anti-suit injunction was to preclude the relitigation, under the guise of joint and several liability, of claims which had been resolved in favour of Mr Emmott in the arbitral proceedings. That purpose would be defeated if it were open to MWP to propound claims on the footing of joint and several liability in respect of the same matters, just because the period in respect of which they claimed in the Arbitration did not coincide with that in respect of which they claimed in NSW-1.

Accordingly, I am unpersuaded that the primary judge erred in concluding that the contribution claim amounted to no more than about USD$2,000. However, it is unnecessary to resolve this issue, because I prefer to rest my decision to uphold the declining of jurisdiction in respect of the contribution claim on the alternative grounds raised by the respondent’s Notice of Contention dated 4 October 2019, which contends that the decision below should be upheld on two grounds advanced below but not determined by the primary judge, namely that:

Although MWP opposed the filing of the Notice of Contention, ample notice of the intention to rely on it was given, the grounds it raised were clearly argued though not decided before the primary judge, no relevant prejudice was apparent, and MWP made submissions engaging with the substance of the notice.

The equitable doctrine of contribution derives from the equitable maxim that “equality is equity”; and the notion that, as between multiple interested parties, ultimately liability should not depend on the creditor’s choice of defendant, nor (as the common law would insist in requiring a claim to be brought within the framework of contract, express or implied) on the knowledge of one obligor of the existence, present or proposed, of the others. [31] Its rationale is to protect one of several obligors from having to bear more than its just share of the obligation. [32] One application of the doctrine – and one in which contribution can be had only in equity – is between trustees, who are jointly and severally liable to the beneficiaries for any loss caused by a breach of trust, so that one who makes good the loss is generally entitled to call upon the others to contribute their share. [33]

The touchstone of a claim for contribution is that those liable to contribute are under a “co-ordinate obligation” [34] in respect of “the one loss”, [35] or an obligation “of the same nature and to the same extent”. [36] The requirement that the contributories be equally liable for the same obligation means that liability is apportioned between them equally, or where the amount of their liability differs, proportionately. [37]

The concept of liability “of the same nature and to the same extent” imports, at least in the context of equitable contribution, notions of comparable culpability and causal significance. Thus for there to be contribution between co-trustees they must be in pari delicto (“in equal fault”). [38] In some cases, a trustee who has had to make good the loss is entitled to call upon a co-trustee not merely for contribution but for indemnity, [39] and a trustee who has caused loss by his or her personal fraud, for example by converting trust property to his or her own use, may be held liable to indemnify a co-trustee. [40] In Bahin v Hughes, [41] Cotton LJ said:

MWP, as assignee of Mr Slater and Mr Nicholls, contends that it is entitled to indemnity from Mr Emmott, essentially because Mr Slater’s and Mr Nicholls’ liability was accessorial while Mr Emmott’s liability was as the principal. Mr Bennett QC submitted that: [42]

However, as will appear, there are indeed cases addressing “contribution in a Barnes v Addy situation”, and far from showing that the “knowing assistants” are entitled to indemnity from the principal wrongdoer, they show that such “knowing assistants” are not entitled to contribution at all. Where there has been a fraudulent breach of trust to which all the trustees have been parties, there is no right of contribution between them. [43] This is an application of the more general rule that a person who has been guilty of fraud, illegality, wilful misconduct, or even gross negligence is not entitled to contribution from his or her partners, [44] which in turn, reflects the requirement that to obtain contribution in equity the claimant must have “clean hands”. [45] In Belan v Casey, [46] Campbell J (as he then was) explained that equity follows the law in denying contribution between joint wrongdoers, referring to Lingard v Bromley [47] and to Attorney-General v Wilson. [48] In the latter case, the Aldermen, in anticipation of reforms to local government of which they did not approve, caused the Leeds Corporation to procure the transfer of trust property to third parties for their absolute use and benefit, which was then applied for various purposes of which the Aldermen approved. Upon creation of a new Corporation of Leeds under the Municipal Corporation Reform Act 1835 (UK), it sued the former trustees in whose name the property had been vested, and some but not all of the Aldermen who had been involved in the transfer, to recover the trust property. In response to a submission that everyone who had been involved in the transfer should have been joined, Lord Cottenham LC said: [49]

Campbell J also referred [50] to the view expressed by Spence in 1846 that: [51]

In McNally v Harris, White J (as his Honour then was) held that there was no right of contribution between multiple knowing participants in a breach of trust who were liable under the second limb of Barnes v Addy. [52] His Honour said: [53]

The liability of Mr Slater and Mr Nicholls was under the second limb of Barnes v Addy as knowing participants in a dishonest breach of trust. It is true that in the High Court appeal it was observed, in passing, that “as between Mr Emmott and [Mr Slater and Mr Nicholls] the doctrine of contribution would regulate the ultimate allocation of the burden of satisfying the particular claims”. [54] However, that does not amount to a holding that Mr Slater and Mr Nicholls would be entitled to contribution. Indeed, the Court explicitly rejected the proposition that the liability of Mr Slater and Mr Nicholls was no more than “ancillary, or coordinate with,” the liability of Mr Emmott, stating “[t]his understanding of the relationship between the liabilities of a defaulting fiduciary and a knowing assistant of the fiduciary’s breach should not be accepted”. [55] Gummow ACJ, Hayne, Crennan and Bell JJ, with whom Heydon J agreed, explained that the liability of Mr Slater and Mr Nicholls was not truly accessorial but independent, and may differ in nature and quantum from that of Mr Emmott: [56]

As the liabilities of Mr Slater and Mr Nicholls as “knowing assistants” do not necessarily coincide in either nature or quantum with the liability of Mr Emmott, it cannot be said that they are “of the same nature and to the same extent”. But even if they were, Mr Slater and Mr Nicholls, being liable as knowing assistants in a dishonest breach of trust, would not be entitled to claim contribution, let alone indemnity, from Mr Emmott.

Assuming that Mr Nicholls, Mr Slater, and Mr Emmott bore a co-ordinate obligation to MWP equally as between them, in respect of which contribution was otherwise available, it was submitted for Mr Emmott that the primary judge’s conclusion should be upheld on the basis that Mr Slater and Mr Nicholls (and thus their assignee) could not enforce any right of contribution in circumstances where they had not paid – and, being bankrupt, never would pay – their debt to MWP. It was submitted that there was no evidence of any payment to MWP by Mr Nicholls or Mr Slater, and that as the principal obligation had not been paid, no contribution claim could be sustained by MWP as assignee of Mr Nicholls and Mr Slaters’ rights to contribution.

At common law, contribution cannot be claimed until the claimant had paid the creditor more than its proportionate share of the liability. However, in equity, the right to contribution accrues once the creditor has an immediate right to payment from the claimant, of which an instance is entry of judgment in favour of the creditor against the claimant. [57]

In the course of the hearing, attention was drawn to St Thomas’s Hospital, as a case in which the position of the creditor of a bankrupt debtor who had a right of indemnity against a third party was considered. In that case, a lessor obtained a judgment for arrears of rent against its lessee. The lessee was a trustee and was entitled to be indemnified by his beneficiary in that respect. The lessor bankrupted the lessee, before any proceedings to enforce the indemnity were taken, but then obtained leave in the Court of Bankruptcy to sue the beneficiary for indemnity, jointly in the lessor’s own name and in the name of the lessee’s trustee in bankruptcy. It was held that the trustee in bankruptcy could avail of the right of indemnity, but only for the purpose of passing on the money recovered to the lessor, being principal creditor that was indemnified. [58] Lindley applies that in the context of contribution, stating that the limit of the liability of the indemnifier party to the indemnified party is the full amount for which the latter is liable, or if it is dead or insolvent the full amount provable against its estate – and not merely the amount of dividend which such estate can pay. [59]

That might suggest that, in the present context, it does not matter that Mr Slater and Mr Nicholls have not and cannot pay MWP as judgment creditor, and that their trustees in bankruptcy (and their assignee MWP) and/or the principal creditor (MWP), can enforce the indemnity or the right of contribution regardless, on the basis that where a creditor recovers judgment against a debtor, who becomes insolvent before paying, but the debtor is entitled to be indemnified by a third party, the debtor’s trustee in bankruptcy is entitled to enforce the indemnity, although only for the benefit of the creditor and not as divisible property in the insolvency. However, in Rankin v Palmer, [60] Griffith CJ considered St Thomas’s Hospital and maintained that equity would not compel a surety to pay money to the person to whom he or she was surety before the latter had actually paid:

Indeed, in St Thomas’s Hospital, in the passage immediately following that quoted by Griffith CJ, Fletcher Moulton LJ said: [61]

In Wren v Mahony, [62] Barwick CJ, with whom Windeyer J and Owen J agreed, affirmed what Griffith CJ had said in Rankin: [63]

In Mahoney v McManus, Gibbs CJ, with whom Murphy J and Aickin J agreed, observed that the circumstances in which a surety who has not made payment may enforce a claim to contribution had not been precisely defined: [64]

In Bond v Larobi Pty Ltd, [65] Owen J recognised that as a right of contribution is an equitable right to protect a surety against the injustice that would be suffered if it were to pay more than its fair share of the debt, there is attraction in the proposition that if the surety has not paid at least its rateable proportion of the debt, or is not ready willing and able to do so, it ought not be able to maintain an action for contribution. Nonetheless, his Honour rejected that proposition, to some extent, referring to R Goff & G Jones, The Law of Restitution, who stated: [66]

After considering Wolmershausen, Kent v Abrahams, [67] and Woolmington v Bronze Lamp Restaurant Pty Ltd, [68] his Honour held that the right to contribution, in the sense of the cause of action, accrued once there was a judgment against the surety, regardless of whether the surety was willing and able to pay it. In the 4th edition of Meagher, Gummow & Lehane it was said that “[t]he better view is that the right to contribution accrues even if the surety against whom judgment has been issued is unwilling or unable to repay the debt”. [69] That passage does not appear in the current 5th edition, presumably in light of the statement of the High Court in Friend v Brooker that equity will not intervene unless the claimant for contribution is ready willing and able to pay at least its share. [70] There is also authority of this Court that payment cannot be said to be “imminent” – so as to attract the intervention of equity – in circumstances where a surety is not able to pay because it is insolvent. [71]

It may be that these decisions are not irreconcilable. In the context of equitable causes of action for quia timet relief, the line between a defence that denies the existence of a cause of action, and a discretionary ground for refusing relief, is not clear cut, and the better view may be that absence of readiness, willingness and ability in this context is a discretionary consideration, albeit generally a conclusive one. [72] In Bond, Owen J was referring only to the accrual of the cause of action, and his Honour proceeded to recognise that whether the surety is willing and able to pay the debt, or at least its just proportion, is relevant in determining what, if any, relief is available, in that if the surety is not willing and able to pay, the risk of injustice in it having to pay more than its just proportion is not demonstrated, and declaratory relief would be conditioned on its having made payment of the judgment debt; if there were no real prospect of its doing so, it would be futile to make the orders: [73]

Further, where it appears that a plaintiff is neither willing nor able to pay his or her just proportion of the debt, the defendant against whom contribution is sought will be entitled to a stay of the proceedings: [74]

In denying that equity would intervene where the claimant for contribution was not ready, willing and able to pay its share, Friend and Harpley dictate the same result.

From the cases to which reference has been made, the following propositions of present relevance appear:

The equitable doctrine of contribution exists to protect one of several debtors from having to bear more than its just share of the obligation. It does not exist to afford the creditor an indirect means of enforcing its debt against those whom it has not sued. It is not engaged where there is no prospect of the claimant paying more than its share. There does not appear to be any prospect that Mr Nicholls and Mr Slater, whose estates are bankrupt, will ever pay more than their proportionate share of the judgment debt. MWP submitted – without supporting evidence – that it was not correct that Mr Nicholls and Mr Slater had not made any payments under the NSW-1 judgment, and that their trustees in bankruptcy had sold Mr Nicholls’ $4.2m Mosman property and distributed some proceeds and were about to do likewise with the (unspecified) proceeds of Mr Slater’s ACT property, and that MWP was proceeding to enforce against a $1.75m Mascot property and various corporate assets. Even if taken at face value, this does not indicate that either Mr Nicholls or Mr Slater are likely to pay more than one-third each of the total liability, which (according to MWP) substantially exceeds $20 million. Accordingly, proceedings in their name for contribution against Mr Emmott would be liable to be stayed or dismissed.

It follows that:

Those conclusions provide more than sufficient basis for holding that, without needing to finally to resolve the arguments concerning the extent to which it is caught by the EWCA injunction, the contribution claim has insufficient prospects of success to warrant putting Mr Emmott to the time, expense, and trouble of defending the claim in Australia. [75]

The partnership claims may be described as claims for inspection, disclosure, the carrying out of an inquiry, the taking of an account and proprietary tracing, based on the Temujin Partnership said to have been formed between Messrs Emmott, Slater, and Nicholls in early September 2005, of which MWP has become the owner as to 67% by assignment from the trustees in bankruptcy of Slater and Nicholls. [76] In essence, they are claims for the winding up and administration of the Temujin Partnership.

The Further Amended Commercial List Statement pleaded that:

In the pleading, “Temujin Entities” is defined as follows:

Under the heading “Proprietary tracing claims of the Temujin Entitles”, it is pleaded:

At first instance, MWP relied on UCPR, Sch 6, par (b)(iv) (claim for a breach of contract governed by Australian law or enforceable or cognizable in an Australian court), and alternatively sought leave under UCPR, r 11.5. In submissions in this Court, MWP also referred to Sch 6, par (o).

In the NSW-1 proceedings, Einstein J concluded that: [77]

To like effect, a judgment of the England and Wales Court of Appeal of 26 February 2019 records that: [78]

I do not accept MWP’s stridently repeated submission that, as a result of the High Court’s supposed reinstatement of the first instance judgment of Einstein J in the NSW-1 proceedings, Mr Emmott (and Ball J, and presumably this Court) is bound by every finding of fact and law and credit made by Einstein J. Save to the ultimately limited extent that it was disturbed on appeal, his Honour’s judgment may well create issue estoppels between the parties to those proceedings – which did not include Mr Emmott. MWP advances elaborate arguments as to why Mr Emmott should also be bound. That is a tendentious proposition, and in any event, it would not extend to findings of credit. However, for present purposes, the concurrent findings of Einstein J and the England and Wales Court of Appeal establish that there is at least a sufficiently triable case that such a partnership as MWP alleges existed.

The primary judge did not accept that UCPR, Sch 6 par (b)(iv) was engaged, in the absence of any allegation that the partnership was formed or that its activities were carried on in Australia, and where a “Cooperation Agreement” relating to a “consultancy business” to be owned by TIL was expressed to be governed the laws of England and Wales, and where there was nothing else indicative of the alleged partners having intended their agreement to be governed by Australian law. [79]

Sch 6, par (b)(iv) refers to an agreement that “was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court” (emphasis added). The words “by its terms or by implication to be” direct attention to the express or implied terms of the relevant agreement, when the agreement was made, as distinct from subsequent events. In private international law, the law of a partnership is ordinarily the law of the place of its formation or where it carries on business. [80] Prima facie, that appears to be Kazakhstan, where the Temujin Partnership carried on its business. As the primary judge held, there was nothing to point to an express or implied term in the alleged partnership agreement to the effect that it was to be governed by Australian law, or to be enforceable or cognizable in an Australian court. The existence of unsigned consultancy agreements between TIL and Mr Emmott referring to NSW law says nothing, because they remained unsigned, and because even if a consultancy between TIL and Mr Emmott was to be governed by NSW law, that does not mean that the alleged partnership was. On the other hand, the signed Co-operation Agreement relating to a “consultancy business” to be owned by TIL positively points against Australian jurisdiction, because it is expressed to be governed by the law of England and Wales, and the parties agreed to resolve any dispute by arbitration in London. The circumstance that there has subsequently been litigation in Australia [81] in which it was found that there was such a partnership, in which the alleged partners gave evidence, and in which some of them were parties, does not show that there was any such term, express or implied, in the partnership agreement: the mere fact that an Australian court finds that a partnership existed does not mean that the partnership agreement was by its terms or by implication to be cognizable in an Australian court. His Honour rightly held that par (b)(iv) of Sch 6 was not engaged.

His Honour refused leave under UCPR, r 11.5, being dissatisfied that the claims had a real and substantial connection with Australia, or that Australia was an appropriate forum, notwithstanding comments of the London Tribunal and the England and Wales Court of Appeal that were said to contemplate that the partnership claims would be determined in Australia.

In my judgment, his Honour rightly concluded that the factors relied on by MWP, [82] individually and accumulated, established no “real and substantial connection” with Australia. The fact that Mr Nicholls and Mr Slater were defendants in other proceedings, in which it was incidentally found that the partnership existed, does not give a proceeding for winding up a partnership which carries on business in Kazakhstan any connection with Australia. Nor does the circumstance that one of the partners was bankrupted in Australia and another’s bankruptcy is recognised here. The unsigned consultancy agreements prove nothing, and although MWP submitted that there are signed versions which have not been produced by Mr Emmott for “tactical reasons”, this did not rise above bare assertion. Citizenship is at best a slight connecting factor, and even if an Australian corporation were funding Mr Emmott’s defence, that does not give the claim for winding up the partnership a connection, let alone a substantial one, with Australia. And while the fact that Mr Emmott has given evidence in Australia previously might have some bearing if it came to questions of convenience, it does not give the partnership claims any connection with Australia.

The primary judge identified MWP’s “principal point” as being the proposition that the partnership claims arise from an underlying dispute which has already been dealt with by Australian courts applying Australian law, in that (1) MWP made claims (in NSW-1 and in the London Arbitration) against Messrs Nicholls, Slater, and Emmott in respect of their “underlying dispute”; (2) at least some of those claims were decided (in NSW-1) by Australian courts applying Australian law; and (3) the partnership claims involve, among other things, a working out between Messrs Nicholls, Slater, and Emmott of their respective responsibilities in respect of those claims and the costs orders that were made in them. It was said to follow that there is a real and substantial connection between the current (partnership) claims and Australia.

As to his Honour’s expression that the connection with Australia largely ceased once final judgment was given by the NSW Court of Appeal, [83] I would put it slightly differently: the fact that judgment has been obtained in Australia against two alleged partners in respect of what is said to be a partnership liability does not of itself establish a real and substantial connection between a claim for winding up a Kazakhstani partnership and Australia. Thus, suppose that the partners of a London law firm were sued in NSW, in respect of negligent advice which had caused damage in NSW, and judgment was given against them. That would not suffice to establish that a subsequent claim to wind up the London Partnership, even on the basis of the NSW judgment, would have a “real and substantial connection” with NSW. Although the claim arises as a consequence of the judgment of an Australian court, the relevant claim is that for winding up and taking accounts of the partnership, and that claim depends on the existence and terms of the partnership, the law governing the partnership, and its assets and liabilities. That one partnership liability may be a judgment of an Australian court does not give the winding up and accounting claim a “real and substantial connection” with Australia in the case of a partnership formed and carrying on business outside Australia and governed by the law of its principal place of business.

However, in addition to the considerations referred to and rejected by the primary judge as establishing a sufficient connection, before us MWP submitted that the Temujin Partnership owned a number of entities which own assets in Australia, and that TIL, a partnership entity, banked with Westpac in Sydney. Mr Wilson deposed, in his affidavit of 13 December 2018, which was read before the primary judge, that “the Temujin Partnership had and still has various asset-owning and operating entities in Australia, including the PJT … and FOF Groups … of Australian companies and trusts and Sandwood Pty Ltd”, for which he cited the ABNs and ACNs, and that TIL contracted with PJT Corporate Services Pty Ltd (“PJT”) in Australia (exhibiting an “Engagement Contract … for professional services” in the form of a letter dated 22 August 2007 from TIL to PJT at a Milsons Point, NSW, address, for the provision by TIL to PJT of legal advisory services and legal compliance services). The Australian entities were also identified, and ACNs cited, in the pleading, as set out above. There are findings in the judgment of Einstein J that TIL’s receipts were paid into an Australian Westpac account in the name of Mr Slater, [84] and that TIL contracted with and invoiced PJT in Australia for significant sums. [85] It is implicit if not explicit in his Honour’s interlocutory judgment of 23 May 2008 that it was considered seriously arguable that PJT was in truth “not an arm’s length client of TIL but instead … a company owned and/or controlled by [relevantly Mr Nicholls, Mr Slater, TSL, TIL, and TIFZE] …. directly or indirectly”. [86] The submission that significant assets of the partnership were Australian corporations with substantial assets in Australia was reiterated several times in the appellant’s submissions, and was at no point contested by the respondent. [87] Bearing in mind that at this stage it is necessary for the appellant to establish only a sufficiently arguable claim to survive an application for summary dismissal, [88] the available evidence suffices to establish that there are in Australia assets of the Temujin Partnership, including PJT, FOF, and Sandwood, and/or assets into which partnership assets may be traced.

His Honour did not refer to the significance of the alleged existence of partnership assets in Australia. That his Honour did not do so is entirely understandable, since it was not a matter referred to in MWP’s submissions – although, as appears from the above, it was in evidence. However, although I am unpersuaded that any other of the factors relied on by MWP, alone or accumulated, establish a real and substantial connection with Australia, the alleged existence of partnership assets – or assets into which MWP as assignee of Mr Slater and Mr Nicholls claims to be able to trace partnership property – radically affects the position.

Maunder v Lloyd concerned a partnership between Edward Lloyd, an English resident, and two residents of Haiti (William Lloyd and Julius Gaetjens), in a business to be carried on in Haiti which was governed by the law of Haiti. Edward and William were also members of a separate firm in Liverpool, England, which acted as agent for the Haiti firm. Gaetjens died, and the winding up of the Haiti firm was entrusted by agreement to Edward and William. Then Edward died, leaving William as the sole survivor in each firm. William and Gaetjens’ Haitian legal representative engaged in cross-suits in Haiti, in which certain accounts were settled accounts. Edward’s assets were all in England, and his representative was not a party to the Haitian suit. On a bill filed by Gaetjens’ administrator in England, Page-Wood V-C held that there was jurisdiction in the Court of Chancery to wind up the Haitian partnership and to take the accounts of that firm, and of the agency of the Liverpool firm. The Vice-Chancellor said (emphasis added): [89]

One of the bases of the decision was that though the partnership was governed by the law of Haiti, which was its place of business, it could be wound up in England and accounts taken in England because there were relevant assets in England. That judgment was noted by this Court in Murakami v Wiryadi, in which Spigelman CJ said: [90]

In my opinion, the same reasoning applies here. If, as alleged and as appears at least sufficiently arguable, there are partnership assets in Australia, then, at least in respect of the Australian assets, the partnership can (and possibly can only) be wound up in Australia and accounts taken here. In that context, the presence of partnership assets in Australia provides ample “real and substantial connection” for the purposes of r 11.5(5)(a). It is true that this issue does not appear to have received attention in the submissions of the parties before the primary judge, and it is therefore unsurprising that it was not considered and referred to in the judgment. But the evidence was there, and it was articulated in Mr Wilson’s affidavit.

In order to obtain a grant of leave under r 11.5, it must also appear that Australia is an appropriate forum for the trial, and that in all the circumstances the court should assume jurisdiction. In holding that those requirements were not satisfied, his Honour noted comments of the England and Wales Court of Appeal and the London Tribunal which MWP submitted contemplated that the partnership claims would be determined in Australia, which became the keystone of MWP’s argument in this Court, to the effect that the English courts have mandated that the partnership claims be conducted in Australia. In particular, the Tribunal said: [91]

In the appeal relating to the anti-suit injunction, the Master of the Rolls (with whom Jackson LJ and Underhill LJ agreed) said: [92]

In respect of these passages, the primary judge said: [93]

Before us, MWP referred to subsequent decisions, in particular of HHJ Pelling in the Commercial Court, as further demonstrating that the English courts have “deferred” the partnership claims to the NSW courts. On 7 October 2020, on the application of MWP and upon Mr Wilson informing the Commercial Court that the current NSW appeal had been or was likely to be listed for hearing in December 2020, HHJ Pelling ordered that the trial of a preliminary issue that was listed for a period of 4½ days commencing on 19 October 2020 be vacated, and that the parties inform the Court in writing of the outcome of the NSW appeal within three days after delivery by this Court of its judgment. As described above, this appeal did not proceed as Mr Wilson had represented, and on 27 May 2021, HHJ Pelling ordered that there be a case management stay of all proceedings between the parties before the Commercial Court (with certain specified exceptions), until such time as this Court hands down its final judgment and orders in relation to MWP’s NSW appeal. On 16 September 2021, HHJ Pelling considered and allowed an application by MWP “to lift the case management stay of these proceedings that has been applied to these proceedings by consent until after determination of proceedings between the Applicant and the Respondent in the Court of Appeal of the New South Wales Supreme Court” in certain respects.

None of these orders involved a decision that the partnership claims should be heard in Australia and not in England. The notion of a “case management stay” is well-established. It does not involve any conclusion as to jurisdiction, or as to appropriate forum, but is a technique for the management of proceedings in the context of lis alibi pendens. The applicable principles were expounded by Lockhart J in Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd, [94] to which reference was made by the High Court in Henry v Henry, as follows: [95]

Lockhart J rejected a submission that the principles relating to the permanent stay of proceedings in Australia where there are other proceedings pending in a foreign country between the same parties for the same cause of action are applicable in the context of a temporary stay. His Honour said: [96]

On an application for a temporary stay, the question is not whether the proceedings are vexatious and oppressive. The power of the Court to grant a temporary stay of this kind is an aspect of its general power to control its own proceedings, and is exercisable where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first. Its exercise is informed by the general principle that it is undesirable that two courts should determine the same dispute, and practical considerations based on common-sense and fairness guide which action should proceed first. [97]

Thus the “case management stay” of the Commercial Court proceedings is not a permanent or even a substantive stay of those proceedings, but a case management stay until this Court decides this appeal. The English Court has simply decided that this appeal should be decided before the case before it proceeds. HHJ Pelling has done no more than accede to the proposition that it is desirable that present appeal should be determined before the proceedings in his Court proceed. There is no implication that a NSW court, rather than an English or Kazakhstani court, should determine the partnership claims. As the primary judge rightly pointed out, not only could the observations of the Arbitral Tribunal and the England and Wales Court of Appeal – and for that matter of HHJ Pelling in the Commercial Court – not bind the Supreme Court of New South Wales, they involved no observation as to whether NSW has jurisdiction or is an appropriate forum – as the passage in the judgment of the Master of the Rolls referred to by the primary judge makes manifest. MWP’s repeated submission that the English courts have mandated that the partnership claims be conducted in Australia is misconceived.

What the decision of the England and Wales Court of Appeal did however determine was that it would not restrain the prosecution in NSW of the partnership claims. In that is implicit a conclusion that it was not vexatious or oppressive, from the perspective of the English courts, for such claims to be prosecuted here.

The primary judge did not accept that Australia was an appropriate forum to hear the dispute, essentially because, apart from the judgment and costs orders themselves, all the events occurred, and all the persons concerned in those events reside, outside of Australia. [98] However, for essentially the same reasons as establish a “real and substantial connection” with Australia, the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictates that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the Court should assume jurisdiction. The requirements of r 11.5 for a grant of leave are therefore satisfied.

On appeal, MWP sought to rely also on Sch 6 par (o) (claim for relief which affects the defendant in respect of his or her membership of a partnership carrying on any part of its affairs in Australia). This was not relied on before the primary judge. However, it was an issue that Mr Emmott was aware, before the hearing at first instance, was one on which he would be required to adduce evidence. In his written submissions to the primary judge, Mr Emmott identified paragraph (o) (along with paragraphs (g), (h), (k), (n), and (p)) as those potentially relevant, and he expressly submitted that it did not apply as there was no evidence that the Temujin partnership carried on any part of its affairs in Australia. In his affidavit evidence, Mr Emmott deposed that so far as he was aware TIL nor any other of the “Temujin Entities” had carried on business elsewhere than in Kazakhstan. Although the respondent objected forcefully to MWP’s attempt – later abandoned – to rely on appeal on paragraph (g) (domicile), it did not express any objection to reliance on paragraph (o).

However, given the conclusion I have reached that leave should be granted in any event under r 11.5 in respect of the partnership claims, it is unnecessary to rely on paragraph (o).

Before the primary judge, Mr Emmott also invoked the Court’s power to stay proceedings on the ground that it is an inappropriate forum, under UCPR, r 11.6(2)(b). Given his Honour’s conclusion under r 11.5 that Australia was not an appropriate forum, it was not necessary for his Honour separately to address r 11.6(2)(b). However, a conclusion that Australia was an inappropriate forum also for the purposes of r 11.6(2)(b) is implicit. It is encapsulated in the concluding paragraph of his Honour’s judgment: [99]

My above conclusions, for the purposes of r 11.5, that the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictate that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the Court should assume jurisdiction, apply equally to negate the conclusion, for the purposes of r 11.6, that Australia is an inappropriate forum.

The appeal is purportedly brought as of right, although leave is sought if it be required. There is some controversy as to whether leave is required.

The appellant submits that leave is not required, as a permanent stay of proceedings is a final disposition of them, citing Port of Melbourne Authority v Anshun Pty Ltd (No 1), in which Gibbs J (with whom Mason J and Murphy J agreed) held that an order permanently staying proceedings as an abuse of process on the basis that they were “an attempt to litigate an issue which is res judicata” was final, because “as a matter of reality ... [it] does finally dispose of the rights of the parties”. [100] However, while that establishes that an order staying proceedings on the ground that they are an abuse of process because the point raised is res judicata is a final judgment, [101] many orders – including permanent stays – which have apparently final effect but do not involve a judgment on the merits are, for present purposes, regarded as interlocutory, including an order striking out a claim on the ground that it discloses no reasonable cause of action and staying or dismissing further proceedings, [102] an order dismissing proceedings for want of prosecution, [103] and an order summarily dismissing proceedings under UCPR, r 13.4, and its equivalents. [104] In Re Luck, McHugh ACJ, Gummow and Heydon JJ, without reference to Anshun (No 1), said that “[f]or more than a century, courts ... have consistently held that an order staying an action on the ground that is frivolous, vexatious or an abuse of process is an interlocutory order”. [105]

As noted by McColl and Meagher JJA in Leybourne, [106] the apparent tension between Anshun (No 1) and Re Luck was discussed by McColl JA in Bracks v Smyth-Kirk, [107] and previously by the Full Court of the Federal Court (Finn, Kenny and Edmunds JJ) in Egglishaw v Australian Crime Commission, [108] which concluded that there was no inconsistency between the two High Court decisions but that the difference between them flowed “from the difference between the judgments from which an appeal was brought or sought to be brought”. Anshun (No 1), in their Honours' view, concerned a case “where an earlier judgment or proceeding preclude[d] a further judgment or proceeding”. [109] Such a case was to be distinguished from “the ordinary case [such as Re Luck], where a proceeding discloses no cause of action, is frivolous or vexatious, or is to be dismissed on some other basis involving no final determination of rights”. [110] In Bracks v Smyth-Kirk, McColl JA accepted the validity of that distinction, [111] as did McColl and Meagher JJA in Leybourne v Habkouk: [112]

Leybourne was a case in which proceedings had been permanently stayed on the basis that “they were an abuse of process because they sought “to agitate in substance ... the same if not identical claims against [Jacisa] having consented to judgment in favour of [Jacisa] in ... [the first Supreme Court proceedings]””. [113]

Thus the cases in which it has been held that a permanent stay is or may be a final order are confined to cases in which there was deemed to have been a final resolution of the issues by way of estoppel arising from earlier proceedings. In other contexts, the authority that a permanent stay is interlocutory for present purposes is overwhelming. [114] Consistently with Egglishaw, that can be explained on the basis that in the latter class of case there has been no final resolution, actual or deemed, of the real issues in dispute between the parties.

In follows in my opinion that, for the purposes of provisions such as Supreme Court Act 1970 (NSW), s 101(2)(e), a stay of the kind involved here should be regarded as interlocutory. This is because it does not involve a final determination of the rights and obligations of the parties, and it is closely analogous to the summary dismissal of proceedings, which is for such purposes regarded as interlocutory. [115]

However, the stay practically finally determines MWP’s ability to litigate these issues in this forum. The appeal and the application for leave were heard concurrently and in full. If there is merit in the appeal, leave, if required, should be granted.

My conclusions may be summarised as follows:

The liabilities of Mr Slater and Mr Nicholls as “knowing assistants” are not co-ordinate with the liability of Mr Emmott. Moreover, Mr Slater and Mr Nicholls, being liable as knowing assistants in a dishonest breach of trust, are not entitled to claim contribution, let alone indemnity, from Mr Emmott. Even if they were otherwise entitled to contribution, in circumstances where they have not paid their proportionate share of the liability, and there is no prospect of them ever doing so, proceedings in their name for contribution against Mr Emmott would be liable to be stayed. Those conclusions provide more than sufficient basis for upholding his Honour’s conclusion that the contribution claim has insufficient prospects of success to warrant putting Mr Emmott to the time, expense, and trouble of defending the claim in Australia, without needing to consider the arguments concerning the extent to which it is caught by the EWCA injunction.

As to the partnership claims, his Honour rightly held that it did not appear that the partnership agreement was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court, and thus that par (b)(iv) of Sch 6 was not engaged. However, in concluding that the claims had no real and substantial connection with Australia and thus refusing leave under UCPR, r 11.5, his Honour overlooked – understandably in circumstances where the submissions of the parties did not refer to it – the circumstance that it was alleged, and appears at least sufficiently arguable, that there are partnership assets – or assets into which they may be traced – in Australia, in respect of which the partnership can (and possibly can only) be wound up in in Australia and accounts taken here. In that context, the presence of partnership assets in Australia provides ample “real and substantial connection” for the purposes of r 11.5(5)(a). For essentially the same reasons, the presence of partnership property in Australia, and the circumstance that it may be difficult if not impossible to obtain relief in respect of it elsewhere, dictates that Australia is an appropriate forum for the partnership claims, and that in all the circumstances the court should assume jurisdiction. [116] While this issue did not receive attention in the submissions of the parties before the primary judge, the evidence was there, and the issue was articulated in Mr Wilson’s affidavit. Leave should have been granted in respect of the partnership claims, under r 11.5. Having reached that conclusion, it is unnecessary to consider the additional ground, invoked by MWP only on appeal, that service ex juris was authorised, without leave, under par (o) of Sch 6.

The same conclusions negate any proposition that, for the partnership claims, Australia is an inappropriate forum within UCPR, r 11.6(2)(b). Accordingly, while proceedings on the contribution claim and the director duties claims were rightly stayed, the partnership claims ought to have been permitted to proceed. [117]

Leave to appeal is required. However, the permanent stay granted by the primary judge practically finally determines MWP’s ability to litigate the partnership claims in this forum. The appeal and the application for leave were heard concurrently and in full. Leave to appeal should be granted.

The outcome at first instance ought to have been that Mr Emmott succeeded in respect of the contribution claim and the director duties claims, but failed in respect of the partnership claims. That represents an approximately equal measure of success and failure for each party, and is appropriately reflected in neither party being required to bear the other’s costs of the motion. In this Court, in my opinion, MWP should succeed in respect of the partnership claims but fail in respect of the contribution claim and director duties claims. Although MWP has improved its position as a result of the appeal, it has incurred and inflicted costs which were quite unnecessary to achieve that result. Again, in my view, there should be no order as to the costs of the appeal, save to the extent that extant interlocutory costs orders otherwise provide.

I propose the following orders:

EMMETT AJA:

The question in the proceedings before this Court is whether Michael Wilson & Partners Limited (Wilson Partners) should be permitted to prosecute proceedings commenced in the Equity Division against Mr John Emmott (the Current Proceedings). By its further amended summons filed in the Current Proceedings, Wilson Partners claimed an order that Mr Emmott contribute towards the liability of certain judgment debtors (the Temujin Entities) under judgments obtained by Wilson Partners against the Temujin Entities in proceedings in the Commercial List heard by Einstein J (the Original Proceedings). The Temujin Entities are Mr David Slater, Mr Robert Nicholls, Temujin International Limited (TIL), both in its own right and as trustee of the Temujin International (Trading) Trust, and Temujin Services Limited (TSL). In the Current Proceedings, Wilson Partners also claimed damages and equitable compensation for various breaches of fiduciary and contractual duties owed as a shadow director and officer and controller of TIL, its trust, and TSL, although this was not pursued on appeal. Finally, Wilson Partners claimed declarations to the effect that Messrs Emmott, Nicholls and Slater had established a partnership upon leaving Wilson Partners (the Partnership), and sought an account of all benefits received by Mr Emmott as partner.

By notice of motion filed on 1 November 2018. Mr Emmott sought, relevantly, a stay of the Current Proceedings (the Stay Application). On 8 March 2019, for reasons published on that day, a judge of the Equity Division (the primary judge) ordered that the Current Proceedings be permanently stayed and that Wilson Partners pay Mr Emmott's costs of the motion. By notice of appeal filed on 31 May 2019, Wilson Partners appealed from those orders. Against the contention that the orders were interlocutory, Wilson Partners has also sought leave to appeal from the orders made by the primary judge.

In the Original Proceedings, Wilson Partners sought judgment against the Temujin Entities. Ultimately, judgments were entered against all of those parties after appeals to this Court and to the High Court of Australia and a further hearing by this Court. [118] Sequestration orders were subsequently made in respect of the estates of Mr Slater and Mr Nicholls, and TIL and TSL have been wound up in insolvency. While Wilson Partners has received some payments from trustees in bankruptcy and liquidators, the judgments remain substantially unsatisfied.

Wilson Partners claims that Mr Emmott is liable to contribute to the liability that the Temujin Entities have to Wilson Partners or that the Temujin Entities are entitled to be indemnified by Mr Emmott in respect of that liability. Wilson Partners has taken assignments, from the trustees in bankruptcy of Messrs Slater and Nicholls and from the companies in liquidation, of all of their entitlements to contribution from or to be indemnified by Mr Emmott in respect of the judgments against them in the Original Proceedings. The assignments also include any entitlement to damages from Mr Emmott in respect of the Partnership.

The primary judge accepted that Wilson Partners, as assignee, may have a small claim for contribution against Mr Emmott in the order of USD$2,000, on the basis of equal apportionment among Messrs Emmott, Slater and Nicholls. His Honour considered that a claim that was unlikely to succeed for anything more than several thousand dollars did not meet the requirement that it has sufficient prospects of success to warrant putting a person served outside Australia to the time, expense and trouble of defending the claim. Mr Emmott asserted that, in circumstances where neither of Messrs Nicholls and Slater has satisfied the judgments against them, they have no entitlement to contribution or indemnity. The primary judge did not need to deal with that contention. Further, having found that all relevant events occurred outside Australia, his Honour concluded that Australia was not an appropriate forum for the determination of the claims in respect of the Partnership.

Thus, the proceedings involve two independent sets of claims. The first are concerned with contribution and indemnity. The second are concerned with the Partnership.

Wilson Partners contends that each of Messrs Nicholls and Slater is entitled to indemnity from Mr Emmott in respect of their respective liabilities under the judgments in the Original Proceedings. It asserts that each is entitled to be indemnified because Mr Emmott was found to be principally responsible while Messrs Nicholls and Slater were liable only as having been knowingly concerned in the breaches by Mr Emmott.

It is difficult to see why, as a matter of principle, a person who is knowingly concerned in a breach of a fiduciary duty would be entitled to be indemnified by the person who perpetrated the breach of duty. Even if a knowing participant has a co-ordinate liability with the principal perpetrator, there is no reason, in the absence of something further, as a matter of principle, why the main perpetrator should be indemnified.

In ordinary circumstances, the only reason for pursuing a person who has been a knowing participant in a breach of fiduciary duty by another person who is the principal perpetrator is the impecuniosity of that principal perpetrator. The principal perpetrator clearly has a liability to the victim of the breach of duty for any loss or damage suffered as a consequence of the breach of duty or, in appropriate circumstances, to account for any benefit received by the principal perpetrator. It is only where the principal perpetrator cannot satisfy an obligation to make good the loss or to account for the benefit that there would be any need to pursue a knowing participant in the breach.

I have had the considerable advantage of reading in draft form the reasons of Brereton JA for concluding that the prosecution of the contribution and indemnity claims should not be permitted. In particular, I agree with his Honour that the contribution claim amounted to no more than about USD$2,000. That was sufficient basis for declining to grant leave in relation to the stay applicable to that aspect of the claims.

It may have been interesting, if the contribution and indemnity claims were to be pursued, to consider whether the Roman law treatment of contribution and indemnity in the context of co-ordinate liability of guarantors has any contribution to make to the common law. Under Roman law, where there were several guarantors, each was liable for the whole amount. Accordingly, the creditor could sue whichever guarantor he pleased. However, if an application was made before judgment, a guarantor had a defence that compelled the creditor to divide the burden of his claim under the guarantee among all of the guarantors who were solvent at the time when issue was joined. The effect was that, if one of the guarantors was insolvent, the burden on the other guarantors would be increased. However, if one of a plurality of guarantors failed, prior to joinder of issue, to invoke the right to have his liability limited to his proportionate share and the creditor succeeded in recovering judgment from that guarantor, that guarantor was required to bear the whole of the debt if the principal debtor was insolvent. However, if a guarantor paid anything to the principal creditor, he could bring an action against the debtor for indemnity in respect of the amount that he paid [119] .

In the Current Proceedings, Wilson Partners made claims for inspection, disclosure, the carrying out of an inquiry, the taking of an account and proprietary tracing. Essentially, Wilson Partners sought the winding up and administration of the Partnership.

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

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