Emmott v Michael Wilson and Partners Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lawrence Collins,Lord Justice Thomas,Lord Justice Carnwath |
| Judgment Date | 12 March 2008 |
| Neutral Citation | [2008] EWCA Civ 184 |
| Docket Number | Case No: A3/2007/2785 & 2786 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 March 2008 |
[2008] EWCA Civ 184
Lord Justice Carnwath
Lord Justice Thomas and
Lord Justice Lawrence Collins
Case No: A3/2007/2785 & 2786
CASE NO: 2007 FOLIO 1521
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE FLAUX
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Andrew Sutcliffe QC and Mr Nicholas Craig (instructed by Messrs Lane & Partners) for the Appellant
Mr Philip Shepherd QC and Mr Adam Cloherty (instructed by Mr Michael Robinson) for the Respondent
Hearing date : January 21, 2008
I Introduction
This appeal raises questions, in unusual circumstances, of considerable practical importance relating to confidentiality in national and international arbitration. It is an appeal from orders of Flaux J dated November 23 and December 4, 2007, in which he authorised the disclosure, for the purposes of proceedings in New South Wales and in the British Virgin Islands, of documents generated in an English arbitration.
The appeal is just one part of some bitter and hard fought worldwide litigation arising out of a dispute between Mr Michael Wilson, who is an English qualified solicitor, and Mr John Emmott, who was formerly a partner with Richards Butler & Co and who in 2001 joined Mr Wilson in Mr Wilson's company, Michael Wilson & Partners Ltd (“MWP”). MWP, which is incorporated in the BVI, was established by Mr Wilson, to provide legal services in Kazakhstan.
Pursuant to the terms of an agreement dated December 7, 2001, Mr Emmott joined MWP as a director and senior lawyer of MWP, and was to have 33% of its shares, with Mr Wilson having the rest. Mr Emmott left MWP in June 2006 and then practised through Temujin International Ltd (“TIL”), and Temujin Services Ltd, an associated service company (“TSL”), which are incorporated in the British Virgin Islands, together with two other former MWP employees, Robert Nicholls and David Slater (both Australian citizens).
MWP claims that all of this was part of a scheme by Mr Emmott to divert MWP's business in breach of contract and in breach of trust. This led to arbitration in London and court proceedings by MWP in England (for search orders and freezing orders in support of the arbitration) and in New South Wales (“NSW”), the British Virgin Islands (“BVI”), Jersey and Colorado. Mr Emmott's case is that the court proceedings in NSW and BVI and the London arbitration are part of the same dispute. This is because MWP says in the BVI and NSW proceedings that Messrs Nicholls, Slater and Emmott, along with TIL, have been involved in joint wrongdoing and/or that Messrs Nicholls and Slater and TIL have secondary/accessory liability for involvement in Mr Emmott's alleged primary breaches of duty.
Mr Emmott says that Mr Wilson is running a litigation campaign to outspend him, and to prevent him carrying on his business, and he relies on criticisms of Mr Wilson's conduct of this and other litigation by judges in England (including me): ICS Incorporated Ltd v Michael Wilson & Partners Ltd [2005] EWHC 404 (Ch), at [82], [111]; Celtic Resources v Arduina Holdings [2006] EWHC 2553 (Comm), at [46]; Arduina Holdings v Celtic Resources [2006] EWHC 3155 (Comm), at [48], [50]; Michael Wilson & Partners Ltd v Emmott [2007] EWHC 1949 (Comm), at [10].
London arbitration
The agreement under which Mr Emmott joined MWP contained an arbitration clause providing for arbitration in England under English law. MWP gave notice of arbitration to Mr Emmott on August 14, 2006. MWP obtained a search order from the English court against Mr Emmott in support of the arbitral proceedings in August 2006, and freezing orders against Mr Emmott and his wife in December 2006.
There was considerable delay by MWP in progressing the arbitration but by early 2007 the tribunal was constituted, consisting of Mr Christopher Berry (Chairman), Lord Millett and Ms Valerie Davies. Points of Claim in the London arbitration were not served until July 2007. In the course of his affidavits in the interlocutory proceedings in the Commercial Court, Mr Wilson alleged that Mr Emmott had been guilty of what he described as “a substantial fraud on MWP”, or “dishonest conduct” or a “serious fraud” or “fraud … massive in scale.”
The Points of Claim served in July 2007 (shortly before the hearing of an application before Tomlinson J by Mr Emmott to discharge the freezing order on the ground, inter alia, of delay in the conduct of the arbitration) also made allegations of fraud and conspiracy against Mr Emmott. It was alleged that Mr Emmott had acted in breach of various duties “fraudulently”, that he had “fraudulently sought and/or received secret profits”
On October 3, 2007, Mr Emmott made an application to the tribunal to strike out MWP's Points of Claim in the arbitration on the grounds that they purported to allege fraud without any proper particularisation; that they made prejudicial allegations which did not form the basis of any claim, and were otherwise embarrassingly vague. MWP was given the option by the tribunal of having its claim struck out or re-pleading its case. Amended Points of Claim were served in the London arbitration on October 19, 2007.
The Amended Points of Claim plead (at paras 23–26) that in breach of the terms of the agreement and his fiduciary duties, in breach of trust and in breach of his duty of confidence: Mr Emmott diverted work, commercial opportunities and clients and/or potential clients of MWP to Richards Butler; he dishonestly received secret profits; with the assistance of Mr Nicholls, Mr Slater and Mr Shaikenov, planned a consultancy in competition with MWP and formed Temujin as a competitor to MWP; and with the assistance of the same persons diverted work, commercial opportunities and clients and/or potential clients of MWP to Temujin. Claims of conspiracy and fraud against Mr Emmott are no longer made in the arbitration.
That pleading has, in turn, been the subject of an application by Mr. Emmott, heard by the arbitrators in December 2007, to strike out various aspects of it. By the time this appeal was heard, no determination had been made by the tribunal on that application.
New South Wales proceedings
In October 2006 MWP commenced proceedings against Mr Slater and Mr Nicholls in NSW to which Mr Emmott is not a party. Originally the Commercial List Statement (equivalent to particulars of claim) sought an account of profits and damages for breach of their contracts of employment and breach of fiduciary duties owed to MWP. The Statement included an allegation that Mr Slater and Mr Nicholls had conspired together with Mr Emmott to breach his agreement with MWP and his fiduciary duties. In January 2007 the Commercial List Statement was considerably amended to particularise these allegations (and to add the Temujin companies as defendants) but it did not directly allege fraud or dishonesty.
In an affidavit submitted on behalf of MWP to the NSW court on March 26, 2007 Ms Dixon of Clayton Utz said that the underlying contentions to be made by MWP in the arbitration were based substantially on the same substratum of facts as those raised in the NSW proceedings, with the principal potential difference being directed at some matters concerning Mr Emmott (for example relating to Richards Butler).
MWP applied on October 5, 2007 to amend the NSW proceedings to allege fraud and fraudulent conspiracy against Mr Emmott. In MWP's counsel's submissions on a hearing concerning the proposed amendments in NSW on October 5, 2007 it was stated that the purpose behind the amendments was to:
“bring a level of parity to the proceedings presently being conducted in New South Wales, the British Virgin Islands and England.”
Leave to file the Further Amended Commercial List Statement in NSW was granted on November 23, 2007. It makes extensive claims against Mr Nicholls, Mr Slater (and the Temujin companies) of breach of employment contracts, breach of fiduciary duty, fraud, and knowing participation in Mr Emmott's breach of contract, breaches of fiduciary duties and fraudulent acts. In particular the Further Amended Commercial List Statement alleges that Mr Nicholls and Mr Slater “acted fraudulently” and “knowingly participated in Emmott's … fraudulent acts” (para 6(c)); that Mr Nicholls and Mr Slater (and the Temujin companies) conspired with Mr Emmott “to defraud MWP and to conceal the fraud and the proceeds of it from MWP” (para 8(b)). Among the “key issues” in MWP's case which the Statement identifies is whether Mr Nicholls and Mr Slater (and the Temujin companies) “conspired with Emmott to defraud MWP and to conceal the fraud and the proceeds of the same from MWP” (para 10(g)).
BVI Proceedings
MWP also commenced proceedings against TIL and TSL (and others) in the BVI in December 2006 and freezing orders were obtained ex parte.
In the BVI, the Amended Statement of Claim (February 5, 2007) pleads that the Temujin companies had dishonestly assisted Mr Emmott, Mr Nicholls and Mr Slater in breaches of fiduciary duty, and that Mr Emmott “had conspired… to injure MWP, by unlawful means, including (without limitation) by fabricating evidence with the object of concealing and attempting to render judgment proof, assets of Emmott, or assets to which MWP might lay claim in equity” (para 14).
TIL and TSL agreed to be joined in the proceedings in NSW, and consented to a stay of the BVI proceedings, but MWP...
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