Michael Wilson & Partners Ltd v John Forster Emmott
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Andrew Smith,and |
| Judgment Date | 08 June 2011 |
| Neutral Citation | [2011] EWHC 1441 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2010 FOLIO 368 |
| Date | 08 June 2011 |
[2011] EWHC 1441 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Andrew Smith
Case No: 2010 FOLIO 368
David Cavender QC and Edward Davies (instructed by ENYO Law LLP) for the Claimant
Philip Shepherd QC (instructed by Michael Robinson) for the Defendant
Hearing dates: 14, 15 & 16 February 2011
Michael Wilson and Partners Limited ("MWP") applies under sections 68 and 69 of the Arbitration Act 1996 (the "1996 Act") in relation to an award, the Tribunal's Second Interim Award dated 19 February 2010, which was clarified under section 57 of the 1996 Act on 7 April 2010. The Tribunal (Mr. Christopher Berry, Lord Millett and Ms. Valerie Davies) were appointed under an arbitration agreement included in a contract (the "Emmott agreement") made on 7 December 2001 between MWP and the respondent, Mr. John Emmott, whereby Mr. Emmott, a qualified solicitor, became a director of MWP and joined its practice. MWP contends that the Tribunal were guilty of a large number of serious irregularities in their conduct of the reference and of making numerous errors of law, in respect of each of which they were obviously wrong.
On 17 June 2010 David Steel J ordered that, on the hearing of the application under section 68, the Judge should give directions as to the application under section 69. At the hearing before me, after some initial resistance on the part of Mr. Emmott, the parties agreed that I should hear submissions about the application under section 69 and that, if and to the extent that I granted leave for an appeal, I should determine it.
MWP is a company incorporated in the British Virgin Islands, which practises both as a conventional law firm, with a practice particularly of transactional work, and as a business consultancy in central Asia. It has offices in, among other places, Almaty, Kazakhstan. Its managing partner is Mr. Michael Wilson.
Mr. Emmott, an Australian citizen, was admitted as a solicitor in the Supreme Court of New South Wales in 1978 and as a solicitor in England and Wales in 1985. Before joining MWP Mr. Emmott was for some years employed by and then a partner in Richards Butler. Under the Emmott agreement, Mr. Emmott joined MWP on 10 January 2002. He resigned from the company on 30 June 2006. The circumstances of his resignation gave rise to the disputes which were the subject of the reference.
MWP is the claimant in the reference and Mr. Emmott is the respondent. In broad summary, MWP claimed:
i) That Mr. Emmott had been in repudiatory breach of the Emmott agreement because he had purported to terminate it with immediate effect and without giving the requisite 6 months' notice.
ii) That, in breach of his contractual and fiduciary duties to MWP, Mr. Emmott had acted as a consultant to Richards Butler, and had diverted work and business opportunities from MWP to Richards Butler.
iii) That Mr. Emmott had received secret profits from Richards Butler and elsewhere, including a reward for acting in relation to a series of transactions leading to and following the flotation of Max Petroleum plc ("Max") by way of 14.75 million shares in Max and some US$950,000.
iv) That Mr. Emmott had, with others, formed a competitor to MWP that comprised a group of companies and a trust and practised under the name of "Temujin", and that he had diverted work, commercial opportunities and clients or potential clients of MWP to Temujin.
v) That Mr. Emmott had misappropriated confidential documents, information and materials belonging to MWP or its clients and provided them to Temujin.
MWP also pleaded that Mr. Emmott had failed to act competently when employed by MWP but that claim was not pursued in the reference. Mr. Emmott brought a counterclaim against MWP under the Emmott agreement and in particular claimed that he was entitled to an interest of one third in MWP.
The applications were made by a claim form dated 22 March 2010. MWP has served notices of two amended versions of the claim form. The first was served on 5 May 2010 and contains what I shall call the "May amendments", and the second was served on 26 January 2011 and contains the "January amendments". Mr. Emmott does not resist the May amendments. He opposes the January amendments, principally on the grounds that the application to make them was inexcusably late and that the proposed amendments do not meet the requirements for applications under sections 68 and 69 of the 1996 Act. I see force in these observations, but in the event Mr. Emmott has not, I think, been prejudiced by the lateness of the proposed amendments and has been able to respond to the substance of the complaints. Given the nature of this litigation, in my judgment it is preferable that the court rule upon the applications that MWP seek to make. I grant permission for both the May amendments and the January amendments.
The arbitration proceedings were brought on 16 August 2006. Between 3 October 2007 and 13 July 2009 the Tribunal made numerous procedural orders and issued other directions and orders. The Second Interim Award followed a hearing that took place over 20 days between 10 November 2008 and 24 February 2009. There were no oral closing submissions: I heard explanations for this, but they are not relevant to my decision.
In paragraph 1.4 of the Second Interim Award the Tribunal wrote that,
"In the Parties' closing submissions various unpleaded allegations were made on which there was little, if any, evidence and some allegations were made in the amended Points of Claim of which there was no evidence. We have in this Award dealt with those pleaded allegations on which findings are required by the Parties for the purposes of finalising, in due course, the accounting between them".
As I shall explain, some of MWP's arguments on these applications seem to me to amount to complaints that the Tribunal did not consider allegations which had not been pleaded, but they cannot be criticised for confining their Award in the way that they explained.
Before coming to MWP's complaints, it is convenient to mention other proceedings to which it referred in its submissions. First, MWP has brought proceedings in the Supreme Court of New South Wales against a Mr. Robert Nicholls and a Mr. David Slater, who are said to have been involved with Mr. Emmott in establishing Temujin, and against three of the Temujin companies. On 6 October 2009 Einstein J delivered a judgment in which he upheld complaints by MWP of breaches of fiduciary duties and contract, of inducements to breach of duty and of conspiracy. On 11 December 2009 Einstein J delivered a judgment about the quantum of MWP's loss and awarded MWP by way of equitable compensation and damages the equivalent of something in excess of $8 million. On 15 September 2010 the Court of Appeal set aside the judgments of Einstein J on the grounds of apparent bias. On 14 February 2011 the High Court of Australia granted special leave to appeal against the decision of the Court of Appeal.
MWP emphasised differences between the conclusions of Einstein J and the Tribunal. It was submitted that Einstein J had advantages which were not available to the Tribunal: for example, Mr. Slater gave evidence in the New South Wales proceedings but not before the Tribunal, and documents about Temujin were disclosed in the Australian proceedings that were not available to the Tribunal. To my mind, this does not assist MWP's contentions that the Tribunal were guilty of serious irregularities and that they made errors of law. The only possible relevance of the Australian proceedings is that they might have supported MWP's submission that matters of which they complain have caused or are likely to cause substantial injustice, but in view of my other conclusions I do not consider that they do so in any material way.
On 19 October 2006 Mr. Thomas Sinclair brought proceedings in the Supreme Court of the Bahamas in which he sought declarations about the 14.75 million shares in Max. The defendants to these proceedings are MWP, Mr. Emmott and Eagle Point Investments Limited ("EPIL"), a Bahamian company whose shares were owned by two trusts, Eagle Point Trust 1 and Eagle Point Trust II, the discretionary beneficiaries of which are Mr. Emmott and members of his family. The Bahamian court granted Mr. Sinclair leave to serve the proceedings on MWP out of the jurisdiction, but the Court of Appeal has overturned that decision. Mr. Sinclair has been granted leave to appeal to the Privy Council.
Further, MWP has brought in this court proceedings against Mr. Sinclair, EPIL and others about MWP's claims, in which it seeks a declaration that EPIL holds the shares on trust for it.
Mr. Philip Shepherd QC, who represented Mr. Emmott, submitted that MWP's pleading in the claim form for these applications is defective, and does not properly plead any claim under section 68 or section 69 of the 1996 Act. For example:
i) The Civil Procedure Rules require at part 62.4 that an arbitration claim form identify the part or parts of the award challenged and specify the grounds for the challenge. Often the form does not identify the part or parts of the award to which a complaint relates.
ii) As Mr. Shepherd rightly observed, the form does not even mention, let alone specifically identify, any substantial injustice which has been caused or will be caused by the alleged irregularities. During the hearing before me those representing MWP produced, at my request, a document setting out the injustice that it asserts, which went some way to remedying this.
iii) An appeal may be brought only under section 69 only on a point of law and section 69(4) requires that an application for...
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