New South Wales Supreme Court CITATION : Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033 HEARING DATE(S) : 15/6/09, 16/6/09, 23/6/09, 24/06/09, 29/06/09, 30/06/09, 13/07/09, 14/07/09, 23/07/09, 24/07/09, 27/07/09 - 30/07/09,6/08/09, 10/08/09, 11/08/09, 13/08/09 17/08/09- 20/08/09, 24/08/09 - 28/08/09, 1/09/09, 2/09/09, 7/09/09, 9/09/09. 10/09/09 JUDGMENT DATE : 6 October 2009 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Plaintiff disentitled to relief by way of a constructive trust. Plaintiff entitled to elect as between ultimate forms of relief on the sundry causes of action upheld in the reasons inter alia including an election for an equitable account of profits or equitable compensation. CATCHWORDS : Equity - Fiduciary obligations - When and to what extent may employees owe fiduciary obligations to employer - Circumstances in which fiduciary obligations may be regarded as 'spent' - Accessorial liability under second limb of rule in Barnes and Addy - Breaches of contract - Secret profits - Diverting business opportunities from former employer to competing business - Confidential information - Plaintiff law firm offering legal services and business consultancy in Kazakhstan brings proceedings against former employees for having furthered their own interests to their employers detriment by various means - Jurisdiction - Enquiry as to whether foreign law applies to determination of matters litigated - Principled approach to determining questions of foreign law - Proceedings involve consideration of several potentially applicable systems of law - Multiplicity and overlapping nature of issues require Court to consider the level of abstraction appropriate to address issues so as to discharge its ultimate mandate of doing justice between the parties - Fraud - Principles which inform the proper approach to whether or not particular conduct is proven to have been fraudulent - Conspiracy to defraud - Principles - Interference with contractual relations-Principles-Causation-Abuse of process - Defendants claim that proceedings amount to an abuse of process and required to be summarily dismissed-Consideration of what amounts to an abuse of process - Case management - Allegations of abuse of process intertwined with principal issues litigated - Efficiently dictates that both the plaintiffs pleaded case as well as the defendant's abuse of process case be litigated together - Causation - Remedies - Constructive trusts - Election - Split election - Nullus commodum capere potest de injuria sua propria - Overriding purpose rule - Achievement of a just, timely and cost-effective resolution of dispute has an effect upon the Court and upon other litigants - Commercial life depends on timely and just payment of money such that those who claim to be entitled to money should know, as soon as possible, whether they will be paid and those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay - Ethos of Commercial List to determine disputes speedily Civil Procedure Act 2005 (NSW) Evidence Act 1995 [NSW] LEGISLATION CITED : Insolvency Act 1968 (Eng) Revised Professional Conduct and Practice Rules 1995 (NSW) Supreme Court Rules (NSW) CATEGORY : Principal judgment Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461 Acme Office Service Pty Limited v Ludstrom and Others [2002] NSWSC 277 ADC v White [1999] NSWSC 43 Addstead Pty Ltd (in liq) v Liddan Pty Ltd (1997) 25 ACSR 175 Akai Pty Limited v People's Insurance Company Ltd (1996) 188 CLR 418 Alghussein Establishment v Eton College [1988] 1 WLR 587, Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (1995) 58 FCR 26 Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50 An Arbitration between A/S Tank of Oslo and Agence Maritime L Strauss of Paris, Re [1940] 1 All ER 40 Angus & Coote Pty Ltd v Render (1989) 16 IPR 387 Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 Artistic Builders Pty Limited v Elliot and Tuthill (Mortgages) Pty Limited and Ors [2002] NSWSC 16 ASX Operations Pty Limited v Pont Data Australia Pty Limited (No 1) (1990) 27 FCR 460 Attorney General v Blake [1998] Ch 439 Attorney-General (NSW) v Watson (1987) 20 Leg Rep SL 1 Aubanel & Alabaster Ltd v Aubanel (1949) 66 RPC 343 Baden Delvaux & Lecuit v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA [1993] 1 WLR 509 ; [1992] 4 All ER 161 Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437; [2000] 4 All ER 221 Barnes v Addy (1874) LR9ChApp 244 Bayne v Blake, Baillieu v Riggall; sub nom Bayne v Blake (1908) 6 CLR 382; 14 ALR 426 Beach Petroleum NL v Kennedy & Ors (1999) 48 NSWLR 1 Beatty v Guggenheim Exploration Co (1919) 122 NE 378 Berger v Raymond Sun Ltd [1984] 1 WLR 625 Boardman & Anor v Phipps (1967) 2 AC 46; [1966] 3 All ER 721 Bonython v Commonwealth of Australia [1951] AC 201 Bowden Bros & Co v Imperial Marine and Transport Insurance Co (1905) 5 SR (NSW) 614 Breavington v Godleman (1988) 169 CLR 41 Briginshaw v Briginshaw (1938) 60 CLR 336 Bristol & West Building Society v Mothew [1998] Ch 1 British Industrial Plastics Limited v Ferguson [1940] 1 All ER 479 Bumper Development Corp Ltd v Commissioner of Police of the Metropolis [1991] 1 WLR 1362 Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 Canadian Aero Services Ltd v O'Malley [1974] SCR 592, (1973) 40 DLR (3d) 371 Canson Enterprises Limited v Boughton & Co [1991] 3 SCR 534; (1991) 85 DLR (4th) 129 Casey v Casey [1949] P 420 Castro v Murray (1875) LR10Exch 213 Chalmers v Pardoe [1963] 1 WLR 677; [1963] 3 All ER 552 Charles Lo Presti Pty Ltd v Karabalios [2000] NSWSC 395 Clegg v Edmondson (1857) 44 ER 593 Club of the Clubs Pty Limited v King Network Group Pty Limited (No 2) [2007] NSWSC 574 Cocker v Tempest [1841] Eng R 242; (1841) 7 M & W 502 (151 ER 864); Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 Colorado, The [1923] P 102 Colour Control Centre Pty Ltd v Ty (1996) 39 AILR 5–058 Comax Secure Business Services Limited v Wilson (Judge Richard Seymour QC, Queens Bench Division, 21 June 2001, unreported) Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 Concut Pty Limited v Worrell (2000) 176 ALR 693 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; 5 ALR 231 Cookney v Anderson (1863) 1 De GJ & Sm 365; (1863) 46 ER 146 Coomber, In re; Coomber v. Coomber [1911] 1 Ch 174: Coomera Resort Pty Ltd v Securities Ltd [2004] 1 Qd R 1 D'Orta-Ekenaike v of Victorian Legal Aid (2005) 223 CLR 1 Daher v Doulaveras [2009] NSWCA 58; [2008] NSWSC 583 Damberg v Damberg [2001] 52 NSWCA 87 Dawkins v Prince Edward of Saxe Weimar (1876) 1 QBD 499 Dawson,Re; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399 De Reneville v De Reneville [1948] P 100 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Director of Public Prosecutions v Humphrys [1977] AC 1. Doss v Secretary of State for India in Council (1875) LR19Eq 509 Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509; 21 ALR 425; [1915] HCA 56 Dr Martens Australia Pty Limited & Ors v Bata Shoe Co of Australia Limited & Ors [1997] FCA 505 Edmonds v Donovan [2005] VSCA 27 EFG Australia Ltd v Kennedy [1999] NSWSC 922 Emerald Construction Co Limited v Lowthian [1966] 1 WLR 691 Ertel Bieber & Co v Rio Tinto Co Ltd; Dynamit Actien-Gesellschaft (Vormals Alfred Nobel & Company) v Rio Tinto Co Ltd [1918] AC 260 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] 230 CLR 89 Fatimi Pty Limited v Bryant & Ors [2004] NSWCA 140 Fightvision Pty Limited v Onisforou (1999) 47 NSWLR 473 Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134; 163 ALR 744; [1999] FCA 773; BC9903036 Francis v South Sydney District Rugby League Football Club Ltd [2002] FCA 1306 Furs Limited v Tomkies (1936) 54 CLR 583 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Giannarelli & Shulkes v Wraith (1988) 165 CLR 543 Goldsmith v Sperrings Ltd [1977] 2 All ER 566; [1977] 1 WLR 478 Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 Grovit v Doctor [1997] 2 All ER 417; [1997] 1 WLR 640 Guth v Loft (1939) 5 A 2d 503 GWK Limited v Dunlop Rubber Co Limited (1926) 42 TLR 376 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 Hartmann v Konig (1933) 50 TLR 114 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Henville v Walker (2001) 206 CLR 459. Hexiva Pty Limited v Lederer [2006] NSWSC 318 Hillig v Darkinjung Pty Ltd (No 2) [2008] NSWCA 147 Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169 Hollingsworth v Commissioner of Police (No 2) (1999) 47 NSWLR 151 Holmes v Walton [1961] WAR 96 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 CASES CITED : Idoport Pty Ltd v National Australia Bank Ltd [2000] 50 NSWLR 640 Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443 Jabbour v Custodian of Absentee's Property of State of Israel [1954] 1 All ER 145 Jago v District Court of NSW (1989) 168 CLR 23 James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554 James, Ex parte (1803) 8 Ves 337 Jarvis (decd), Re [1958] 1 WLR 815 Jones v Schiffmann 1971) 124 CLR 303 Keech v Sandford (1726) Cas temp King 61 King v Henderson (1897) 3 ALR (CN) 12; 13 WN (NSW) 137 Lawrance v Lord Norreys (1890) 15 App Cas 210 Lloyd v Guibert (1865) LR1QB 115 Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 Lonrho plc v Fayed [1992] 1 AC 448 Lord Corporation Pty Ltd v Green (1991) 22 NSWLR 532 Maguire & Tansey v Makaronis (1996-1997) 188 CLR 449 Majory; Re [1955] Ch 600 Malec v J C Hutton Pty Limited (No 2) (1990) 169 CLR 638, Manifest Shipping Co Limited v Uni-Polaris Shipping Co Limited [2003] 1 AC 469 March v E & M H Stramare Pty Limited (1991) 171 CLR 506 McKenzie v McDonald [1927] VLR 134 McWilliam v Penthouse Publication Ltd [2001] NSWCA 237 Metlez v Kavanagh (1981) 2 NSWLR 339 Mordecai v Mordecai (1988) 12 NSWLR 58 Mostyn v Fabrigas (1774) 1 Cowp 161; (1774) 98 ER 1021 Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] 1 NZLR 720 National Commercial Bank v Wimborne [Holland J, Supreme Court of New South Wales, 28 April 1978, unreported] National Mutual Holdings Pty Ltd v Sentry Corporation [1989] 22 FCR 209 Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 Neary v Dean of Westminster [1999] IRLR 288 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 New Zealand Netherlands Society "Oranje" Incorporated v Kuys (1973) 1 WLR 1126 News Ltd v Australian Rugby League Football Ltd (1996) 64 FCR 410 Nocton v Lord Ashburton [1914] AC 932 Nottingham University v Fishel [2000] ICR 1462; [2000] IRLR 471 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 OBG Limited & Ors v Allan & Ors; Douglas & Ors v Hello! Limited (No 3) & Ors; Mainstream Properties Ltd v Young [2007] UKHL 21; [2008] 1AC 1; [2007] 2 WLR 920 Oz-US Film Productions Pty Ltd (in liq) v Heath [2000] NSWSC 967 Pacifica Shipping Co Ltd v Andersen [1986] 2 NZLR 328 Parana Plantations Ltd, Re [1946] 2 All ER 214 Parkasho v Singh [1968] P 233 Parker v McKenna (1874) LR 10 Ch App 96 Pascoe v Federal Commissioner of Taxation (1956) 30 ALJR 402 Pedler v Richardson (Young J, Supreme Court of New South Wales, 16 October 1997, Young J, unreported,) Personal Representatives of Tang Man Sit v Capacious Investments Limited [1996] 1 AC 514 Peters v R (1998) 192 CLR 493; [1998] HCA 7 Pickering v Stephenson (1872) LR14Eq 322 Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 PMC Holdings v Smith [2002] EWHC 1575 Poseidon Ltd & Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Queensland Electricity Commission, Re; Ex parte Electrical Trades Union of Australia [1987] HCA 27; (1987) 61 ALJR 393; 72 ALR 1 R v Derby Crown Court; Ex parte Brooks (1984) 80 Cr App Rep 164 Reading v Attorney-General [1951] AC 507 Regal (Hastings) Ltd. v Gulliver & Ors [1942] 1 All ER 378 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 Royal Boskalis Westminster NV v Mountain [1999] QB 674 Sanders v Snell (1997) 143 ALR 426 Seager v Copydex Ltd [1967] 1 WLR 923; [1967] 2 All ER 415; [1969] 1 WLR 809; [1969] 2 All ER 718 Securities & Exchange Commission v Chenery Corporation (1943) 318 US 80 Sedgwick, Collins & Co, Ltd v Highton (1929) 34 LlL Rep 448 Septimus Parsonage & Co, Re [1901] 2 Ch 424 Shepherds Investments Limited v Walters [2006] EWHC 836 Spautz v Williams [1983] 2 NSWLR 506 Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd, (O'Keefe CJ in Comm D, Supreme Court of New South Wales, 14 September 1994, unreported) Stephenson Nominees Pty Ltd v Official Receiver on behalf of Official Trustee in Bankruptcy; Ex parte Roberts & Anor (1987) 76 ALR 485 Szechter (Orse Karsov) v Szechter [1971] P 286 Target Holdings Ltd v Redferns (A Firm) [1996] 1 AC 421 The Colorado [1923] P 102 The Marinero [1955] Vol 1 Lloyds Rep 230 The Nouvelle Banque de L'Union v Ayton (1891) 7 TLR 377 The Parchim [1918] AC 157 The Torni [1932] P 78 Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 Travel Compensation Fund v Tambree (2005) 224 CLR 627 United States Surgical Corporation v Hospital Products International [1982] 2 NSWLR 766 Varawa v Howard Smith & Co Ltd (1911) 13 CLR 35 Victoria University of Technology v Wilson and Ors [2004] VSC 33 Visnic v Sywak [2008] NSWSC 427 Walker v W A Pickles Pty Ltd [1980] 2 NSWLR 281 Walton v Gardiner (1993) 177 CLR 387 Warman International Ltd & Anor v Dwyer (1995) 182 CLR 544 Watson v Foxman (1995) 49 NSWLR 315 Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 Westpac Banking Corporation v Northern Metals Pty Ltd (1989) 14 IPR 499; (1989) ATPR 40-953 Williams v Hursey (1959) 103 CLR 30 Williams v Spautz (1992) 174 CLR 509; 107 ALR 635; BC9202694 Womboin Pty Ltd v Reichelt (Windeyer J, Supreme Court of New South Wales, 25 August 1995, (unreported) Wright Heaton & Co Ltd v Barratt (1892) 13 LR (NSW) 206 Youyang Pty Limited v Minter Ellison Morris Fletcher [2003] 212 CLR 484 Youyang Pty Ltd v Minter Ellison [2001] NSWCA 198 Zachariah v Ajay Investments Pty Ltd (1983) 33 SASR 395 Broom's Legal Maxims, 10th edition, Pakistan Law House, 1989 Bullen & Leake & Jacob's Precedents of Pleadings, 16th ed, 1st Sup, 2007, Sweet & Maxwell Collins (ed), Dicey and Morris on 'The Conflict of Laws', 13th ed, 2 vols, 2000, Sweet & Maxwell Dr Andrew Bell 'Forum Shopping and Venue in Transnational Litigation', 2003, Oxford University Press J Macken, G McCarry and C Sappideen, The Law of Employment, 5th ed, 2002, Law Book Co. TEXTS CITED : Lindley & Banks on Partnership, 2nd Supplement, 17th Edition, Roderick I'Anson Banks, 1995, Sweet & Maxwell , Lord Millett, 'Equity's Place in the Law of Commerce' [1998] 114 LQR 214, Mason and Carter's Restitution Law In Australia Second Ed, 2008 Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 3rd ed, 1992, Butterworths PD Finn, Fiduciary Obligations, 1977, Law Book Co RW White, 'Equitable Obligations in Private International Law: the Choice of Law', 1986, Sydney Law Review volume 2 Young, Croft and Smith, "On Equity", 2009, Law Book Company Michael Wilson & Partners (Plaintiff) Robert Colin Nicholls (First Defendant) David Ross Slater (Second Defendant) PARTIES : Temujin Services Limited (Third Defendant) Temujin International Limited (Fourth Defendant) Temujin International FZE (Fifth Defendant) Shaikenov & Partners, LLP (Sixth Defendant) Temujin Holdings Limited (Seventh Defendant) FILE NUMBER(S) : SC 50151/06 Mr M Walton SC, Mr J Carney (Plaintiff) COUNSEL : Mr G McGrath, Mr A Fox (First Defendants) Mr G Lindsay SC, Mr A Fox, Mr S Adair (Second to Fifth Defendants) SOLICITORS : Clayton Utz (Plaintiff) Henry Davis York (First to Fifth Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Tuesday 6 October 2009 50151/06 Michael Wilson & Partners Limited v Robert Colin Nicholls & Ors JUDGMENT The proceedings 1 At their core, these strongly contested proceedings involve allegations that nominate former employees of the plaintiff, Michael Wilson and Partners Pty Ltd [MWP] [a law firm which offers legal services and a business consultancy in Kazakhstan, the Central Asian and Caucasus Region, Russia and Ukraine] have furthered their own interests to their employer's detriment by various means. 2 MWP employed: i. An Australian barrister, Mr Robert Colin Nicholls as a senior associate during the period from 24 April 2004 to 1 March 2006. ii. An Australian solicitor, Mr David Ross Slater as an associate during the period from 1 September 2005 to 9 January 2006. iii. An English and Australian solicitor, Mr John Forster Emmott as a director in the period from 7 January 2002 to 20 July 2006. The United Kingdom arbitration 3 Pursuant to inter-se contractual arrangements, MWP in August 2006 commenced arbitral proceedings against Mr Emmott in the United Kingdom. Later the present proceedings were commenced but relying upon his contractual rights with MWP, Mr Emmott refused to permit the former to proceed against him in New South Wales. The arbitrators are presently reserved in terms of the handing down of an award. The unusual parameter 4 The unusual parameter arises from the fact that the jurisdiction of the Supreme Court of New South Wales is said to be available to the plaintiff notwithstanding that close to no part of the events which occurred took place in New South Wales or indeed in Australia. The reservation concerns the negotiation in Australia of the contractual arrangements reached between MWP and first Mr Nicholls and then Mr Slater. 5 There is also an enquiry as to whether foreign law applies to the determination of the facts of this case and, if so, on what basis and for what causes of action. 6 It is fair to observe that the present proceedings pose for the court's determination a set of questions which differ from those considered by the relatively few reported Australian cases and academic dissertations dealing with 'choice of law' issues. This is because: i. The proceedings involve reliance by the plaintiff upon multiple "causes of action" and "claims for relief" (using those expressions in their most generic sense), not simply a single form of "cause of action" accompanied by a closely associated form of "claim for relief"; ii. The proceedings involve reliance by the plaintiff upon both "causes of action" [in the classic Common Law sense] and "claims for relief" in Equity rather than only one head of jurisdiction (at Law or Equity) or the other; iii. The proceedings involve consideration of several potentially applicable systems of law (namely, NSW, Kazakhstan, United Kingdom and the British Virgin Islands) and require the court to be aware of the nature of proceedings pending in jurisdictions that serve still other systems of law (the Bahamas, Switzerland, Colorado and Florida) rather than having a less complex focus upon a choice between two competing systems; iv. The diversity of the systems of law under consideration in these proceedings is substantial. In particular: (a) the evidence has required to examine alleged differences and/or similarities as between the law of New South Wales (historically derived from the law of England) and Kazakhstan (historically derived from the Soviet Union and having some affinity with a Roman law-based, civil law system); (b) it has been contended that the differences between the laws of England, the British Virgin Islands and NSW (in relation to the duties of company directors and, more broadly, primary and accessory liability for breaches of fiduciary obligations) are likely to be more subtle, but nonetheless potentially important. v. Interwoven with questions about 'choice of law' in these proceedings are closely related questions about: (a) the plaintiff claim of an abuse of process; (b) whether there is sufficient connection between the facts and allegations underlying the proceedings (on the one hand) and the jurisdiction of the Court (on the other hand) to warrant any grant of relief to the plaintiff; (c) whether (and, if so, to what extent) the Court should apply, or reject, forum non conveniens principles in response to the plaintiff's claims. 7 I accept as correct the defendants proposition that because of the multiplicity and overlapping nature of the issues that arise from all of these different considerations, the Court needs to consider the level of abstraction appropriate to address them so as to discharge its ultimate mandate of "doing justice between the parties", in the resolution of "all questions in dispute" between them, as part of the 'proper administration ' of justice in the exercise of its jurisdiction. The overriding purpose rule 8 There are many levels necessary to be closely examined in unravelling both the material facts as well as the principles of law which inform the party's rights in this complex litigation. The reasons require very close analysis of disparate areas of the law including: i. the principles which inform the proper approach to whether or not particular conduct is proven to have been fraudulent; ii. a close focus upon a number of parameters concerning the extent to which, and reasons why, partners or employees may be seen to owe particular fiduciary obligations in particular circumstances, and whether those fiduciary obligations may in particular circumstances be regarded as 'spent'; iii. a necessity to deal with the parameters of accessorial liability under the second limb of the rule in Barnes and Addy ; iv. the causes of action for the tort of conspiracy and for interference with contractual relations; v. the conflict of law questions; vi. matters concerning causation; vii. close questions as to remedy as well as the election; viii. the defendant's abuse of process case. 9 None of these matters can be worked through without considerable care. To my mind the legal issues which arise fairly permit the Court to travel closely into a number of areas of principle and to do so in considerable detail where relevant to the ultimate rights of the parties. 10 Finally the Court is well aware that the instant litigation has had a considerable gestation period and that, consistently with the overriding purpose rule which underpins the approach to litigation in this State, parties are entitled to as rapid a decision as is practicable in the circumstances. Justice delayed is justice denied: i. cf Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 at 93 per Gummow, Hayne, Crennan, Kiefel and Bell JJ, observing that the achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the Court and upon other litigants; ii. per Heydon at 137, observing that 'commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible , whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs'. 11 The ethos of the Commercial List is to determine matters concerning businessmen and others who come before the Court, to have their disputes determined speedily. This I have endeavoured to do [even at the risk of the occasional duplication of quotes from authorities]. Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 12 In Regie Nationale des Usines Renault SA v Zhang the High Court considered a claim arising out of a motor vehicle accident in New Caledonia in which a New South Wales resident had been seriously injured. 13 Gleeson CJ and Gaudron, McHugh, Gummow and Hayne JJ at [68] stated the primary rule to be that "there is no obligation upon either party to plead foreign law in order to render a claim or cross-claim justifiable". However if a party is going to rely on that law, it must be pleaded. 14 The passage in which they so found merits quoting in full (at [68-72], (footnotes omitted): "Once the distinction between jurisdiction as a "threshold requirement" and choice of law is appreciated, it will be seen that there is no obligation upon either party to plead foreign law in order to render a claim or cross-claim justiciable. If, however, either party seeks to rely on foreign law, rules of court and general principles of pleading may oblige the party to plead the relevant foreign law. As is said in Bullen & Leake & Jacob's Precedents of Pleadings : "Where a party relies on foreign law to support his claim or as a ground of defence thereto, he must specially plead the foreign law relied on in his statement of claim or defence, as the case may be, and he should give full particulars of the precise statute, code, rule, regulation, ordinance or case law relied on, with the material sections, clauses or provisions thereof. A mere allegation that an instrument depending on foreign law is null and void is too vague." 15 Their Honours continued: The first question is whether it is necessary for the plaintiff to plead the foreign law in order to establish a cause of action. The answer preferred by Dicey is in the negative. In Walker v W A Pickles Pty Ltd , Hutley JA explained: "An action of tort may be brought in New South Wales courts irrespective of where the facts founding the action may have occurred, even if they occurred in a place where there may be no law at all: see Mostyn v Fabrigas . A pleading of a cause of action in tort which did not allege that the facts occurred in any particular law district would be formally valid. On the basis that the utmost economy is enjoined by the rules, it would seem to me that pleading of a foreign element in the initiating process in a claim in tort can never be necessary. … This approach is reinforced by the principle that foreign law, which is, except between the States and the Territories of the Commonwealth, a fact, is presumed to be the same as local law; and a fact presumed to be true does not have to be pleaded: See Supreme Court Rules , Pt 15, r 10(a)." On the other hand, if the defendant seeks to rely upon a foreign lex causae, then, in the ordinary way, it is for the defendant to allege and prove that law as an exculpatory fact." The second question is whether, whilst not obliged to do so, it is for a plaintiff who sees a forensic advantage in the foreign law (for example, in its provision for strict liability) to plead that law in its statement of claim or other initiating pleading. In Walker [[1980] 2 NSWLR 281 at 285], Hutley JA concluded not only that it was unnecessary for the plaintiff to plead the foreign law but wrong to do so. However, what is involved here is the application of a choice of law rule. It cannot be beyond the competence of the plaintiff to invoke that rule and be solely for the defendant to rely upon it for any exculpation it offers. The term "justifiable" may have conveyed a suggestion of exculpation but since the reformulation of the second limb by Brennan J in Breavington [(1988) 169 CLR 41 at 110-111], that term has not appeared and it cannot control the operation of a choice of law rule which selects the lex loci delicti as that to be applied in Australia to govern questions of substance in a proceeding arising from a foreign tort. It follows that the rule must be that which Dicey regards as "well established", namely that "a party" who relies on a foreign lex loci delicti "must allege, and, if necessary, prove it " [Collins (ed), Dicey and Morris on The conflict of Laws, 13 th ed (2000), vol 2 at 1568]. Where, as here, the applicant on a stay motion seeks to rely upon a foreign lex causae as providing an advantage, then, at a level of specificity, the applicant should advance appropriate evidence as to the foreign law and particular features of that law which provide that advantage to the applicant. (Emphasis added) 16 This topic is of course dealt with in the reasons which follow. However bearing in mind the disputes separating the parties in terms of the formalities concerning certain parameters of a formal nature it presently appropriate to repeat sections 174 and 175 of the Evidence Act 1995 [NSW]: 174 Evidence of foreign law (1) Evidence of a statute, proclamation, treaty or act of state of a foreign country may be adduced in a proceeding by producing: (a) a book or pamphlet, containing the statute, proclamation, treaty or act of state, that purports to have been printed by the government or official printer of the country or by the authority of the government or administration of the country, or (b) a book or other publication, containing the statute, proclamation, treaty or act of state, that appears to the court to be a reliable source of information, or (c) a book or pamphlet that is or would be used in the courts of the country to inform the courts about, or prove, the statute, proclamation, treaty or act of state, or (d) a copy of the statute, proclamation, treaty or act of state that is proved to be an examined copy. (2) A reference in this section to a statute of a foreign country includes a reference to a regulation or by-law of the country. 175 Evidence of law reports of foreign countries (1) Evidence of the unwritten or common law of a foreign country may be adduced by producing a book containing reports of judgments of courts of the country if the book is or would be used in the courts of the country to inform the courts about the unwritten or common law of the country. (2) Evidence of the interpretation of a statute of a foreign country may be adduced by producing a book containing reports of judgments of courts of the country if the book is or would be used in the courts of the country to inform the courts about the interpretation of the statute. Corporate vehicles and trusts 17 There are a number of corporate vehicles and trusts which the plaintiff contends played a part in the alleged web of wrongdoing. These will be introduced in detail below. For present introductory purposes it may be noted that MWP claims that Messrs Nicholls and Slater, Temujin International Ltd (TIL), Temujin Services Ltd (TSL), Temujin International FZE (TFZE), Temujin Holdings Ltd (THL) and Shaikenov & Partners LLP (Shaikenov): i. acted to injure MWP's interests and ii. acting with the intent to cause loss to MWP, conspired with Emmott to defraud MWP and conceal the proceeds of the fraud from MWP. [But see below where the plaintiff accepts that it is disentitled from pursuing any case against Shaikenov & Partners LLP for reasons concerning service] [As a matter of convenience through much of these reasons the reference to 'Temujin' is used to describe TIL as opposed to the other Temujin companies] 18 The name "Temujin" was the childhood name of Genghis Khan, a name adopted at the suggestion of Mr Nicholls. MWP's case 19 MWP's case which traverses a number of causes of action centrally concerns allegations that: Messrs Nicholls and Slater Messrs Nicholls and Slater had breached sundry duties owed to MWP by soliciting MWP's contacts, clients, employees and consultants inter alia by: i. breaching express and implied terms of their employment contracts with MWP: The respective employment contracts between MWP, Messrs Nicholls and Slater are said to have contained restrictive covenants and obligations of confidentiality to MWP ii. dishonestly and fraudulently breaching their fiduciary duties and duty of care owed to MWP; iii. acted fraudulently; iv. knowingly participating and assisting in Mr Emmott's alleged wrongdoings; v. Mr Slater is said to have failed to act to the standard one would expect of a solicitor of ordinary competence in NSW. vi. MWP also contends that Slater breached his alleged duty to exercise all reasonable skill, care, diligence and competence that he owed to MWP as a result of negligent advice he gave to a now former client of the plaintiff: Mr Emmott vii. Emmott is said to have breached fiduciary duties towards the plaintiff. viii. he is said to have breached the terms and conditions of his employment contracts with the plaintiff. ix he is accused of earning secret commissions and benefits through his position within MWP Destruction of document allegations x. There have also been particular allegations levelled at Messrs Slater, Nicholls and Emmott, claiming that they took, used and destroyed MWP's documents from October 2005 and continuing throughout the period of their employment. Under billing xi. the same defendants are said to have under billed MWP's clients for work performed by the three of them on behalf of MWP. Allegations against the remaining six defendants xii. Further, MWP seeks to prove that TIL, TSL, TZFE, THL knowingly participated and assisted in the alleged breaches of duty by Messrs Nicholls, Slater and Emmott: That is, the plaintiff pleads causes of action grounded upon allegations of conspiracy and accessorial liability. xiii. All or some of the remaining six defendants are said to have knowingly participated and/or assisted in any breaches of fiduciary duties or terms and conditions of contract. xiv. All or some of the six defendants are said to have conspired against the plaintiff. 20 Attention requires to be given to the successive departure from the employ of MWP: i. Slater was the first to leave and before leaving sent from his MWP e-mail account to his personal e-mail address, a considerable number of important documents including MWP's precedence, documents and correspondence. He simply fail to return to work at MWP 19 January 2006 following his annual leave taken in the period 21 December 2005 to 8 January 2006 thus unilaterally resigning his employment with MWP; ii. Nicholls was the second to leave purporting to resign his employment by providing one months notice of his intention to do so on about 31 January 2006. His last day of employment with MWP was on 1 March 2006; iii. Emmott was the last to leave purporting by letter of 30 June 2006 to terminate his agreement with immediate effect by leaving a letter dated 30 June 2006 addressed to Mr Wilson on the latter's desk at about 3 a.m. [this being whilst Wilson was away on a business trip and during a time when Emmott had personally committed to MWP that he would remain in Almaty and look after the office). 21 The plaintiff's case is that before, during and after the occasions when Messrs Slater, Nicholls and Emmott left the employ of MWP, sundry activities were engaged in by each of these persons which constituted wrongdoing of the kind pleaded in the extensive and detailed the Third Further Amended Commercial List Statement. The plaintiff's conspiracy case is that the whole of the staged departures by these persons from the employ of MWP was carefully planned. The plaintiff's case is that during the period from about 19 December 2005, TIL with the assistance and cooperation of THL and Mr Shaikenov assisted, procured and solicited Messrs Nicholls, Slater and Emmott to: (i) prefer the business and interest of TIL and Shaikenov to the business and interests of MWP; (ii) compete with the business of MWP; (iii) divert clients and contacts of MWP to become clients and contacts of TIL and Shaikenov; (iv) solicit staff, consultants ad other personnel and cause them to act in breach of their contract and obligations to MWP; (v) divert fee and other income, remuneration and compensation from MWP to themselves, TIL, THL and Shaikenov at the expense of MWP; (vi) wrongly provide, make available for use and disclose confidential, copyright and privileged data, documents and information belonging to MWP and its clients; and 22 The case is that Mr Emmott continued with MWP and during the period when he alone had not yet departed from his employ with MWP, his activities involved his having one foot in his employers camp and the other foot squarely planted in the business activities in which [unknown to MWP] he already had an interest and to which he would migrate once he left MWP. 23 I have already mentioned that one of the difficulties in dealing with the proceedings is by reason of the number of corporate instruments through which Messrs Nicholls, Slater and Emmott operated. The plaintiff's case is that TSL, TFZE and THL were under the control of Messrs Nicholls, Slater and Emmott and with the assistance and cooperation of Mr Shaikenov, were the instruments by which they carried out their respective breaches. 24 The conspiracy to defraud case is put in a number of alternative ways. For present purposes it should suffice to repeat paragraph 72 of the pleading which alleges as follows: At some point from February/March 2005 but before August 2005, at least Messrs Nicholls, Slater and Emmott unlawfully conspired to: (a) injure MWP by unlawful means; or, alternatively, (b) perform acts done for the sole or predominant purpose of injuring MWP, namely by: (i) assisting in the setting up of their agency, advisory and legal business (ultimately trading as TIL with the co-operation of Shaikenov); (ii) entering into co-operative arrangements with each other and with Shaikenov for the establishment of those businesses; (iii) preferring those businesses to the business and interests of MWP; (iv) competing with MWP's business; (v) diverting clients and contacts of MWP to become clients and contacts of those businesses; (vi) diverting fee and other income, remuneration and compensation (in whatever form) from MWP to TIL, TSL, TFZE, Shaikenov and/or themselves or their nominees personally, without accounting to MWP; (vii) whilst still working with MWP, working for the benefit of themselves, TIL, TSL, TFZE and/or Shaikenov (doing work during the period they should have been engaged for MWP's benefit, and not billing their time for the benefit of MWP); (viii) soliciting and/or making offers of employment to MWP's staff to leave MWP and take up employment with TIL, TSL, TFZE and Shaikenov; and (ix) the copying and taking of precedents, documents and correspondence of MWP and its clients for their own benefit and the benefit of TIL, TSL, TFZE and Shaikenov. Loss/remedies 25 The claims for relief include questions concerning: i. Whether the plaintiff has suffered loss due to the actions of the remaining six defendants and/or Emmott; ii. Identifying the remedies available to the plaintiff if liability is established. The specific relief sought 26 Notwithstanding MWP's claims for relief as originally pleaded in the summons, in final address the plaintiff made clear that its relief sought was as follows: i. a constructive trust over the shares of TIL,TSL and TFZE; ii. in the alternative an equitable account of profits from each of the defendants; iii. in the further alternative, equitable compensation sought from each of the remaining six defendants; iv. an enquiry as to damages; v. costs; vi. Interest up to judgement as per s 100 of the Civil Procedure Act 2005 (NSW). [Clearly questions of election of remedy arise] An overview of the difficulties faced by the plaintiff in unravelling the defendant's activities and in endeavouring to frame its claims for relief 27 The following matters serve to emphasise the difficulties which faced the plaintiff in its endeavours to pursue the defendants and in particular Temujin: Establishment of TIL TIL was incorporated on or about 19 December 2005 with Slater as its sole shareholder with 50,000 shares. The company had been incorporated as a result of a request that he had made to Mr. Shaikenov in early December 2005. This came about in the following way: i. Mr. Shaikenov attended to its incorporation with one of his associates in Moscow (Slater cross-examination at T 1359.20-25). Slater gave evidence that this was done at his request, which was made either at the meeting with Mr Kachshapov or shortly thereafter (Slater cross-examination at T 1361.15-25). ii. Slater dated the meeting with Kachshapov as being held sometime in early December 2005 (the "fifth meeting" at the Ankara hotel was on the weekend of 26/27 November 2005 and Slater's evidence was that the meeting with Mr. Kachshapov occurred between three and 10 days but he thinks it was at least a week after the Hotel Ankara meeting: see Slater cross-examination at first week of December 2005 (Slater cross-examination at T 1358.20-35)). iii. Slater gave evidence that at the time of its incorporation Mr. Shaikenov was initially the only shareholder in Temujin International Limited. Sometime later, between August and October 2006, Slater became the owner of the company (Slater cross-examination at T 1359.35-45). The documentation however suggests that on 19 December 2005 Mr. Slater was issued 50,000 shares in TIL on 19 December 2005 (5/136 at 139, where there is a resolution that 50,000 shares be issued to Slater and see cross-examination of Slater at T 1359.1-45). iv. In February 2006 TIL established a branch office in Almaty, which was registered with the assistance of Mr. Shaikenov (Slater affidavit at paragraph 82). v. From about 28 March 2006 Slater has been the general director of the Kazakhstan branch office of TIL (see Response at paragraph 14 (iii)). vi. The establishment of the branch with Slater as general director was in accordance with what was anticipated in Cooperation Agreement (see clause 1 of the second schedule of the Cooperation Agreement at 6/149). vii. The branch was established to provide local legal services. Any income earned in doing this would be subject to Kazakhstan tax. TIL itself would have the offshore matters (Slater, cross-examination T 1375.15-20). Messrs Slater, Nicholls and Emmott's roles at TIL i. The sole director of TIL is a Mr. Vasquez (Slater cross-examination at T 1361.1-5). Slater has never met Mr. Vasquez (Slater cross-examination at T 1359.45-50). There is no evidence that Mr. Vasquez is even aware of these proceedings. ii. In the ordinary course one would expect that instructions in this proceeding, discovery and evidence on behalf of TIL would be given by its only director, Mr Vasquez. TIL has been ordered to attend two mediations in this matter without the participation of Mr. Vasquez. He has not verified TIL's discovery. iii. It is therefore necessary to identify what precisely is the role of the witnesses in this proceeding in relation to TIL. The evidence is as follows: (a) Slater, Nicholls and Emmott only describe themselves as "consultants" to TIL (Slater, paragraph 14 (iv) of the Response, Nicholls says he ceased to be a consultant to TIL on or about 14 September 2008 (see paragraph 13 (iv) of the Response and see Nicholls' confirmation of paragraph 11 of his affidavit of 17 August 2009 at 1058) and Emmott paragraph 15 (a) of the Response). Save for Nicholls, no documentation relating to their "consultancy" has ever been produced. (In the case of Nicholls a letter of appointment dated 8 April 2007, well after the commencement of these proceedings confirming his appointment as "of counsel" or "senior consultant" was discovered: see 12/38 and cross-examination of Nicholls at T 1186-87.) (b) Slater generally described himself as a "partner" on TIL invoices and up to October 2006 Emmott was also described on the invoices as a "partner" . Slater said in cross-examination that Emmott gave him no explanation as to why he had requested that the description of himself be changed to that of "consultant" (Slater cross-examination at T 1470). (c) Although Slater sometimes described himself as a "director" of TIL without any qualification limiting that role to the Almaty branch he made it clear in evidence that he was not, in fact, a director of TIL. See, for example the evidence he gave about letter he wrote as a "director" of TIL at 27/52 about which he was cross-examined at 1364. (d) Although from about 28 March 2006 Slater has been the general director of the Kazakhstan branch office of TIL (see Response at paragraph 14 (iii)), Slater's own evidence was that a branch is not a separate entity under Kazakhstan law (Slater affidavit at paragraph 83) and this office has no relevance as a matter of English law. (e) Although there was a reference in the evidence to Slater entering into an agreement with PJT Corporate Services Pty Limited on 22 August 2007 pursuant to a power of attorney dated 14 August 2006 (27/74 and see Slater cross-examination at T 1531.1-10) there was no evidence as to what the scope of that power of attorney was. There is evidence that a "General Power of Attorney" was granted to Mr Shaikenov to act for the company (5/139). The Power of Attorney itself appears at 6/322. An undated resolution of TIL to grant Slater a general power of attorney appears at 6/321. Whether this is an effective document or not is unclear: Slater's evidence in relation to a similar, undated, Temujin document (providing for the resignation of Mr Vasquez) was that it was ineffective until it was dated: see cross-examination of Slater at T 1361.1-10 regarding the document at 5/140.) No positive evidence has been led that Slater ever held a power of attorney in relation to TIL. iv. Accordingly the Court has to assess the evidence against TIL on the basis that: (a) the sole director of that company has not participated at all in these proceedings; (b) the sole director of that company has not been responsible for discovery in these proceedings (discovery was made on the unusual basis that Slater was the ultimate beneficial owner of the third to fifth defendants to the proceedings (c) Evidence as to the company's activities has been led through Slater, Nicholls and Emmott whose role as "consultants" to the company has remained vague. (d) No evidence has been given by a person who has a legal responsibility for overseeing TIL's affairs. This is of particular significance given the limited evidence that TIL has given of bank accounts (as to which, see below) and other records which might disclose its business activities. (e) It is a striking feature of this case that no evidence of TIL's earnings or profitability has been led in evidence by any of Slater, Nicholls or Emmott. 28 Against that background it is to be noted that the plaintiff contends that the conclusion to be drawn from the evidence is that: i. from 20 December 2005 onwards Slater, Nicholls and Emmott effectively operated in partnership together; ii. TIL was one of the vehicles (along with TSL and Temujin FZE) through which the partnership business was conducted. Who stands behind MWP 29 Amongst the many cloak and dagger secrecy parameters which have beset this case is the simple question of establishing which person or persons [or structure or structures] are behind Windsor Fine Arts Establishment Ltd [WFA] which is apparently MWP's sole shareholder. 30 Mr Wilson claimed that he did not know who was behind WFA, giving evidence that he did not consult with anyone behind WFA regarding decisions such as the issue of 49,998 shares in MWP and their subsequent cancellation or the commencement of proceedings against the alleged wrongdoers. It is fair to say that Mr Wilson was evasive regarding questions put to him under cross-examination about the 'family structure' [referred to in an affidavit which he had sworn on 6 October 2006], his evidence simply being that the family structure was WFA and going no further. The scale of the proceedings 31 There have been several interlocutory judgments delivered since the commencement of the final hearing and even prior thereto. It is pertinent to observe that the respective parties cases [and most particularly the plaintiff's case] have involved an enormous amount of detail with mountains of documents being placed into evidence and with many overseas witnesses giving evidence; sometimes on video link and sometimes in person. The case management of the proceedings has thrown up enormous difficulties with both parties deploying a variety of forensic tactics usually involving notices to produce and subpoenas but also extending outside of those steps. The defendants' abuse of process cases 32 The defendants have also sought by notice of motion to have the proceedings set aside as an abuse of the process of this Court. The very allegations of abuse of process of this Court are so intertwined with the principal issues being litigated in the proceedings that it has been efficient to permit both the plaintiff pleaded cases as well as the defendants abuse of process cases to be litigated together on the basis that in due course and after final submissions both parameters would be the subject of decision. The abuse of process cases have been carefully considered along with the MWP's cases. As a matter of convenience only, the abuse of process cases are dealt with towards the end of these reasons where they are dismissed. The fiduciary obligation parameter 33 Later in these reasons an extensive examination is undertaken of the authorities which inform when fiduciary obligations will or will not arise, with particular reference to different classes of employee prior to and then after they leave the relevant employ. 34 For present purposes it suffices to be reminded of the following observations: "The obligation not to profit from a position of trust, or, as it is sometimes relevant to put it, not to allow a conflict to arise between duty and interest, is one of strictness. The strength, and indeed the severity, of the rule has recently been emphasised by the House of Lords: Boardman v Phipps [1966] UKHL 2; (1967) 2 AC 46. It retains its vigour in all jurisdictions where the principles of equity are applied. Naturally it has different applications in different contexts. It applies, in principle, whether the case is one of a trust, express or implied, of partnership, of directorship of a limited company, of principal and agent, or master and servant, but the precise scope of it must be moulded according to the nature of the relationship. As Lord Upjohn said in Boardman v Phipps (1967) 2 AC 46, at p 123: 'Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case'." Lord Wilberforce in New Zealand Netherlands Society "Oranje" Incorporated v Kuys (1973) 1 WLR 1126 at pp 1129-1130, cited by Gibbs J in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 391. The words of Frankfurter J in Securities Commission & Exchange Commission v Chenery Corporation (1943) 318 US 80 bear repetition. His Honour said: "But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?" In particular, the fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is "a conflict or a real or substantial possibility of a conflict" between personal interests of the fiduciary and those to whom the duty is owed. Cited by the majority of the High Court in Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 at 78. Returning to briefly sketch in additional detail of the particular entities and persons who play a part in the narrative of events Michael Wilson & Partners, Ltd (MWP) 35 MWP is a company incorporated in the British Virgin Islands (BVI) in 1998. It has branch offices in Almaty, Kazakhstan and Baku, Azerbaijan. Through its Almaty office, it operates a full service law firm and business consultancy in Kazakhstan, the central Asian region, the Caucasus, Russia and Ukraine. 36 An essential part of MWP's business involves the structuring of investments in Kazakh assets, in particular energy and mineral assets to attract foreign investors, and for listing on a public stock exchange. MWP refers to this aspect of its business as the "Structured Investments Business". 37 This Structured Investments Business has a fee structure which often includes a success fee or commission component and which also includes an opportunity to take equity in the investment. 38 Remuneration arrangements of this nature would be unheard of in this jurisdiction. Such unorthodox business practices would inevitably lead to conflicts of interest and greed, as ultimate remuneration would theoretically be uncapped. Mr Michael Earl Wilson 39 Mr Wilson is the founder and current managing director of MWP since its formation. He was awarded a Bachelor of Laws from Manchester University in 1980 and was admitted as a solicitor in London in 1984, working at Baker and McKenzie. In 1991 became a partner at Baker and McKenzie eventually establishing a practice branch in the Central Asia region. 40 In 1998, Mr Wilson left Baker and McKenzie to establish MWP on or about 14 July 1998. At MWP, Mr Wilson has continued a practice in commercial law. Mr Robert Colin Nicholls 41 Mr Nicholls is an Australian barrister, admitted to the Barrister's Roll in New South Wales. Most of his legal career has been spent at Freehills, where he had been a partner. 42 Mr Nicholls was employed as a senior associate by MWP from 24 April 2004. On 31 January 2006 Nicholls provided Mr Wilson one month's notice of the termination of his employment with MWP. Mr Nicholls ceased employment with MWP on 1 March 2006. Mr David Ross Slater 43 Mr Slater is a solicitor admitted to practise in New South Wales. 44 Mr Slater was employed by MWP from 1 September 2005. He left the firm on 23 December 2005 and never returned. Mr John Forster Emmott 45 Mr Emmott is a solicitor admitted to practise in England and Wales and also New South Wales. Mr Emmott 's contract 46 The contract with Mr Emmott provided that on and from 7 January 2002 he would become a director and full-time employee of MWP and would be subject to the usual partnership obligations and duties of cooperation, disclosure and good faith in carrying on business in common with MWP with a view to making profit. 47 Following the recitals the agreement recorded the following: AGREED 1. Agreement in Principle 1.1 Mr Emmott and MWP have agreed that Mr Emmott will join MWP, as a director and shareholder, with effect from 7 January 2002 in accordance with the terms set out in this Agreement 1.2 MWP and Mr Emmott have agreed to enter into a long-term and mutually acceptable business relationship and association and that they will share and be party to much sensitive, confidential and valuable information, not least as to MWP's clients and contracts established in the Region since 1994 and as to Mr Emmott's own clients and contacts . 1.3 MWP and Mr Emmott have agreed that their fundamental strategy is to create the leading independent legal and business consultancy firm, not only in Kazakhstan, but also throughout the Region, which will be developed pursuant to a strategic plan and budgets to be negotiated and agreed between the Parties and to be updated on a regular basis. The Parties expect that this can be achieved by them acting in partnership over a period of three to five (3-5) years and they will mutually devote all of their time, energy and efforts in order to achieve this as quickly as is possible and in order to maximise the value, client base, name and reputation of MWP in Kazakhstan and throughout the Region. In particular, the Parties have agreed to consider and, if viable, acquire existing firms, practices or businesses or recruit staff in order to pen and establish offices or presences throughout the Region as soon as is possible (economics permitting) and, in particular, in Tashkent and Baku and, possible in the future, in other regional important business centres such as Tbilisi, Yerevan, Ashgabat, Bishkek, Ulan-Bator, Teheran and Istanbul. Any such expansion shall be funded, insofar as it is possible, from the cash-flows of MWP, from debt or equity financing and/or from Mr Emmott and the shareholders of MWP (should they agreed) in proportion to their respective net profit sharing interests in the business; 1.4 Although the cooperation established between the Parties pursuant to this Agreement is as co-shareholders and co-directors in MWP, a legal entity, the Parties have agreed that in effect MWP will function and operate as a quasi-Partnership between them and the Parties shall have and observe the usual partnership obligations and duties to each other i.e. co-operation, of disclosure and of good faith as partners carrying on business in common with a view to making profits . [emphasis added] 48 Clause 2 provided inter alia as follows: 2. Terms Agreed 2.1 Mr Emmott will join MWP, on a full-time basis, primarily based in and operating out of its office in Almaty by no later than 7 January 2002; 2.2 Mr Emmott will become a director of MWP, with a thirty-three per cent (33%) profit-sharing interest, which shall be earned as follows… 2.2.2 by devoting his full time and attention to developing the practice and business of MWP; 2.2.3 by seeking to bring and refer to MWP all and as many as is possible of his clients and contracts;… 2.4 Mr Emmott and MWP will full and closely cooperate together in order to promote, develop and enhance the business of MWP in the Region and shall not compete in any manner whatsoever. In particular, they shall discuss and reach agreement before any new partner is introduced to MWP;… 2.6 The Parties have agreed that, if and when any solicitations or proposals are received from other firms they shall discuss and agree how to respond to the same and that when MWP and its business reaches what the Parties agree to be an appropriate scale and size, they will consider and agree the strategic options for the future of the business of MWP which may include the merger with or take-over by one or more other firms or the continuance on an independent basis; 2.7 Mr Emmott shall be entitled to have access to the books and records of MWP and to copies of all relevant documents on a strictly private and confidential basis recognising the commercial and in-confidence nature of the same . Equally, MWP shall be entitl3ed to a copy of any agreement or agreements or other documents concluded between Mr Emmott and Messrs Richards Butler relating to the termination of his partnership with them and any on-going consultancy or other arrangements; 2.8 Mr Emmott and MWP shall freely share all of their clients and contacts and shall give each other free and unrestricted access to their databases, precedent systems, client files and work products;… 2.12 Mr Emmott and MWP will agree on appropriate client in-take, engagement, termination, time recording, billing and collection arrangements, practices and procedures; 2.13 Mr Emmott will use all reasonable endeavours (and subject to clients' instructions) refer to and bring with him to MWP all and any clients, contacts or matters howsoever relating to Kazakhstan and the Region in or with which he is currently involved in any manner whatsoever and on or in relation to which he is instructed or with whom he has established contact or relations, it being recognised that this Agreement creates sole and exclusive relations between Mr Emmott and MWP. 3. Termination 3.1 Either Party shall be entitled to terminate this Agreement at is discretion by not less than six (6) months' notice in writing to the other… 5.2 This Agreement shall be governed by and interpreted in accordance with the laws of England and Wales and all and any disputes shall be referred to and subject to arbitration in London before a tribunal of three (3) arbitrators with one (1) arbitrator to be appointed by each Party and the chairman of the tribunal to be appointed by the President of the Law Society… 5.9 Each Party shall carry out and provide all necessary acts, matters and things and shall deliver, negotiate, finalise and sign all manner documentation in order to give effect to the provisions of this Agreement, as soon as is reasonably possible, following the date of this Agreement, time being of the essence; 5.10 Both Parties will keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship. [emphasis added] Findings as to the implied terms and conditions of Mr Emmott's agreement 49 I accept that in all of the circumstances the following were implied terms and conditions of Mr Emmott's agreement, namely that he would at all times: i. act with fidelity in carrying out his duties as an employee of MWP; ii. act in good faith in carrying out his duties as an employee of MWP; iii. acting MWP's interest in carrying out his duties as an employee of MWP; iv. act is a reasonably competent lawyer; v. dedicate all of his time in the course of his employment with MWP in furtherance of the interests of MWP. 50 Each of those implied terms arose by virtue of his employment by MWP as a senior lawyer and his practice as a lawyer on behalf of MWP. Temujin Services Ltd (TSL) 51 TSL, the third defendant was incorporated in the BVI and was established by Messrs Nicholls, Slater and Emmott on or about 8 March 2006. It operates as a service company providing services to TIL. "TSL is a firm that we use from time to time in effect to in effect facilitate transactions. TIL is a functioning law firm to both onshore and offshore clients. For example, we've been approached to, and in essence, coordinating a listing on AIM for a KZ entity. TSL in those circumstances will, in essence, facilitate the appointment of various parties such as advisors, brokers et cetera and coordinate and manage the whole process. TIL may provide legal services in terms of due diligence alongside counsel for the PLC. In return TSL will receive a monthly management fee and a percentage of the common shares that are issued. TSL may also from time to time introduce various business opportunities to various parties and take a fee for such an introduction. TSL last year was appointed to seek a purchaser for a large oil and gas asset in Kazakhstan which, unfortunately, was sold to another party. The fee there was a small monthly fee and a large success fee." [cf: PX 35 - E-mail from Mr Slater to Mr Phillip Shepherd QC] Temujin International Limited (TIL) 52 TIL, the fourth defendant, was incorporated in the BVI and is the trustee of the Temujin International (Trading) Trust (the Trust). TIL was established by Messrs Nicholls, Slater and Emmott on or about 19 December 2005 and operates as business advisor, agent and arranger and provides legal services. A Trust Deed executed on or about 20 December 2005 established the Trust. TFZE 53 TFZE, the fifth defendant, was incorporated in the Free Trade Zone of Ras Al Khaimah in the United Arab Emirates (UAE) also on 8 March 2006. It operates as a service company and provides financial and other services to TIL and clients in the UAE. Mr Nicholls has been a manager of TFZE since that time. 54 Mr Nicholls is the legal owner of shares in TFZE which he holds on trust for TIL. "FZE" stand for Free Zone Establishment and granted under of authority of the UAE. Shaikenov & Partners LLP (Shaikenov LLP) 55 Shaikenov LLP, the sixth defendant is a Kazakhstani limited liability company that operates as a full service law firm in Almaty, Kazakhstan. Its principal is Mr Arman Shaikenov [Shaikenov]. 56 As already indicated, during address Mr Walton [leading counsel for the plaintiff] made clear that the sixth defendant although originally served, had played no part in the proceedings and had not been subsequently served with later emanations of the Commercial Statement. In consequence the plaintiff accepted that there was no case against the sixth defendant. Temujin Holdings Ltd (THL) 57 THL, the seventh defendant, was incorporated in the Commonwealth of the Bahamas on 15 September 2006 as Arcadian Overseas Inc and changed its name to THL on 19 October 2006. Mr Slater wholly owns this entity. 58 It is the company into whose bank accounts all monies are now paid by the clients of TIL. It operates as a service company and for a fee provides administrative and bookkeeping support services to TIL pursuant to an Administration Support Agreement with TIL dated 9 November 2006. 59 No appearance has been filed for THL but leave to proceed against this defendant was granted by the court on 30 May 2008 pursuant to UCPR 11.4. 60 During the hearing Mr Slater gave evidence that Mr David Risbey is the owner of THL and a director of that company. 61 Close to the final minutes of the final address in reply by the plaintiff, Mr Walton sought leave to tender an affidavit filed in the proceedings by the defendants during an interlocutory stage. This is said to have been an affidavit made by Mr Slater which had been overlooked by the plaintiff during the final proceedings and in which affidavit Mr Slater apparently conceded that he is in fact the beneficial owner of the shares in THL. 62 The significance of the new evidence would go to the plaintiff claim to relief in relation to THL in that it seeks a constructive trust over its shares which it now wishes to contend are held by Mr Slater 63 Mr Slater was not cross-examined to suggest any such thing and has long departed from the witness box. The application to tender material parts of this affidavit was objected to on behalf of all the defendants who had taken an active role in the proceedings. The Court indicated that a determination as to whether or not the tender would be permitted would be made privately and that the decision would be announced in the final judgment. 64 The decision rejects the tender. It would have been necessary to put the matter to Mr Slater in order to permit him to respond. There could be any number of reasons to explain the suggested inconsistency. The dictates of natural justice require that the tender be rejected there not even having been an application to re- call Mr Slater. The principles: fraudulent conduct 65 There is a plethora of authority in support of the proposition that the Court is bound to see that a case of fraud is clearly proved. An allegation of fraudulent intent is one of the most serious allegations capable of being made. Actual dishonesty is said to be "the hallmark of fraud". The gravity of the allegation has been said to be such that whereas section 140(1) of the Evidence Act 1995 (NSW) stipulates a single standard of proof for all civil cases, namely the balance of probabilities, Section 140(2) preserves the doctrine in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; Pedler v Richardson (unreported, Supreme Court of NSW, 16 October 1997, Young J) at 10-11. See also McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, 319. More recently in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 the High Court has put the matter in the following terms: "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 66 The High Court has pointed out that the evidence given by a man of his intention and state of mind, must be tested: "Most closely and received with the greatest caution." [ Pascoe v Federal Commissioner of Taxation (1956) 30 ALJR 402] 67 Courts have emphasized that the best evidence of a man's purpose is to look at what was actually done: ASX Operations Pty Limited v Pont Data Australia Pty Limited (No 1) (1990) 27 FCR 460 at 482 - 483. Fiduciary duties – when, to what extent and why may an employee owe fiduciary obligations to his/her employer 68 I intend next and before launching into the massive and unwieldy detail requisite in finding the facts, to first set the scene, at least insofar as the fiduciary obligation case is concerned. 69 I take the following propositions [which are supported by the authorities which follow] as trite: i. fiduciary duties arise not as result of the mere fact that there is an employment relationship, but rather from the fact that within a particular contractual relationship, there are specific contractual obligations which the employee has undertaken which have placed him/her in a situation where equity imposes fiduciary duties in addition to the contractual obligations; ii an implied contractual term is not to be equated with a fiduciary obligation; iii. the critical feature of fiduciary relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect in a legal or practical sense the interests of that other person: [ Concut Pty Limited v Worrell (2000) 176 ALR 693 at [17] per Gleeson CJ, Gaudron and Gummow JJ; Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 at [70] per McHugh, Gummow, Hayne and Callinan JJ] iv. it is necessary to consider with precision the precise activity agreed to be undertaken by a particular employee and to ask if that employee had agreed to perform that activity solely in the interests of the employer to the exclusion of his/her own interests. 70 In Youyang Pty Limited v Minter Ellison Morris Fletcher [2003] 212 CLR 484 the Court [Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ at [40]] approved the statement of principle of McLachlin J in Canson Enterprises Limited v Boughton & Co [1991] 3 SCR 534 at 543 that "The essence of a fiduciary relationship, …is that one party pledges itself to act in the best interest of the other. The fiduciary relationship has trust, not self-interest, at its core, and when breach occurs, the balance favours the person wronged." 71 Elias J in Nottingham University v Fishel [2000] IRLR 471 [followed in Comax Secure Business Services Limited v Wilson (unreported, Queens Bench Division, Richard Seymour QC, 21 June 2001); PMC Holdings v Smith [2002] EWHC 1575 (QB) per Burton J; see also Macken & Ors, Law of Employment (5th ed) at pp 139-143]] accurately summarised the position: "Establishing fiduciary obligations: the legal principles What then are the underlying principles which enable the court to determine whether or not fiduciary obligations arise? Lord Millett, writing extra-judicially has identified three distinct categories of relationship (see his article 'Equity's Place in the Law of Commerce' [1998] Vol 114 LQR 214). Two of them have no application in this case. These are first, where the obligations arise out of the fact that one party is in a position of influence over another; and second, where they arise from the fact that one is in receipt of information imparted in confidence by the other. Employees frequently fall into this latter category, because their work will often involve their being made privy to trade or business secrets of their employer. But although the existence of the employment relationship explains why the employee comes to be in possession of such information, and the contract of employment will define the purposes for which such information may be used, the employment relationship itself in such cases is really only incidental to the imposition of the fiduciary duties. As the Court of Appeal noted in Attorney General v Blake [1998] Ch 439, this fiduciary obligation of confidence often arises in the course of another fiduciary relationship but it is not derived from it. It is for this reason that the obligation of confidence can continue to subsist even when the employment relationship, and any fiduciary duties arising out of it, has terminated. The third category identified by Lord Millett, and described by him as the most important, is as follows: '[it] is the relationship of trust and confidence. Such a relationship arises whenever one party undertakes to act in the interests of another, or where he places himself in a position where he is obliged to act in the interests of another. The core obligation of a fiduciary of this kind is the obligation of loyalty.' In Bristol and West Building Society v Mothew [1998] Ch 1 at 18, he elaborated on this analysis, and identified the duties which classically arise from such a fiduciary relationship: 'A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.' It is vital to recognise that although the key feature identified is the obligation of loyalty, that has a precise meaning, namely the duty to act in the interests of another. This is the fundamental feature which, in this category of relationship at least, marks out the relationship as a fiduciary one… Employees as fiduciaries … As these examples all illustrate, simply labelling the relationship as fiduciary tell us nothing about which particular fiduciary duties will arise. As Lord Browne-Wilkinson has recently observed: '. . . the phrase "fiduciary duties" is a dangerous one, giving rise to a mistaken assumption that all fiduciaries owe the same duties in all circumstances. This is not the case' ( Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 206). This is particularly true in the employment context. The employment relationship is obviously not a fiduciary relationship in the classic sense. It is to be contrasted with a number of other relationships which can readily and universally be recognised as 'fiduciary relationships' because the very essence of the relationship is that one party must exercise his powers for the benefit of another. Trustees, company directors and liquidators classically fall into this category which Dr Finn, in his seminal work on fiduciaries, has termed 'fiduciary offices'. (See PD Finn, Fiduciary Obligations (1977)). As he has pointed out, typically there are two characteristics of these relationships, apart from duty on the office holder to act in the interests of another. The first is that the powers are conferred by someone other than the beneficiaries in whose interests the fiduciary must act; and the second is that these fiduciaries have considerable autonomy over decision making and are not subject to the control of those beneficiaries. By contrast, the essence of an employment relationship is not typically fiduciary at all. Its purpose is not to place the employee in a position where he is obliged to pursue his employer's interests at the expense of his own. The relationship is a contractual one and the powers imposed on the employee are conferred by the employer himself. The employee's freedom of action is regulated by the contract, the scope of his powers is determined by the terms (express or implied) of the contract, and as a consequence the employer can exercise (or at least he can place himself in a position where he has the opportunity to exercise) considerable control over the employee's decision-making powers. This is not to say that fiduciary duties cannot arise out of the employment relationship itself. But they arise not as a result of the mere fact that there is an employment relationship. Rather they result from the fact that within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations . Where this occurs, the scope of the fiduciary obligations both arises out of; and is circumscribed by, the contractual terms; it is circumscribed because equity cannot alter the terms of the contract validly undertaken. The position was succinctly expressed by Mason J in the High Court of Australia in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 as follows: 'That contractual and fiduciary relationships may coexist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all-important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.'… … in analysing the employment cases in this field, care must be taken not automatically to equate the duties of good faith and loyalty or trust and confidence, with fiduciary obligations. Very often in such cases the court has simply been concerned with the question whether the employee's conduct has been such as to justify summary dismissal, and there has been no need to decide whether the duties infringed, properly analysed, are contractual or fiduciary obligations. As a consequence, the two are sometimes wrongly treated as identical: see eg Neary v Dean of Westminster [1999] IRLR 288 at 290 where the mutual duty of trust and confidence was described as constituting a 'fiduciary relationship'. Accordingly, in determining whether a fiduciary relationship arises in the context of an employment relationship , it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. It is only once those duties have been identified that it is possible to determine whether any fiduciary duty has been breached, as Lord Upjohn commented in Boardman v Phipps [1967] 2 AC 46 at 127: 'Having defined the scope of [the] duties one must see whether he has committed some breach thereof and by placing himself within the scope and ambit of those duties in a position where his duty and interest may possibly conflict. It is only at this stage that any question of accountability arises.' It follows that fiduciary duties may be engaged in respect of only part of the employment relationship, as was recognised by Lord Wilberforce, giving judgment for the Privy Council in New Zealand Netherlands Society v Kuys [1973] 1 WLR 1126 at 1130: 'A person . . . may be in a fiduciary position quoad a part of his activities but not quoad other parts: each transaction, or group of transactions, must be looked at.'" [Emphasis added] 72 In Victoria University of Technology v Wilson and Ors [2004] VSC 33, Nettle J applied Nottingham University in the following passage: "[145] The same is true of fiduciary duties [ Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 97, per Mason J], although it is necessary to distinguish between an employee's contractual duty of good faith and loyalty and such if any fiduciary duty as he or she may owe to their employer [ Nottingham University v Fishel (QBD) [2000] ICR 1462 at 1490, per Elias J]. Some employees, particularly senior employees, do owe fiduciary duties to their employers [see, for example, Reading v Attorney General [1951] AC 507 at 517 per Lord Normand; Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488; Angus & Coote Pty Ltd v Render (1989) 16 IPR 387; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (unreported, Supreme Court of NSW, O'Keefe CJ in Comm D, 14 September 1994); Colour Control Centre Pty Ltd v Ty (1996) 39 AILR §5–058 (Santow J) at 4,318–4,320; EFG Australia Ltd v Kennedy [1999] NSWSC 922 (Hodgson CJ)); Francis v South Sydney District Rugby League Football Club Ltd [2002] FCA 1306 [265]; Canadian Aero Services Ltd v O'Malley (1973) 40 DLR 3d 371 at 391; Guth v Loft (1939) 5 A 2d 503]. But others do not. The scope of an employee's fiduciary duties to the employer depends as much as anything upon the nature and terms of the employment. "The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with and conforms to them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction". [ Hospital Products Ltd v United States Surgical Corporation above at 97, per Mason J; Nottingham University v Fishel (QBD) [2000] ICR 1462 at 1491–2, per Elias J]" 73 In Francis v South Sydney District Rugby League Football Club Ltd [2002] FCA 1306, Lindgren J also accepted the analysis of Elias J in Nottingham University, although his Honour did not find that a relevant fiduciary duty existed (that case being one where there was an attempt to impose such a duty upon the employer). His Honour said: "[267] In support of the existence of the pleaded fiduciary duty Francis relies on Hollingsworth v Commissioner of Police ( No 2) (1999) 47 NSWLR 151 and Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 in which it was accepted that there is implied in every employment contract a term that the employer will not, without reasonable and proper cause, act so as to destroy or seriously damage "the relationship of confidence and trust" that exists between employer and employee, and that the employee has a corresponding duty to act with fidelity and good faith (cf Hollingworth at 190; Burazin at 146-147, 151). But an implied contractual term of that kind is not to be equated with a fiduciary obligation: see Nottingham University v Fishel [2000] ICR 1462 at 1492-1493. Mutual trust and confidence may characterize a fiduciary relationship, but are not sufficient, without more, to give rise to one. In News Ltd v Australian Rugby League Football Ltd (1996) 64 FCR 410 at 539-540, this Court noted that the notion of mutual trust and confidence may be more significant in establishing a fiduciary relationship between "collaborative" parties who are related to one another "horizontally", such as joint venturers or partners , than between parties who are related to one another "vertically", such as employer and employee. [Emphasis added] [268] As Mason J pointed out in Hospital Products (at 96-97): "[t]he critical feature of [fiduciary] relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person" (referred to with apparent approval in Pilmer at [70]; and cf Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (3rd ed, 1992) at 130). It is the lack of this "critical" undertaking by Souths to act "for or on behalf of or in the interests of" Francis with respect to the matters pleaded that signifies that Souths was not a fiduciary in its relationship with Francis. [Lindgren J then referred to paragraph 269 from Mason J's observations in Hospital Products ] Canadian Aero Service Ltd v O'Malley [1974] SCR 592, 40 DLR (3d) 371 74 The seminal judgment of the Supreme Court of Canada in Canadian Aero Service Ltd v O'Malley repays the closest of attention. In short the case involved the activities of respectively the President [O'Malley] and Executive Vice President [Zarzycki] of a company called Canaero. The holding was these persons were 'top management' and not mere employees [whose duty to their employer, unless enlarged by contract, consisted only of respect for trade secrets and for confidentiality of customer lists]. The responsibilities of O'Malley and Zarzycki was held to be a larger, more exacting duty which was similar to that owed to a corporate employer by its directors. The position of these two persons as senior officers of a subsidiary, which was a working organisation, charged them with initiatives and with responsibilities far removed from the obedient role of servants. 75 In essence O'Malley and Zarzycki had resigned their positions with Canaoro and proceeded to set up an independent company which negotiated a contract to carry out a particular project which O'Malley and Zarzycki had been pursuing for a considerable time with their previous employer. 76 The issues which arose for consideration involved a determination of the relationship of O'Malley and Zarzycki to Canaoro; the ascertainment of the duty or duties, if any, owed by O'Malley and Zarzycki to Canaoro by reason of the ascertained relationship; the question whether there had been an a breach of duty, if any were as owing, by reason of the conduct O'Malley and Zarzycki in acting through their new company to secure the particular contract; and the question of liability for breach of duty if established. 77 The judgment of the Court delivered by Laskin J included the following observations: "24 It follows that O'Malley and Zarzycki stood in a fiduciary relationship to Canaero, which in its generality betokens loyalty, good faith and avoidance of a conflict of duty and self-interest. Descending from the generality, the fiduciary relationship goes at least this far: a director or a senior officer like O'Malley or Zarzycki is precluded from obtaining for himself, either secretly or without the approval of the company (which would have to be properly manifested upon full disclosure of the facts), any property or business advantage either belonging to the company or for which it has been negotiating; and especially is this so where the director or officer is a participant in the negotiations on behalf of the company . 25 An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company , or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired. [Emphasis added] 78 Attention was drawn to general statements of law to be found in Regal (Hastings) Ltd. v Gulliver [FN2], at pp. 381 and 389: Per Viscount Sankey: In my view, the respondents were in a fiduciary position and their liability to account does not depend upon proof of mala fides . The general rule of equity is that no one who has duties of a fiduciary nature to perform is allowed to enter into engagements in which he has or can have a personal interest conflicting with the interests of those whom he is bound to protect. If he holds any property so acquired as trustee, he is bound to account for it to his cestui que trust . The earlier cases are concerned with trusts of specific property: Keech v Sandford (1726), Cas temp King 61 per Lord King, L.C. The rule, however, applies to agents, as, for example, solicitors and directors, when acting in a fiduciary capacity. Per Lord Russell of Killowen: In the result, I am of opinion that the directors standing in a fiduciary relationship to Regal in regard to the exercise of their powers as directors, and having obtained these shares by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office, are accountable for the profits which they have made out of them. The equitable rule laid down in Keech v Sandford [ supra ] and James, Ex parte (1803), 8 Ves. 337, and similar authorities applies ... in full force. It was contended that these cases were distinguishable by reason of the fact that it was impossible for Regal to get the shares owing to lack of funds, and that the directors in taking the shares were really acting as members of the public. I cannot accept this argument. It was impossible for the cestui que trust in Keech v Sandford to obtain the lease, nevertheless the trustee was accountable. The suggestion that the directors were applying simply as members of the public is a travesty of the facts. They could, had they wished, have protected themselves by a resolution (either antecedent or subsequent) of the Regal shareholders in general meeting. In default of such approval, the liability to account must remain. 79 Laskin J continued: The reaping of a profit by a person at a company's expense while a director thereof is, of course, an adequate ground upon which to hold the director accountable. Yet there may be situations where a profit must be disgorged, although not gained at the expense of the company, on the ground that a director must not be allowed to use his position as such to make a profit even if it was not open to the company, as for example, by reason of legal disability, to participate in the transaction. An analogous situation, albeit not involving a director, existed for all practical purposes in the case of Boardman v Phipps [FN3], which also supports the view that liability to account does not depend on proof of an actual conflict of duty and self-interest. Another, quite recent, illustration of a liability to account where the company itself had failed to obtain a business contract and hence could not be regarded as having been deprived of a business opportunity is Industrial Development Consultants Ltd. v. Cooley [FN4], a judgment of a Court of first instance. There, the managing director, who was allowed to resign his position on a false assertion of ill health, subsequently got the contract for himself. That case is thus also illustrative of the situation where a director's resignation is prompted by a decision to obtain for himself the business contract denied to his company and where he does obtain it without disclosing his intention. What these decisions indicate is an updating of the equitable principle whose roots lie in the general standards that I have already mentioned, namely, loyalty, good faith and avoidance of a conflict of duty and self-interest. Strict application against directors and senior management officials is simply recognition of the degree of control which their positions give them in corporate operations, a control which rises above day-to-day accountability to owning shareholders and which comes under some scrutiny only at annual general or at special meetings. It is a necessary supplement, in the public interest, of statutory regulation and accountability which themselves are, at one and the same time, an acknowledgment of the importance of the corporation in the life of the community and of the need to compel obedience by it and by its promoters, directors and managers to norms of exemplary behavior. 80 At 48 the following observations were made: …. The general standards of loyalty, good faith and avoidance of a conflict of duty and self-interest to which the conduct of a director or senior officer must conform, must be tested in each case by many factors which it would be reckless to attempt to enumerate exhaustively. Among them are the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's or managerial officer's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or, indeed, even private, the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, and the circumstances under which the relationship was terminated, that is whether by retirement or resignation or discharge. [Emphasis added] 81 At 51 the following appears: Liability of O'Malley and Zarzycki for breach of fiduciary duty does not depend upon proof by Canaero that, but for their intervention, it would have obtained the Guyana contract; nor is it a condition of recovery of damages that Canaero establish what its profit would have been or what it has lost by failing to realize the corporate opportunity in question. It is entitled to compel the faithless fiduciaries to answer for their default according to their gain. 82 In Edmonds v Donovan [2005] VSCA 27 the judgment delivered by Phillips J [with whom Winneke P, and Charles J agreed] observed that [at 58]: Canadian Aero is an oft-cited authority: see, for example, Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 (Full Court) at 19 per Kennedy J] . ; Pacifica Shipping Co Ltd v Andersen [1986] 2 NZ LR 328 (Davison CJ) at 334, 337-8 . ; Mordecai v Mordecai [(1988) 12 NSWLR 58 at 65] . ; Lord Corporation Pty Ltd v Green [(1991) 22 NSWLR 532-4] . ; Colour Control Centre Pty Ltd v Ty [(1996) 39 AILR 4,316 (Santow J) at 4,319] . ; Natural Extracts Pty Ltd v Stotter [(1997) 24 ACSR 110 (Hill J)] . ; Addstead Pty Ltd v Liddan Pty Ltd [(1997) 25 ACSR 175 (FC of SA) at 195 per Perry J] . ; and in Victoria, Spincode Pty Ltd v Look Software Pty Ltd [(2001) 4 VR 501 (C.A.) at 522-3 per Brooking JA]. . Such cases suggest that the most common situations giving rise to the application of the principles enunciated in Canadian Aero involve directors or senior officers of companies, partners and, on occasion, solicitors. Each category has its own problems and it is not possible to generalise from one to the other: indeed it is not wise to attempt to generalise at all in this area for, as is often pointed out, the existence and scope of fiduciary obligations must always be assessed in the particular context in which they are claimed to arise: Colour Control Centre [at 4,319] . per Santow J. None the less all the cases just mentioned are instructive, each in its own way, and to these one may add the cases dealing with the acquisition by a former partner of what once was a partnership asset: notably Zachariah v Ajay Investments Pty Ltd [(1983) 33 SASR 395] in the Full Court of South Australia . and in the High Court 7 ; compare Metlej v Kavanagh [(1981) 2 NSWLR 339], which must now be read subject to what was said by the High Court in Chan. Examining the status of Mr Nicholls as an employee of MWP 83 The initial approach from Mr Nicholls was made to Mr Emmott who liaised with Mr Wilson. In about late February 2004 Mr Wilson sent an e-mail to Mr Nicholls making the point that the financial expectations of the former were out of MWP's league. More negotiations followed. Then in early March 2004 a formal offer of employment was made by MWP to Mr Nicholls. He was asked to sign that letter of offer to indicate his acceptance of the terms. At the beginning of March 2004 Mr Emmott sent an e-mail to Mr Wilson advising that Mr Nicholls had rung him that very day and would like MWP to increase the offer they had made to $90,000. Thereafter a further offer was made to Mr Nicholls [P X 1 at 168] The terms of that offer were as follows: "Following our discussions we have pleasure in confirming our offer for you to join this company: You will join MWP with effect from 26 th April 2004 initially based here in Almaty (although there is a possibility we may, at some later stage, ask you to live and work whether on a part or full-time basis, for MWP in one of our other offices or presences i.e. Baku or Atyrau); There will be an initial probationary period of three (3) months, during and after which your performance and continued employment will be reviewed by the Partners; Your salary will be US$90,500 per annum, payable monthly in arrears. You will be entitled to an "offshore" deferred compensation, which will be paid into a designated offshore bank account (we normally help establish accounts for our staff at Brown Shipley (part of KBC Group) in London, where the Firm banks) in an amount to be agreed between us, providing enough to be paid locally to meet your minimum life-style requirements and to give you a defensible local package, given your expatriate status and seniority (probably, 25% onshore and 75% offshore in your case); MWP will consider, once a year, paying you a discretionary bonus, depending on a number of factors, including your performance individually as a very senior lawyer and the overall profitability and success of the Firm; You will be expected to use all reasonable efforts to achieve a minimum of 1,650 billable and about 250-350 non billable tasks hours i.e.: principally relating to marketing business development etc.; Annual leave is twenty (20) working days per year, which will accrue quarterly in arrears; Health: MWP will enrol you in the Interteach Health Insurance Scheme here in Almaty and will reimburse you for the reasonable costs of your medical insurance with an Australian provide (or PPI or BUPA in the UK, should you so wish); Work Permits and Visas: The Firm will use all reasonable endeavours to arrange (at its cost) all necessary work permits and visas required to enable you to practice law with this Firm in Kazakhstan, and elsewhere in the former Soviet Union where we may ask you to work; MWP will reimburse the reasonable cost of the relocation of yourself and your personal belongings to Kazakhstan; MWP will provide you with a furnished apartment in Almaty for one (1) month on your arrival in Kazakhstan, so as to enable you to find your own accommodation of your choosing (at your own cost); MWP will provide you with one (1) economy return airfare to Australia in each year; MWP provides lunch each day for our staff in the office; MWP expects you to respect and maintain strict confidentiality as to all matters, especially dealings the Firm has as to projects, clients and with Government and State Agencies; Three (3) month's prior written notice is required should you decide at any time to leave MWP; You agree that if you leave MWP, you will not approach, solicit or make offers to any of our contacts, clients or staff and will not seek to work on any projects or developments in which we are involved, without our prior consent; and Please sign this letter of offer to indicate your acceptance of the above and return a copy to us." 84 The evidence given by Wilson [T 302] was that on about 1 April 2004 he had sent an e-mail to Mr Nicholls confirming MWP's offer to him to join it. Mr Wilson also gave evidence that he spoke to Mr Nicholls on the same day and that Mr Nicholls had called to confirm that he accepted MWP's revised offer. At that time Mr Nicholls was in Sydney and said that he was calling to confirm that he accepted MWP's offer and was ready and willing to start work as soon as possible and to relocate to Kazakhstan to work for MWP on a full-time basis. [T 302] 85 The evidence given by Mr Wilson in relation to this matter is accepted as reliable. Mr Emmott firmly insisted that notwithstanding the entire time of his employment with MWP for nearly 2 years, there never was any contract of employment between himself and MWP. That denial is without substance. Although there is no evidence of his actually signing the revised offer it is plain that this document bound by him and MWP. He agreed under cross-examination that: i. He took paid leave from MWP; ii. He was provided with an annual return airfare to Australia; iii. He was enrolled in the Interteach health insurance scheme; iv. MWP paid for relocation expenses; v. MWP paid for short-term accommodation for his arrival in Almaty. 86 Mr Nicholls insisted that the plaintiff employed him as a "consultant". He rejected the proposal that he was employed as a lawyer. However, when asked whether from 24 April 2004 to 1 March 2006 he worked as a "senior expatriate lawyer" he agreed. 87 Although Mr Nicholls denied providing advice to clients of MWP (T 1081.37-1082.9), Mr Nicholls conceded that he: i. Had a role in drafting transactional documents; ii. Had contact at a senior level with clients of MWP under the supervision of Wilson and Emmott; iii. Worked for clients of MWP under the supervision of Emmott (examples being Resource Capital Partners and UMC) iv. In particular, he stated that he did work on behalf of Sokol in relation to the following transactions: a) Max 1 b) Kazgas c) Chilisai phosphate d) Urals gold 88 He gave evidence that in dealing with MWP clients, he had access to documents and information that was not in the public domain. 89 He purported to resign by a letter of resignation dated 31 January 2006 [i.e . giving one months notice]. 90 The dispute between himself and MWP was as to whether he had breached a term of his contract of employment that contained a three-month notice period. Nicholls denied this. The terms of Mr Slater's employment contract 91 The terms of Mr Slater's employment contract of 19 July 2005 [accepted in writing on 20 July 2005] were very short. The agreement was for him to join MWP for the period September 5 until December 16, 2005 as an associate based in Almaty. The terms provided inter alia as follows: i. Should you or MWP terminate this agreement you agree that you will not approach, solicitor or make offers to any of our contacts, clients or staff and will not seek to work on many projects or developments in which MWP is or has been involved. ii. You will be expected to respect and maintain strict confidentiality as to all matters, especially dealings we have has to climb matters, projects and with Government and State Agencies. 92 Mr Slater commenced his employment with MWP on 1 September 2005. 93 A second offer of employment was extended to Mr Slater on 2 December 2005 that emphasised the prohibition on solicitation as well as a three-month notice clause in the event of termination of employment. Mr Slater never accepted this offer. 94 Mr Slater continued working at the firm beyond 16 December 2005 and took holidays on or about 21 December 2005. The genesis of what later became the Cooperation Agreement 95 Whilst it is never simple to define the moment from which point in time discussions commence which will ultimately lead to a conspiracy to defraud an employer, the evidence plainly suggests that it was Mr Slater who, soon after his arrival to work with MWP, drafted a proposal setting out a particular business arrangement. 96 Mr Slater gave evidence that towards the end of September 2005 he drafted a proposal setting out a business arrangement. 97 The proposal involved a BVI company being formed as trustee of a trust that would act as either an arranger or an agent to clients of MWP. 98 The role of "arranger" accurately describes much of the work undertaken by MWP in Kazakhstan and the Central Asia Region. 99 The principal beneficiaries of the trust would be Messrs Wilson, Emmott, Slater or their "nominees" in equal shares of trust property. 100 The proposal also provided that "any proposed payment by shares [for provision of services by MWP] would be directly transferable to the offshore entity upon issue and should be available immediately to dispose of by beneficiaries of the trust". 101 His evidence was that the business proposal was based on his previous experience and roles he had seen performed by various parties in Australia. 102 There are some unusual and suspicious circumstances which surrounded the creation of Mr Slater of the business proposal. 103 Although the proposal was drafted less than a month after Mr Slater began working at MWP, it refers to Mr Slater has an equal beneficiary of the trust referred to in it alongside Messrs Wilson and Emmott. 104 The role of "arranger" as stated in the business proposal accurately described much of the work already undertaken by MWP in Kazakhstan and the adjacent region. 105 Mr Slater's evidence was that he had provided a copy of his business proposal to Wilson and to Mr Sherry [MWP's finance adviser] in late September 2005 as a discussion draft. That evidence is rejected. Mr Wilson steadfastly contended that he had never seen the business proposal. That evidence is accepted as of substance. 106 Indeed Mr Slater, who insisted that he had given Mr Wilson a copy on 29 September 2005 could not recall whether he had sent a copy to Mr Wilson by e-mail or by hand. By contrast, Mr Emmott admitted that he had seen the document at or about that time. [Emmott affidavit paragraph 139] 107 The business proposal exhibited many similarities to the Cooperation Agreement executed on 20 December 2005 that purportedly established the rival business with the principal changes being that Mr Shaikenov LLP was substituted for MWP and the reference to Mr Wilson as beneficiary of the trust was removed. More details regarding the Cooperation Agreement itself is referred to in the reasons below. 108 Mr Slater further gave evidence that in about early December 2005 he began discussing with Messrs Emmott and Nicholls the possibility of establishing a law firm in Kazakhstan. His evidence was that during one conversation with Mr Nicholls, they discussed the need to have an association with the local Kazakhstan lawyer in order to set up a new law firm and that they agreed that Mr Shaikenov may be a good person to be associated with. 109 The Court's findings as to the following events are as follows First meeting – some time between 15 and 20 November 2005 110 The first meeting to between Mr Nicholls and Mr Emmott over lunch at Ramstore sushi restaurant in the "second half" of November 2005. During the lunch, Mr Nicholls told Mr Emmott that he wanted to leave MWP and that he was considering setting up a legal practice in Almaty in which Messrs Slater and Shaikenov might be involved. Mr Nicholls asked Mr Emmott whether he would be interested. Mr Emmott said he "may be interested". Second meeting – some time between 15 and 20 November 2005 111 Shortly after that meeting Mr Nicholls approached Mr Slater and asked him whether he might be interested in doing something else in Almaty if he decided to leave MWP. Slater said "OK". Third meeting, at the Ankara Hotel, on the weekend of 19 - 20 November 2005 112 Messrs Emmott, Nicholls, Slater and Shaikenov met at the Ankara Hotel in Almaty on the weekend of 19-20 November 2005. This meeting lasted "less than several hours". 113 Nicholls said I accept that the conversation included: "The new venture would pay David, John and himself consulting fees at an agreed level, with any super profits being divided in four equal parts among interests designated by each of 'Arman, David, John' and himself." Fourth meeting at Bar Vogue 114 Messrs Emmott, Nicholls and Slater then met with Mr Shaikenov on Tuesday 22 November 2005 at the Bar Vogue (a bar in Almaty) and Mr Shaikenov was invited to join the enterprise. Although initially suggesting this meeting occurred in December 2005 Mr Slater eventually conceded that it took place on 22 November. [T 1357]. Fifth meeting, at the Ankara Hotel, on the weekend of 26-27 November 2005 115 On the following weekend, 26-27 November 2005, all four men met again at the Ankara Hotel. The meeting lasted "about two hours". According to Nicholls, Slater went through the numbers. Mr Shaikenov was deputized to approach Mr Kachshapov to see if he would provide up to US$200,000 working capital. The name "Temujin" was chosen and it was determined that it would be incorporated in the British Virgin Islands. It was suggested by Mr Nicholls that Temujin be the trustee of a trading trust. 116 On Monday 28 November 2005 Mr Slater set up his new Gmail account: 4/5 (T 1356.27-34). Sixth meeting, with Mr Kachshapov in the first week of December 2005 117 A further meeting took place after the one on 26-27 November 2005 in December 2005 at which Mr Kachshapov was present and at which he agreed to fund the new venture up to US$300,000. [T 1137 – 1138] 118 It was at about this time Mr Slater said he "tore up" his offer of further employment with MWP. 119 On 8 December 2005 Mr Nicholls had his secretary email to him a clean draft Facilitation Agreement used as a precedent by MWP and on 12 December 2005 he had her email him an MWP standard form acquisition due diligence check-list. 120 On 13 December 2005 Mr Slater asked a translator employed by MWP to translate for him a document relating to a US dollar facility offered to "TI Company". 121 On 15 December 2005 Nicholls followed up his earlier enquiries concerning Dubai with an email to Mr Steve Kappelle enquiring about obtaining for himself a business visa for Dubai, entitling him to be a resident of Dubai: "The context would be that I contemplate that a BVI company providing consultancy services, from Dubai to entities outside Dubai, would establish a branch or representative office in Dubai, and that I would be the director of the branch/rep office." [5/132-3 and 1122/2 - Mr Nicholls cross-examination] 122 During December 2005 Mr Slater using MWP's resources drafted a Services Agreement between TIL and Shaikenov LLP. 123 Also during December 2005 Mr Nicholls had been preparing a draft Trust Deed (on MWP's time and using MWP's resources) and on 19 December he and Mr Slater emailed the draft from MWP's office to Shaikenov LLP. 124 On 19 December 2005 Mr Slater caused TIL to be incorporated and registered in the BVI: [5/138]. Mr Slater was the sole shareholder: [5/139] A General Power of Attorney was created on behalf of TIL in favour of Mr Shaikenov. [5/139]. 20 December 2005: the Cooperation Agreement and other documents The meeting on 20 December 2005 to execute the documents 125 There was then a meeting on 20 December 2005, kept secret from Wilson who was at the time out of the country, between Messrs Emmott, Nicholls, Slater and Shaikenov at the office of Shaikenov LLP office in Almaty. The meeting was also attended by Mr Alexei Volkov, who worked for Mr Shaikenov. At this meeting the following documents were signed: i. a Cooperation Agreement between the four of them personally in respect of a consultancy to be owned and operated by TIL (which was referred to in the document as "TI" ) as the trustee of the "Temujin International Trust" : 6/145-151 ii. a Services Agreement between TIL and Shaikenov LLP in which Shaikenov LLP agreed to provide various services to TIL: 6/167-176; iii. the Temujin International (Trading) Trust Deed in respect of which TIL was trustee, with Volkov as settlor: 6/39-85: this trust appears never to have been activated, and no units have been shown ever to have issued in respect of it (see 6/81); iv. a facility agreement signed by Slater on behalf of TIL and delivered to Horizon Services (a company controlled by Mr Garifolla Kachshapov) in respect of a loan facility of at least US$200,000 a copy of which has not been produced: Slater's evidence at T 1387. 126 Either at or prior to this meeting Mr Nicholls had prepared and distributed a draft of the Cooperation Agreement: 6/142-144. When compared to the executed copy [at 6/145-151] the following points emerge: i. originally no sum had been settled upon in respect of the funding Kachshapov was to provide through Horizon Services; ii. Shaikenov was first intended to be part of the underwriting of this facility but dropped out; iii. the notice periods in clause 2 in respect of Nicholls and Emmott were originally left blank: Nicholls gave evidence that the notice periods he added to the final document reflected the respective notice periods which he and Emmott were required to give under their contracts of employment: [T 1141-1142] iv. There was no clause 7 in the draft (relating to governing law). 127 In addition, the Cooperation Agreement provided that: i. Shaikenov and Slater "hereby" established a legal consultancy business through the Temujin International Trust, the trustee of which was TIL; ii. the nature of the business was the provision to clients of legal services relating to natural resources, commercial and other matters; iii. TIL was to establish a branch in Almaty, Kazakhstan; iv. TIL was to enter into one or more facilities for the provision of funding to a maximum of US$300,000 to fund the business; v. Nicholls, Slater and Emmott were each given the opportunity of taking an interest in TIL, provided that in the case of Nicholls and Emmott they were to take that opportunity when he was legally free to do so, in the case of Nicholls no later than 31 March 2006, and in the case of Emmott no later than 30 July 2006 (the notice periods referred to by Nicholls in his evidence that is referred to above); vi. Nicholls, Slater and Emmott each immediately came under an obligation to pay one third of any shortfall from the operations of the Trust as may be necessary to allow TIL to discharge its obligations to the provider of the loan facility or facilities (of a maximum of US$300,000); vii. Schedule 2 sets out a Business Plan that referred to details including designated geographical and temporal work requirements for the parties should they elect to participate in the new consultancy as well as their respective remunerations. The Cooperation Agreement provided that Nicholls and Emmott would "acknowledge" the Business Plan (clause 6) viii. Schedule 3 sets out assumptions and financial projections for the new business. It was essentially a forecasting budget for Temujin. The Cooperation Agreement provided that the signatories would use their "best endeavours" to achieve the projections in Schedule 3 (clause 6). ix. Schedule 3 the use of the word " partners " in a number of places clearly contemplated that the arrangement that was being entered was one of partnership. 128 Although the Cooperation Agreement is drafted in a form that suggests that the parties 'may elect' to participate in the new Temujin venture, there is extremely strong evidence to suggest that it was immediately binding: (a) Mr Slater conceded that as soon as he signed the document, he was responsible for 1/3 of any shortfall from the operations of the Trust and that Messrs Emmott and Nicholls would be responsible for the remaining 2/3 of any shortfall in equal 1/3 shares (T 1371.35-38). (b) Temujin International in fact entered into a loan agreement with Horizon Services in accordance with the Cooperation Agreement on 20 December noting that Mr Kachshapov who controlled Horizon Services attended the meetings before 20 December (T 1387). This clearly suggests that the Cooperation Agreement was on foot. (c) The wording of clause 6 refers to all parties (including Messrs Nicholls and Emmott and not just Messrs Shaikenov and Slater) using their "best endeavours" to fulfil the financial forecasts in Schedule 3. The very words "best endeavours" foreshadows a certain degree of commitment. Mr Slater conceded that "best endeavours" condition applied to him (T 1378.32-35). (e) The words "best endeavours" must be seen in light of the projected cash flow in Schedule 3 prepared by Mr Slater. The agreement reflects one set of drawings from January for $20,833, two sets of drawings from March totalling $41,667 (2 x $20,833) and three sets of drawings from July totalling $62,500 (3 x $20,833). It clearly anticipated Mr Slater immediately starting in January 2006 and the arrival of Mr Nicholls in March 2006 and Mr Emmott in July 2006. This is what in fact transpired. (f) Note also use of the word 'partners' in Schedule 3. 129 A strange feature of the Cooperation Agreement anticipated that the new business would be making profits from its first month in operation. When cross-examined about this, Mr Slater conceded that he assumed that certain amount of work would have been available for Temujin right from January 2006 (T 1377.10-13). However, he could not justify any basis for this assumption (T 1377.18-20). 130 Suspiciously, none of the defendants informed Mr Wilson of the execution of the said documents, the establishment of Temujin and the financing of Temujin by Mr Kachshapov. 131 The projected cash flow in Schedule 3 to the cooperation Agreement (prepared by Mr Slater) anticipated the arrival of Mr Nicholls in March 2006 and of Mr Emmott in July 2006: it reflects one set of drawings for January and February, increasing to two in March and three in July: when cross-examined about the schedule he prepared Mr Slater agreed that the schedule was drafted by him to reflect the expectation he had that Mr Nicholls would join in March 2006 and Mr Emmott in July 2006 (as did in fact happen): T 1376. Finding as to Cooperation Agreement 132 The finding is that the Cooperation Agreement had been deliberately drafted in a way to suggest that Messrs Nicholls and Emmott were not bound to join the new business. On the Court's findings the Cooperation Agreement was an attempt by the parties to it to disguise what really was an immediate partnership involving each of Messrs Nicholls, Slater and Emmott from the time of entry into the Agreement: see Lindley & Banks on Partnership, 17th ed., page 15 [2-13]. The terms of the agreement required each party to be immediately bound to fund the new venture. 133 The structure that was intended to be put in place by the execution of the documents at the meeting on 20 December mirrored in many respects the structure that had been proposed under the Business Proposal that Mr Slater had prepared in September that year, with the principal changes being that Shaikenov LLP was substituted for MWP and the reference to Mr Wilson as a beneficiary of the trust was removed. 134 On the very same day that the meeting at Mr Shaikenov's office took place, 20 December 2005, Mr Slater was continuing to send emails to his personal email address forwarding among others all of the agreements that had been drafted by MWP for UMC. It is no surprise that TIL later emerged with this business. 135 The men then retired to the Bar Vogue where they celebrated the formation of Temujin. Mr Slater's emailing of MWP documents and departure from MWP Emails sent out by Mr Slater in preparation for his departure 136 In December 2005, up to and including 20 December, Mr Slater sent at least seven emails to his newly opened Gmail address which attached copies of a large number of documents that related to the Karamandybas (Roxi) transaction, the Chilisai transaction and the Urals Gold transaction: i. one on 14 December (5/7); ii. two on 19 December at 10.03am (5/142; 5/150); iii. two on 20 December at 1.36 pm (5/170; 6/1); and iv. another two on 20 December, the first at 1.37 pm (5/207); and the second at 1.38 pm (5/273). (See also the Commercial List Response paragraph 48(b). In relation to Nicholls a similar admission is made in paragraph 34(b) of the Commercial List Response.) 137 Attached to these emails were documents relating to the Karamandybas (Roxi), Chilisai and the Urals Gold transaction that MWP was acting upon at the time (T 1396.33-41). 138 After these emails and documents were dispatched by Mr Slater he proceeded systematically to delete the emails from MWP's computer system in an obvious attempt to conceal this activity from his employer. These were not the actions of an honest man. 139 As appears from the documents produced on subpoena from Westpac Banking Corporation, Mr Slater gave notice of his intention to resign from Westpac on 19 December 2005: [Exhibit PX28]. 140 Mr Slater conceded that after these emails and documents were sent, he deleted the emails from MWP's computer system (T 1398.11-20). He denied that the deletions occurred to cover his actions from the plaintiff but could not give another reason why he did so (T 1398.22-31). He consistently did not recall deleting the emails (T 1399-1402). 141 The combination of the Mr Slater's forwarding of MWP documents to his private Gmail address, the deletion of the emails from MWP's servers and the forecast of immediate profits arising from Temujin indicate in the strongest terms that the defendants intended to secretly deploy MWP's clients in their own interests. 142 Mr Slater resigned shortly afterwards. On 21 December 2005, he left Almaty for Helsinki, leaving behind the expectation that he was merely going on holidays and would be returning to MWP in early 2006. In particular, an email written by him on 22 December to Mr Sehsuvaroglu stated: "I am on annual leave until 5 January but will be answering emails and the phone if I can get it to work". 143 Under cross-examination, Mr Slater conceded that around the time this email was drafted, the probability of him returning to MWP was "remote" (T 1392.14-15). He did not deny that that email was sent (T 1393.16-17). 144 Another email sent to Ms Aigul Djailaubekova on 26 December also stated that he would return to MWP in 2006 albeit on a different date: "I am on leave until 6 January 2005". 145 He did not dispute that this email sent to Ms Djailaubekova was a business related email (T 1394.46-48). 146 While Mr Slater was away in Helsinki he conducted extensive email correspondence with his MWP clients and also met with Mr Rasmussen of Kangamiut Seafoods, at the introduction of MWP. Kangamiut became a Temujin client later in 2006. 147 In early December 2006, Kangamiut had contacted MWP with a view to engaging the firm to act for it. Mr Wilson and Ms Pedersen (MWP's Business Development Director) arranged that Mr Slater would meet a Kangamiut representative - Mr Rasmussen. 148 Mr Slater returned to Almaty on 7 January 2006. On 9 January 2006, he commenced the operations of Temujin International Limited, working from Shaikenov LLP's offices in Almaty (T 1403.12-14). Mr Emmott's involvement with the defendants 149 Although Mr Emmott is not a party to the proceedings, his involvement with the defendants, in particular, after the establishment of Temujin sheds further light upon the occurrence of the wrongdoings by the defendants. 150 Firstly, there are strong grounds to conclude that Mr Emmott attempted to "cover the tracks" of the master plan involving himself and the defendants – but at the same time revealing its implementation. 151 The first instance of Mr Wilson becoming suspicious of Mr Slater was an email sent from Mr Sinclair to Messrs Emmott and Slater on 12 January and forwarded to Mr Wilson. Notably, the email (which supports the contention that he was involved in Temujin's affairs) was written: "… We will sign under Sokol letterhead for the time being until be straighten out the FML BoD…" 152 After enquiring about this email, Mr Emmott was non-committal in his reply on the same day: "I don't know why it would have come to you… As far as I am aware Tom knows he is not here". 153 When Mr Wilson discovered that Mr Slater had joined Mr Shaikenov's firm as shown in his email to Mr Emmott dated 13 January, Mr Emmott again gave a heavily qualified response: "He hasn't joined Arman as far as I am aware although I believe he is sitting in the office there". 154 He was similarly evasive about whether he had seen Mr Slater's Business Proposal in emails to Mr Wilson and Mr Sherry dated 19 January 2009 one of which stated: "Not me but looks interesting". 155 This cloak and dagger approach persisted when Mr Nicholls abruptly resigned from MWP. On 8 April 2006, Mr Wilson asked Mr Emmott what was afoot in that both Messrs Nicholls and Slater appeared to be doing work for the plaintiff's client Sokol: "John, It seems that, somehow both of David Slater and Robert Nicholls are drafting, working on the legal documents and are both still otherwise involved in the legal work on the [Chilisai] phosphor project for Sokol, and possibly other projects, how come that is the case, and what is the basis for that?"… 156 Mr Emmott did not respond to this enquiry. 157 Mr Wilson forwarded a further email on 18 April 2006 to Mr Emmott. This email was sent from Mr Slater to Ms Lighezzolo seeking to raise funds for Chilisai. He asked Mr Emmott: "Here is David Slater working on raising monies for the Temir Service/Phosphate deal. John what do you know about his involvement". 158 Mr Emmott replied: "I don't know whether he is or isn't raising money for this deal but it wouldn't surprise me if he was trying to as this was exactly the sort of thing he said he wanted to do when he left. Are you putting anything into it"? 159 This response was clearly ingenuous in light of his executing the Cooperation Agreement and, in a wider sense, his involvement in Temujin's establishment in terms of meetings and discussions. 160 The finding is that after 20 December 2005 Mr Nicholls knew of Mr Emmott's intention to leave MWP and to set up a rival consulting business in Kazakhstan. 161 Notably Mr Nicholls, although conceding that Mr Emmott was a senior lawyer at MWP, vehemently refused to acknowledge that his own understanding was that Mr Emmott owed fiduciary duties to the plaintiff (T 1106.14-1107.3). This evidence is rejected in all of the circumstances including the close relationship which they had enjoyed whilst at MWP and taking into account the fact that Mr Nicholls himself is a vastly experienced lawyer (T 1106.35-40). 162 Mr Nicholls wrote an email to Mr Andrew Lewis on 31 March 2006 which clearly enunciated: "I have left my previous employ and have set up a consultancy firm with some other guys, two other Australians and a Kazakh". 163 Mr Nicholls, under cross-examination, admitted that one of the "two other Australians" referred to Mr Emmott (T 1207.40). This email is significant in light of the fact that it had been written before Mr Emmott left MWP. 164 When referring to the above email, Mr Nicholls' own affidavit stated clearly that (Nicholls Affidavit paragraph 164(b)): I was not aware of whether Mr Emmott intended to resign from MWP on any particular day, other than I recall (as I described in paragraph 109 above) that Mr Emmott had told me that he had to give 6 month's notice of his intention to leave MWP and that he anticipated telling Mr Wilson of that either before 31 December 2005 or in early January 2006, when both Mr Emmott and Mr Wilson would be back in Almaty after year end break. 165 When confronted with the proposition that he knew that Mr Emmott was planning to leave MWP, Mr Nicholls was forced to concede, "my affidavit says what my affidavit says" (T 1150.1-3). 166 It is also clear that Mr Nicholls was fully aware that Mr Emmott was to resign on 30 June 2009. A key piece of evidence is an email sent by Mr Nicholls to Messrs Slater and Emmott on 20 April 2006 where Mr Nicholls clearly indicated that 30 June "could not come soon enough". 167 This was, in fact, the day Mr Emmott resigned. His resignation letter dated 30 June 2006 was found in a sealed envelope in Mr Wilson's desk (T 406). 168 Notably, Mr Wilson recognised that, in the resignation letter (T 406.8-20): (a) The "thirty" written on the letter in front of "June" was Mr Nicholls' handwriting. (b) The "12.30pm" written on the letter was Mr Emmott's handwriting. 169 The evidence clearly permits a finding which is made that Mr Emmott was highly involved in the affairs of Temujin after it was established and whilst he was still working at MWP and that Mr Slater was fully aware of Mr Emmott's involvement. 170 Mr Sinclair (whose entities Sokol and Frontier Mining were Temujin's first clients) said that Mr Emmott's role was "leading the transactions" (T 1295.3). Mr Sinclair left it entirely to Mr Emmott to use whatever lawyers he chose to assist him, stating, "I didn't really care who else was in his team" (T 1294-1297 see also T 1306-1308). 171 In his discretion, Mr Emmott proceeded to introduce Mr Slater and Temujin into the deals. Although he denied this arrangement (T 1684.14-18), he conceded that he was copied in "a great deal of the commercial documentation as it [Temujin] proceeded with the drafting" (T 1684.23-26). 172 Under cross-examination Mr Emmott was taken to an email which he had received in May 2006 from Mr Sinclair on receipt of the first Temujin invoice to pay it to the account nominated by Mr Slater (his Westpac account) (T 1687-1688). 173 The cross-examination then included (T 1687.3-1688.16): Q. You see there an email from Mr Slater to Mr Sinclair? A. Yes. Q. May 10, 2006, subject, "Bank account details for TIL"? A. Yes. Q. "Tom, bank account details as requested by SMS set out below, regards David Slater" and again he refers to the Monash University branch account in his own name, you see that? A. Yes. Q. And then at the top of the page Mr Sinclair has apparently emailed to you, "John, okay to pay to this private account"? A. Yes. Q. And you've responded, "No problem Tom"? A. Yes. Q. You were intimately involved in the financial affairs of Temujin at this stage, weren't you? A. I certainly not intimately involved in the financial affairs of Mr Walton (as said). Q. Well why wouldn't you have said to Mr Sinclair, well it's none of my business? A. My recollection was that I was aware that Mr Slater was receiving payments into that account and Mr - Mr Sinclair was checking with me that that was all right. Q. And why do you suggest that Mr Sinclair was checking with you Mr Emmott and not with Mr Slater? A. Well I was an old friend of Mr Sinclair's. I believe he trusted me. … Q. Why do you suggest Mr Emmott that you felt it was your business to respond to Mr Sinclair in the way that you did in a communication which was clearly directed between Temujin International Limited and its client? A. Well Mr Walton Mr Sinclair trusted me. I don't think I make any further suggestion than that. Q. Well then my suggestion is that you were in fact supervising the work of Temujin International Limited during this period and supervising its bills? A. I was neither supervising the work nor the bills Mr Walton. Q. You would agree with me, wouldn't you, Mr Emmott that it is highly unusual for a solicitor in or a lawyer in another firm to be consulted in any respect about payment of bills of a competing firm? A. Highly unusual, I wouldn't accept that no, necessarily, depend on the circumstances. Q. Can you think of any other examples of that occurring in your experience? A. I certainly have had clients ask me to comment on bills of other firms yes. Q. But have you ever asked a client to ask you whether it is all right to pay a bill to a certain account? A. I don't recall that I've ever been asked that no. 174 Mr Slater was shown a letter in his cross-examination dated 11 May 2006 from Temujin to Sokol for the Chilisai Phosphate project for the period 1 April 2006 to 30 April 2006. The letter had a heading "Summary of work provided". Under the heading was a series of dot points which included: "* Reviewing or sending various emails by Robert Nicholls or David Slater to Thomas Sinclair, John Emmott, Nurdin and Serik. * Attendance at various meetings by Robert Nicholls and David Slater with Thomas Sinclair, John Emmott, Nurdin and Serik in relation to this transaction. * Telephone attendances by Robert Nicholls or David Slater with Thomas Sinclair, John Emmott, Nurdin and Serik in relation to this transaction". 175 Again, emphasis must be placed in the fact that the letter and the events that preceded it occurred months before Mr Emmott departed MWP. Suffice to say, the letter clearly demonstrates the scope of Mr Emmott's involvement with the MWP client. Mr Emmott's fiduciary duties 176 Earlier in these reasons I indicated that the matters discussed in Canadian Aero would be returned to. 177 As earlier observed by Laskin J, relevant considerations to be closely kept in mind when determining whether or not fiduciary obligations have arisen and in due course been breached included: i. the factor of position or office held, the nature of the corporate opportunity, ii. its ripeness, iii. its specificness and the director's or managerial officer's relation to it, iv. the amount of knowledge possessed, v. the circumstances in which it was obtained and whether it was special or, indeed, even private, vi. the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, vii. the circumstances under which the relationship was terminated, that is whether by retirement or resignation or discharge. [cf in similar vein focusing upon the particular : "… to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as fiduciary? In what respect has he failed to discharge these obligations? And what are the Consequences of his deviation from duty?" ( Securities and Exchange Commission v Chenery Corporation 318 US 80 (1942), at pp 85, 86 per Frankfurter J.) 178 The above findings make plain in relation to Mr Emmott that the position which he held with MWP was entirely antithetic to the activities which, following the departure of Mr Slater and then Mr Nicholls, he was secretly undertaking. As pointed out above Mr Emmott's role was "leading the transactions" (T 1295.3). Mr Sinclair left it entirely to Mr Emmott to use whatever lawyers he chose to assist him. These activities were in flagrant breach of his relevant fiduciary obligations. 179 The finding is that by reason of the terms of Mr Emmott's agreement, his position as a senior lawyer and director of MWP and the high degree of trust placed in Mr Emmott by MWP: Mr Emmott was at all material times in a fiduciary relationship with MWP and owed to MWP fiduciary duties under the laws of England and Wales being: (i) a duty to act in good faith and in the best interests of MWP at all times; (ii) a duty not without the informed consent of MWP to place himself in a position where there was or might be a conflict between on the one hand his own personal interests and/or the interests of a third person or entity and on the other hand his duty to MWP and/or the interests of MWP except in so far as authorised by the agreement; (iii) a duty not without the informed consent of MWP to act for his own benefit or the benefit of a third person or entity except in so far as authorised by the Agreement; (iv) a duty to ensure that the interests of MWP were not subordinated or sacrificed to any personal interests or to the interests of any other person or entity; (v) a duty not to derive any benefit or profit for his or any third person or entity's gain to the detriment of MWP without the informed const of MWP; (vi) a duty not to make any secret profit or receive any secret payment from any third party with whom he was dealing, whether as a director of MWP or otherwise; (vii) a duty to use any information obtained from MWP solely for the benefit of MWP and not for his own or the gain or benefit of any third person or entity; (viii) a duty to ensure that MWP's assets including all business opportunities available to it were applied and exploited for their proper purposes, and both during and after the termination of the Agreement not to appropriate or divert these for his own benefit or the benefit of any third person or entity , nor apply them for any collateral or unlawful purpose; (ix) a duty to promote the interests of MWP and not to do anything that would be injurious to the proper interests of MWP including: A. a duty to inform MWP of any activity, actual or threatened, which damages or might have damaged these interests of MWP; B. a duty to disclose to MWP the actual or threatened misconduct of employees of MWP (including his own misconduct); (x) a duty not to combine with other persons or entities to do anything that was injurious to the interests of MWP and its business; (xi) a duty to resign his office as soon as he had formed an irrevocable intention to engage in a competing business (provided that such competing business did not involve the exploitation of confidential or proprietary information, or business opportunities available to him by virtue of his position in MWP; and (xii) a duty to maintain for MWP's exclusive use and benefit the confidential information belonging to MWP as to the services it was performing on behalf of its clients, which duty by virtue of its nature continued after the termination of Emmott's employment with MWP (Emmott's "duty of confident"). 180 It is possible to thumbnail sketch Mr Emmott's fiduciary duties and the breach thereof by reference to the five particular duties frequently referred to in the authority. Hence although there is some duplication the relevant duties which he owed [stemming from both the relationship between himself and MWP and his directorship of MWP gave rise to: i. The "no conflict duty" , that is, Emmott's duty not to enter into any engagement in which he had, or could have, a personal interest that conflicted, or which may have conflicted, with the interests of MWP (see Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461, 471 per Lord Carnworth LC and Boardman v Phipps [1967] 2 AC 46, 123 per Lord Upjohn); ii. The "no profit duty" , that is, Emmott's duty not to obtain for himself, or any related third party, a profit by means of a transaction in which he was concerned on behalf of MWP or by reason of his position within MWP unless all material facts were disclosed to MWP's shareholders and by resolution a general meeting of MWP approved of his doing so or all its shareholders acquiesced (see Furs Limited v Tomkies (1936) 54 CLR 583 at 592; iii. The "duty of loyalty" , that is, Emmott's duty not to act for his own benefit or for the benefit of a third party (see, for example, Bristol & West BS v Mothew [1998] Ch 1 at 18 per Millett LJ), which duty included a "duty of disclosure" , that is, a duty to make disclosure to MWP of: (a) any breach of his own fiduciary obligations which amounted to misconduct; and (b) any breach of fiduciary duties or contractual obligations owed by employees in the business of which be became aware, as such matters would be of relevance and concern to the company. See Shepherds Investments Limited v Walters [2006] EWHC 836 at paragraph 132. iv. The "no harm" duty, that is, Emmott's duty to not by any act incompatible with his powers, rights and duties in relation to the management or control of MWP inflict harm on MWP in the furtherance of his own interests, or of the interests of an actual or potential competitor. This duty falls within the overarching fiduciary duty of loyalty as well as the broader equitable duty of fidelity identified in Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169 and Aubanel & Alabaster v Aubanel (1949) 66 RPC 343. v. The "duty of confidence" , that is, Emmott's duty to: (a) keep confidential information received during the term of the Emmott Agreement or by reason of his being a MWP director; and (b) not to use for his benefit the confidential information of MWP, whether to solicit business from MWP's clients or to carry out work for such clients, even if unsolicited. 181 This is quintessentially the kind of relationship that attracts equitable duties of the nature here found to be owed by Mr Emmott: see Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, per Gibbs CJ at 68, per Mason J at 96, and per Dawson J at 141. 182 Effectively Mr Emmott from around the time when the Cooperation Agreement came to be made and up until and indeed after he left MWP to join Temujin was in flagrant breach of these fiduciary obligations. The finding is that Mr Emmott was really the backbone of the plot which had been hatched and likely played the dominant role in every step of Temujin's initial and ongoing activities. Temujin related transactions in offshore bank accounts 183 Another important aspect to be considered is the activity demonstrated in various overseas bank accounts, in particular, Mr Slater's Australian Westpac bank account. It is alleged by the plaintiff that the only income that Temujin was receiving was income from MWP clients or contacts (T 1848.36-44). 184 Mr Slater admitted that (T 1388.36-39): "I think for a period of time in 2006 my Westpac bank account at Monash University was used… for my own personal uses as well as for the Temujin International". 185 Analysis of the statements of the Westpac account from the 1 January 2006 to 20 November 2006 which have been admitted into evidence (T 1439.1-4) yielded the following results (in $A): (a) Payments from Horizon Services NV totalling $261,270.29. (b) Payments from Kangamiut Seafoods totalling $87,476.91. (c) Payments from Sokol totalling $316,456.08. (d) Payments from Frontier Mining Ltd totalling $48,399.33. (e) Payments by Fergusons Solicitors on behalf of Pinegrove (the Roxi project) totalling $228,495.74. (f) Other sources of Temujin earnings identified by Slater - nil. 186 In addition to Mr Slater's Westpac account, Temujin made use of other accounts in the name of Temujin Holdings Ltd, namely a USD account and a Euro account. 187 Analysis of the statements of the Temujin Holdings $US account yield the following results: (a) Payments from Ferguson Solicitors totalling $166,476.74. (b) Payments from PJT Corporate Services totalling $344,920.00 (c) Payments from Roxi Petroleum totalling $400,000.00. (d) Payments from Sokol totalling $69,701.00. 188 Analysis of the statements of the Temujin Holdings Euro account yield the following result: (a) Payments from Fergusons Solicitors totalling €864,136.18. (b) Payments to Horizon Services NV totalling €147,232.58. 189 In short, the financial documentation dictates two findings. Firstly, TIL was established entirely on the basis of income derived from former clients of MWP and an interest free loan made by Horizon Services of $US 200,000.00. The loan has been repaid by TIL from earnings also derived from income earned from former MWP clients (as featured in Temujin Holdings' Euro account). 190 Secondly, save for minor items, the bank accounts derived disclosed by Temujin only show income derived from former MWP clients, the very clients that MWP in these proceedings say are the subject matter of the allegations made against the defendants. Big Sky claim against Mr Slater 191 There is a discrete claim based upon a breach of his contract of employment (and negligence) by Mr Slater in advising a client of MWP in October 2005. 192 The facts giving rise to the claim are found in the evidence of Mr Valery Chechulin, a senior Kazakh lawyer with MWP. 193 During the course of his employment with MWP, Mr Slater conducted work for Big Sky Energy Corporation a client of MWP in relation to the termination by it or its subsidiaries Vector Energy West LLP and Kozhan LLP of the employment of Mr Farkhad Shakirov. 194 Mr Shakirov was an employee of Big Sky and the head of its Kazakhstani branch, as well as being the president of Vector Energy West and chairman or president of Kozhan. 195 MWP was engaged on 7 October 2005 to advise in relation to the matter. 196 Mr Slater, who admitted he had no expertise in Kazakh law (T 1477.33), was directed to and did work with a team of local lawyers on the matter including Mr Chechulin. He was directed to consult with MWP's local lawyers to obtain assistance and advice on Kazakhstani law and procedures (T 1477.41). 197 Mr Slater drafted a letter that was subsequently sent on the letterhead of Vector Energy West dated 26 October 2005 addressed to Mr Shakirov. The letter asserted that Mr Shakirov had invalidly appointed himself as president of Vector Energy West. That letter was drafted after Mr Slater formed the view that this was in fact an effective way to deal with the matter of the dismissal 198 Before the letter was sent Mr Chechulin gave Mr Slater certain advice That advice was to the effect that Big Sky or its subsidiaries had purported to terminate Mr Shakirov's employment in violation of Kazakhstani Labour Law, which would have the effect that the Kazakhstani court would restore the employee to his position. 199 Mr Slater ignored Mr Chechulin's advice and Mr Shakirov was dismissed. Big Sky was taken to court by Mr Shakirov and lost. Mr Shakirov was subsequently reinstated 200 Mr Chechulin gave evidence in cross-examination that before the draft letter was sent and after so advising Mr Slater, he endeavoured to contact Mr Wilson both by telephone and email but, as stated above, was unsuccessful on all counts (T 888.38-47). 201 Mr Slater's evidence was that he could not recall the conversations to which Mr Chechulin deposed in his affidavits regarding violations of Kazakhstani Labour Law However, he did not deny that it was given (T 1480.25-31). 202 While not accepting that Mr Wilson was unable to be contacted, Mr Slater was quite unable to recall any occasion when he spoke to or otherwise communicated with Mr Wilson during the time he was working on the matter (T 1478). In re-examination he was taken (at T 1582) to a time record of the matter to suggest that he did in fact communicate with Mr Wilson but in further cross-examination he was again quite unable to recall anything that might have occurred (T 1588-1589). 203 Mr Slater did not disagree that the relevant work on this matter by him took place after 19 October 2005. There was only one entry referring to Mr Wilson in the time record that related to this period and, as noted, even with the assistance of that record Mr Slater recalled no conversation with Wilson on this or any other day in relation to the matter (T 1590.21-22). 204 Mr Barry Swersky, the principal of Big Sky, gave evidence that he withdrew instructions on all matters from MWP and directed them to another Almaty law firm as a result of this incident and demanded a significant discount of the fees that had been rendered by the firm (T 912). 205 Under cross-examination, Mr Swersky stated that did not recalling telling Mr Wilson that he expected him personally to be involved although he was expected some degree of personal involvement (T 922.10-12). He maintained that he had dealt primarily with Mr Slater on a day-to-day basis and that he certainly did not deal with Mr Wilson on a day-to-day basis (T 922.39-41). Decision 206 It is possible to deal with this claim shortly. 207 Clearly Mr Slater was unfamiliar with the law of Kazakhstan, accepting as he did that he had no expertise in that regard. Clearly he was directed to and worked with a team of local lawyers on the matter having been directed to consult with MWP's local lawyers to obtain assistance and advice on the relevant Kazakhstan law and procedures. 208 Furthermore and as the defendants have submitted, the allegation of negligence particularised against Mr Slater focuses upon i. events prior to Mr Wilson leaving Almaty for holiday in Sri Lanka and ii. events that followed the departure of Mr Slater from MWP's office. 209 The `Big Sky retainer letter' of 7 October 2005 was signed by Mr Wilson well before he departed Almaty for Sri Lanka on or about 15 October 2005 and as appears in its initial paragraph, was predicated upon the basis that Mr Shakirov had been dismissed before the engagement of MWP. 210 The proceedings subsequently brought by Mr Shakirov and settled were not initiated until after Mr Slater had ceased to be employed by MWP. 211 In any event, were the claim negligence against Mr Slater governed by the law of New South Wales, it is quite plain that the decisions of the High Court [in Giannarelli & Shulkes v Wraith (1988) 165 CLR 543 and D'Orta-Ekenaike v of Victorian Legal Aid (2005) 223 CLR 1] would stand in the path of the plaintiff claim. Those authorities make clear that a solicitor who is not acting as an advocate enjoys the same immunity as an advocate in respect of advice which leads to a decision affecting the conduct of the case in court. 212 Hence MWP would presumably have been immune from any suit in negligence and it could not, accordingly, have suffered any damage as a result of any 'negligence' on the part of Mr Slater. And as the defendants have submitted, the same immunity would have attached to Mr Slater so as to protect him from any liability in negligence. 213 There is no substance to this claim. Addressing the credit of the major witnesses called Mr Wilson 214 Wilson is plainly enough very aggrieved at what he considered to be a conspiracy practised upon MWP by Messrs Nicholls, Slater, and Emmott. The depth of his obvious anger with these persons cannot be overstated. The evidence before the Court justifies the finding that, to his mind, bringing these persons to account has become a major obsession. The amount of funding of the litigation commenced in many jurisdictions makes this very plain. But it was also very plain through his extensive time spent in the witness box both in giving evidence chief as well as being cross-examined. 215 The Court's assessment of Mr Wilson is that he is a person of high intelligence but also a person whom when crossed, can be a formidable enemy. Part of the problems in assessing his credit in the present massive litigation stems from the depths of his anger at being `toyed with' by the above-described threesome. 216 There were many occasions during his cross-examination where it seemed to me that he was over exaggerating the place which MWP in fact had, as a leading firm of lawyers operating in Kazakhstan and its neighbours. This is not to downplay its obvious extensive practice built up over many years. However had it not been for the extraordinarily extensive damaging documentary evidence adduced on behalf of MWP, there would have been a number of major question marks as to the veracity of certain sections of the evidence adduced from Mr Wilson. 217 Some only of the matters which require to be determined include the following: i. Mr Wilson's allegation that Mr Emmott was never a shareholder in the plaintiff [He was shown a document entitled "register of shareholders" dated 20 February 2006 which stated that Mr Emmott held 33% of the shares in the plaintiff, being the document upon which both Wilson and Emmott's signatures appear. That notwithstanding Mr Wilson continued to claim that the document was not an accurate reflection of the shareholding in the plaintiff.] ii. Under cross-examination Mr Wilson was shown a bundle of documents being correspondence between himself and Mr Emmott in 2001. In an e-mail which he wrote to Mr Emmott the document clearly stated that Mr Wilson was currently the only shareholder in the plaintiff. This was however inconsistent with Mr Wilson's evidence on the previous day to the effect that Windsor Fine Arts Establishment Ltd [WFE] was the sole shareholder of the plaintiff. Wilson conceded that this was an error but attempted to pass responsibility to a Mr Peter Wrightley, an executive manager of MWP. After being confronted with the proposition that he had written the e-mail to deceive Mr Emmott, Mr Wilson's evidence was that Mr Emmott had at all times had access to the plaintiff records and was presumably on notice of any error in the contents. [I formed the view that…cf t 717.718, 719]. iii. Whilst he was prepared to admit that WFE was the plaintiff company's sole shareholder, Mr Wilson maintained that he did not know who was behind that company going so far as to say that he did not even enquire about it. 218 Additionally, Mr Wilson although having been specifically asked to ensure that he gave responsive answers, on quite a number of occasions adopted the role of being his own counsel, insisting on pouring out facts and matters which he obviously thought should be placed before the Court. 219 Of particular significance is the evidence given by Mr Wilson concerning Mr Slater's Business Proposal dated 29 September 2005. Mr Wilson's evidence in this regard was as follows: i. He found this document through checking Mr Slater's personal documents drive on the plaintiff's computer system. ii. Messrs Slater, Nicholls, or Emmott did not inform him about the subject matter of the document. 220 An important finding accepts this evidence as of substance. 221 Notwithstanding these shortcomings in Mr Wilson's evidence, a fair overview [taking into account the sense of emotion and obvious strain which he was under during the lengthy giving of evidence in chief and the lengthy cross-examination] is that he had a reasonable recollection of the most important events in question and subject to questions concerning some of MWP's particular claimed losses, can with limited exceptions, be accepted as a witness of truth. Mr Nicholls 222 Mr Nicholls was a very difficult witness. On number of occasions he proved difficult preferring to not directly and fairly answer a question. An example is to be found at transcript 1085 - 1086: Q. Do you accept that in acting for these clients of MWP you had a duty to act in MWP's interests rather than your own? A. Yes…. Q. You owed MWP a degree of loyalty in working with its clients, did you not? A. No more than any other employee. Q. Did you regard yourself as owing a duty of loyalty to MWP in working with its clients? A. The problem I have with answering that question is the interests of MWP as contrasted to what? Contrasted to what? Q. What I'm suggesting is that you owed it a duty of loyalty, do you understand that? A. Do I understand duty of loyalty? Q. Yes. A. Yes, I do. Q. And you understood that in acting for MWP in relation to its clients you owed it a duty of loyalty as you understood that term. A. As I understood what that term involved, yes, not a term of absolute loyalty. Q. I'm sorry? A. I did not understand that involved some expanded idea of loyalty, absolute, total, unquestioning loyalty. 223 He steadfastly refused to accept that he had ever been an employee of MWP. Likewise this evidence is rejected. 224 Importantly Mr Nicholls had drafted the Cooperation Agreement such that it provided a six-month period in respect of Mr Emmott and a three-month period in respect of himself. Nor was he prepared to agree that the Cooperation Agreement was intended to and in fact established a partnership between the four gentlemen. [Messrs Nicholls, Slater, Emmott and Shaikenov] [transcript 1147] 225 By an e-mail dated 26 November 2004, Mr Nicholls had travelled through a number of parameters calculated to permit Mr Emmott and himself to be appointed as the local director of the local branch of a foreign company and treating with the parameter that neither Mr Emmott nor Mr Nicholls would be an employee of MWP (although subject to checking, it may be possible for Mr Emmott to continue whatever other relationships for relationships he had with MWP. [see generally Exhibit EX 17]. 226 His evidence that he was unaware of Mr Emmott's intentions as to whether or when, or even if, he would leave MWP, or when, or even if he would subsequently join, TIL is rejected. 227 It is clear enough from an e-mail which he sent on 20 April 2006 to Slater [volume 8 PX 1] that he had said that as far as he was concerned, 30 June 'couldn't come soon enough'. That email, on the Court's findings, reflected arrangements to which he had been a party for some considerable time that Mr Emmott would be leaving MWP's employ by 30 June to join Temujin. Mr Nicholls evidence to the contrary [that the email reflected no more than his hope that Mr Emmott would leave MWP and join Temujin] is rejected [Transcript 1151 – 1152]. 228 Mr Nicholls, under cross-examination, conceded that he worked on a number of files for Resource Capital Partners and UMC and later Pinegrove under the supervision of Mr Emmott (T 1082.36-45). 229 He acknowledged that he worked for the clients Sokol and Kazgas with Mr Emmott regarding various deals as stated in paragraph 53 of his affidavit (T 1083.27-1085.2). These included transactions such as Max Petroleum, Chilisai Phosphate and Urals Gold. 230 Mr Nicholls, although conceding that Mr Emmott was a senior lawyer at MWP, vehemently refused to acknowledge that Mr Emmott owed fiduciary duties to the plaintiff (T 1106.14-1107.3). This approach to the contention becomes even more farfetched in light of the fact that Mr Nicholls himself is a vastly experienced lawyer (T 1106.35-40). 231 In the result the evidence given by Mr Nicholls requires to be very carefully checked against the contemporaneous documents prior to being able to be accepted. And as the reasons make clear, on a number of occasions the evidence which he gave is rejected. Mr Slater 232 Mr Slater was in numerous respects a witness whose credit cannot be accepted save as corroborated by contemporaneous documents or by the evidence given by other witnesses in turn accepted as reliable. 233 It is crystal clear that at and from the time when he was preparing and signing the various agreements referred to in these reasons [the 20 December documents] and being at the time when he thought it was highly unlikely that he would ever return to MWP, he set about: i. Opening a newly created G mail account to which he sent a number of transactional documents from the MWP system; ii. Then immediately deleting the sundry emails from MWP's system. 234 In December 2005, up to and including 20 December 2005, Slater sent at least seven emails attaching important transactional documents to this newly opened Gmail account relating to the Karamandybas transaction, the Chilisai transaction and the Urals Gold transaction: on 14 December (5/7); two on 19 December at 10.03 am (5/142; 5/150); two on 20 December at 1.36 pm (5/170; 6/1); and another two on 20 December, the first at 1.37 pm (5/207); and the second at 1.38 pm (5/273). 235 When taxed during cross examination with the proposition that the documents were sent to his new account so that Mr Wilson would not find out what he was doing he denied this proposition. He then was taken from document to document, and purported to have what I regard as a 'very' selective memory loss, simply being unable to recall why the sundry documents were being forwarded by himself to his new account, often within minutes of one another. Clearly this memory loss was nothing more than a device to avoid telling the truth. 236 On my count there are something like 15 'I can't recall' answers given by him from pages 1397-1401 of the transcript. A sampling only is produced: Q. And this was forward from your on your MWP email account to yourself on your Gmail account? A. That's correct. Q. And what is the pro forma commitment letter that you refer to in the subject line of this email Mr Slater? A. I don't recall . Q. Can I suggest to you that it was something to do with the Karamandybas transaction? A. It may have been. Q. And this was a document that had previously, as you will see from the email immediately below the one to which I'm referring you to, had been forwarded by Mr Nicholls? A. To Mr Beshoff and Mr Kyriakou. Q. That's right? A. Yes. Q. And to you and Mr Emmott? A. Yes. … Q. In any event, there can be no doubt that the pro forma commitment letter was a letter to do with a transaction for a client of MWP? A. That's correct. Q. And on 19 December at 10.03am, you were forwarding a copy of that agreement to your private email account? A. That's correct. Q. And after you sent this email, you deleted it from MWP's system, didn't you? A. I don't recall deleting it, but if you say that that's the case then, yes, if it was- … Q. And I want to suggest to you that the reason you did delete this email was so that there would be no paper trail leading from Mr Wilson to you? A. I don't recollect why I deleted it. Q. You were trying to hide your tracks, were you not? A. No. Q. You were trying to conceal from Mr Wilson, your activity in sending this letter out? A. No. Q. …at about the same time that you were sending the pro forma commitment letter, you were sending a final draft option agreement, again to yourself at your private email address? A. Yes. Q. And again, this was a transaction document relating to a client of MWP? A. To the extent that it's copied to Mr Sinclair at Sokol Holdings, yes. Q. And again, this email was deleted by you from the MWP system after it was sent, wasn't it? A. I don't recall . Q. Do you seriously suggest you don't recall deleting this emails? A. I am serious when I say I don't recall deleting the email. Q. Do you make a habit of deleting emails that you send? A. Yes. Q. And in what context is that - does that activity occur? A. From time to time to clean up the number of emails, print them out and then delete them, general housekeeping. Q. This was the day before or two days before you left MWP never to return, wasn't it? A. That's correct. Q. …Mr Slater, again on 20 December 2005 at 1.36pm you forwarded to yourself from your MWP email address to your private email address a document in relation to the Chilisai Phosphate matter did you not? A. It was in relation to the - a rock phosphate project which I think became known as Chilisai. Q. And that was a transaction that you were working on at MWP was it? A. I don't recall doing - I recall doing a small amount of work on that project but not a significant amount of work on that project. Q. Well you'll recall working on that project when you went to Temujin didn't you? A. Yes I did, yes. Q. And again this is another email that you deleted from MWP's system having sent it. Correct? A. I don't recall deleting it. .. Q. What was the purpose of sending this email to yourself on 20 December 2005 at 1.36pm in the afternoon? A. I don't recall . … Q. A minute after you send the Chilisai Rock Phosphate document to yourself you are sending another document, are you not? A. I just don't recall the time the previous one was sent, but if you're saying it's a minute then I'm happy to accept that. Q. Well if you go back to page 170 you'll see that the previous email was sent at 1.36pm and this email is sent at 1.37pm?… … A. That's correct Mr Walton. Q. And a minute later you send another email to yourself and I would suggest to you that this is to day with Maminskoye transaction, the Maminsk gold ore deposit which is part of the Urals Gold transaction, is it not? A. I think it is-- Q. And you were working on the Urals God transaction at MWP? A. I recall doing some work on that project. Q. And you were working on the Urals Gold transaction at Temujin in January 2006? A. Yes that's correct. [Transcript 1397-1400] 237 Clearly enough all of these activities were intended to kickstart the operations of the entity which became Temujin. In the light of these activities the witness credit, save as his evidence is corroborated by contemporaneous documents or by other persons of credit is worthless. 238 However there were occasions when Mr Slater gave truthful answers, as for example when describing the banking transactions detailed in bank statements which were tendered. However he had little choice but to do so as the banking records told a clear story even without explanation. 239 He was not truthful when giving evidence about another important matter of evidence: his decision to leave MWP and how he came to communicate that decision. It is clear that Mr Slater had decided to leave MWP when he "tore up" the offer of an extension of his employment and "put it in the bin". On 19 December 2005 he gave notice of resignation to Westpac. When asked why he did not simply leave MWP at the end of his trial period (16 December 2005) he said "I don't know": T 1390.50. 240 On 21 December 2005 Mr Slater cleaned out his desk and left for Helsinki, ostensibly on holiday leave. His evidence was that he only decided to leave MWP when in Helsinki on 28 December 2005. He did not tell Mr Rasmussen whom he met on that day that this was his decision; only that he was in the process of making a decision. He said he told Mr Emmott either that day or the day before. 241 Mr Emmott's evidence was that Mr Slater only told him of his decision to quit MWP "after he returned from Finland" on about 7, 8 or 9 January 2006. 242 Towards the end of his cross-examination Mr Slater was asked some questions about the role of Temujin Services Limited (TSL) by reference to a document he himself had authored to Mr Shepherd QC in London in April 2007. At T 1552 and at T 1554 Mr Slater was forced to deny the truth of what he had written, but could offer no explanation as to why he had written what he did. 243 This evidence is rejected. There was no reason for Mr Slater not to be truthful in what he was informing Mr Shepherd. What he told Mr Shepherd QC is consistent with the document sent by Mr Slater to Mr Schoonbrood on 10 August 2006, being a proposed engagement letter on behalf of TSL in respect of Pinegrove. There was every reason in terms of this case retreat from what the document to Mr Shepherd QC contained as it contradicted key parts of Slater's own evidence, namely that TSL had never operated or earned any income. Mr Schoonbrood 244 In my view Mr Schoonbrood was a reliable witness. His evidence was given confidently. Generally that evidence established that he is a Dutch national and has conducted business all over the world, but in the last few years he has focused his time and interests in Kazakhstan. He holds an MSc in physics. He has worked for about 40 years in the oil industry. Since 22 May 2007 he has been employed as the Chief Executive Officer of Roxi Petroleum Plc. Roxi is registered in England and Wales and is listed on the Alternative Investment Market of the London Stock Exchange. 245 He is the former Executive Chairman of UMC Energy Plc, a company also incorporated in England and Wales and listed on AIM, He is also a former director of, and later consultant to, Pinegrove Equities Inc, a company incorporated in the British Virgin Islands. 246 From about December 2002 until about December 2003, he was the President of a Swiss company called UniOil AG which had a branch in Almaty. The general manager of UniOil in Almaty at that time was Steve Kappelle. During one of his visits to Kazakhstan, on or about 23 June 2003, Mr Kappelle and he met Mr Emmott in Almaty. This was his first meeting with Mr Emmott, He did not meet him again until about the end of 2005. 247 He joined, and became a director of, UMC on 16 November 2005. MWP had already been instructed by UMC before he joined. Before he joined UMC, he was not aware that MWP had been instructed by UMC. 248 His further evidence was broadly as follows: i. MWP (and in particular Mr Emmott) had been retained by UMC or its predecessor business Resource Capital Partners because Mr Emmott was known to Mr Kappelle. ii. In late 2005, UMC (or RCP) sought to acquire oil and gas assets in Kazakhstan. One such opportunity was the acquisition of rights to an oilfield known as North Karamandybas. MWP were instructed to assist with the legal due diligence and the preparation of acquisition agreements. During the course of this legal work, he met Mr Nicholls, who was working with Mr Emmott on the matter. He also met Mr Wilson, in passing, but did not have any direct involvement with him. He believed that at this time he also met Mr Slater (of MWP), but similarly did not have any dealings with him. iii. UMC did not complete the acquisition of North Karymandybas. In February 2006, he resigned as executive chairman of UMC, although, he retained his position on the Board of UMC and did not resign as a director of UMC until August 2006. UMC was not doing any business in the first half of 2006 and had been looking to pull out of Kazakhstan and the oil and gas business. It was for this reason that he left UMC. iv. In about February 2006, he started to look for the assistance of start up investors to invest in a similar business. Pinegrove was established as a 'special purpose vehicle' to acquire interests in oil and gas assets in the Central Independent States, including Kazakhstan, whose interests would, if successful, be acquired by a company which would be listed on AIM. At this stage, Pinegrove was in its infancy and there were no concrete deals on the table. He effectively ran Pinegrove in Kazakhstan. Pinegrove and UMC are separate companies. There has never been any link or relationship between UMC and Pinegrove save for the fact that he has been a director of both companies. v. Later, around May 2006, he was able to revive interest in the North Karamandybas field for Pinegrove. He knew that he would need a lawyer to assist with the conduct of legal due diligence and the preparation of acquisition agreements so Pinegrove instructed Mr. Emmott and MWP was retained. Some work was completed by MWP but, following Mr Emmott's departure from MWP at the end of June, he decided to terminate the retainer with MWP. vi. The only reason he had gone to MWP the month before was because he wanted to use Mr Emmott, so following his departure Pinegrove had no interest in continuing to instruct MWP. Mr Emmott told him that he did not know what his plans were. The only other lawyer he knew that had extensive knowledge of the North Karamandybas field was Mr Nicholls, He asked Mr Emmott whether he had the contact details for Mr Nicholls. Mr Emmott gave him a mobile number for Mr Nicholls as he did not at that time know which law firm he was working for. vii. To the best of his recollection MWP was only instructed act for Pinegrove in relation to the North Karamandybas field. He recalled discussing a project involving NW Zhetybai with Mr Emmott and asking him to a keep a "watching brief" on this matter however he cannot recall whether this was while Mr Emmott was still at MWP. MWP was never instructed to do any work in respect of NW Zhetybai. viii. UMC never had any involvement in any negotiations to acquire interests in Ravninnoe or Beibars-Munai oil fields. Pinegrove commenced negotiations with the vendors of the Ravninnoe or Beibars-Munai oil fields in about August 2006. ix. In or about early July 2006 he telephoned Mr Nicholls to ask if he could act for Pinegrove with respect to the North Karamandybas field. After some deliberation on his part, Mr Nicholls agreed to accept his instructions and told him that he was then working at Temujin International Limited. He arranged for Pinegrove to retain TIL. TIL was instructed to assist in the acquisition by Pinegrove of a 50% interest in the North Karamandybas field. x. If Mr Nicholls had refused to act for Pinegrove he would not have instructed MWP to act for Pinegrove in relation to the North Karamandybas field, or for any other projects on behalf of Pinegrove. The only reason that he instructed MWP to act for Pinegrove was because he wanted Mr Emmott acting for Pinegrove. xi. None of Messrs Emmott, Slater or Nicholls ever approached, solicited or encouraged him to instruct TIL on behalf of Pinegrove. xii. He arranged for all outstanding fees owed by Pinegrove to MWP to be paid. He asked for all papers held by MWP on behalf of Pinegrove to be handed over to him. MWP did not do so on the basis that UMC had, allegedly, not paid MWP some outstanding fees. xiii. In June 2006, he asked Mr Emmott to send him the draft due diligence report and all other legal documents relating to North Karamandybas. The reason why the request was made at this time was because, on or about 17 June 2006, the hard drive on his computer crashed. As a result he had lost approximately 2 months of data as he had not backed-up my laptop since about April 2006. xiv. Mr Emmott sent him a copy of the draft due diligence report by email dated 27 June 2008 from his MWP email address. The e-mail commences: "Rob here is the latest version of the Due Diligence Report you requested following the crash of your hard drive". v. He also noted that Mr Emmott copied this email to another (local) lawyer at MWP who had been assisting him on this matter. Mr Emmott then sent him a further email later that morning (page 2 of RS1) attaching other documents he thought Mr Schoonbrood might need. This email was also sent from his MWP email address. 249 During his cross-examination Mr Schoonbrood was taken through a series of emails and documents presumably in a bid by the plaintiff to establish some clarity or certainty (and basis) to the precise business opportunities which the defendants are alleged to have caused to have been solicited. 250 I accept as of substance the defendant's submission that what emerged from the cross-examination was that these business opportunities were at all times highly uncertain and speculative. Further, Mr Schoonbrood had been cut loose from UMC and was handed 'on a plate' the opportunity to pursue business opportunities he wished: see eg. D28 T-1733 (lines 1-4). He was entirely at liberty to do as he pleased. Mr Sinclair 251 Mr Sinclair described himself as a businessman principally resident in Almaty. His business interests focus primarily in the natural resources sector. Geographically, the projects in which he has been involved in recent times have been located in the Commonwealth of Independent States (CIS) of which Kazakhstan is a member (Affidavit of Mr Sinclair paragraph 1). 252 Mr Sinclair asserted in his affidavit as preliminary matters that: (a) He denied being aware of or a party to any "off the books" charging or remuneration. (b) He was not aware of any fees being paid, either in cash or in kind, other than directly to MWP, or of any benefits being given to any of the defendants or Mr Emmott, such as "free of charge shares" or any other participation rights in any of the Sokol or Frontier projects. (c) He denies that Messrs Emmott, Nicholls and Slater solicited his business to Temujin but rather gives evidence that he moved his business on his own accord. (d) Mr Wilson did not introduce him to Mr Emmott. (e) He wanted to ensure that Mr Wilson was not involved in his projects due to perceptions about Mr Wilson's character. (f) Mr Wilson referred a number of potential deals to him including: Emperor Mines, Eurogold, Hambledon Mining Ltd and Celtic Resources. (g) He denied that Mr Emmott undercharged him for the work that MWP did for his business. 253 His affidavit canvassed the various deals in wish that his company Sokol was involved. For the purposes of these proceedings, the Chilisai Phosphate and Urals Gold projects were the important ones dealt with. 254 What is notable is that the affidavit sketches, in a lot of detail, the interaction between the defendants in their respective firms (MWP and Temujin) after 20 December 2005 regarding the said transactions. 255 Regarding the Chilisai project, Mr Sinclair stated that he deliberately engaged both MWP and Temujin to work on it through a split retainer because at that time, the project was "at a critical stage" and he wanted Messrs Emmott, Slater, and Nicholls working on the project "regardless of which firm they were working for at a given point in time" 256 His affidavit recorded that Sokol was billed a total of $218,630.00 in fees and disbursements by Temujin from the period of 12 April 2006 to 9 October 2006). 257 Mr Sinclair noted that Mr Emmott had drafted the due diligence report whilst Mr Slater worked on a confidentiality agreement He noted that: Mr Emmott was also finalising the due diligence around this time, and liaising with Mr Slater on various matters). 258 According to him, Mr Emmott (at MWP) later worked on "finalising various restructuring and other issues at this time" and was to draft shareholder documents pending final approval of the deal structure 259 In his affidavit Mr Sinclair sought to clarify certain issues regarding the fundraising of the Chilisai project. He stated that: (a) An amount of approximately $300,000.00 that was paid into Mr Emmott's London bank account was an investment by Mr Thomas Velasco-Gomez to make as investment in the Chilisai project; (b) Mr Slater proposed and found a number of investors in the Chilisai transaction including Ms Debra Lighezzolo and Ms Susan Sanders; (c) Mr Wilson offered investors for the Chilisai project and was apparently also interested in investing in the project. 260 Regarding the Urals Gold project, this project was the second major project for Sokol on which MWP and Temujin worked upon jointly from January to May 2006. Mr Sinclair noted that the work was undertaken jointly for the same reasons that applied to the Chilisai transaction 261 Temujin's work included: drafting the transaction agreements; ongoing due diligence; meetings to review the transaction documents; and review of previous due diligence 262 Mr Sinclair presented $109,292.00 of invoices issued by Temujin to Sokol regarding the Urals Gold transaction After Mr Emmott left MWP, MWP was no longer retained. The deal eventually aborted around September 2006 because Sokol decided to swap its investment for one of their other mining projects the Benkala Copper Mine project in Kazakhstan which became part of Frontier. 263 Mr Sinclair was cross-examined on a range of topics. However, the most prominent topic was the perceived similarity between the Max transaction and the transactions involving Sunkar (e.g. the Chilisai Phosphate project). 264 Regarding this issue, Mr Sinclair strongly denied the similarities between the transactions. The exchange below demonstrates his reluctance to countenance the idea: Q. And I won't trouble you too much with it Mr Sinclair, but you will see on about the sixth bullet point under the headings 'Assumptions' that Mr Slater states that, "Sokol desires to utilise the recent Max Petroleum structure if possible to facilitate the project." Now that is in fact how the initial structure proceeded, was it not? A. I'm not sure on the detail. I'm not sure if we used some of the Netherlands Antilles companies. I think there might have been other jurisdictions used in the end. Q. Well can I just suggest this proposition to you that broadly speaking the structure of the Chilisai Phosphate Deposit Project was utilised the Max Petroleum structure that had been used on behalf of Sokol? A. No. Q. You disagree with that? A. Yeah. Q. So you think that Mr Slater is wrong in stating what he does in this memoranda? A. Initially, dated 7 February 2006; we listed the company 30 June 2008 so a lot happened between those dates. Q. I understand that Mr Sinclair, but my question was directed to the situation in February/March 2006; what I'm suggesting to you is that at that time what was proposed the Chilisai Phosphate deal or project, was that it would broadly similar to the structure used in the Max Petroleum transaction? A. Well that was an assumption written here, yes. Q. And that's how it started out wasn't it? A. In the Max transaction Sokol acted as the special purpose vehicle basically which bought the Kazakh entity and sold it on to the publicly listed company, that didn't happen in the Sunkar transaction. So I had a series of lawyers in Kazakhstan and the Kazakh partners working with David on the actual structure so I wasn't privy to a lot of the detail on the structure. But it did not turn out to be the same structure as Max Petroleum. Q. But I'm not asking how it turned out, you understand Mr Sinclair, I'm asking you at its inception in February/March 2006 the initial proposal was that the Chilisai Phosphate Deposit Project would essentially follow the same structure as the Max transaction? A. That's the assumption, that says it yes. 265 Mr Sinclair then confirmed that Temujin and MWP acted jointly on the Chilisai Phosphate transaction (T 1289.8-30). He noted that Mr Emmott was the lead lawyer for that transaction and that he would not have instructed Messrs Nicholls or Slater had Mr Emmott not been the lead lawyer (T 1296.39-1297.14). 266 Mr Sinclair elaborated on the nature of the joint retainer in terms of what MWP did and what Temujin did (T 1297.48-1298.10). Q. So were they dealing in different ways with the transaction? Was there a demarcation of what each firm was doing or were they just working together, or what was your understanding? A. I think it was Slater and Temujin generally doing more of the nuts and bolts preparation of documents dealing with the Kazaks. I think the relationship with the Kazaks turned a little bit sour and they weren't then interested in continuing with Temujin and I think they changed to - somewhere in the mid to late 2006, I think they changed to Salans or another local law firm, so it was - one main function was dealing with, you know, raising money; we had other - the Kazak partners were dealing more with the legal details with Temujin than I was. But there was a - it was mainly to do with - I recall that they were doing some of the documentation detail with the Kazak partners and the entity that we were doing due diligence on to acquire it. 267 Notably, Mr Sinclair made clear that if Mr Emmott and/or Messrs Slater and Nicholls were not available for one reason or another to assist him regarding the Chilisai Phosphate transaction, he would not have been forced to use MWP's services (T 1300.40-1301.4). 268 The final relevant tranche of evidence given relates to the contrast in the legal fees between the Max Petroleum project, which occurred before the establishment of Temujin, and the Chilisai project. 269 After conceding that the Chilisai project was more complex than the Max transaction (T 1318.35-39), Mr Sinclair attempted to explain the difference in legal fees charged by both MWP and Temujin with respect to the Chilisai Phosphate transaction (T 1320.47-1321.14): Q. So can I suggest to you that the total legal fees charged both by MWP and Temujin in respect of the Chilisai Phosphate matter came to just over 275,000 dollars US? A. At that period, yes. Q. And that's can I suggest to you less than half the amount that was charged in respect of the Max transaction? A. Well you're talking about a period January or December 2005 to May, June 2006, six months. I think John Emmott was working on the Max or rather the circle work for Max a lot longer period. Q. The last Temujin invoice that you received was dated 9 October 2006 wasn't it? If you turn to page 35 of that folder. A. Yeah, 11,000 in October. Q. That was the last invoice you received from either of those two firms, wasn't it? A. Yeah. And as you saw my Kazak partners reduced their role and got another lawyer. 270 Overall, Mr Sinclair was a witness of credit despite being adopting a fairly partisan approach. Apart from his reluctance to address the issue of similarities between the Max transaction and the Chilisai transaction, his evidence on the witness box was consistent to his affidavit evidence. Accessorial liability under the second limb of the rule in Barnes and Addy 271 The template pursued by MWP treats with the proving of accessorial liability of persons or entities otherwise than Mr Emmott. 272 The recent decision by the High Court in Farah Constructions v Say-Dee [2007] 230 CLR 89 has clarified the material principles. 273 The judgment made clear [at 160] that as conventionally understood in Australia, the second limb of Barnes and Addy makes a defendant liable if that defendant assists a trustee or fiduciary with knowledge of a dishonest and fraudulent design on the part of the trustee or fiduciary. 274 The applicable principles were then set out at [173] - [179] in the following terms: i. As a matter of ordinary understanding, and as reflected in the criminal law in Australia, a person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest by those standards. Further, as early as 1801, Sir William Grant MR stigmatised those who "shut their eyes" against the receipt of unwelcome information [at 173]; ii. Against this background, it has been customary to analyse the requirement of knowledge in the second limb of Barnes v Addy by reference to the five categories agreed between counsel in Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA : "(i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man; (v) knowledge of circumstances which would put an honest and reasonable man on inquiry." In Bank of Credit and Commerce International (Overseas) Ltd v Akindele ("BCCI") Nourse LJ observed that the first three categories have generally been taken to involve "actual knowledge", as understood both at common law and in equity, and the last two as instances of "constructive knowledge" as developed in equity, particularly in disputes respecting old system conveyancing. After noting that in Royal Brunei the Privy Council had discounted the utility of the Baden categorisation, Nourse LJ in BCCI went on to express his own view that the categorisation was often helpful in identifying the different states of knowledge for the purposes of a knowing assistance case. [at 174] iii. Although Baden post-dated the decision in Consul , the five categories found in Baden assist in an analysis of that for which Consul provides authoritative guidance on the question of knowledge for the second limb of Barnes v Addy . [at 175]; iv. Thus, support in Consul can be found for categories (i), (ii) and (iii). Further, Consul also indicates that category (iv) suffices. However, in Consul , Stephen J held that knowledge of circumstances which would put an honest and reasonable man on inquiry, later identified as the fifth category in Baden , would not suffice. Gibbs J left open the possibility that constructive notice of this description would suffice. Barwick CJ agreed with Stephen J. [at 176]; v. The result is that Consul supports the proposition that circumstances falling within any of the first four categories of Baden are sufficient to answer the requirement of knowledge in the second limb of Barnes v Addy , but does not travel fully into the field of constructive notice by accepting the fifth category. In this way, there is accommodated, through acceptance of the fourth category, the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons. [at 177]; vi. These conclusions in Consul as to what is involved in "knowledge" for the second limb represent the law in Australia. They should be followed by Australian courts, unless and until departed from by decision of this Court. [at 178]; vii. What then of the phrase "dishonest and fraudulent design"? Since the widening of the second limb of Barnes v Addy beyond breaches of express trust, attempts commonly are made in corporate insolvencies to render liable on this footing directors, advisers and bankers of the insolvent company. This makes a proper understanding of the second limb important, lest its application prove unjust. As Lord Selborne LC said in Barnes v Addy : "There would be no better mode of undermining the sound doctrines of equity than to make unreasonable and inequitable applications of them." The relevant passages in Consul establish for Australia that "dishonest and fraudulent designs" can include not only breaches of trust but also breaches of fiduciary duty; but any breach of trust or breach of fiduciary duty relied on must be dishonest and fraudulent. [at 179]. 275 Whilst each of the several causes of action pursued by MWP require to be treated with independently, the underlying factors had a common thread. The clear inference open on the whole of the evidence is that Mr Nicholls as well Mr Slater by reason of their anterior experience as lawyers and by dint of their having worked with Mr Emmott at MWP, well knew that Mr Emmott owed fiduciary duties to MWP. That inference is drawn. 276 The finding is that: i. both Mr Nicholls as well as Mr Slater had actual knowledge that what was occurring as Mr Emmott, whilst still with MWP, distributed work to Temujin, involved his breaching his duties of fidelity as well as his fiduciary obligations owed to MWP; and ii. that they were participating with knowledge in that exercise. 277 Hence it is unnecessary to travel through the second, third and fourth of the categories upheld by the High Court constituting the requirement of knowledge in the second limb of Barnes and Addy. However had that exercise been necessary then the finding would certainly have justified, in cascading order, the alternate holdings that they: (i) wilfully shut their eyes to the obvious; and/or (ii) wilfully and recklessly failed to make such enquiries as an honest man would have made; and/or (iii) had knowledge of circumstances which would indicate the facts to an honest and reasonable man. A matter of terminology 278 As a matter of convenience only, many of the references in these reasons, [particularly when travelling through the disparate transactions which analyse the benefits received or that could have been received by the plaintiff but for the accessorial liability of persons or entities otherwise than Mr Emmett] will simply refer to that liability by using the slightly incorrect phrase 'the defendants breaches of fiduciary duty'. Returning to aspects of the breaches of duty by Mr Nicholls and Mr Slater 279 Notwithstanding the already extensive findings concerning the breaches of duty by Mr Nicholls and Mr Slater it seems useful to identify these by reference to the so-called 'no profit' and 'no conflict' rules. 280 They are shown as in breach of the 'no profit' rule in that: i. Messrs Nicholls and Slater took advantage of their positions within MWP to take establish TIL and TSL. They used MWP's resources to document the establishment of the business. They used MWP's resources to provide them with a set of precedent documents relevant to the deals they intended to work on in the new business. ii. Once they had left MWP they continued to use MWP's resources, in the form of Emmott, to supervise their work and direct work to them. In fact the business was entirely reliant on Emmott doing this from within MWP. iii. This too involved a breach of the no-profit duty because Messrs Slater and Nicholls had clearly both resigned in circumstances which meant that this duty was ongoing. iv. Their resignations from MWP could "fairly be said to have been prompted or influenced by a wish to acquire for themselves" the business opportunities that MWP had. As the plaintiff has submitted no better evidence of this can be given than the fact that Mr Slater emailed out to himself (and therefore TIL) contractual documents dealing with Chilisai, Urals Gold and Karymandybas and the fact that, at the time Mr Nicholls resigned from MWP to join TIL, the only TIL work was in fact MWP work. v. There is therefore a direct causal relationship or "historical involvement" between the relevant breach of fiduciary duty, and respectively, the "maturing business opportunity which the company", that is MWP, was not only actively pursuing but actively had. vi. As MWP has contended the relevant business opportunity is appropriately defined broadly and slightly differently with respect to Mr Sinclair's business and Mr Schoonbrood's business: a) With respect to both Mr Sinclair's business and Mr Schoonbrood's business it was the opportunity to act in relation to the sales of assets to listed companies. b) With respect to Mr Sinclair's business this opportunity was more defined because at the relevant time MWP had acted in relation to both the initial IPO of Max ("Max 1") and the selling of an additional oilfield (Astrakhansky) to Max in December 2005. c) With respect to Mr Schoonbrood's business this strategy – first at UMC and then from February 2006 on his own account – had not led to an asset sale. However in considering what the relevant business opportunity was it should be remembered that: (i) Mr Schoonbrood's strategy involved him in looking at the acquisition of many possible oilfields. (ii) MWP's role included a "watching brief" to introduce oilfields to him. (iii) By the time Pinegrove had been established, Schoonbrood was acting on behalf of investors not only in relation to North Karymandybas but also the other assets which formed the basis of the Roxi admission which was a natural consequence of the business relationship that existed between MWP and Mr Schoonbrood (whether through UMC or later Pinegrove). 281 It should be remembered that but for the breaches of duty in relation to Chilisai, Urals Gold and Kangamiut, TIL could not have been established and the additional work with Sinclair and Schoonbrood could not have taken place. 282 In the result there has been proven a direct causal connection between the 'no profit' breaches of fiduciary duty and: i. The establishment of TIL; ii. The Chilisai Phosphate and Urals Gold/Benkala transactions on behalf of Sinclair; and iii. Work done for Pinegrove and Roxi on both the Roxi AIM admission. 283 They are shown as in breach of the 'no conflict of duty' rule in that: i. Nicholls in the period 20 December 2005 (at the latest) until his resignation on I March 2006 was in a position of conflict with respect to the Sokol/Sinclair work that was being undertaken by Slater at TIL; ii. Slater, Nicholls and through them TIL, well aware of Emmott's position within MWP and his interest in the Temujin business being run through TIL, received work sent their way as a result of that conflict of interest were accessories in Emmott's breach of duty; [As an aside in relation to Emmott it is also clear that : a) Emmott in the period 20 December 2005 (at the latest) until his resignation on 30 June 2006 was in a position of conflict with respect to the Sokol/Sinclair work that was being undertaken by Slater at TIL; and b) Emmott was in a position of conflict when in a telephone conversation with Schoonbrood on or about 30 June 2006 he directed Schoonbrood to Nicholls at TIL] iii. Liability for the consequences of breach of the "no conflict" rule, in accordance with the principles outlined in Furs Limited v Tomkies , is strict because as stated by Rich, Dixon and Evatt JJ in that case (cited above by Heydon JA in Harris v Digital Pulse ) "the consequences of conflict are not discoverable" . In other words, the law recognises that it is simply not practicable to conduct a forensic investigation into what would have happened to the work had Emmott not acted in breach of the "no conflict" duty. Treating seriatim with each of the causes of action pursued. The tort of conspiracy 284 MWP has framed its conspiracy to defraud case in terms of an unlawful conspiracy: i. to injure MWP by unlawful means; or, alternatively; ii. to perform acts done for the sole or predominant purpose of injuring MWP. 285 MWP's alternate forms of pleading and particulars treating with this course of action cover several pages of the Commercial List Statement. There are many alternatives and care is taken to treat with particular dates when alleged conspirators are said to have joined the conspiracy. 286 The relevant principles are examined in the reasons given by Handley JA (with whom McColl JA agreed) in Fatimi Pty Limited v Bryant & 2 Ors [2004] NSWCA 140 [applying the formulations of the High Court of the tort in Williams v Hursey (1959) 103 CLR 30 as follows: "In Williams v Hursey (1959) 103 CLR 30 at 78 Fullagar J (whose judgment received the concurrence of Dixon CJ and Kitto J) said that the conspiracy was "a combination to do unlawful acts necessarily involving injury". In the same case Menzies J put the matter equally broadly when he said at 122: "If two or more persons agree to effect an unlawful purpose, whether as an end, or a means to an end, and in the carrying out of that agreement damage is caused to another, then those who have agreed are parties to a tortious conspiracy."] 287 Although there is a live question as to whether or not the claim in conspiracy for the predominant purpose of injuring MWP is made out, I do not see it as necessary to determine this issue as to my mind and for the reasons which follow, the claimed conspiracy to injure by unlawful means is made out. 288 As the trial judge [Campbell J] had made clear in Fatimi if such a claim is to be actionable, one of the purposes of the conspiracy must have been to injure the plaintiff. In developing outlining the established principles Handley JA observed as follows: 13. However this requirement will be satisfied if the conspiracy and the unlawful means were aimed at or directed at the plaintiff. In Williams v Hursey [ (1959) 103 CLR 30 at 78 Fullagar J (whose judgment received the concurrence of Dixon CJ and Kitto J) said that the conspiracy there was "a combination to do unlawful acts necessarily involving injury". In the same case Menzies J put the matter equally broadly when he said at 122: "If two or more persons agree to effect an unlawful purpose, whether as an end, or a means to an end, and in the carrying out of that agreement damage is caused to another, then those who have agreed are parties to a tortious conspiracy." If the conspiracy and the unlawful means were aimed at the plaintiff damage to the plaintiff that was foreseen or foreseeable or was necessarily caused in carrying out the conspiracy will satisfy the requirements for this branch of the tort. 14. Where as in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 the joint illegal action was not directed at the plaintiff the fact that damage to it was reasonably foreseeable did not make the conspiracy actionable. See also Lonrho Plc v Fayed [1992] 1 AC 448, 467 where Lord Bridge quoted with approval from the unreported judgment of Lord Denning MR in the earlier Lonhro case: "I would suggest that a conspiracy to do an unlawful act - when there is no intent to injure the plaintiff and it is not aimed or directed at him - is not actionable, even though he is damaged thereby. But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives." 15. Hence, despite the statement by Mason P in McWilliam v Penthouse Publication Ltd [2001] NSWCA 237 at [13], in which I concurred, that: "It is not enough to establish that the acts of the conspirators necessarily involved injury to the plaintiff or that the plaintiff was a person reasonably within the contemplation of the conspirators as a person likely to suffer damage ... " I would not accept the correctness of the statement by the trial Judge (red 115): "... the purpose to harm must still be what is actuating the defendants in acting. That the defendants realise that damage to the plaintiff is a likely, or indeed an inevitable, consequence of their action is not enough to satisfy this element of the tort. Rather, damage to the plaintiff must be one of the things which the defendants are trying to achieve." 16. The Judge's findings establish that the predominant purpose of the defendants was to preserve the value of the land for the benefit of the Bryant family but, in the words of Fullagar J in Williams v Hursey at 78 this "necessarily" involved injury, Fatimi , because their predominant purpose could not otherwise be achieved. In this situation the relevant principle, as re-established by Lonrho Plc v Fayed is that stated in that case by Lord Bridge at 465-6: "But when conspirators intentionally injure the plaintiff and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests; it is sufficient to make their action tortious that the means used were unlawful." 17. The most recently reported decision on this subject is Coomera Resort Pty Ltd v Kolback Securities Ltd [2004] 1 Qd R 1 where, after reviewing most of the authorities, Mackenzie J said (34-5): "... there is good reason in principle why an intention to injure the plaintiff, albeit not the predominant motive, has to be established. Ordinarily the nature of the offence the conspirators agree to commit and the facts of the case will inevitably lead to the conclusion that it is intended to cause damage to a particular person. On the other hand, whatever other cause of action might be available, it would be contrary to principle for liability for tortious conspiracy to attach merely because a combination was put into effect and a person who was not reasonably within the contemplation of the conspirators as a person likely to suffer damage nevertheless suffered damage ... In such a case, it would be impossible to infer that the conspirators had an intent or purpose of causing damage to that person ... The concept of a requirement of some intent or conduct directed at the plaintiff was applied by Windeyer J in Womboin Pty Ltd v Reinchelt (unreported, 25 August 1995)." 18. This view is supported by the principles governing the crime of conspiracy to defraud stated in Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493. It will be sufficient for present purposes to refer to the joint judgment of Toohey and Gaudron JJ. At p 505 they said: "... for an agreement to constitute a conspiracy to defraud, it must be an agreement to bring about a result by dishonest means - means which ... do not necessarily involve deception." 19. At 507 they said: "It has always been sufficient that the accused be aware that there is a risk of economic loss ... it is misleading to speak in terms of the purpose of a conspiracy to defraud, particularly as the purpose of the conspirators may be quite different from the fraud perpetrated. The purpose of conspirators is usually to obtain some financial advantage; the fraud, on the other hand, is in depriving others of their property or of the opportunity to protect their interests. And, as is pointed out in Archbold , the conspirators may never intend or, even, foresee the probability that others will suffer economic loss. Rather, they may genuinely believe that there will be no loss because their venture will be brought to a successful financial conclusion to the advantage of all concerned, even those whose interests have been put at risk." 20. They explained the requirement for proof of fraud in such a conspiracy as follows (508): "Ordinarily ... fraud involves the intentional creation of a situation in which one person deprives another of money or property or puts the money or property of that other person at risk or prejudicially affects that person in relation to `some lawful right, interest, opportunity or advantage', knowing that he or she has no right to deprive that person of that money or property or to prejudice his or her interests ." (emphasis supplied) 21. Finally they analysed the requirement for dishonest means (509-10): "... the offence of conspiracy to defraud involves dishonesty at two levels. First, it involves an agreement to use dishonest means. Ordinarily, the means will be dishonest if they assert as true something which is false and which is known to be false or not believed to be true or if they are means which the conspirators know they have no right to use or [they] do not believe that they have any right to use the means in question. And quite apart from the use of dishonest means, the offence involves an agreement to bring about a situation prejudicing or imperilling existing legal rights or interests of others. That, too, is dishonest by ordinary standards . If those matters are properly explained to a jury, further direction that the accused must have acted dishonestly is superfluous." (emphasis supplied) Finding 289 The tort of conspiracy to injure by unlawful means is made out. It is clear from the evidence before the court already referred to that one of the purposes of the conspiracy was to injure MWP. Although the predominant purpose of the defendants wise to obtain financial advantage from their Temujin and associated activities, the relevant proof of the fraud is seen in the intentional creation of a situation: i. in which the conspirators deprived MWP of the continuing opportunity to receive fees from sundry clients; and at the same time ii. as well as depriving it of its opportunities to profit by sharing with such clients across a range of possible deals, [hence prejudicially affecting MWP in relation to an interest, opportunity or advantage] knowing that the conspirators had no right to prejudice MWP in this fashion. 290 The above analysis the subject of the observations in Peters v R (1998) 192 CLR 493 [at 33] holds true in terms of the findings of fact in the present proceedings: The offence of conspiracy to defraud involved dishonesty at two levels; a) the means used were dishonest as they asserted as the conspirators did not believe that they had any right to use the means in question; b) And apart from the use of dishonest means, that element of the offence which involved an agreement to bring about a situation prejudicing or imperilling the interests of others is also satisfied. That too was dishonest by ordinary standards. Interference with contractual relations 291 In Fightvision Pty Limited v Onisforou (1999) 47 NSWLR 473, the Court of Appeal approved of the judgment of Lindgren J (with whose judgment Lockhart and Tamberlin JJ agreed) in Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (1995) 58 FCR 26 concerning the requirements of knowledge or intention in the tort of interfering with contractual relations. Lindgren J said (at 43): "In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have 'sufficient knowledge of the contract' is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights. Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the 'actual' or 'subjective' state of mind of the alleged tortfeasor. ...Although an alleged tortfeasor must have 'a fairly good idea' that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known..." Recent English authority is to the same effect ( OBG Limited & Ors v Allan & Ors [2007] UKHL 21; [2007] 2 WLR 920 at [39]- [41] per Lord Hoffman, and [202] per Lord Nicholls of Birkenhead). 292 In Douglas & Ors v Hello! Limited & Ors [2007] UKHL 21 [2008] AC 1 Lord Hoffmann summarised the elements of this tort as follows at [39]: "To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so…" 293 Lord Hoffmann went on to explain what constituted knowledge of the contract in question at [40]-[41] in the following terms: "The question of what counts as knowledge for the purposes of liability for inducing a breach of contract has also been the subject of a consistent line of decisions. In Emerald Construction Co Limited v Lowthian [1966] 1 WLR 691, union officials threatened a building contractor with a strike unless he terminated a sub-contract for the supply of labour. The defendants obviously knew that there was a contract - they wanted it terminated - but the court found that they did not know its terms and, in particular, how soon it could be terminated. Lord Denning MR said (at pp; 700-701). "Even if they did not know the actual terms of the contract, but had the means of knowledge - which they deliberately disregarded - that would be enough. Like the man who turns a blind eye. So here, if the officers deliberately sought to get this contract terminated, heedless of its terms, regardless whether it was terminated by breach or not, they would do wrong. For it is unlawful for a third person to procure a breach of contract knowingly, or recklessly, indifferent whether it is a breach or not." This statement of the law has since been followed in many cases and, so far as I am aware, has not given rise to any difficulty. It is in accordance with the general principle of law that a conscious decision not to inquire into the existence of a fact is in many cases treated as equivalent to knowledge of that fact (see Manifest Shipping Co Limited v Uni-Polaris Shipping Co Limited [2003] 1 AC 469). It is not the same as negligence or even gross negligence: in British Industrial Plastics Limited v Ferguson [1940] 1 All ER 479, for example, Mr Ferguson did not deliberately abstain from inquiry into whether disclosure of the secret process would be a breach of contract. He negligently made the wrong inquiry, but that is an altogether different state of mind." 294 Similarly in New South Wales the Court of Appeal in Fightvision Pty Limited v Onisforou (1999) 47 NSWLR 473 at 512 stated that: "The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention." 295 Accordingly it is not necessary to show that the defendant knew of the precise contractual rights that would be infringed. In Sanders v Snell (1997) 143 ALR 426 the Full Court of the Federal Court observed that: "It will be recalled that at the meeting of the Bureau on 2 June, "copies of the contract were provided for [Mr Sanders'] benefit." There was no evidence, however, that the terms of cl 9 were present to Mr Sanders' mind at any particular time. Although it is not required that Mr Sanders be shown to have been conscious of the precise terms of Mr Snell's contractual rights, it is required that he be shown to have had some appreciation of the general nature of those rights and of the fact that the course of action which he was advocating would constitute a breach of them. More particularly, it was necessary for Mr Snell to establish that Mr Sanders had some understanding that he (Mr Snell) was entitled not to be dismissed summarily, that is, without being given a period of notice, but nonetheless intended to procure the Bureau to dismiss him summarily." 296 Accordingly as a matter of principle, it is not necessary to show that a defendant knew of the precise contractual rights that would be infringed. In Sanders v Snell (1997) 143 ALR 426 the Full Court of the Federal Court observed that: "It will be recalled that at the meeting of the Bureau on 2 June, "copies of the contract were provided for [Mr Sanders'] benefit." There was no evidence, however, that the terms of cl 9 were present to Mr Sanders' mind at any particular time. Although it is not required that Mr Sanders be shown to have been conscious of the precise terms of Mr Snell's contractual rights, it is required that he be shown to have had some appreciation of the general nature of those rights and of the fact that the course of action which he was advocating would constitute a breach of them. More particularly, it was necessary for Mr Snell to establish that Mr Sanders had some understanding that he (Mr Snell) was entitled not to be dismissed summarily, that is, without being given a period of notice, but nonetheless intended to procure the Bureau to dismiss him summarily." 297 The earlier findings of actual knowledge in Mr Nicholls and Mr Slater of what was occurring have made clear that they were participating with knowledge in the relevant exercise. 298 But even had that finding not been able to be made, it is trite that in relation to the course of action now being examined, it is not necessary that the defendants were aware of the particular contractual duties that Mr Emmott was breaching. It would have been and was enough if, as a clearly did, that they knew that he occupied the position of "partner" and that he was likely to owe the contractual duties (set out below) that he did in fact owe. 299 Furthermore, one should not pass over the fact that there evidence that Messrs Nicholls and Slater, who drafted the Cooperation Agreement, were aware of the terms of Mr Emmott's contract with MWP. In drafting that document they were clearly aware that he had a contractual notice provision of six months. Moreover their use of the phrase "when he is legally able to" indicates that Messrs Nicholls and Slater were to some extent cognisant of the duties that Mr Emmott owed. 300 Again, Lord Hoffman provides a useful statement of principle at [42]: "The next question is what counts as an intention to procure a breach of contract. It is necessary for this purpose to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach. Mr Gye would very likely have preferred to be able to obtain Miss Wagner's services without her having to break her contract. But that did not matter. Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice. It is usually to achieve the further end of securing an economic advantage to themselves. As I said earlier, the Dunlop employees who took off the tyres in GWK Limited v Dunlop Rubber Co Limited (1926) 42 TLR 376 intended to advance the interests of the Dunlop company." 301 Returning once again to Mr Emmott's contractual obligations, they clearly included whilst he was at MWP, that he had obligations to disclose misconduct concerning both his own activities and those of Messrs Slater and Nicholls. It will be recalled that his obligations regarding disclosure of misconduct were set out in the following provisions: i. each party was obliged to observe "the usual partnership obligations and duties to each other i.e. Cooperation, of disclosure and of good faith as partners carrying on business in common with a view to making profits" (clause 1.4, emphasis added); ii. both parties were to "… keep each other fully and promptly informed as to all events, matters and things material or relevant to this Agreement and their relationship." (clause 4.10) 302 For the reasons set out above it is clear that Emmott's conduct in failing to disclose what he had done with respect to establishing Temujin and providing it with business constituted a breach of each of the obligations set out above. It is equally clear that Messrs Emmott and Slater knew of, or were reckless to the existence of, the above obligations and acted so as to procure their breach. Returning to the conflict of law questions 303 Earlier in these reasons reference was made to particular difficulties arising from the unusual character of the questions for determination posed by these proceedings. 304 As Dr Andrew Bell 'Forum Shopping and Venue in Transnational Litigation', Oxford University Press, 2003, has observed: The emergence of an ever more integrated global economy has obvious ramifications for transnational litigation. One commentator has observed that 'in a world where daily transactions routinely involve multiple countries, litigants are increasingly likely to find themselves embroiled in simultaneous contests in several theatres'. Quite simply, more international trade means more transnational disputes, contractual, quasi-contractual, and arising from the negligent provision of goods and services. One consequence of a global economy-the posting of employees abroad-may also give rise to disputes as to the application of the employment law protections of the state from which the employee has been posted. And another consequence is that diversification of assets against which judgments may be enforced. As Sir Michael Kerr observed extrajudicially, 'quot contractus, tot contentions, tot lites'. This has had the consequence that 'the business of litigation, like commerce itself, has become increasingly international. It is no coincidence that the last 20 years have seen the burgeoning of 'international law firms', offering not only the personnel and facilities to coordinate complex transnational litigation but also knowledge of and familiarity with the procedural and other advantages to be secured through litigating in particular forums" [at 1.07] 305 The author continues by referring to the fact that modern transnational litigation frequently involves several parties which may have a complex array of claims and cross claims against each other: Such a factual scenario produces dilemmas which must be considered in any study of the venue in transnational litigation, for parties will seek to exploit all jurisdictional possibilities and endeavour either to maximise their chances of success or else minimise their liability. This may involve the initiation of litigation in several forums, either by the same or different parties. [at 6.07] 306 The present litigation and the difficulties which arise in a transnational sense where there are a number of entities incorporated in various parts of the world, bear testimony to the above observations. 307 There are a number of matters to be considered in relation to the conflict of law questions which arise. By way of a preamble the following observations were made in Idoport Pty Ltd v National Australia Bank Ltd [2000] 50 NSWLR 640 at 644: It has been said that the question of foreign law is "a question of fact of a peculiar kind": Parkasho v Singh [1968] P 233 at 250, per Cairns J. At least one peculiarity is the disparate circumstances in which a question as to foreign law can arise. There are at least three such circumstances. The first concerns the direct application of foreign law by a domestic court. Thus, if a contract is expressed to be governed by the law of a foreign country or the law of that foreign country is the appropriate law to govern a contract, in an action properly brought in a domestic court, that court will apply that foreign law to determine the rights and obligations created under the contract. An example of this type of case is United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766. The second type of case concerns the application of foreign law, not to determine the rights and obligations of the parties under foreign law, but in order to determine a question relevant to the ascertainment of the rights and obligations of the parties under domestic law. In such a case foreign law might be relevant to the ascertainment of the existence of and the degree of the loss of a chance to develop and market some product in a foreign country, he loss having been caused by the breach of a contract which is governed by domestic law. It is conceivable that in this type of case evidence which showed that the existence of and degree of the chance was, in fact, determined by matters extraneous to the applicable foreign law, would be relevant. This possibility serves to emphasise the essentially factual nature of the inquiry as to the existence of and content of foreign law in this category of case. The third type of case, which may be considered intermediate between the first two, is where it is necessary to determine, for the purposes of the rules of private international law, the content and effect of foreign law so as to determine whether a domestic cause of action exists: James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554. A related type of case, which may be placed in the same category, is where it is necessary to determine the content and effect of foreign law so as to determine whether a foreign or domestic proceeding should be permitted to continue: see, for example, National Mutual Holdings Pty Ltd v Sentry Corporation (at 232-233), per Gummow J. 308 Back in 1982 McLelland J in United States Surgical Corporation v Hospital Products International [1982] 2 NSWLR 766 at 797, 798 discussed a number of cases in which courts of equity enforced equitable obligations by acting in personam on the conscience of the defendant resident within the jurisdiction and in doing so administered the principles of equity according to the law of the forum. His Honour said: In some circumstances a court of equity will apply equitable principles as administered by itself to found relief against a defendant subject to its jurisdiction in relation to a transaction governed by a foreign law, even if similar principles form no part of that foreign law… An examination of the instances among these cases of the enforcement of equities other than in respect of the performance of contracts, reveals no precise statement or extended discussion of the conditions (apart from the amenability of the defendant to the process of the court) which attract the principle that the court will grant relief in accordance with the equitable principles as administered in the forum. However, since the rationale of the availability of relief in such cases is that the court acts in personam to regulate the defendant's conscience, it would seem sufficient that the defendant while resident within the forum was guilty of conduct which, by offending against those principles, gave rise to the occasion for such regulation…. [cf National Mutual Holdings Pty Ltd v Sentry Corporation [1989] 22 FCR 209 per Gummow J at 232] 309 In an illuminating article 'Equitable Obligations in Private International Law: the Choice of law, Sydney Law Review volume 2 1985-88 by R W White [now Justice White of this Court] examined many parameters concerning the ability of equity to act in personam on the conscience of a defendant. The learned author drew attention to the judgment of Holland J in National Commercial Bank v Wimborne [unreported, New South Wales Supreme Court, 28 April 1978]: In that case a Saudi-Arabian bank gave a guarantee to a Swiss bank of the obligations of a New South Wales debtor. The guarantee and the contract giving rise to the principle debt were governed by Swiss law. The plaintiff (the Saudi bank and a Saudi prince) alleged, and prima facie proved, that the monies were borrowed to be used in constructing a building in Jeddah and were misapplied by the defendant by being used for its own purposes. Part of the money was lent or otherwise made available to other defendants and applied in the purchase of land in New South Wales. The plaintiff sought interlocutory orders to require the defendant to provide security for the payment of the debt to the Swiss bank to ensure that the Saudi bank was not called on to pay under its guarantee. The plaintiff also claimed that the loan funds were held on a trust that the monies be returned to the provider, and claimed that being trust monies they could be traced into assets held by the various defendants. Holland J held that it was, prima facie, a complete answer to the defendants' argument that the parties had adopted or submitted themselves to Swiss law that the plaintiff were claiming equitable rights and equitable remedies. His Honour said: The Equity Court has long taken the view that because it is a court of conscience and acts in personam, it has jurisdiction over persons within and subject to its jurisdiction to require them to act in accordance with the principles of equity administered by the court wherever the subject matter and whether or not it is possible for the court to make orders in rem in the particular matter. In short, if the defendant is here, the equities arising from a transaction to which he is a party as ascertained by New South Wales law and the equitable remedies provided by that law will be applied to him. 310 In the course of the White article the author drew attention to the decision in Doss v Secretary of State for India (1875) LR 19 Eq. 509 at 535-6. In Doss v Secretary State for India the concept of referring a case to its natural forum emerges clearly as a factor going to the jurisdiction of the Court to entertain the suit. Earlier in Cookney v Anderson , Romilly, MR and Lord Westbury, LC in holding that the necessary requisites for jurisdiction were lacking, stressed the inconvenience of the Court deciding that case. In Doss v Secretary for State of India the plaintiff sued the Secretary of State for India in respect of a debt and claimed to be entitled to a charge on the revenues of the territory of Oudh. The defendant demurred and Malins, VC allowed the demurrer on three grounds, two of which went to the merits of the case. The third ground however was that the English Court was not the proper tribunal to hear the case. The plaintiff were normally resident in India; the defendant, the Secretary of State for India was undoubtedly resident in England, but was also resident in India; the cause of action arose in India; and the property over which the charge was claimed was situate in India. The defendant was served in England, and it is important to note that the Court was dealing with the demurrer claiming a lack of jurisdiction, not an application for a stay. Malins VC nevertheless held: …where there is a complete tribunal capable of deciding the question where the property is and where the parties are, that is the tribunal to be resorted to … if this is a case to be sustained at all it is in the Indian courts, and not in the courts of this country, that the suit should be brought. 311 This notion of the significance of locating a complete tribunal capable of deciding the relevant question is of some importance in relation to some of the arguments put forward by the defendants in the present proceedings. In truth the manner in which these proceedings have come before this Court and the plethora of other jurisdictions which play sundry parts in the events which occurred, satisfy the finding that equity requires to act in personam on the conscience of the defendants and that this Court has the jurisdiction to deal with so much of the causes of action as are upheld by these reasons. 312 As has already been observed, if a defendant seeks to rely upon a foreign lex causae, it is for the defendant to allege and prove that law as an exculpatory fact cf Regie Nationale des Usines Renault SA v Zhang supra where the principle was expressed in the following terms: "On the other hand, if the defendant seeks to rely upon a foreign lex causae, then, in the ordinary way, it is for the defendant to allege and prove that law as an exculpatory fact.": 313 The proposition that where foreign law is not proved it will be presumed to be the same as the lex fori is also amply supported: cf Lloyd v Guibert (1865) LR 1 QB 115 at 129 (dictum); Pickering v Stephenson (1872) LR 14 Eq 322 at 340 (special powers of directors or members of a corporation only to be exercised for its purposes); The Nouvelle Banque de L'Union v Ayton (1891) 7 TLR 377 (negotiability of bill); Wright Heaton & Co Ltd v Barratt (1892) 13 LR (NSW) 206 at 210 (waiver of notice of dishonour of promissory note); Bowden Bros & Co v Imperial Marine and Transport Insurance Co (1905) 5 SR (NSW) 614 at 616 (dictum in argument); The Parchim [1918] AC 157 (law relating to sale of goods); Ertel Bieber & Co v Rio Tinto Co Ltd; Dynamit Actien-Gesellschaft (Vormals Alfred Nobel & Company) v Rio Tinto Co Ltd [1918] AC 260 at 295 and 301 (validity of contracts involving trading with the army in wartime); The Colorado [1923] P 102 at 111 (dictum); Sedgwick, Collins & Co, Ltd v Highton (1929) 34 LlL Rep 448 at 457 (construction of contracts); The Torni [1932] P 78 at 91 (construction of statute); Hartmann v Konig (1933) 50 TLR 114 at 117 (construction of contracts); De Reneville v De Reneville [1948] P 100 at 121 (French law on whether incurable impotence renders marriage void ab initio); Re an Arbitration Between A/S Tank of Oslo and Agence Maritime L Strauss of Paris [1940] 1 All ER 40 at 42 (construction of contracts); Re Parana Plantations Ltd [1946] 2 All ER 214 at 217-8 (construction of contracts); Casey v Casey [1949] P 420 at 430 (Canadian law on voidability of marriages); Jabbour v Custodian of Absentee's Property of State of Israel [1954] 1 All ER 145 at 153 (construction of contracts); The Marinero [1955] P 68 at 73 (guarantees); Szechter (orse Karsov) v Szechter [1971] P 286 at 296 (dictum); United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 at 799 (dictum); Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] 1 NZLR 720 at 726-7; Bumper Development Corp Ltd v Commissioner of Police of the Metropolis [1991] 1 WLR 1362 at 1369 (dictum); Royal Boskalis NV v Mountain [1999] QB 674 at 693 and 725 (duress rendering contract unenforceable).:per contra Damberg v Damberg [2001] 52 NSWCA 87. 314 After the case had been opened the defendants obtained leave to amend their response to plead as follows: "(S)uch, if any, entitlements that the plaintiff might have in these proceedings must be determined by the law of Kazakhstan as the law governing : (a) any contract of employment made between the plaintiff and the first and second defendants respectively and (b) the conduct of business in Kazakhstan 315 That being the case the defendants contend that the law of Kazakhstan applies to the employment contracts of Messrs Nicholls and Slater. They also allege that the same law applies to the conduct of business in Kazakhstan. 316 I accept that whether or not either or both of these propositions is correct is a question of fact upon which of course the defendants bear the onus. Examining the question of fact 317 Three witnesses gave opinion evidence and were cross-examined: Professor Maidan Suleimenov, Professor William Butler and Mr Victor Mokrousov. There is also a joint statement of these witnesses dated 5 June 2009 Exhibit PX 4. As well, in evidence as Exhibit PX9 is a copy of the Civil Code of the Republic of Kazakhstan. The evidence given by Professor Suleimenov 318 Professor Suleimenov's primary affidavit was dated 20 March 2008. He is Professor of law at both the Kazakh University for Humanities and the Caspian Public University: His primary affidavit is in Russian and a translation of this and a second affidavit of 27 May 2009, is provided in an affidavit of Barry Lewis sworn 23 July 2009. 319 In 1992 Professor Suleimenov founded a law firm called Zangar which has been one of the leading legal services firms in Kazakhstan for more than 15 years. In a distinguished career he was Head of the Law Drafting Working Group that among other things drafted the Civil Code of the Republic of Kazakhstan. He was described by Professor Butler as "today the most senior civil lawyer in Kazakhstan". 320 In an opinion annexed to his first affidavit Professor Suleimenov expressed the opinion in (Paragraph 12) that "the Branch of a foreign legal entity in Kazakhstan, such as MWP, is not an organisation. Therefore, Part 2 of Article 3.2 of the Law on Labour does not apply to the relations between the Branch of MWP, as a foreign legal entity, and its employees." 321 On the assumptions that neither Mr Nicholls nor Mr Slater held a residence permit for Kazakhstan and that their place of residence in each case was New South Wales, Professor Suleimenov concluded that "the applicable law to the contracts in these instant proceedings is the law of New South Wales (Australia)": paragraph 30. 322 His conclusion expressed in paragraphs 54 were as follows: i. The Law of the Republic of Kazakhstan is not applicable to the contracts concluded between MWP and Nicholls and Slater. Instead, these contracts are regulated by the laws of New South Wales, Australia; ii. Remedial measures similar to the remedial measures given in pages 1, 78 and 81-84 of the FACLS exist in Kazakhstan law, including as to full material responsibility of an employee under a contract (albeit with the limitations set out in the Law on Labour) as described above and under the rules of tort (delict) and fraud, etc; iii. in accordance with the rules on renvoi the proper law applicable to the contract between MWP and Nicholls and Slater should be and is the law of New South Wales Australia. 323 In his affidavit of 27 May 2009 Professor Suleimenov responded to certain segments of the affidavit of Mr Mokrousov called by the defendant's. Mr Mokrousov had said in paragraphs 18 of his affidavit: The Labor Law [ The Labor Law was in effect when the Nicholls Contract and the Slater Contract were entered into , . The Labor Law was replaced by the Labor Code in 2007. I refer to the Labor Law based on the general non-retroactivity principles recognized by Kazakhstan law ] states explicitly that "this Law governs labor relations on the territory of the Republic of Kazakhstan", that it applies to "foreigners carrying out labor activities in Kazakhstan" and that "labor legislation of the Republic of Kazakhstan applies to employees of organizations … located on the territory of the Republic of Kazakhstan" (Article 3 of the Labor Law). Thus, the Labor Law regulates choice of law matters in relation to labor contracts hence there is no basis for applying the Civil Code to such matters. 324 The response by Professor Suleimenov was in the following terms: "Regarding paragraph 18, the Labour Law of the Republic of Kazakhstan shall only apply to employees of organisations located on the territory of the Republic of Kazakhstan. A branch of a foreign company in Kazakhstan, such as MWP, is a structural division of an organisation (in this case a foreign company) located outside of the Republic of Kazakhstan." 325 In paragraphs 20 and 21 Mr Mokrousov had observed as follows: Kazakhstan law does not have a clear definition of the term "organization". Technically, the term "organization" is broader than the term "legal entity" but is frequently viewed as an equivalent of the latter (Articles 33 and 34 of the Civil Code). The location of the legal entity is "the location of its continuing [corporate] body" (Article 39 of the Civil Code). Although the question is ultimately the one of fact, I observe based on the above assumption that for Kazakhstan law purposes MWP is likely to be located in Kazakhstan, at the place where it maintains its principal office. Therefore, as a matter of the Labor Law, Kazakhstan labor legislation applies to all labor contracts between MWP on one hand and MWP's employees in Kazakhstan on the other hand, whether by virtue of the employees' labor activities in Kazakhstan or by virtue of MWP's location in Kazakhstan. 326 The response by Professor Suleimenov was in the following terms: "Regarding paragraphs 20 and 21, there is no clear definition of the term "organisation" in the Labour Law. The term "organisation" as used in the Labour Law has been left over from the Soviet times when legal entities were mainly State organisations. Pursuant to Article 1.3 of the Civil Code of the Republic of Kazakhstan, civil legislation shall apply to labour relations in cases where those relations are not regulated, respectively, by the labour legislation. Accordingly, it is proper to refer to the Civil Code definition in this case I in the Civil Code, the term "organisation" is defined so as to refer to legal entities (i.e. commercial and non-commercial organisations as set out in Article 34 of the Civil Code) and from this definition, it is clear that the term "organisation" defined so as to refer to does not apply to branches, such as the Branch of MWP in Kazakhstan." 327 In his oral evidence at T 511.41-512.3. he indicated that in expressing these views what he had in mind was Article 43 paragraph 3 of the Civil Code. That Article provides that "Branches and representations shall not be juridical persons" [Exhibit PX9]. See also Article 33. [It is to be noted that this is Mr Slater's understanding as well] 328 Accordingly Professor Suleimenov regarded that the conclusion to the contrary expressed by Mr Mokrousov "cannot be considered sufficiently reasonable": paragraph 9. In paragraph 22 Professor Suleimenov repeated his conclusion: "... I am confident that the law governing the employment contracts of both Mr Slater and Mr Nicholls with MWP is the law of New South Wales." 329 Significantly none of these opinions of Professor Suleimenov was in any way questioned or challenged in his cross-examination. The evidence given by Professor Butler 330 Professor Butler is the John Edward Fowler Distinguished professor of Law, Dickinson School of Law, Pennsylvania State University and Emeritus Professor of Comparative Law, University of London. He has conducted law practices in the Republic of Kazakhstan since 1992. He has translated the Civil Code of the Republic of Kazakhstan into English. This is the translation that is Exhibit P9. 331 Professor Butler provided two affidavits on this topic dated respectively 1 April 2008 and 2 June 2009 (in reply). In the former, he too referred to the Civil Code of the Republic of Kazakhstan, in particular Article 43(3): paragraph 29. He concluded: ".... a Branch such as that of MWP in Kazakhstan is not a party to civil law relations and cannot enter into agreements in its own name. Accordingly, Slater and Nicholls were employed by MWP as a BVI company; there is no other possibility, and the contracts could only have been concluded by the BVI company." 332 Having referred (in paragraph 36) to a decision of the Supreme Court of Kazakhstan (the Mizikovski case) he goes on to conclude "that the contracts of Nicholls and Slater are not governed by the law of Kazakhstan": paragraph 37. 333 Professor Butler then turned his attention (in paragraph 44) to the doctrine of renvoi. In paragraph 46 he concluded that if the conflict rules of Kazakhstan applied to determine the applicable law, the law of Australia, presumably New South Wales would be applicable to the relations of MWP and Slater and Nicholls. 334 In paragraph 47 he stated: "It follows from my analysis above that if the law of NSW referred the court to the law of Kazakhstan, there are no labour norms of Kazakhstan applicable to the relationship between the branch of a foreign juridical person and a foreign citizen; accordingly, the reference must be to the law of Kazakhstan generally, as a whole, which returns us to Article 1087 of the Civil Code and full circle back to the law of Australia." 335 In his reply affidavit (of 2 June 2009) Professor Butler described the conclusion of Mr Mokrousov in paragraph 21 of his affidavit, where Mr Mokrousov says that Kazakhstan labour legislation applies to all labour contracts between MWP and its employees in Kazakhstan, as "wildly at odds with the law of Kazakhstan." 336 Professor Butler also provided a short Supplementary Report dated 8 August 2009. This was admitted without objection as Exhibit PX 5 (see T 935). 337 In that report Professor Butler refers to the Mizikovski case referred to in his earlier affidavit in some more detail and expressed either view that he considered it highly probable that a Kazakhstan court would follow the view taken in that case, namely that where there is a foreign citizen employed in a branch of a foreign entity whose head office was located abroad, the labour contract was concluded not with the branch but with the foreign juridical person located abroad and so is not regulated by the Kazakhstan labour legislation but by the laws of (in that case) the United States. 338 Just as with Professor Suleimenov, none of Professor Butler's views was questioned or challenged in cross-examination. This being the case it would be a highly unusual outcome if the evidence of these two eminent lawyers was not accepted. The evidence given by Mr Mokrousov 339 Mr Mokrousov, unlike the expert witnesses called by the plaintiff, was challenged as to the opinions he expressed in his affidavit. He acknowledged in particular that an important assumption on which his opinion rested was that MWP operates a law firm "from its headquarters in Almaty": [T 1425.47-50; T 1432.24] 340 That assumption has not been proved and is clearly incorrect. As explained by both Professors Suleimenov and Butler, the assumed position is central to the question of whether or not the laws of Kazakhstan apply to any contract of employment between MWP and both Messrs Slater and Nicholls. 341 Mr Mokrousov's evidence at T 143-1432 is both confused and confusing. It does not support his affidavit evidence, which has been directly challenged by the two expert witnesses called by plaintiff, both of whom are eminently better qualified to express an opinion about the matter, and which they both do without equivocation and in clear unambiguous terms. 342 The material factual finding of the court based on the evidence before it is that the law applicable to the contracts of employment between MWP on the one hand and Messrs Slater and Nicholls respectively on the other is that of New South Wales. 343 These factual findings are also supported by an examination of the authorities concerning the proper law of the contracts. 344 In Akai Pty Limited v People's Insurance Co Limited (1996) 188 CLR 418, Toohey, Gaudron and Gummow JJ said in relation to the question of choice of law in a contractual setting: "There is said to be a tripartite hierarchy of express, inferred and objective choice of law. This has been criticised, but on the footing that the second category, "inferred choice", is really no choice at all and that there should be but two categories, "express choice" and "no choice". However, the better view is that the first and second categories are but species of the one genus, that concerned with giving effect to the intention of the parties. In Amin Rasheed Shipping Corporation v Kuwait Insurance Co, Lord Diplock referred to what he described as the "pithy definition" of the "proper law" of the contract by Lord Simonds in Bonython v The Commonwealth , namely, "the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connection". Lord Diplock continued: "It may be worth while pointing out that the `or' in this quotation is disjunctive, as is apparent from the fact that Lord Simonds goes on immediately to speak of `the consideration of the latter question' . If it is apparent from the terms of the contract itself that the parties intended it to be interpreted by reference to a particular system of law, their intention will prevail and the latter question as to the system of law with which, in the view of the court, the transaction to which the contract relates would, but for such intention of the parties have had the closest and most real connection, does not arise." It will be noted that his Lordship spoke (and, with respect, accurately) of ascertaining an intention of the parties from the terms of the contract. In approaching that task, as Lord Diplock earlier had pointed out, the court applies the ordinary rules of the common law relating to the construction of contracts. That requires consideration of the terms and nature of the contract and "the general circumstances of the case" in the sense explained, with reference to contractual construction, by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW. What is involved in inquiring whether the parties have exercised their liberty to select a governing law is the ascertainment of that which, in truth, the parties are to be taken to have agreed. This may be discerned from a direct statement in a formal written contract. On the other hand, or even in such a case of a formal written contract, it may be necessary to construe the contract as a whole in the manner we have described. In addition, there may be real difficulty in ascertaining, by the drawing of inferences from the evidence, the existence of the express terms of the contract. The terms of the contract may be something to be gleaned from a number of documents, conversations or business dealings over a period of time. It is not a question of implying a term as to choice of law. Rather it is one of whether, upon the construction of the contract and by the permissible means of construction, the court properly may infer that the parties intended their contract to be governed by reference to a particular system of law. It is in this way that a submission, in the contract, to the exclusive jurisdiction of the tribunals of a particular country, may be taken as an indication of the intention of the parties that the law of that country is to be the proper law of the contract. There is, in truth, only one question here, and that is whether, upon the proper construction of the contract (which may include an expression of choice in direct language), the court properly may conclude that the parties exercised liberty given by the common law to choose a governing law for their contract. If the answer to this is in the negative, then the law itself will select a proper law. References to a "three-tiered approach", with the creation of a conceptual rather than merely evidentiary distinction between an expression of intention derived from the very words used and that which appears upon a proper construction of the contract as a whole, serves needlessly to complicate matters." (Emphasis added; footnotes omitted) 345 Thus in the present case the first task is to ascertain whether it is apparent from the terms of the contracts themselves that the parties intended them to be interpreted by reference to a particular system of law. This, as the majority in Akai pointed out, is a question of construction, requiring consideration of the terms and nature of the contract and "the general circumstances of the case". From this consideration, it may be possible for the court to infer that the parties intended their contract to be governed by reference to a particular system of law. 346 There is only one choice to be made: the contracts are either governed by New South Wales law or Kazakhstan law (as lately pleaded by the defendants). 347 No other foreign law is pleaded. The only other possible candidate is BVI law as the law of the place of incorporation of MWP but this has neither been pleaded nor proved. 348 If some other foreign law were to be found to apply, there is no evidence before the court as to the content of that law and it must be presumed to be the same as New South Wales law. 349 Thus if it is not Kazakhstan law, the court must apply the principles of New South Wales law if only by default. 350 The second task referred to by the majority in Akai only arises if it cannot be inferred as a matter of construction that the parties have chosen a particular law. Then and only then does is court required to consider with which system of law the transaction has its "closest and most real connection". 351 This second step never arises in this case. The first step: the parties' intention 352 The material sections of the contracts of Messrs Nicholls and Slater have already been set out. 353 Here the following factors point to the parties in each case choosing the law of New South Wales to govern their relationship. In what follows the plaintiff submissions are adopted as of substance. 354 Those factors are: a. the contracts were in the English language; b. there was no Russian translation of either contract; c. there are no references to Kazakhstan law or Kazakhstan legal principles in either contract; d. the terminology used in each contract (as distinct from the choice of English as the language used to express the contracts) also suggests a connection with a common law system: i. Nicholls contract was referred to as an " offer of employment " and as " this letter of offer ", it referred to Nicholls as " very senior lawyer ", it provided for a payment of " salary " in US dollars into an offshore bank account, it used terms such as " billable " and " non-billable hours ", it used phrases such as " reasonable endeavours ", " maintain strict confidentiality ", " not approach solicit or make offers to " and spoke of " annual leave " of " 20 working days per year which shall accrue quarterly in arrears "; ii. Slater's contract also was referred to as an " offer of employment ", it also offered payment in US dollars " into a bank account nominated by you ", it used terms such as " this letter of offer ", " indicate your acceptance ", " Associate ", " billable hours ", " terminate this agreement " and " maintain strict confidentiality ". e. neither Nicholls nor Slater were Kazakhstan residents; f. MWP was not a Kazakhstan entity (it was a branch of a BVI company: exhibit PX7); g. the "employees" - Nicholls and Slater - were in each case residents of New South Wales at the time both of negotiating and concluding their contracts; h. both Nicholls and Slater were lawyers admitted in New South Wales; i. neither was trained in Kazakhstan law or procedures; j. their negotiations were with Emmott and Wilson, both lawyers from a common law system, as were they; k. Nicholls was in Australia when he sent the email of 13 April 2004 to Emmott at MWP (1/177) responding to MWP's offer of employment: T 1108.17; l. Nicholls was travelling to Kazakhstan to work at MWP from Australia: 1/179; T 1108.20-1109.30; m. Nicholls' contract offered to reimburse him for the " reasonable cost of your medical insurance with an Australian provider "; n. it also offered a return airfare to Australia each year; o. Nicholls' (presumably Australian) law library was to be shipped from Australia to Kazakhstan; p. the initial approach from and interviews with Slater were in Australia: T 1088; q. Slater sent his acceptance from an address in Woolloomooloo in New South Wales (2/190) having never even set foot in Kazakhstan: T 1341.35; r. Slater's contract spoke of his " arrival in Kazakhstan " in the future tense; s. in an email to Wilson on 23 May 2005 (2/158) Slater stated he currently held " a full practising certificate in NSW and Victoria " and enquired whether he needed to be " admitted to practice in the UK to practice in Almaty ", to which Wilson's response on 26 May 2005 was " no ". t. also relevant in Slater's case as part of the " general circumstances of the case " was that he was, to the knowledge of MWP, on leave from his permanent employer Westpac Banking Corporation in Sydney for the term of his employment offer with MWP. 355 I accept that the matters set out above indicate that the application of a common law system was a matter of common contemplation or common assumption between the parties when they entered into the respective contracts (cf Codelfa Construction Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337, per Mason J at 354; Bonython v Commonwealth of Australia [1951] AC 201 at 219-220 per Lord Simonds delivering their Lordships judgment). 356 I turn next to the contention that the nature of the work to be performed by Messrs Nicholls and Slater under their respective contracts was to be done by them from offices in Almaty in Kazakhstan, suggesting a connection with Kazakhstan. 357 The work which each was engaged to undertake however involved them working on MWP client matters pursuant to which, in every case, the relevant letter of engagement expressly stipulated the laws of England as the governing law of the contract: see for example the letter at 4/121 and the evidence of Wilson at T 344.11 that this letter was "our standard form". 358 Mr Wilson also gave evidence at T313.31-33 that Mr Slater (and presumably Mr Nicholls) was "practising effectively international law". 359 Accordingly the finding to be drawn from the circumstances is that although there was no express choice of law clause in the contracts here, they were intended as a matter of construction by the parties to be governed by the laws of the State of New South Wales. In this, the position in this case is not unlike that in Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50, where the House of Lords found that an English language marine insurance contract which gave Kuwait as its place of issue and provided for claims to be payable there was, as a matter of construction, intended to be governed by English law. The second step: the closest and most real connection 360 Even if the above conclusion be incorrect such that it were impossible for the court to infer from the above matters that the parties have chosen a system of law to govern their relationship, the question which would arise to be addressed would be as to which system of law the transaction has its "closest and most real connection". 361 In that circumstance I accept that it would be a very curious result if the law to be chosen as having the closest and most real connection to these contracts were to be a system which by its own rules did not regard itself as having any role to play in the matter. This would be the case if Kazakh law were chosen: see the evidence of Professor Suleimenov and of Professor Butler. 362 The very same factors that are discussed above under the first step are relevant also to this question. Hence the fact that the contracts were in English, not Russian, that they made no reference to Kazakhstan law or principles, that they were expressed in terminology relevant to a common law system and so on are matters that also suggest no close or real connection to the law of Kazakhstan. 363 In these circumstances the contention that the system of law with which these contracts had their closest and most real connection is anything other than New South Wales is rejected. The contracts were negotiated here, with people resident here, they were in English, and there was no apparent intention that if there were a default in the performance of the contracts the parties would resort to the courts of Kazakhstan to resolve it. And if they did, according to the evidence of the Kazakhstan law experts, they would be rebuffed. Conclusion 364 The defendants have failed to prove as a matter of fact that Kazakhstan law applies to the contracts of employment. The plaintiff has overwhelmingly proved it does not. The presumption that Kazakhstan law is the same as local New South Wales law applies in that event. Remedy 365 As often occurs the proceedings before the court raise difficult questions of remedy. 366 In Nocton v Lord Ashburton (1) [1914] AC 932, Viscount Haldane LC described the three primary remedies consequent upon a breach of a fiduciary obligation between a solicitor and client: "Courts of Equity had jurisdiction to direct accounts to be taken, and in proper cases to order the solicitor to replace property improperly acquired from the client, or to make compensation if he had lost it by acting in breach of a duty which arose out of his confidential relationship to the man who had trusted him." 367 As is made plain in Warman International Ltd & Anor v Dwyer (1995) 182 CLR 544 at 556: Although the Lord Chancellor was addressing the fiduciary relationship which arises between a solicitor and client, his words are of general application. In the present appeal, all three of those remedies are relevant, but, as has been indicated, the primary focus is the remedy of account. 368 Hence liability for breaches of equitable obligations may be of either a restitutionary or a compensatory nature. 369 Restitutionary relief may be given: i. by way of the imposition of a constructive trust over specific property (specific restitution) or ii. by an accounting for profits. 370 The imposition of a liability to account for profits is essentially a personal rather than a proprietary remedy, but it may in some cases be appropriate to impose an equitable lien over specific property by way of security for such accounting. 371 In the area of relief [against what used to be called equitable fraud], of which profiting from a fiduciary position is one example, the precise form of relief must be moulded to satisfy the demands of justice and good conscience in the particular case: "the court must look at the circumstances in each case todecide in what way the equity can be satisfied" ( Chalmers v Pardoe [1963] 1 WLR 677, at p 682; [1963] 3 All ER 552, at p 555; "the equity of the transaction must shape the measure of the relief": Beatty v Guggenheim Exploration Co 122 NE 378 (1919), at p 381; 225 NY 380, at p 389. [Per McClelland J United Surgical Corporation v Hospital Products at 815] 372 As to the alternative restitutionary claim [for an account of profits] such a remedy is generally appropriate where the fiduciary's relevant gain is thederivation of profits from a particular activity rather than by the acquisition of a particular asset: it is directed at revenue rather than capital. 373 It is a remedy which is directed to restitution to the beneficiary of the fiduciary's gain rather than compensation to the beneficiary for its loss. As Windeyer J said in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25, at p 32; "The distinction between an account of profits and damages is that by the former the infringer is required to give up his ill-gotten gains to the party whose rights he has infringed: by the latter he is required to compensate the party wronged for the loss he has suffered. The two computations can obviously yield different results, for a plaintiff's loss is not to be measured by the defendant's gain, nor a defendant's gain by the plaintiff's loss." Monetary compensation 374 Apart from the limited power to award damages in addition to or in substitution for equitable relief, the court has an inherent power to grant relief by way of monetary compensation for breach of a fiduciary or other equitable obligation: see Nocton v Lord Ashburton [1914] AC 932, at pp 946, 956, 957; McKenzie v McDonald [1927] VLR 134, at p 146; Holmes v Walton [1961] WAR 96; cf Seager v Copydex Ltd [1967] 1 WLR 923; [1967] 2 All ER 415; [1969] 1 WLR 809; [1969] 2 All ER 718. The nature and extent of this remedy have been discussed by I E Davidson in an illuminating article entitled "The Equitable Remedy of Compensation" in 13 Melbourne University Law Review 349. 375 This remedy differs from an account of profits in that the loss to the plaintiff rather than the gain to the defendant is the measure of relief. The principles of assessment of equitable compensation do not necessarily coincide with those applicable to common law damages. 376 Warman gives substantial guidance on many parameters which operate where questions of identifying the appropriate remedy in the case of a breach of fiduciary obligation arise. The joint judgment makes the following matters clear: i. Where the rule [that a person in a fiduciary position is not entitled to make a profit without the knowledge and assent of the person to whom the fiduciary duty is owed] applies, the liability of the person in a fiduciary position does not depend on the fact that the person to whom the duty is owed has suffered injury or loss. ii. A fiduciary must account for a profit or benefit if it was obtained either when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position. iii. The stringent rule that the fiduciary cannot profit from his trust is said to have two purposes: that the fiduciary must account for what has been acquired at the expense of the trust, and to ensure that fiduciaries generally conduct themselves "at a level higher than that trodden by the crowd". iv. The objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage. v. Thus, it is no defence that the plaintiff was unwilling, unlikely or unable to make the profits for which an account is taken or that the fiduciary acted honestly and reasonably. cf Regal Hastings supra and Phipps v. Boardman ,. vi. The assessment of the profit will often be extremely difficult in practice; accordingly it has been said that "(w)hat will be required on the inquiry ... will not be mathematical exactness but only a reasonable approximation". What is necessary however is to determine as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his duty. vii. In Hospital Products Ltd. v. United States Surgical Corporation , Mason J referred to the two approaches to the problem of determining the fiduciary's liability mentioned by Upjohn J in Re Jarvis (decd) : "One approach, more favourable to the fiduciary, is that he should be held liable to account as constructive trustee not of the entire business but of the particular benefits which flowed to him in breach of his duty. Another approach, less favourable to the fiduciary, is that he should be held accountable for the entire business and its profits, due allowance being made for the time, energy, skill and financial contribution that he has expended or made. ... In each case the form of inquiry to be directed is that which will reflect as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his duty." viii. Ordinarily a fiduciary will be ordered to render an account of the profits made within the scope and ambit of his duty. Of course, if the loss suffered by the plaintiff exceeds the profits made by the fiduciary, the plaintiff may elect to have a compensatory remedy against the fiduciary . That election will bind the plaintiff. ix. Although an account of profits, like other equitable remedies, is said to be discretionary, it is granted or withheld according to settled principles. It will be defeated by equitable defences such as estoppel, laches, acquiescence and delay. And, notwithstanding what was decided in Regal (Hastings) Ltd. v Gulliver and Phipps v Boardman , it may be that: "the liability to account for a personal benefit or gain obtained or received by use or by reason of fiduciary position, opportunity or knowledge will not arise in circumstances where it would be unconscientious to assert it or in which, for example, there is no possible conflict between personal interest and fiduciary duty and it is plainly in the interests of the person to whom the fiduciary duty is owed that the fiduciary obtain for himself rights or benefits". The conduct of the plaintiff may be such as to make it inequitable to order an account . Thus a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profits. x. It is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts . As Fletcher Moulton LJ observed in Coomber, In re; Coomber v. Coomber [1911] 1 Ch 174: "Fiduciary relations are of many different types ... and the Courts have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts which, between persons in a wholly independent position, would have been perfectly valid. Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it. They conclude that every kind of fiduciary relation justifies every kind of interference. Of course that is absurd. The nature of the fiduciary relation must be such that it justifies the interference. There is no class of case in which one ought more carefully to bear in mind the facts of the case ... than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them." xi. But the basic principle remains that a principal who so elects is entitled to an account of profits, subject to considerations of the kind already mentioned. … And when the fiduciary is actively dishonest and obtains an identifiable profit from that dishonesty , it is more difficult still to conceive of circumstances in which no account at all should be ordered. xii. In the case of a business it may well be inappropriate and inequitable to compel the errant fiduciary to account for the whole of the profit of his conduct of the business or his exploitation of the principal's goodwill over an indefinite period of time. In such a case, it may be appropriate to allow the fiduciary a proportion of the profits, depending upon the particular circumstances. That may well be the case when it appears that a significant proportion of an increase in profits has been generated by the skill, efforts, property and resources of the fiduciary, the capital which he has introduced and the risks he has taken, so long as they are not risks to which the principal's property has been exposed. Then it may be said that the relevant proportion of the increased profits is not the product or consequence of the plaintiff's property but the product of the fiduciary's skill, efforts, property and resources. This is not to say that the liability of a fiduciary to account should be governed by the doctrine of unjust enrichment, though that doctrine may well have a useful part to play; it is simply to say that the stringent rule requiring a fiduciary to account for profits can be carried to extremes and that in cases outside the realm of specific assets, the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment of the plaintiff. xiii. It is for the defendant to establish that it is inequitable to order an account of the entire profits. If the defendant does not establish that that would be so, then the defendant must bear the consequences of mingling the profits attributable to the defendant's breach of fiduciary duty and the profits attributable to those earned by the defendant's efforts and investment, in the same way that a trustee of a mixed fund bears the onus of distinguishing what is his own (28). xiv. Whether it is appropriate to allow an errant fiduciary a proportion of profits or to make an allowance in respect of skill, expertise and other expenses is a matter of judgment which will depend on the facts of the given case. However, as a general rule, in conformity with the principle that a fiduciary must not profit from a breach of fiduciary duty, a court will not apportion profits in the absence of an antecedent arrangement for profit-sharing but will make allowance for skill, expertise and other expenses. xv. In determining the proper basis for an account of profits, it is of first importance.. to ascertain precisely what it was that was acquired in consequence of the fiduciary's breach of duty. And, in some situations, it may also be relevant to ascertain what was lost by the plaintiff. Causation 377 I further accept as pervasive the following propositions and authorities relied upon by the defendants in generally treating with matters such as questions of causation: i. Although the concept of "causation" is sometimes said to play less of a role in claims for relief in Equity than it does on the determination of an action for damages at common law, it is never wholly absent as a factor to be taken into account, in some form or another, bearing in mind the ever-present necessity upon an exercise of Equitable jurisdiction to identify the "equity" said to give rise to an entitlement to relief in the context of the particular facts of the case. ii. In the context of a breach of trust, the High Court of Australia in Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 501-502 [43]-[44] endorsed statements to the effect that "there is no equitable by-pass of the need to establish causation" and that "in questions of causation it is important to focus on the relevant equitable duty". iii. In the context of a claim for equitable compensation, the Court of Appeal in Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at 90 [431]-[432] emphasised the necessity in each case: (a) to focus with precision on both the nature of an obligation said to have been breached and the nature of the breach; and (b) to apply a commonsense approach to causation. iv. In O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 274G-275A Spigelman CJ (with the concurrence of Priestley and Meagher JJA) said: "…[A] claim for equitable compensation for breach of a fiduciary obligation requires a causal link between the breach and the loss. Causation in equity is not, however, susceptible to the formulation of a single test. It is necessary to identify the purpose of the particular rule to determine the appropriate approach to issues of causation…." v. As Brereton J remarked in Visnic v Sywak [2008] NSWSC 427 at [4]-[13] and more particularly at [9] and [13] – in a judgment cited in Young, Croft and Smith, On Equity (2009) at page 123 n.228 – the scope of a liability to pay equitable compensation or account for profits is not unlimited; there must be some commonsense connection between the loss or the profit the subject of the liability and the breach of fiduciary obligation from which the liability is said to flow . vi. The concept of "causation" is often subtly embedded in the formulation and operation of equitable principles rather than stated as a separate issue as it commonly is in the identification of the elements of a cause of action at common law. vi. In both O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 273D and Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at 90 [432], the Court of Appeal endorsed reasoning of McLachlan J in Canson v Boughton & Co (1991) 85 DLR (4 th ) 129 at 163. There her Honour said of equitable compensation: "In summary, compensation is an equitable monetary remedy which is available when the equitable remedies of restitution and account are not appropriate. By analogy with restitution, it attempts to restore to the plaintiff what has been lost as a result of the breach, the plaintiff's lost opportunity. The plaintiff's actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight. Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are only those which on a commonsense view of causation, were caused by the breach. The plaintiff will not be required to mitigate, as the term is used in law, but losses resulting from clearly unreasonable behaviour on the part of the plaintiff will be adjudged to flow from that behaviour, and not from the breach." vii. In Young, Croft and Smith, On Equity (2009) at page 127 [2.510] the authors commend the following summary of principles by Handley JA in Youyang Pty Ltd v Minter Ellison [2001] NSWCA 198 at [16]: a) the object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation. b) the Court must decide, using hindsight and commonsense, what loss was in fact caused by the breach of equitable duty. c) the question is whether the loss would have occurred if there had been no breach. d) the question is whether the loss would have been caused even if the breach had not occurred. e) if these issues are determined favourably to the beneficiary, it does not matter that the intermediate cause of the loss was the dishonesty or breach of duty of a third party, since there is no scope in Equity for the common law rules of remoteness and the effect of new intervening acts. f) there is sufficient connection between the loss and the breach when the loss would not have occurred if there had been no breach of duty. [But see below as to different tests of causation which apply to equitable and common law remedies] Election 378 In Dr Martens Australia Pty Limited & Ors v Bata Shoe Co of Australia Limited & Ors [1997] FCA 505, Goldberg J approved and followed the approach set out by Lord Nicholls in the Privy Council decision of Personal Representatives of Tang Man Sit v Capacious Investments Limited [1996] 1 AC 514 at 521, which read as follows: "Faced with alternative and inconsistent remedies a plaintiff must choose or elect between them. He cannot have both. The basic principle governing when a plaintiff must make his choice is simple and clear. He is required to choose when but not before judgment is given in his favour and the judge is asked to make orders against the defendant . A plaintiff is not required to make his choice when he launches his proceedings. He may claim one remedy initially, and then by amendment of his writ and his pleadings abandon that claim in favour of the other. He may claim both remedies, as alternatives. But he must make up his mind when judgment is being entered against the defendant. Court orders are intended to be obeyed. In the nature of things, therefore, the Court should not make orders which would afford a plaintiff both of two alternative remedies. In the ordinary course, by the time a trial is concluded a plaintiff will know which remedy is more advantageous to him. By then, if not before, he will know enough of the facts to assess where his best interests lie . There will be nothing unfair in requiring him to elect at that stage. Occasionally this may not be so. This is more likely to happen when the judgment is a default judgment or a summary judgment and at the conclusion of a trial. A plaintiff may not know how much money the defendant has made from the wrongful use of his property. It may be unreasonable to require the plaintiff to make his choice without further information. To meet the difficulty, the Court may make discovery and other orders designed to give the plaintiff the information he needs, and which in fairness he ought, to have before deciding upon his remedy ." (emphasis added) 379 This approach has been endorsed in New South Wales. See in particular Artistic Builders Pty Limited v Elliot and Tuthill (Mortgages) Pty Limited and Ors [2002] NSWSC 16 per Campbell J at [159]-[161], Acme Office Service Pty Limited v Ludstrom and Others [2002] NSWSC 277 per Gzell J at [39] and Hexiva Pty Limited v Lederer [2006] NSWSC 318 per Brereton J at [57]-[64]. 380 In a case such as the present (where, non-disclosure of relevant information by the defendants has been an ongoing issue), I accept that both principle and fairness dictate that, in accordance with the above, the MWP not be put to election as to its remedies until these reasons have been given. Split election 381 During the conduct of these proceedings MWP reserved its right to make a "split election", seeking different remedies against different defendants, in accordance with Bergin J's decision in Club of the Clubs Pty Limited v King Network Group Pty Limited (No 2) [2007] NSWSC 574. I further accept that such an election cannot in fairness be made until after delivery of reasons for decision. MWP's approach to the relief which it seeks 382 MWP primarily seeks equitable relief for breach of the fiduciary duties owed to it by reason of Messrs Nicholls and Slater's employment, and also knowingly assisting in Mr Emmott's dishonest breaches of his fiduciary duties as, in effect, a partner in MWP. 383 MWP claims: i. a constructive trust over the shares held by Slater in Temujin International Ltd; ii. a constructive trust over the shares in Temujin Services Ltd held by Slater; iii. a constructive trust over the shares in Temujin FZE held by Nicholls; iv. in the alternative an equitable account of profits from each of the defendants; v. in the further alternative, equitable compensation: see Nocton v Lord Ashburton [1914] AC 932 at 956-957. vi. An enquiry as to damages. vii. MWP also makes a common law claim, against Messrs Nicholls and Slater. The defendants' proposition 384 In answer to the plaintiff's case that it has lost the opportunity to gain for itself the profits of the defendants' dishonest enterprise, the defendants assert that those profits would not have been made by MWP. 385 As the authorities already cited make clear, in terms of the plaintiff's claims for equitable relief it does not matter that the plaintiff may not have been able to achieve in its own right the benefits derived by the defendants. It is simply no defence that the plaintiff was "unwilling, unlikely or unable to make the profits for which an account is taken": see Warman International Limited v Dwyer (1995) 182 CLR 544, at 558 per Mason CJ, Brennan, Deane, Dawson & Gaudron JJ. 386 This is based in the first case on a breach of their equitable duties and in the second on a breach of their respective contracts for the lost opportunity presented by the transactions that presented themselves to the defendants at common law in accordance with the well known principles enunciated in such cases as Malec v J C Hutton Pty Limited (No 2) (1990) 169 CLR 638, Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 and Poseidon Ltd & Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. As opened, the value of such a claim will be determined, "by reference to the degree of probabilities or possibilities": see Poseidon Ltd & Sellars v Adelaide Petroleum Limited per Mason CJ, Dawson, Toohey and Gaudron JJ at 355, and, in equity, in accordance with the principles discussed by Austin J in Charles Lo Presti Pty Ltd v Karabalios [2000] NSWSC 395 at [50] - [57]. 387 Different tests of causation apply to the equitable and common law remedies. As to the cause of action in equity, Spiegelman CJ in Visnic v Sywak [2009] NSWCA 173 at [21]-[23] summarised the position as follows: 21 What is required is the identification of a link between the particular breach of fiduciary duty found to have occurred and a "profit" capable of being identified. This linkage is often referred to in terms of "causation". However, it is more appropriate to use the terminology of the joint judgment of the High Court in Maguire & Tansey v Makaronis (1997) 188 CLR 449. What is required is "a sufficient connection (or 'causation') between breach of duty and the profit derived …" (at 468). 22 The issue before this Court is whether there is a "sufficient connection" between the particular breach found and any matter into which an order for accounts could be said to relevantly inquire. The necessity for such a link, to which it may be convenient, albeit somewhat inaccurate, to refer to as a requirement of causation, has been expressed on a number of occasions in different but equivalent terminology. 23 The joint judgment in Maguire v Makaronis supra at 468 said: "Where the plaintiff seeks recovery of a profit, the necessary connection has been identified in this Court by asking whether the profit was obtained 'by reason of [the defendant's] fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position'. [Warman at 557.]" [See also O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262] 388 The question of causation at common law has been the subject of attention by the courts, some of it quite recent. It is now recognized that while a "but for" test of causation "may have an important negative function, it is inadequate as a comprehensive positive test": Travel Compensation Fund v Tambree (2005) 224 CLR 627, per Gleeson CJ at 638 [25]. This recognition stems from the earlier decision of the High Court in March v E & M H Stramare Pty Limited (1991) 171 CLR 506 where it was held that as a matter of law whether conduct is a "cause" of injury or loss is "to be determined by a value judgment involving ordinary notions of language and common sense": per Deane J at 524. The conduct need not be the sole cause of the injury or loss: Henville v Walker (2001) 206 CLR 459. 389 In Amann Mason CJ and Dawson J said at 83: "The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann Menzies J went so far as to say that the "assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation". Where precise evidence is not available the court must do the best it can. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages." [See also per Brennan J at 102] Standing back from the issues 390 Obviously the Court has to ascertain precisely what it was that was acquired in consequence of the breaches of fiduciary duty now found by the Court and set out in the above reasons. Also of relevance is the ascertainment of exactly what was lost by the plaintiff. 391 The notion of 'exactitude' is far from achievable in the current environment. So much uncertainty exists. But at least there is no requirement of mathematical exactness but only a reasonable approximation in assessing the true measure of the profit or benefit obtained by the fiduciary is in breach of their duty. 392 One of the matters which seems to me in this particular case to require close attention is the factor of time in the continuation of fiduciary duty-mentioned by Laskin J in Canadian Aero Service [at 25]. In an entirely disparate area of the law [concerning misrepresentations as to material fact], it has been observed that a representation may in particular circumstances lose its operative significance so as to be regarded as having lapsed or been being spent hence losing its operative significance. Benefits obtained by the defendants 393 There are two types of benefits that the defendants have obtained from their breaches of fiduciary duty which can be disgorged to the plaintiff. 394 The first type constitutes financial benefits for the services provided by Temujin, in particular for legal services provided to former clients of MWP. These payments were made out to Temujin from the clients and have been readily identified by the plaintiff. 395 The second type would be non-financial benefits received for the services provided by Temujin. There is evidence that both the corporate and individual defendants have received shares from former MWP clients through their work on various client projects. 396 The benefits received by the defendants will be canvassed in the following section on a transaction-by-transaction basis. Each transaction will have an overview of the transaction itself and an analysis of the benefits received or that could have been received by the plaintiff but for the breaches. The Chilisai Phosphate project 397 The Chilisai Phosphate project was a transaction in respect of which the plaintiff, and then Temujin, carried out work on behalf of a client Sokol Holdings Inc ("Sokol"). 398 MWP commenced work on the project on or about 25 August 2005 (Sinclair Affidavit, paragraph 151). 399 The persons instructing MWP in 2005 on behalf of Sokol were Messrs Sinclair, Savage, Utegan, and Damitov (Sinclair Affidavit, paragraph 151). 400 Messrs Nicholls and Slater both worked on the Chilisai project whilst at MWP. As mentioned earlier, Mr Slater emailed material documents relating to this project out of his Gmail account on 20 December 2005 in preparation for leaving MWP and commencing operations at Temujin. 401 He re-commenced working on the Chilisai Phosphate project on or about 9 January 2006, soon after arriving at Temujin. There was, in effect, a joint retainer between Temujin and MWP at the time (Sinclair Affidavit, paragraph 31). 402 Mr Emmott was heavily involved behind the scenes, as outlined earlier. He was responsible for retaining Mr Slater as well as passing work from the client to him. When Mr Emmott finally resigned from MWP Mr Sinclair no longer briefed MWP (Sinclair Affidavit, paragraph 10). 403 After years of work, the project continues to unfold. So far, it has led to the floatation of Sunkar Resources PLC ("Sunkar") on the Alternative Investment Market (AIM). 404 The listing on 30 June 2008 raised approximately ₤31,000,000 in net proceeds with a market capitalisation on admission of approximately ₤191,800,000 according to Sunkar's AIM Admission Document. 405 Sunkar acquired a 90% interest in Temir-Service LLP as a result of the deal. Temir-Service LLP is a Kazakh limited liability partnership that had won a tender from the Kazakh government in 2004 to mine phosphates in a phosphate deposit (the Chilisai deposit) located in Kazakhstan. 406 In terms of the first category of benefits received. The plaintiff has identified numerous invoices issued by Temujin to Sokol. These are tabulated below: Date of Invoice Period of Invoice Amount ($US) 12/04/06 09/01/06 - 31/03/06 $90,000.00 11/05/06 01/04/06 – 30/04/06 $47,700.00 11/06/06 01/05/06 – 31/05/06 $58,300.00 25/07/06 01/06/06 – 30/06/06 $36,570.00 11/08/06 01/07/06 – 31/07/06 $22,206.00 09/10/06 01/08/06 – 30/09/06 $11,554.00 [Certain of these invoices appear to have arguably been duplicated or similar. The parties will be given an opportunity to address in relation to this possibility.] 407 Nevertheless, these receipts do not paint the full picture. 408 No invoice has been discovered for the period after 30 September 2006. Mr Slater, on cross-examination gave evidence to the effect that Temujin had effectively ceased working on the Chilisai project after September 2006 (T 1509.10-21): Q. No invoice has been discovered for the period after 30 September 2006, is there a reason for that? A. I think that we ceased doing work for - on this particular project about that day - around the end of that period... Q. So what you're saying is that Temujin's role in respect of this matter effectively ceased at the end of September? A. Effectively yes. 409 This evidence is not accepted for numerous reasons. 410 There is an email from Mr Emmott to Mr Slater of 26 October 2006 which read as follows: "Tom thinks that on the phosphate matter it would be better if my name did not appear so as not to give Wilson any ammo. He is happy for my time to be distributed among other fee earners so the final bill will be the same". 411 This email clearly indicates that the project continued after 30 September, as well as a desire to conceal Temujin's continuing activities from the plaintiff. 412 There is further documentary evidence that directly contradicts Mr Slater's assertion. Emails drafted in 2007 clearly disclose each of Messrs Emmott, Nicholls, and Slater working on the project during that year with Nicholls stating in an email of 3 July 2007 that TIL would clearly continue involvement in the project for the "entrepreneur" (T 1695.45-1696.10). 413 As at December 2006 TIL had an expectation that it would receive shares as part of a pre-IPO placement of "founder's shares" in the ultimately listed entity Sunkar. 414 Mr Emmott on 22 August 2006 referred to taking shares as consideration when rendering Temujin bills. In his email to Mr Sinclair, he said, regarding the Chilisai Phosphate project: "… We are always ready to discuss fees and reach agreement so that everyone is happy. We can agree a cap on each of the above and other projects although the size of the cap will depend to some extent on what else we would get by way of shares etc " 415 On 4 December 2006 in an email exchange between Messrs Emmott, Slater and Nicholls, Mr Emmott wrote: "As far as I am aware there is still going to be an issue of founders shares although the total number is changing. This includes all the pre-IPO investors and I understand us – at least this was the case when I mentioned it a couple of months go". 416 Mr Emmott admitted that the reference to "us" in this email was a reference to Temujin (T 1702.46). 417 A pre-IPO share issue did in fact take place on 30 November 2007. The Sunkar AIM admission document at paragraph 18.18 refers to a: "Pre-IPO placing agreement dated 30 November 2007 and made between (1) the Company [Sunkar], (2) the directors (at the time), (3) the founders (as defined in the agreement) and (4) Canaccord". 418 From an analysis of the above communications, there is strong evidence to suggest that Temujin received Sunkar shares from the pre-IPO placing. 419 The AIM document shows, by reference to "Material Contracts" many different transactions directly involving Sokol. A critical fact is that the above-mentioned IPO was but one of those Material Contracts referred to. From this, it can be inferred that Temujin could have worked on any number of such transactions under the Material Contracts heading. 420 Although for the reasons given below no constructive trust is to be given over any shares issued to Temujin springing from this project, should the plaintiff so elect it may have an account of profits seeking to obtain all benefits accruing to Temujin between September 2006 and the pre-IPO issue of Sunkar shares on 30 November 2007 relating to success of the transaction. 421 That is to say that notwithstanding the long period of time that had passed between the time when Temujin began to work on the project in 2006 and the pre-IPO issue of shares in 2007: (a) It is clear that through Mr Slater copying of confidential documents relating to the transaction and the relaying of work to him by Mr Emmott whilst he was still working at MWP, that a substantial amount of work could not have been carried out but for such breaches of fiduciary duty. (b) Notwithstanding Mr Slater's assertions, Temujin, in fact, worked on this transaction long after Temujin was established. (c) The evidence regarding the defendants' expectations of receiving founders' shares demonstrates that the work done on the project was to culminate in the defendants receiving such a return if the project succeeded. (d) Therefore, it is appropriate to conclude that all instances of work done by the defendants up to 30 November 2007 are interconnected - for the sake of project success. (e) In a situation where work is interconnected in such a way, any temporal gap between the breaches of fiduciary duty and the completion of the work is irrelevant for determining whether the work is no longer tainted by the breaches. 422 In short, all work attributed to Temujin regarding the Chilisai Phosphate project up to the pre-IPO issue on 30 November 2007 has flowed from their breaches of their fiduciary duties to the plaintiff. 423 For the sake of completeness, it is important to mention that the plaintiff also seeks a claim for equitable compensation for the loss of opportunity for the work done regarding the "Material Contracts". 424 I accept as made out the plaintiff's submission that such "Material Contracts" related work in fact represents business opportunities lost to the plaintiff as a result of the defendant's actions. 425 There is a crucial exchange between Mr Nicholls and Mr Slater on 3 July 2007 which stated: "As I said to both of Nurdin and John they must be very firm with these people who want to worry about the international tax implications of the baggage retrievable system at Heathrow. I may be completely taken in but my view is that TIL will continue to get the Deal legal work for the entrepreneur even if Salans London now act for this and other PLCs". 426 Within this exchange there is a clear reference to "the Deal legal work" as opposed to "Deal legal work". The passage therefore heavily implies that TIL had a monopoly over that work – legal work that the plaintiff was deprived of and could have had. 427 The ultimate ruling regarding the Chilisai Phosphate project is that for the reasons above the plaintiff is entitled to an election between remedies concerning the Chilisai Phosphate project for all amounts paid to Temujin in the form of legal fees between September 2006 and the pre-IPO issue on 30 November 2007 relating to success of the transaction. The Urals Gold project 428 The Urals Gold transaction involved the proposed acquisition by Sokol of the Maminskoye goldmine in Russia. MWP was instructed by Sokol to act on this matter from about early September 2005. 429 Various items of correspondence flowed between Mr Slater and Mr Emmott during December 2005. In particular, two emails are worth mentioned in this context: (a) An email from Mr Slater to Messrs Emmott, Nicholls and Sinclair dated 12 December 2005 containing a clean version of an option agreement Mr Slater was drafting and referring to "our discussions on Friday evening". (b) An email from Mr Slater to Mr Sinclair dated 15 December 2005 requesting instructions from him. 430 It is useful to note that such communications were sent at a time when Mr Slater was clearly convinced that he was to leave MWP (i.e. after late November 2005). 431 Temujin worked on this deal after it was established. Various documents were forwarded back and forth between the defendants, Mr Emmott, and Mr Sinclair. Notably, on 28 March 2006, Mr Slater emailed to Messrs Emmott and Nicholls on 28 March 2006 amongst other things a memorandum, facilitation agreement and shareholders' agreement. 432 Numerous invoices were rendered for this deal. They are displayed below: Date of Invoice Period of Invoice Amount ($US) 12/04/06 09/01/06 - 31/03/06 $12,826.00 11/05/06 01/04/06 – 30/04/06 $9,000.00 26/06/06 01/05/06 – 31/05/06 $14,946.00 25/07/06 01/06/06 – 30/06/06 $24,645.00 11/08/06 01/07/06 – 31/07/06 $36,375.00 19/12/06 01/11/06 – 30/11/06 $11,500.00 433 It is clear that the invoices represent benefits received by Temujin that have arisen from the defendants' breaches of duty: (a) MWP had worked on this transaction long before Temujin was established. (b) It is obvious that the defendants have exported the work to Temujin through their communication before and after its establishment. 434 The principled approach in this situation is to allow the plaintiff to elect [assuming it pursues this leg of its rights to elect as between remedies] for an account of profits with respect to all financial benefits (i.e. the legal invoices) from Urals Gold that have flowed to Temujin. 435 Mr Sinclair's evidence was that the Urals Gold Transaction did not proceed because his company decided to swap their investment for one of their other mining projects (Sinclair Affidavit, paragraph 216). 436 The ultimate ruling regarding the Urals Gold project is that for the reasons above the plaintiff is entitled to an election between remedies concerning the Urals Gold project for all amounts paid to Temujin in the form of legal fees up to and including 30 November 2006. The Benkala Copper project 437 The Benkala Copper project involved the acquisition of a significant asset for Frontier Mining Limited, a company of which Mr Sinclair is Chief Financial Officer. 438 According to Frontier Mining's 30 April 2009 press release, Benkala is a copper-molybdenum-gold deposit located in north-western Kazakhstan within the Urals gold/copper ore belt. 439 In effect, as stated in Frontier Mining Limited's 2008 annual report, Frontier acquired a 50% interest in USMegatech BVI, which owned the Benkala deposit during November 2007. 440 Subsequently, in September 2008 all rights and obligations for the Benkala project and licences were transferred from the subsidiary to KazCopper LLP (KazCopper). 441 Frontier owns a 50% share in KazCopper as at 30 April 2009 as stated in its media release on that date. 442 It is important to note that MWP did not act in respect of this project. Rather, the plaintiff claims that Benkala was a continuation of the work that MWP had been doing since 2004 for Sokol and, in particular, the Urals Gold project, effectively claiming it as a lost business opportunity. 443 There do not seem to have been any Temujin receipts produced in these proceedings. However, MWP quantifies the benefits in two ways: (a) Mr Schilling's expert opinion values the legal work at $625,000.00. He nevertheless concedes, "… It is difficult to be any more precise without more detailed information". (b) In addition, the plaintiff claim the anticipated success fee for the transaction of $US 12,500,000.00 as a lost opportunity. This they submit is derived from 5% of the $US 250,000,000.00 value attributed to the asset in Frontier's media release of 30 April 2009. 444 It is not appropriate for benefits flowing from the Benkala Copper project to be accounted for in favour of the plaintiff or that equitable compensation should be awarded: (a) Barring the fact that Frontier Mining was an MWP client, there is no connection between MWP and the Benkala Project. In particular, the shift in resources Benkala Project occurred months after Mr Emmott left MWP. The plaintiff have failed to make out any compensable loss. (b) There is no or insufficient evidence that Temujin in fact received any benefits of the 5% variety that the plaintiff alleges that can be accounted for. 445 The ultimate ruling regarding the Benkala Copper project is that for the reasons given above, the plaintiff is not entitled to an election between remedies concerning this transaction. The Roxi Petroleum project 446 The Roxi Petroleum project is best characterised as a conglomerate of business opportunities associated with Mr Robert Schoonbrood, an MWP client (and of Temujin). 447 Mr Schoonbrood's commercial plan was to acquire oilfields that would ultimately be housed in a public company. Roxi Petroleum PLC ("Roxi") came to be that company. 448 As explained earlier, it is clear that the defendants and Mr Emmott, in establishing Temujin along with various other actions appropriated Roxi project work from the plaintiff. 449 Mr Emmott was the partner of the North Karymandybas acquisition. Mr Slater had, amongst other things, assisted Mr Nicholls in the due diligence that occurred at this time (T 1345). 450 As mentioned earlier, Mr Slater forwarded documents relating to the North Karymandybas acquisition to his private Gmail in December 2005 without a valid explanation (T 1404.40-50). 451 By February 2006, Mr Schoonbrood had determined to embark upon a new course whereby he would cease to be associated with UMC. In essence, he established an entity called Pinegrove as a special purpose vehicle to acquire resource interests in the CIS, which would on-sell the interests to a company to be listed on the AIM (Schoonbrood Affidavit, paragraph 9). 452 In implementing his plan to acquire oil and gas assets to list on AIM Schoonbrood retained MWP generally to carry out a "watching brief" (Schoonbrood Affidavit, paragraph 4). Mr Emmott carried out this brief and would bring possible acquisitions to Mr Schoonbrood's attention. Mr Emmott, for example, wrote to Mr Schoonbrood on 10 March 2006 asking if he was interested in acquiring a small oilfield (T 1739). 453 Accordingly, it was part of MWP's role to find or introduce oilfields to Mr Schoonbrood and Pinegrove. 454 Three assets played a part in the listing of Roxi Petroleum. These were interests in the: (a) North Karamandybas Contract Area (b) Ravinnoye Contract Area (c) Beibars (Munai) Contract Area 455 Regarding the North Karamandybas oilfield acquisition, from 26 April 2006 onwards, MWP acted in relation to a proposal that Pinegrove acquire the North Karymandybas oilfield and list that asset on AIM through a reverse takeover process. 456 This acquisition (known as "Project Kandy") continued throughout May and June. A spreadsheet setting out due diligence and documentation work to be done by MWP during these months was prepared by Schoonbrood and sent to Mr Emmott on 10 May 2006. 457 Mr Schoonbrood gave evidence to the effect that he switched firms because in a phone conversation between 28 and 30 June, Mr Emmott told him "he would no longer be able to look after the project" (T 1750.25-35). 458 Temujin immediately started working on the North Karymandybas acquisition after Mr Emmott left MWP with Mr Schoonbrood noting in an email of 1 August 2006 that he now engaged Temujin to act on his behalf. 459 Mr Emmott's explanation to Mr Schoonbrood about being unable to look after the project is disingenuous because the first bill Temujin rendered to Pinegrove for the month of July 2006 recorded Mr Emmott billing as a Temujin partner for 15 hours work. 460 On or about 10 August 2006, Mr Slater sent Mr Schoonbrood a proposal whereby TSL had sought to act as exclusive commercial advisers to Pinegrove to arrange for the purchase of a 50% interest in the Ravinnoye deposit and had sought a 5% success fee in doing so. 461 The Beibars Munai asset was merely an area to be explored and not an oilfield (T 1740.23-30). It turns out that there were low expectations for its yield in the foreseeable future. 462 Roxi was admitted to AIM on 22 May 2007. 463 The Roxi Petroleum work was clearly obtained through the defendant's breaches of fiduciary duty, in particular, through Mr Slater's theft of the Roxi documents via email and Mr Emmott's dishonesty in telling Mr Schoonbrood that he could no longer work on the project. The plaintiff should it determine to do so as between alternate remedies, may elect for an account of profits relating to the above-identified invoices for the three assets: Karamandybas, Ravninnoye and Beibars Munai. 464 The invoices sent by MWP regarding the three sub-projects are set out in the tables below: 465 Karamandybas Project: Date of Invoice Period of Invoice Amount (€) 10/08/06 01/07/06 – 31/07/06 €38,550.00 06/09/06 01/08/06 – 31/08/06 €45,142.00 12/10/06 01/09/06 – 30/09/06 €26,372.00 08/11/06 01/10/06 – 31/10/06 €15,750.00 19/12/06 01/11/06 – 30/11/06 €14,371.00 06/02/07 01/12/06 – 31/12/06 €23,807.00 466 Ravninnoye Project: Date of Invoice Period of Invoice Amount (€) 06/09/06 01/08/06 – 31/08/06 €13,780.00 12/10/06 01/09/06 – 30/09/06 €50,933.00 08/11/06 01/10/06 – 31/10/06 €43,880.00 19/12/06 01/11/06 – 30/11/06 €9,000.00 06/02/07 01/12/06 – 31/12/06 €6,826.00 467 Beibars Munai Project: Date of Invoice Period of Invoice Amount (€) 12/10/06 01/09/06 – 30/09/06 €34,026.00 08/11/06 01/10/06 – 31/10/06 €41,000.00 19/12/06 01/11/06 – 30/11/06 €11,665.00 06/02/07 01/12/06 – 31/12/06 €15,126.00 468 There was also a €10,000.00 upfront payment to Temujin from the client on 27 July 2007 via Mr Slater's Westpac bank account. 469 Nevertheless, the episode does not end here. 470 Roxi was also involved acquisitions of other interests in oilfields. In particular, emphasis was placed on a company called Eragon Petroleum PLC. The acquisition of Eragon Petroleum was first referred to as "Project X" in an email Mr Slater sent to Mr Schoonbrood of 12 December 2006: "Commercially the deal is agreed, John is speaking to David Rigoll today and then there needs to be a discussion between Rigoll and Sauer as to their likely contributions". 471 On 13 December 2006 Mr Emmott wrote to Mr Slater about Temujin's position in Project X that clearly indicated that Temujin were equity participants Project X: "At the moment, as you know Rigoll has agreed to a 1/3 Split to Temujin of any upside". 472 The invoices for Project X are presented below: Date of Invoice Period of Invoice Amount (€) 19/12/06 01/11/06 – 30/11/06 €25,290.00 06/02/07 01/12/06 – 31/12/06 €4,660.00 473 Notwithstanding the fact that Project X involved a former MWP client, there are no other links between Project X and MWP. As shown above: (a) The first reference to Project X in correspondence occurred almost six months after Mr Emmott left for Temujin. (b) The first invoice for Project X issued by Temujin was issued on 19/12/06 for a period spanning throughout November. This period is beyond the date that any breaches of fiduciary duty occurred. (c) There were no MWP invoices issued for this transaction. In fact, there is no evidence put forward by the plaintiff that MWP was ever involved in this transaction. (d) Project X was not related in anyway to the initial admission of Roxi Petroleum. There is no reference to Eragon in the AIM admission document of 22 May 2007. 474 Project X is beyond the scope of the breach. Any benefits received by the defendant from this transaction are to remain with the defendant. 475 Roxi then became involved in a further transaction involving the acquisition of additional oilfields. Part of this acquisition involved a reverse takeover of Eragon Petroleum PLC and accordingly a suspension from AIM for which readmission to trading was necessary. The readmission was on 31 January 2008. 476 The readmission, in summary, involved: (a) A conditional agreement dated 22 August 2007 (referred to as the Eragon acquisition) for: (i) The acquisition of a 59% interest in Eragon Petroleum PLC for a consideration of $US 190,000,000.00. This transaction has been completed. (ii) An option to acquire associated assets of $US 60,000,000.00. (b) On 4 October 2007, the purchase for $US 2,000,000.00 of an option to acquire a 50% indirect interest in ADA group for an aggregate consideration of $US 425,000,000.00 (referred to as the ADA acquisition). The option was originally exercisable on or before 30 March 2008. 477 With regards to both transactions, the evidence demonstrates that an entity called PJT Corporate Services Pty Ltd (PJT) would facilitate those transactions. It is evident that PJT was, in substance, an intermediary between Roxi and Temujin. Before continuing, it is useful to outline the context of PJT. 478 PJT is a company incorporated in Australia. Mr Slater's friend Ms Debra Lighezzolo became a director in August 2007. On 20 August 2007, Ms Lighezzolo executed a power of attorney to Mr Slater to act on behalf of PJT, which Mr Slater confirmed on the same day. 479 Notably, on 22 August 2007, Temujin International entered into an engagement contract with Ms Lighezzolo referred to as "Engagement Contract Number 5" that confirmed the terms on which services would be provided by Temujin represented by Mr Slater. 480 One particular term was that Temujin would provide legal advisory services and: "… planning advice on how to structure transactions and investments to achieve the client's [PJT's] instructions". 481 A third agreement was executed on 22 August 2007 between the parties called the "assignment agreement" which referred to Roxi requesting PJT that it would be responsible on a day-by-day basis to manage, supervise and oversee all aspects associated with the re-admission of Roxi. 482 This assignment agreement confirmed: "… our understanding of the terms and objectives of our engagement and the nature and limitations of the professional services that Temujin International Ltd… will provide to PJT Corporate Services Pty Ltd…" 483 On 25 September 2007, Mr Slater prepared two draft agreements in the form of letters to Mr Schoonbrood, in relation to the "Proposed Acquisition of Eragon Petroleum plc" and "Proposed Acquisition of Ada Oil LLP and Ada LLP". 484 The first letter set out the terms upon which PJT was to act as a "facilitator project manager" to Roxi to arrange the acquisition of at least 59% of Eragon from a company called Baverstock Gmbb. [Note that this Eragon transaction is not the same as Project X which occurred earlier in the year.] 485 The consideration for the services to be provided by PJT was $US 12,500,000.00. This was payable by way of a non-refundable cash fee of $US 500,000.00. 486 With respect to the second agreement, which referred to the ADA acquisition, it provided for such things as the assistance in conducting a due diligence for a total consideration of $US 17,500,000.00 for stage 1 of the project including a non-refundable cash fee of $US 500,000.00 which was payable by way of an initial deposit of $US 200,000.00 followed by six equal monthly payments of $US 50,000.00. 487 On 3 October 2007, Mr Slater wrote two letters to Mr Schoonbrood in which he nominated Temujin Holdings Ltd as the recipient of the non-refundable cash fee under each of the agreements. The fees are broken down as follows: (a) Initial cash fee of $US 200,000.00 followed by six instalments of $US 50,000.00 payable monthly for the Eragon transaction. (b) Initial cash fee of $US 200,000.00 followed by six instalments of $US 50,000.00 payable monthly for the ADA acquisition. 488 Temujin International rendered further invoices for legal work relating to the transactions to PJT. These invoices are tabulated below: 489 Eragon acquisition Date of Invoice Period of Invoice Amount ($US) 12/10/07 04/01/07 – 30/09/07 $300,000.00 19/11/07 01/10/07 – 31/10/07 $75,000.00 10/12/07 01/11/07 – 30/11/07 $158,000.00 11/02/08 01/12/08 – 31/01/08 $175,000.00 490 ADA acquisition Date of Invoice Period of Invoice Amount ($US) 12/10/07 01/01/07 – 30/09/07 $192,500.00 19/11/07 01/10/07 – 31/10/07 $97,500.00 10/12/07 01/11/07 – 30/11/07 $86,670.00 01/01/08 01/12/07 – 31/12/07 $48,500.00 11/02/08 01/01/08 – 31/01/08 $38,500.00 491 Additionally, there is evidence that Mr Slater himself was given shares in Roxi Petroleum regarding this re-admission transaction. 492 On 11 December 2007 Paul Puxon of Ferguson's solicitors asked Ms Lighezzolo to sign a letter drafted by the lawyers of the nominated brokers of Roxi that requested that: "All interested parties in the transactions to provide letters confirming their interests". 493 The draft letter contained a schedule of disclosed interests that confirmed that Ms Lighezzolo intended to nominate 6,169,230 shares in Roxi to go to Lynus Development Limited, a company registered in the Seychelles. 494 The schedule also contained the statement to be given by Ms Lighezzolo that "I am the ultimate beneficial owner of the shares of Lynus Development Limited". 495 Ms Lighezzolo executed the letter and returned it on 12 December 2007. 496 Fergusons wrote to Ms Lighezzolo in January 2008 attaching a form of a letter from PJT to Roxi designating Lynus as the recipient of 9,230,679 ordinary shares in Roxi. 497 On 11 January 2008, Ms Lighezzolo responded suggesting that the number of shares should have been different. Fergusons wrote back with the comment that the query had been correct and that they "should have checked a certain person's draft". 498 On 14 January 2008, Lighezzolo wrote to Fergusons attaching an executed direction letter for a total of 9,230,769 shares. 499 On 21 January 2008 Mr Slater under the heading "Lynus Developments" to both Lighezzolo and Puxon in the following terms: "I had a conversation with Deborah on Sunday regarding the nomad/broker issues and also about matters generally. I hope that she will contact you today in regards to these matters". 500 Ms Lighezzolo then wrote to Paul Puxon at Fergusons in the following terms in an email dated 21 January 2008: "I hope the short note you well. I understand that the broker has made a request to specific changes relating to Lynus Develop Limited. So that I might instruct you properly, please let me know the nature of and common reasons behind, such request". 501 Fergusons responded on 24 January 2008 in the following terms: "Regarding the position of the broker and nomad (WHI), the position is that despite various representations made on the half of Roxi, WHI require and effectively demanded that David [Slater] be disclosed as the promoter and thus the recipient of the PJT Roxi shares, except the shares that are to be issued to Saxford. I believe that the easiest way to deal with this is fort the existing structure to remain in place (i.e. the foundation and Lynus) but for you to instruct us to replace David for you as the ultimate beneficial owner of the Foundation. I will need to send such letter to Mossfon and copy it to the Nomad to put this in place". 502 Mossfon were the managers of an entity called Fencourt Foundation located in Panama. This letter heavily implies that Mr Slater was the beneficial owner of this Panamanian foundation that was to hold, through Lynus, the Roxi shares. 503 Ms Lighezzolo also write a further letter to Roxi dated 25 January 2008 stating that if the transfer of the beneficial ownership of the foundation had not been completed and affected by the date of the issue of the 6,169,230 ordinary shares pursuant to the "Project X Project Management Agreement", then such shares will not be issued to Lynus but will be issued to David Slater personally or to another nominated person. 504 The reference to Project X here is a frank acknowledgment that the Project X arrangements which were referred to in the email of 13 December 2006 between Temujin and David Rigoll which at that stage referred to a one third of the upside going to Temujin had come to fruition. 505 Eventually, a draft letter was prepared for Slater to sign dated 31 January 2008 whereby under paragraph 2 Mr Slater confirmed that he was to be absolutely on beneficial owner of 6,169,230 shares in Roxi. 506 In pressing for the benefits received by Temujin regarding the Roxi Petroleum re-admission transaction the plaintiff utilised Mr Schoonbrood's evidence about the payment of finder's fees 507 Mr Schoonbrood's evidence appeared to refer to two reasons as to why the Eragon fee was payable. 508 Firstly, he stated that (T 1742.4-10): "… in the Eragon case there was a case of a project really being sent in our direction, a project which existed long before we even got incorporated, well not long, but existed before we got incorporated, so there is a finder's fee was paid and since that was a paper transaction that was a finder's fee in shares of Roxi…" Secondly, he was of the view that (T 1761.12-20): "Q. Could you explain the rationale for paying Temujin $12.5 million? A. As I said, if a final is genuine and the deal would not happen without him, then we are quite happy to defend 5 per cent vis-a-vis shareholders and board. And in this particular case, this deal would not have been possible without this particular intervention because Slater was dealing with what, where the possibility stood to put this thing on the market. Because the idea with the vendors was to list this particular project on its own, it's big enough, and then through the intervention of Temujin, we could find a formula which Roxi actually could do". 509 It was submitted that, with respect to the Eragon transaction, as such an opportunity existed before Pinegrove was incorporated, the opportunity existed whilst Pinegrove was an MWP client. Ergo, the benefits of the transaction should flow to MWP. 510 It was also submitted that what Temujin did to structure the deal was what earned them the fee. From this the plaintiff says that MWP could have similarly structured it instead of Temujin but for the defendants interfering by breaching their fiduciary duties and therefore should be held accountable. 511 With regards to the ADA transaction (T 1765.4-10): "Q. If I understand you correctly, and tell me if I don't, it's because they effectively brokered to negotiated a deal that otherwise couldn't have been brokered or negotiated? A. Yeah, first place they brought it to attention that this deal was available to us and then we worked out something with Temujin's help because they knew what the vendors were looking for. We worked out something which worked, or could work, if we would've had some cash". 512 For the ADA transaction, the plaintiff framed the submission in the form of a lost business opportunity. It argued that is it likely that had there been no breaches of duty, MWP would have been able to obtain this work and the concomitant fee for itself. 513 Although there may be a connection between the plaintiff and the Eragon transaction in that the opportunity may have arose whilst Mr Schoonbrood was an MWP client, other considerations play a part: (a) The Roxi re-admission is separate from its initial admission on AIM – which MWP had completed work on. In other words, this was a distinct business opportunity of which MWP conceded that it had done no work on at all. (b) Mr Schoonbrood's response in cross-examination about the finders' fee does not refer at all to MWP. If such an opportunity arose whilst Mr Schoonbrood was an MWP client it is unusual that MWP was not the first to find out especially since Temujin would not have existed at that time. (c) The plaintiff has not sufficiently established a connection between any wrongful actions by the defendants. There is insufficient evidence to show that Eragon documents were copied or that Mr Emmott obtained work regarding Eragon to Mr Slater. (d) Thirdly, the Roxi re-admission occurred almost two years after Mr Emmott left MWP for Temujin. It would be unjust to allow the plaintiff to "sit back" and wait for the defendant to make a profit before bringing its claim in this instance – especially as there is such a threadbare link between this Eragon and MWP. 514 Regarding the ADA transaction, there is even less of a connection between it and the plaintiff. Most importantly, there is no evidence (unlike Eragon) that demonstrates that the opportunity existed while Mr Schoonbrood was the plaintiff's client. 515 The most appropriate way forward is therefore to quarantine any profits or benefits earned by Temujin from the two transactions from any profits or benefits that the plaintiff may elect to account for. 516 The ultimate rulings regarding the Roxi Petroleum project are that, for the reasons above: (a) The plaintiff is entitled to an election between remedies concerning the amounts identified by the invoices for work relating to Karamandybas, Ravninnoye and Beibars Munai. (b) The plaintiff is not entitled to an election between remedies concerning the amounts received for Project X. (c) The plaintiff is not entitled to an election between remedies concerning the amounts received for work done on the re-admission of Roxi (i.e. for the ADA and Eragon transactions). Project Ablai 517 Project Ablai is the name given to a series of transactions for the acquisition and development of a bundle of gold mines. 518 The business model of the project was for Sokol, or its special designated purpose vehicle, to acquire these existing assets and resources, restructure, re-package and vend them into Frontier Mining Limited, and then to put the projects into production. 519 Mr Wilson gave evidence that the defendants and Mr Emmott worked on this transaction with Mr Emmott as principal and Messrs Nicholls and Slater as associates (T200.39-50). 520 A letter from Mr Brian Savage to Mr Timur Kuanyshev on 16 September 2005 which referred to Frontier immediately beginning due diligence indicates that MWP began working on this project at that time. The target closing date referred to in this letter was 30 November 2005. 521 The due diligence was well advanced with a Draft Legal Due Diligence Report was prepared by MWP, dated 30 November 2005 in accordance with the letter above-mentioned. The MWP legal bills demonstrate a substantial amount of time and resources devoted to the project. 522 However, in Mr Slater's affidavit of 27 February 2007, he stated that Project Ablai was a project in which Temujin received instructions from by Mr Sinclair before Mr Emmott left MWP (Slater Affidavit, paragraphs 177-178). 523 These instructions were confirmed by Mr Sinclair's affidavit (Sinclair Affidavit, paragraph 226). 524 So far, there has been one invoice rendered by Temujin for this project totalling $36,959.00: Date of Invoice Period of Invoice Amount ($US) 26/07/06 01/06/06 – 30/06/06 $36,959.00 525 It clear that Project Ablai is an opportunity that Temujin took from MWP. The defendants and Mr Emmott had done a substantial amount of work into the project before instructions were withdrawn. Evidently, the defendants would have had been intimately familiar with the transaction and were, in fact, in a prime position to continue it after they defected from the plaintiff. 526 Therefore, it is appropriate that the plaintiff should it elect to do so, would be entitled to an account being taken for the benefits that Temujin received as a result of working on Project Ablai. 527 The ultimate ruling regarding Project Ablai is that, for the reasons above, the plaintiff is entitled to an election between remedies concerning the amounts identified by the invoices for work relating to Project Ablai. Maersk Oil Joint Venture 528 On 28 December 2005 Lancaster Group (Lancaster) approached MWP to discuss "acting on behalf of an oil company which wants to issue and get listed on AIM its depositary receipts, probably in the third quarter [of] next year" (according to an email from Ms Larissa Orlova to Messrs Wilson and Emmott dated 29 December 2005). 529 A subsequent email on 11 January 2006 by Mr Emmott to Mr Wilson showed that Mr Emmott had met a representative from Lancaster. He wrote that "They are some way away from appointing lawyers" and that they planned on listing "sometime during the year". 530 At that stage, Mr Wilson gave evidence to the effect that Lancaster was a client of MWP and that he had known Lancaster's controllers since 1994 (T 346.40-347.3). 531 So far, there has been one invoice rendered by Temujin for this project totalling $19,504.00 entitled "Maersk Oil Joint Venture": Date of Invoice Period of Invoice Amount ($US) 11/06/06 31/03/06 – 30/04/06 $19,504.00 532 For this transaction, it is also clear that Temujin appropriated the work from MWP. Lancaster was at the very least a long-term contact with Mr Wilson and his firm and had made the initial approach to MWP in December 2005. 533 The principled ruling is to allow the plaintiff, should it elect to do so, to seek that an account be taken the benefits earned by Temujin for the Maersk Oil Joint Venture. 534 The ultimate ruling regarding the Maersk Oil Joint Venture is that, for the reasons above, the plaintiff is entitled to an election between remedies concerning the amounts identified by the invoices for work relating to the Maersk Oil Joint Venture. Kangamiut Seafoods 535 As recounted earlier, while away Mr Slater met on 28 December 2005 in Helsinki at the arrangement of Mrs Pederson at MWP with representatives of a Danish company, Kangamuit Seafood, which was building a fish processing factory in Kazakhstan with a view to retaining MWP as its local Kazakh lawyers (T 1403.29-33). 536 The following exchange indicates that MWP was actively pursuing this opportunity (T 1406.37-1407.1): Q. Ms Pedersen then sent you an email on the same day, "Dear David, here is the info that I got from this Danish fishing company. Could you please tell me if any of these dates are good for you. Best Regards. Dodo." A. Yes. Q. Do you remember receiving that? A. I don't remember receiving it but-- Q. There's no doubt, is there, that attached to that email from Ms Pedersen to yourself was Mr Rasmussen's earlier email to her suggesting times and dates? A. I just - I assume so, Mr Walton. Q. And then you replied on 16 December 2005, "Dodo, the 28th is fine for me. Regards, David."? A. Yes. 537 However, Kangamiut in fact became Temujin's client but never an MWP client. Temujin began working with Kangamiut in April 2006 (Slater Affidavit, paragraph 186). 538 The invoices rendered by Temujin for Kangamiut work are as follows: Date of Invoice Period of Invoice Amount ($US) 11/05/06 31/03/06 – 30/04/06 $10,600.00 26/06/06 01/05/06 – 31/05/06 $13,250.00 25/07/06 01/06/06 – 30/06/06 $15,900.00 539 It is clear from the evidence that the defendants obtained the work from MWP. Kangamiut was clearly seeking MWP to represent its interests as shown by their correspondence with the plaintiff. Mr Slater was sent to meet Kangamiut in order to attract work to MWP as shown by his communications with Ms Pederson. Notwithstanding, Temujin ended up conducting work for Kangamiut. 540 In the result the ruling is that benefits arising from the Kangamiut work are accessible to the plaintiff whether by account of profits or by equitable compensation 541 The ultimate ruling regarding Kangamiut Seafoods is that, for the reasons above, the plaintiff is entitled to an election between remedies concerning the amounts identified by the invoices for work relating to Kangamiut Seafoods. Miscellaneous Invoices 542 There have been certain Temujin invoices that have not been touched upon apart from a brief mention in the plaintiff's final submissions. These include invoices relating to: (a) The client Pinewood Equities in regards to matters including: Pinegrove Corporate Matters, and the Modular Technology Project. (b) The client Ravninnoe Oil LLP in regards to the: Ravninnoye Project, General Matters and Ravninnoe Oil. (c) The client Roxi Petroleum Kazakhstan LLP with respect to the: Roxi Petroleum Kazakhstan LLP – General Matters. 543 No or insufficient evidence has been adduced regarding the nature of these invoices. Hence it is very difficult to determine any links between them and breaches by the defendant. 544 The ultimate ruling regarding those miscellaneous invoices is that, for the reasons above, the plaintiff is not entitled to an election between remedies concerning the amounts identified by such invoices due to insufficient evidence. Missed legal costs (evidence given by Mr Schilling) 545 Mr Schilling was an expert retained by the plaintiff in its attempt to quantify the defendants' potential liability for its breaches. In short, Mr Schilling's expert report attempts to identify what the plaintiff could have charged in legal fees to the clients that Temujin appropriated had the defendants had not committed the wrongdoings. 546 His qualifications were as follows Since early in my career in Hong Kong almost 20 years ago, I have had experience working as a lawyer in emerging market economies. Over the past 14 years I have specialised in providing legal services in economies at various stages of transition towards mature market economies. During the last 14 years I have been either a managing partner of an office of an international law firm in an emerging market (at Burns Schwartz this included management of offices in Prague, Budapest and Bucharest, at Linklaters this included management of the Bucharest office) or a managing partner of a legal practice within an international firm focusing on emerging markets (for many years I led a practice group focused on South Eastern Europe and for the last year I have lead a practice group focusing on Emerging Europe including CIS markets in Central Asia). As a partner in Burns Schwartz and more recently as a partner in Linklaters I have also participated in regional management as a member a regional management committee. As a member of the International Board of Linklaters between 2006 and 2007 I have also had experience dealing with a wide range of law firm governance issues at a global level. 547 There were a number of evidentiary problems faced by the plaintiff in having admitted into evidence several sections of Mr Schilling's report [generally following the reasons for judgment delivered on 10 August 2009 concerning the late discovery by the plaintiff of approximately 37,000 pages of documents]. 548 In consequence of that judgment certain parts of the evidence deposed to by Mr Schilling were rejected. 549 It is necessary to follow somewhat closely the sequential rulings in relation to the objections taken to Mr Schilling's report. Initially Question 1 was disallowed. Later, parts of Question 1 were allowed because the cross-examiner had 'cross-examined back in', parts of this witness's evidence. 550 In any event, in order to make any sense of the sections of the report which were later re-introduced into evidence, it is necessary to observe that Mr Schilling had been asked to answer questions concerning: Question 1: By reference to: (i) Each of the MWP Clients and projects on which MWP acted in respect of those clients; (ii) The terms of engagement in respect of which MWP was engaged by those clients; and (iii) The work conducted by the MWP employees in respect of those MWP Clients and projects, in your opinion for each of the MWP Clients: (A) What was the value of the legal work preformed for the MWP Clients; and (B) What amounts was MWP entitled to charge the MWP Client for such work performed over and above amounts actually billed to MWP Clients. Please indicate these amounts by reference to the actual bills? … Question 2: By reference to: (a) The description of professional services provided contained in the Affidavit of David Slater sworn on 27 February 2008; and (b) The summary of work performed for each project in the TIL Invoices; in your opinion and for each project listed under the column heading "Description of Client File" what would be the total fees and disbursements which you would expect to be reasonably billed for each project? If there is insufficient information in Mr Slater's Affidavit to enable you to make such an assessment please state this in your report and please state what documents would be required for you to make such an assessment. … Question 3: By reference to: (i) The matters set out in paragraphs 3.8 to 3.23 of the Letter of Instruction [paragraphs 1.7-1.22 above]; (ii) Paragraphs 690 to 705 under heading "The conduct of Mr Slater for Big Sky' of Mr Michael Earl Wilson's Affidavit sworn on 20 March 2008; and (iii) The Affidavits of Mr Valery Chechulin sworn on 20 March and 2 May 2008; in your opinion: (A) What amount did MWP have to write off as a result of the conduct of Mr Slater in relation to Big Sky; (B) What amount did MWP have to write off generally as a result of the loss of its client Big Sky; and (C) What revenue loss over what future period would represent the value of the loss of the client, Big Sky? 551 As the Court has held that Mr Slater is not liable for negligence, Question 3 is no longer relevant. 552 In any event as Mr Schilling made clear in relation to engagement letters: "Good matter management in any law firm includes ideally having terms of each matter agreed in writing with each client. In practice the ideal is rarely fully achieved and in this respect the practice in the Region and indeed at MWP itself are consist in pursuing but not always achieving the ideal. Most clients considered in this report had a written if not signed letter of engagement although not every matter for the same client had a letter of engagement. This is not unusual as firms with regular clients often do not maintain the practice of having a written engagement for each matter and indeed the MWP standard form of engagement letter is broad enough in general scope to include additional instructions from the same client. For present purposes it is also noteworthy that the general introduction to schedule of fees and charges in MWP's standard letter of engagement contained the statement that 'We will not charge purely by reference to time spent, but instead, will consider a number of factors such as our overall relationship with a client; the nature, extent and volume of work handled for particular clients, the size, urgency and complexity of a matter; the level of skill, care, attention and effort required and applied; the importance of the matter and the results and any success (or failure) achieved." I note this language is consistent with the guidance provided by Rule 2 of the Solicitors' Code of Conduct 2007. The standard form also concludes with reference to an annual review of billing rates and other fees and costs with effect from 1 January with effect from that date without obligation to notify. All MWP engagement letters I reviewed relating to the matters considered in this Report used the standard wording of the MWP standard form of engagement letter". 553 I was impressed by the evidence given by Mr Schilling. He had obviously carried out an enormous amount of work in a very difficult environment. The task set of him involved a requirement that he carry out his best estimate of the appropriate level of legal fees for certain transactions in situations where there had been a need to treat with reconstructed files, those which survived being clearly incomplete. In this respect he gave a number of estimates. 'Nullus commodum capere potest de injuria sua propria' 554 This is an area where the maxim 'Nullus commodum capere potest de injuria sua propria' [no man can take advantage of his own wrong] must be borne in mind. This principle which is enlivened by way of a presumption against the wrongdoer may be invoked for the purpose of quantifying damages. . 555 In an affirmation of that principle in which the actions of the defendant had made it "difficult to assess the compensation due to the plaintiff", Handley JA put the matter as follows: "In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party 'whose actions have made an accurate determination so problematic'": Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46, per Handley JA at 59. [cf ADC v White [1999] NSWSC 43 at [89] et seq. There is a long line of authority to this effect [Cf. Broom's Legal Maxims , 10th edition, Pakistan Law House, 1989 at 191 et seq., noting that this maxim, being 'based on elementary principles, is fully recognised in Courts of law and equity, and indeed, admits of illustration from every branch of legal procedure'.] 556 The principle and its application to several areas of law was discussed in the House of Lords by Lord Jauncey of Tullichettle in Alghussein Establishment v Eton College [1988] 1 WLR 587, with whose reasons Lord Bridge, Lord Elwyn-Jones, Lord Ackner and Lord Goff agreed. (at page 591). 557 The principle is applicable to 'various and dissimilar circumstances' [ per Broom at page 195]. Returning to Mr Schilling 558 Without requiring to travel through the whole of the summary table of estimated legal fees detailed in appendix H of Mr Schilling's report it suffices to say that, through this witness, the plaintiff has established an entitlement to elect for equitable remedies. 559 In essence, the plaintiff has established that MWP could have charged the clients that Temujin appropriated much more in legal fees than are revealed by the Temujin invoices. Mr Schilling has quantified the extra amount (which for the sake of simplicity I will call "missed legal costs") in his report. 560 The findings have been tabulated below regarding: (a) So much of Question 1 as was permitted to be reintroduced into evidence and (b) The whole of Question 2. 561 The transactions where no remedy has been awarded to the plaintiff (e.g. the Benkala Copper project) are not in the said table. An explanation is also provided below: Client: Project Schilling's valuation MWP invoices TIL invoices Missed legal costs Sokol: Urals Gold (aka Maminskoye) $400,000.00 $1,678.00 $109,292.00 $289,030.00 Sokol: Chilisai Phosphor $1,750,000.00 $97,571.00 $218,630.00 $1,433,799.00 Frontier: Project Ablai $500,000.00 $0.00 $31,959.00 $468,041.00 Pinegrove: Karamandybas $250,000.00 $0.00 €153,992.00 Kangamiut Seafoods $167,500.00 $0.00 €39,750.00 562 Explanation of the summary table: (a) The column entitled "Client: Project" identifies the project analysed. (b) The column entitled "Schilling's valuation" identifies the final amount that Mr Schilling has assigned as the value of the services provided to the client for the given project. (c) The column entitled "MWP invoices" identifies the amount that has already been billed to the client by MWP. (d) The column entitled "TIL invoices" identifies the amount that has already been billed to the client by TIL. (e) The column entitled "Missed legal costs" is the remaining amount that is derived by subtracting the aggregate of the amount that both MWP and TIL have charged the client from Mr Schilling's valuation of the services provided. (f) The figures for the Karamandybas project and for Kangamiut Seafoods have been left blank due to the Mr Schilling's valuation being in a different currency to the invoices rendered by Temujin. 563 Although the plaintiff has made good its entitlement to elect for equitable remedies there are certain factors to be recognised in determining the amount that the plaintiff may access. 564 Firstly, the very exercise of quantifying the value of legal services is fraught with uncertainty regardless of the experience or knowledge of the person who conducts such an exercise. 565 Mr Schilling under cross-examination stated that: (a) His methodology included making an estimate based on the scope of the work and to add or subtract a "value added loading". This value added loading differed from project to project (T 975.22-32). (b) Certain transactions required an additional premium (a "success premium") to be grafted onto the calculation to factor any uplift in the case a transaction succeeded (T 977.28-32). (c) Firms had great flexibility in selecting the success fee up to a very high level if necessary both positively and negatively (T 982.11-25). (d) Where there was a file which had a large time gap between work done on it, his methodology assumed that there was work done, in effect, "filling in the gaps" (T 985.15-43). (e) Where there was no record of due diligence, he assumed that due diligence was done to a particular level of competence and expertise (T 986.47-50). He assumed that MWP executed it at a high level of competence and expertise (T 988.8-10). (f) He emphasised many of his conclusions were founded on his expertise as opposed to raw data (T 994.46-995.6). 566 Secondly, there were factors which Mr Schilling simply did not take into account when arriving at his conclusions: (a) He did not assess the fees on the basis that the bills were going to be taxed or assessed (T 978.42-44). (b) He did not enquire about whether Kazakhstan had any legal costing rules (T 1001.43-1002.2). 567 In light of the uncertainties that shroud the exercise, the principled approach is to allow the plaintiff to elect between remedies regarding Mr Schilling's figures as necessarily subject to an appropriate discount for exigency. 568 The question of which judicial or quasi-judicial officer should determine the quantum of that discount may be subject of argument following the parties having the opportunity to consider these reasons. Decision as to relief 569 The precise form of relief must be moulded to satisfy the demands of justice and good conscience in the particular case before the Court: the overriding requirement being that the Court must look at the circumstances in each case to decide in what way the equity can be satisfied. That is to say, 'the equity of the transaction' must shape the measure of the relief. Constructive trust 570 In the unusual circumstances with which these proceedings are concerned the remedy of a constructive trust over Temujin [ie TIL] as an entity is inappropriate. Certainly MWP is entitled to relief with respect to the profits earned by Temujin in consequence of the breaches of fiduciary duty earlier referred to. The measure of advantage to Messrs Slater, Nicholls, Emmott and Temujin inheres in Temujin [and through it Messrs Slater, Nicholls and Emmott] being in a position to immediately [on and from the commencement of the business of Temujin], by reason of the breaches of fiduciary obligation, be in a position to commence with the obtaining of work which it may otherwise have taken Temujin a considerable time to attract. 571 But the factor of time in the continuation of fiduciary obligations has to be taken into account presently. The murky world of Temujin may have some similarities with Timber Engineering but in many ways depart from being on all fours with the findings in those proceedings. 572 When one focuses upon the profits made by Temujin the picture becomes: i. Monetary amounts relating to invoices for the services provided by Temujin, in particular for the legal services provided to former clients of MWP; ii. Missed legal costs that MWP could have charged but for Temujin taking over the work; iii, in kind benefits [non monetary] that the defendants/ Temujin received for the provision of its services to former MWP clients. 573 In terms of the other assets which Temujin may be said to have acquired by dint of Mr Slater's wrongful actions in downloading MWP's material documents, one is left with no more than those documents. The wrongful use by the conspirators of those documents cannot be gained said. However this is not the territory in relation to which a constructive trust should now be ordered. 574 And even cognizant of: i. the manner in which courts of equity enforce equitable obligations by acting in personam on the conscience of the defendant resident within the jurisdiction; and ii. of its ability to make orders concerning property in other jurisdictions, yet still such orders may be withheld on the ground that intervention of that nature is likely to be futile. The difficulties of enforcement of such orders are obvious in the present environment. 575 In relation to the claimed remedy of a constructive trust over the shares held by Mr Slater in Temujin, it is appropriate to observe that it continues to be an active company and in terms of the relief to which the plaintiff is entitled, it is necessary to draw the line at the point in time when Temujin may be regarded as no longer tainted by the manner of its creation. In another field of discourse [that of representational law] it is well recognized that a representation can for various reasons, in certain circumstances be regarded as 'spent'. It is that analogy to which I refer. 576 And to continue with that subject, outside of the particular findings set out above, the point in time when Temujin may be regarded as no longer tainted by the manner of its creation is the date of the final invoice that it rendered that was connected to the defendants' breaches (as discovered by the plaintiff). This date is 6 February 2007. [For the convenience of the parties a summary table concerning elective rights or negating elective rights is to be found at the end of these reasons.] 577 Further a plaintiff must move quickly and not stand by, permitting the defendants to take the risk of losses before claiming the fruits of success: Cf Knight Bruce LJ in Clegg v Edmondson (1857) 44 ER 593 at 604: '… a man having an adverse claim in equity on the ground of constructive trust should pursue it promptly, and not by empty words merely. He should show himself in good time willing to participate in possible loss as well as profit, not play a game in which he a loan risks nothing' 578 Whilst MWP certainly moved with expedition in obtaining ex parte relief in this and other jurisdictions, to my mind the years of interlocutory forensic decision making by MWP, although not amounting to an abuse of the process of this Court, do suggest that MWP could have and should have moved earlier into a final hearing mode. This is yet another factor which may be and is taken into the balance contributing to the decision that MWP is not entitled to the constructive trust remedy/remedies that it has pursued. 579 The mandate requiring that the court must ascertain precisely what it was that was acquired in consequence of the breaches of fiduciary duty and must also endeavour to ascertain exactly what was lost by MWP, results in the principled exercise of the relevant discretion being otherwise than to order a constructive trust over the Temujin shares held by Mr Slater. 580 Nor has the plaintiff made good any entitlement to a constructive trust over any of the other Temujin entities for the following reasons: (a) barring their establishment there is no or insufficient evidence that those entities have been involved in any aspect of the wrongful conduct identified in these reasons; (b) any benefits alleged to have been received by those entities were for projects or transactions that applying the common sense test were too remote from the wrongful conduct. Other relief 581 In the result the plaintiff is entitled to relief arising from the sundry breaches of fiduciary and contractual obligations by way of: i. An equitable account of profits from each of the defendants; ii. in the alternative equitable compensation from each of the defendants. It would appear that in the current state of the law, an account of profits is available in the alternative to compensatory awards of equitable compensation/common law damages. The parties will be permitted to address on this question: cf Mason and Carter's 'Restitution Law In Australia', second ed. [at 1509]. 582 Whilst the conspiracy count has been made out it is difficult to see what remedy, if any, additional to the above may still be contended for in relation to this course of action. The same may arguably be said in relation to the finding in terms of the tort of interfering with contractual relations. These matters may be the subject of further submissions by the parties. The defendants' abuse of process case (s) 583 As earlier indicated in these reasons, the defendant sought by notice of motion to have the proceedings set aside as an abuse of process of the Court. The matter was case managed by reference to the requirement that the Court organise its business in a way that facilitated the just, quick and cheap resolution of the real issues in the proceedings. In particular and following observations by Campbell JA [with whose observations generally Giles and McFarlane JJA agreed] in Daher v Doulaveras [2008] NSWCA 58; [2009] NSWSC 583, the Court determined to permit the abuse of process application to be dealt with at one and the same time as the plaintiff's case. 584 In the judgment [30 June 2009] dealing with the case management decision, I cited so much of the reasons in Daher as were to the following effect: If, as in Hillig , the issues involved in deciding whether a solicitor is validly retained are dependent on complex questions that also arise at the hearing, the just, quick and cheap disposal of the real issues may require the question of retainer to be dealt with in the course of a final hearing . As well, one can envisage situations where the question that is involved in a final hearing is a question of law that can be argued quickly, so that it would be wasteful to require the parties to come to court on one day to argue about retainer, and on another day to argue about the issue involved in the final hearing. In such a case, a single hearing in which the challenge to retainer and the final hearing are heard concurrently may be appropriate. Further, sometimes the basis on which a question concerning a solicitor's retainer arises might become known only immediately before or in the course of a hearing, and in such a case it might be appropriate to permit the challenge to be argued at the final hearing rather than have the parties incur the delay and extra cost involved in adjourning the final hearing. 585 I continued: As I see it the parameters of the final hearing in these complex proceedings which have already begun, make very clear that all appropriately pleaded questions should be permitted to be litigated once and for all . And at the same time, certain notices of motion may be clear candidates for being litigated during the final hearing. The second 'Abuse' tranche likely falls into that category. However the regular procedures require to be followed. The present is par excellence a circumstance where the overriding purpose rule which facilitates the just, quick and cheap resolution of the real issues comes to the fore. Explaining the defendants' abuse of process cases 586 The defendants' notice of motion filed on 13 July 2009 relevantly sought the following orders/directions: 1. An order that the plaintiff's claim for relief in these proceedings be dismissed (or stayed permanently), as an abuse of the processes of the Court. 2. An order that the plaintiff pay the costs of the first to fifth defendants (the "defendants") of and incidental to the proceedings on an indemnity basis. 3. Directions for the determination of any claims for compensation that might be made by the defendants, or any other persons, on undertakings as to damages given by the plaintiff in the proceedings. 4. An order that all orders granting liberty to the plaintiff to use in other proceedings, for any criminal investigation or for any other purpose, documents obtained by way of discovery, subpoena or notice to produce in these proceedings be revoked. 5. An order that the plaintiff and Michael E Wilson, by themselves, their servants or agents, be restrained from making, keeping or using any documents obtained in any way of discovery, subpoena or notice to produce in these proceedings. 6. A direction that the Register of the Court notify the Courts, Tribunals and public authorities to which the plaintiff has, or might have, communicated such documents of the fact of that revocation and of any Reasons for Judgment published in support of the revocation. 587 The notice of motion itself included an extensive set of contentions in support of the proposition that the plaintiff in bringing these proceedings are engaging in an abuse of process of the Court. 588 Later on 1 September 2009 the defendants by letter addressed to the plaintiff's solicitors [MFI D 24] after making clear that the nature of the allegations made in support of their notice of motion was particularised in paragraphs 93 of the Draft Amended Response, went on to enumerate their contentions as follows: (a) the institution and maintenance of these proceedings is an abuse of the processes of the court in that they (sic) have been instituted and maintained for collateral, improper purpose (particularised in sub-paragraphs (a) to (g) on pages 30 – 31 of the Draft Amended Response). (b) the maintenance of the proceedings is an abuse of the processes of the Court in that the plaintiff has conducted (and persists in conducting) the proceedings in a manner that is vexatious and oppressive and there is a reasonable apprehension that it will continue to do so (particularised in sub-paragraphs (a) to (f) on pages 31 – 35 of the Draft Amended Response). (c) the proceedings are an abuse of the processes of the Court in that the plaintiff has obtained coercive orders against the defendants, on ex parte application to the Court, without full or proper disclosure of facts bearing upon those applications (particularised in sub-paragraphs (a) to (f) on pages 35 – 36 of the Draft Amended Response). (d) the proceedings are an abuse of the processes of the Court in that Mr Michael Wilson swore an affidavit in the proceedings on 17 June 2009 in which he made false and misleading statements about the relationship between the plaintiff and KazHoldings Inc (particularise in sub-paragraph (5) on page 36 of the Draft Amended Response). (e) the proceedings are an abuse of the processes of the Court in that the plaintiff has sought in its conduct of the proceedings, to constrain the defendants' capacity to defend the proceedings and to limit or interfere with the legal representation available to the defendants in the proceedings (particularised in sub-paragraphs (a) – (c) on pages 37 – 38 of the Draft Amended Response). (f) the proceedings are an abuse of the processes of the Court in that the plaintiff has conducted these proceedings notwithstanding that it has no presence in Australia apart from the proceedings, no assets in Australia and no connection with Australia apart from the fact that its principal (Mr Wilson, a non-resident) is, or purports to be, an Australian lawyer (particularised in sub-paragraph (7) on page 38 of the Draft Amended Response). (g) the proceedings are an abuse of the processes of the Court insofar as the plaintiff has objected to making disclosures , in the course of the proceedings or in the course of the London arbitral proceedings, about its financial circumstances or ownership and control of it (particularised in sub-paragraph (a) on page 38 of the Draft Amended Response). (h) the proceedings are an abuse of the processes of the Court insofar as the plaintiff claims relief against the defendants referrable to obligations said to have been owed to the plaintiff as its employees in circumstances in which, prior to engagement of the first and second defendants respectively, the plaintiff concealed from them that its principal (Mr Wilson) had engaged in "unethical activities" whilst acting as a lawyer in Kazakhstan in partnership with Baker & McKenzie, thereby inducing each of those defendants to undertake work for the plaintiff (particularised in paragraph 92 and sub-paragraph 93 (a) on page 30 of the Draft Amended Response). What is an abuse of process of the Court 589 In Walton v Gardiner (1993) 177 CLR 378 Mason CJ, Deane J and Dawson J [at 394] observed that in her judgment in Jago v District Court of NSW (1989) 168 CLR 23, Gaudron J stressed that the power of a court "to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands." Her Honour added the comment "that, at least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and abuse of process, on the other hand". 590 In Dey v Victorian Railways Commissioners [(1949) 78 CLR 62 at 91] Dixon J said: "A case must be very clear indeed to justify the summary intervention of the court ... [O]nce it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process ." [See also Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 602] 591 In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130, Barwick CJ, in a similar vein, affirmed that: "….great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal". 592 I further accept that the principle in Dey is entirely consistent with more recent High Court authority, which reaffirms that the power to exercise a stay in civil proceedings is only to be exercised with the "utmost caution". 593 Returning to the judgment of Gaudron J in Jago v District Court of NSW her Honour observed [at 76] as follows: "The nature of the power to grant a permanent stay of proceedings itself reveals an important principle which confines its exercise. The power is, in essence, a power to refuse to exercise jurisdiction. It is thus to be exercised in the light of the principle that the conferral of jurisdiction imports a prima facie right in the person invoking that jurisdiction to have it exercised. In this context it is relevant to note the remarks of Deane J. in Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia [1987] HCA 27; (1987) 61 ALJR 393, at p 399; [1987] HCA 27; 72 ALR 1, at p 12, that the "prima facie right to insist upon the exercise of jurisdiction is a concomitant of a basic element of the rule of law, namely, that every person and organisation, regardless of rank, condition or official standing, is 'amenable to the jurisdiction' of the courts and other public tribunals ". Thus, the power is one that is readily seen as exercisable (whether in civil or criminal proceedings) only in exceptional cases or, as was said by this Court in refusing special leave to appeal in Attorney-General (NSW) v Watson (1987) 20 Leg Rep SL 1, "sparingly, and with the utmost caution". See, generally, Cocker v Tempest [1841] Eng R 242; (1841) 7 M & W 502 (151 ER 864); Lawrance v. Norreys , at p 219; Humphrys , at p 26; and Reg. v Derby Crown Court; Ex parte Brooks (1984) 80 Cr App R 164, at p 168." 594 As the authors of Ritchie's Uniform Civil Procedure NSW observe: Every court has, as a necessary incident of its jurisdiction, the power to control its own proceedings and procedure and has the power to strike out proceedings which constitute an abuse of process. … The concept of abuse of process overlaps other specific rules that justify the striking out of proceedings or pleadings. It involves wider considerations than mere non-compliance with the rules, orders or directions. Proceedings conducted within the literal application of the formal rules may, nonetheless, constitute an abuse of process. The width of the concept defies any exhaustive categorisation of the types of proceeding that may constitute an abuse of process…[Part 14.28] 595 I do not see that there is utility in endeavouring to thumbnail sketch the types of inappropriate activities which have from time to time, depending upon the particular circumstances, merited a finding of an abuse of process. However at least the category of abuse of process in terms of the use of proceedings for an improper purpose, does seem to merit mention. 596 In that regard the authors of Ritchie's Uniform Civil Procedure NSW have made the following observations which it seems to me should be closely kept in mind: It is clearly an abuse of process to use "Court proceedings... for the purpose of obtaining... some collateral advantage... and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused": Re Majory [1955] Ch 600 at 623–4 per Evershed MR; Williams v Spautz (1992) 174 CLR 509; 107 ALR 635 ; BC9202694 ; Spautz v Williams [1983] 2 NSWLR 506 at 539; Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134; 163 ALR 744 ; [1999] FCA 773; BC9903036 ; see also Castro v Murray (1875) LR 10 Ex 213; Dawkins v Prince Edward (1886) 11 P 59 at 63; King v Henderson (1897) 3 ALR (CN) 12; 13 WN (NSW) 137; Re Septimus Parsonage and Co [1901] 2 Ch 424; Bayne v Baillieu (1908) 6 CLR 382; 14 ALR 426; Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509; 21 ALR 425; [1915] HCA 56; Goldsmith v Sperrings Ltd [1977] 2 All ER 566 ; [1977] 1 WLR 478; Varawa v Howard Smith & Co Ltd (1911) 13 CLR 35 at 91. But proceedings may constitute an abuse of process if they are being prosecuted for any improper purpose, irrespective of whether or not that purpose is "collateral" in the ordinary sense of that term. The essential question for determination is whether or not the proceedings, or the particular claims made in them, are genuinely intended to be determined in the proceedings: Flower & Hart (a firm) v White Industries (Qld) Pty Ltd , above. According to this criterion, proceedings may be categorised as having an improper purpose, even if the moving party has a prima facie case, or must be assumed to have such a case: Grovit v Doctor [1997] 2 All ER 417 ; [1997] 1 WLR 640 (commencement and continuation of proceedings with no intention of bringing them to a conclusion is an abuse of process irrespective of whether the defendant has been prejudiced by the delay); Berger v Raymond Sun Ltd [1984] 1 WLR 625 (unduly prolonging a trial); Westpac Banking Corp v Northern Metals Pty Ltd (1989) 14 IPR 499 ; (1989) ATPR ¶40-953 (alternative claim struck out as embarrassing where its only purpose was to obtain wider discovery). [[14.28.10] Abuse of process — use of proceedings for an improper purpose] 597 There is a question as how it could be the conduct of foreign proceedings could amount to an abuse of the process of this Court. Perhaps there can be circumstances in which such a finding could be made and it seems pointless to speculate on that matter. However I note that Young J in Oz-US Film Productions Pty Ltd v Heath [2000] NSWSC 967 at [36] – [37] [without deciding the matter] observed as follows: "36 It was put by Mr Wales SC that a step taken outside the NSW proceedings and which could not, except perhaps forensically or with respect to a commercial settlement, impinge on the NSW proceedings cannot be an abuse of the NSW process. He further submitted that the Court is not to be concerned with whether there is a possible abuse of process in America or even if there is (which was denied) a tactical move dehors the proceedings by N and MN. 37 On reflection, these submissions are probably correct. However, it is not necessary to reach a final view on this matter." Overview 598 Before examining the eight grounds relied upon by the defendants in support of their abuse of process cases it seems appropriate to at least in part, repeat some of what has earlier been said in relation to Mr Wilson. 599 My assessment of Wilson from the extensive evidence which he gave and from the extensive general evidence before the Court is that he is an extraordinarily difficult person whom once crossed in any serious way, could be counted on one to make things as difficult as possible for his adversaries. And it is clear from the materials before the Court that he has pursued the defendants through many jurisdictions over extended periods of time in order to track what he regarded as wrongdoing of the highest order, required to be redressed by curial process. That of itself, by no means, proves that he has abused the process of this Court. 600 Indeed the remedy for obtaining interim and then final Mareva injunctive relief, freezing orders and the like, exist where a court is satisfied on the evidence before it that such relief is justified. 601 Without exception the grounds relied upon by the defendants in relation to the so-called abuse of process case fail. As is apparent from a careful reading of each of the grounds they consist of numerous complaints of the conduct of Wilson/the plaintiff covering an enormous amount of paper without ever achieving the status of that which is known as an abuse of process. 602 Of course there is a critical interrelationship between the ultimate merits of plaintiff's pleaded case and the abuse of process cases pursued by the defendants. And in many respects the substance of the plaintiff pleaded case upheld by the reasons, simply puts paid to the defendants abuse of process case (s). 603 I turn now to deal with the specifics in terms of the nominate grounds put forward by the defendants in support of the abuse of process cases. 604 Unfortunately it becomes necessary to set out the claims in detail. The simplest procedure is to set out the claims [which are summarised in the defendant's final written submissions] seriatim and to then give rulings in relation to each of them. Whilst I am cognizant of the fact that one does not repeat the pleadings in a final judgment, the circumstances in which the abuse of process case was never actually formally pleaded seem to me to make it necessary to set the defendant's case on abuse. Ground 1: Collateral, Improper Purposes. 605 The institution and maintenance of these proceedings by the plaintiff is an abuse of the processes of the Court (in the sense discussed in Walton v Gardiner (1993) 177 CLR 378) in that the predominant purposes of the plaintiff in its institution and maintenance of the proceedings are directed towards obtaining some advantage for which the proceedings are not designed or some advantage beyond what the law offers; namely: a. to obstruct, defeat or delay any entitlement that Mr Emmott has, or might have, against the plaintiff or Mr Wilson, to: i. shares in Steppe Cement Ltd. ii. shares in the plaintiff. b. to obstruct, defeat or delay the arbitral proceedings between the plaintiff as Claimant and Mr Emmott as respondent, pending in London, before Mr Christopher Berry, Mrs Valerie Davies and Lord Millett sitting as a Panel of Arbitrators appointed pursuant to an agreement made between Mr Emmott and the plaintiff. c. to place pressure on the defendants, Mr Thomas Ian Sinclair and entities associated with Mr Sinclair, and Mr Jean Joseph Louis Robert Schoonbrood and entities associated with Mr Schoonbrood, to induce Mr Emmott to desist in his claim to an entitlement to shares in Steppe Cement and the plaintiff. d. to disrupt any and all relationships between Mr Emmott and prospective or actual clients or professional associates of Mr Emmott, including: i. Mr Sinclair. ii. Mr Schoonbrood. e. to disrupt any and all relationships between the defendants and Messrs Sinclair or Schoonbrood. f. to impose upon the defendants an apprehension of continuing exposure to financially ruinous, wide-ranging litigation across multiple jurisdictions. g. to expose Mr Emmott (and any person, including the first and second defendants, who might be associated with him) to criminal investigation. Ground 2: Vexatious and Oppressive Conduct of the Proceedings. 606 Maintenance of the proceedings by the plaintiff is an abuse of the processes of the Court in that the plaintiff has conducted (and persists in conducting) the proceedings in a manner that is vexatious and oppressive and there is a reasonable apprehension that it will continue to do so insofar as: a. the plaintiff has maintained in these proceedings claims for relief against the defendants which are ancillary to claims for relief made against Mr Emmott (in the arbitral proceedings) without joinder of Mr Emmott as a party in the proceedings. b. the plaintiff has conducted the arbitral proceedings against Mr Emmott concurrently with these proceedings, using processes of discovery in these proceedings for the purpose of the arbitral proceedings, but obstructing or delaying completion of the arbitral proceedings before the trial of these proceedings. The Arbitrators have made several Procedural Orders against the plaintiff in peremptory terms, including an Order styled "Eighth Procedural Order" made on 26 September 2008 in which the Arbitrators found that the plaintiff had been guilty of deliberate obfuscation and unreasonable and unconscionable delay in the conduct of the proceedings, as well as of attempts to cross examine witnesses of Mr Emmott for the purpose of other proceedings. The plaintiff has failed to provide to the defendants in these proceedings the whole of the record of the arbitration (including all of the orders made by the Arbitrators). It has failed to make final submissions to the Arbitrators in a timely manner, thereby delaying the making of an award. c. the plaintiff has maintained in these proceedings allegations of fraud and conspiracy (involving allegations of wrong-doing against Mr Emmott and the defendants) which were abandoned in the arbitral proceedings. d. the plaintiff has sought to adduce in these proceedings evidence from witnesses whose evidence was abandoned by it in the conduct of the arbitral proceedings. e. the plaintiff has, without notice to the defendants or Mr Emmott, used the processes of this Court in aid of a criminal complaint against Mr Emmott, in a foreign jurisdiction, designed to expose Mr Emmott and the defendants to criminal investigation. f. having obtained extensive freezing orders against the defendants in these proceedings, and against Mr Emmott in connection with the arbitral proceedings, the plaintiff has taken steps to place, or to facilitate placement of, its assets beyond the reach of any order for compensation that might be made on undertakings as to damages given by it in respect of such freezing orders. g. in the course of the trial of the (NSW) proceedings the plaintiff manifested a pattern of conduct in which witnesses called to give evidence on behalf of the defendants were subjected to oppressive processes immediately before or after giving evidence. Reference is here made to: i. the application made by the plaintiff on 20 August 2009 for the issue of a subpoena addressed to Mr Sinclair immediately after the conclusion of his oral evidence (22 T1324 (line 30)-T1325 (line 39)). ii. the application made by the plaintiff on 25-26 August 2009 for the issue of a subpoena addressed to Mr Emmott immediately before he was scheduled to commence giving evidence on 26 or 27 August 2009 (24 T1493 (line 50-T21494 (line 4); 25 T1496 (line 20)-T1502 (line 7)). iii. the purported service by the plaintiff on Mr Emmott, on 28 August 2009 as he was leaving the Court having been cross examined on a similar subject matter, of what purported to be a "Statutory Demand" under the Insolvency Act 1968 (Eng) (Emmott Affidavit sworn 28 August 2009; 27 T1701 (lines 40-46) and 27 T1708-1712; Affidavit of Aliaya Syzdykova sworn 2 September 2009) in circumstances in which (as appears at 29 T1799 (line 40)-T1800 (line 43)) a primary object of the plaintiff has been to secure from Mr Emmott an "admission" that he has an indebtedness to the plaintiff in connection with procedural steps taken in the London Arbitration and an exposure to bankruptcy proceedings in England referrable to that debt. iv. the plaintiff's correspondence with Mr Schoonbrood on 29-31 August 2009, via Clayton Utz and without notice to either Mr Schoonbrood's legal representatives or defendants' solicitors, as Mr Schoonbrood travelled to Sydney to give evidence (Exhibit "D17"). h. in the course of the trial of the proceedings the plaintiff manifested a pattern of conduct in which witnesses called to give evidence on behalf of the defendants were subjected to cross examination which bore the hallmarks of Mr Wilson's ongoing preoccupation with "discovery" processes directed to exposure of the business interests and plans of a range of people unconnected with any legitimate claim for relief that the plaintiff might reasonably make in the proceedings (a pre-occupation reflected in Mr Wilson's ongoing interest in "conspiracy theories" at 12 T630 (line 6)-T631 (line 32); 12 T640 (line 14) – T641 (line 23); 14 T789 (line 18) - T791 (line 38) and his doubt at 14 T792 (lines 13-15) about whether the discovery processes instigated by the plaintiff could ever be regarded as finished). i. the "Statutory Demand" purportedly served upon Mr Emmott in the precincts of the Court on 28 August 2009 (Annexure "JFE-A" to Mr Emmott's Affidavit sworn 28 August 2009), the cross examination of Mr Emmott immediately before service of that "Demand" on him (27 T1701 (lines 40-46) and 27 T1708-1712) and the plaintiff's proposal of 2 September 2009 to cross examine Mr Emmott on his Affidavit for the purpose of establishing in him a liability for a "debt" claimed by the plaintiff and an exposure to bankruptcy proceedings at the suit of the plaintiff (29 T1799 (line 41)-T1800 (line 43)) demonstrate a determination by the plaintiff to use these (NSW) proceedings for an improper purpose (falling squarely within the principles enunciated in Williams v Spautz (1992) 174 CLR 509) to obtain advantages for which the proceedings are not designed or beyond what the law offers, especially as the "particulars" set out in the "Statutory Demand" are inconsistent with the London Arbitrators' "Sixteenth Procedural Order" made on 13 July 2009 and dated 24 August 2009 (of which Mr Wilson must have been cognizant). j. the email addressed by Mr Wilson to Baker & McKenzie in mid-2008 (Exhibit "D11") seeking to engage in ongoing debate about the dispute between the parties that was supposedly settled "amicably" some years ago, and related to events over a decade old, manifests Mr Wilson's obsessive tendency of mind. 607 On 9 October 2006 the plaintiff obtained Freezing Orders against the defendants in an ex parte hearing in which the plaintiff relied upon: (A) a Commercial List Statement filed on that date, by paragraph C8 of which the plaintiff represented to the Court that a family structure of Mr Wilson was the ultimate beneficial shareholder in the plaintiff; and (B) an Affidavit sworn by Mr Wilson on 6 October 2006, in paragraphs 4 and 5 of which substantially the same representation was made. Those representations were inconsistent with: (C) clause 2.3 of the written agreement dated 7 December 2001 between Mr Emmott and the plaintiff (pursuant to which Mr Emmott had an entitlement to receive shares in the plaintiff), by virtue of clause 5.2 of which the plaintiff commenced the arbitral proceedings against Mr Emmott in London; and (D) the fact that on or about 20 February 2006 Mr Wilson had signed a certified copy of the Share Register of the plaintiff, bearing that date, to the effect that he personally owned 66.7% of the share capital of the plaintiff and Mr Emmott owned the balance of 33.3%. In paragraph C11 of its Amended Commercial List Statement filed 29 January 2007 the plaintiff deleted so much of the paragraph that had been numbered C8 in its Commercial List Statement as had alleged that a family structure of Mr Wilson was the ultimate beneficial shareholder in the plaintiff. 608 On or about 23 February 2008 Mr Wilson purportedly effected a re-organisation of the share capital of the plaintiff based upon a purported, undated Share Register of the plaintiff first discovered by the plaintiff to Mr Emmott in the arbitral proceedings in or about January 2009, recording two bearer shares as the only issued capital in the plaintiff. The "reorganisation" involved an exchange of the two bearer shares for shares registered in the name of Windsor Fine Arts Establishment (an entity registered in Lichtenstein, a jurisdiction not a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, known as "the New York Convention") and the issue of the remaining authorised capital in the plaintiff as shares registered in the name of Windsor Fine Arts Establishment. Documents relating to the "reorganisation" were not disclosed in the arbitral proceedings until the plaintiff was forced to make a disclosure pursuant to the Arbitrators' peremptory order dated 12 December 2008. The disclosure remains inadequate in that no documents evidencing the ownership of Windsor Fine Arts Establishment, Kazholdings Inc or Kazholdings Inc LLP have been disclosed in the arbitral proceedings or otherwise to the defendants. 609 On or about 21 September 2008 the plaintiff purportedly adopted "reconstructed accounts" for the years 2002-2006 inclusive by a certification bearing the date 21 September 2008 signed by Mr Wilson. In evidence given by Mr Wilson in the arbitral proceedings (at T. 3/119) he asserted that the "reconstruction" of the accounts was effected for the purpose of the arbitration and for the "Australian litigation", referring to these proceedings. The effect of the "reconstruction" was: to change the method of accounting from "partnership accounts" (treating Messrs Wilson and Emmott as partners, entitled to drawings) to "corporation accounts" (converting drawings to "directors loans"); to record an increase in expenses incurred by the plaintiff so as to reduce its profitability substantially; and to record an alleged indebtedness of the plaintiff to Kazholdings Incorporated (a company registered in the British Virgin Islands) for a substantial loan repayable on demand. The plaintiff objects in these proceedings to disclosure of documents relating to the financial circumstances of the plaintiff or documentation relating to ownership, control or financial circumstances of Kazholdings Incorporated. 610 Notwithstanding that on the public register of Steppe Cement Ltd the plaintiff is and has been since about 2004 recorded as a significant shareholder in the company (holding 13,407,852 shares or 8.71% of the 154,000,000 shares issued in the company as at 11 May 2009), an alleged deed dated 22 September 2004 discovered by the plaintiff during the hearing of the arbitral proceedings purports to show that the shares recorded in the public register of Steppe Cement Ltd as having been issued to the plaintiff were under the control of Kazholdings Incorporated. The deed was signed for Kazholdings Incorporated by Alexander Gusev (a person employed by the plaintiff as Mr Wilson's driver) and Dilyara Alimbayeva (a person employed by the plaintiff as Mr Wilson's office manager). It was signed by Mr Wilson and his wife Carol for the plaintiff. Notwithstanding that Mr Emmott was a director of the plaintiff at the time Deed was purportedly made, it was not disclosed to him until 25 September 2008 or thereabouts in the course of the arbitral proceedings. Nor was the fact that the plaintiff and Mr Wilson claimed that Mrs Wilson was a director of the plaintiff (that is, a co-director of Mr Wilson and Mr Emmott) at the time the Deed was purportedly made. In the arbitral proceedings evidence indicated that the Steppe Cement Ltd shares constituted the major asset of the plaintiff. In the course of those proceedings the plaintiff resisted orders designed to preserve 27% of the plaintiff's shareholding pending determination of Mr Emmott's claim to that property, asserting that the shares were held in a nominee account with HSBC Jersey. In the course of his evidence to the Arbitrators on 25 September 2008 Mr Wilson refused to disclose the whereabouts of the other 73% of the plaintiff's shareholding in Steppe Cement Ltd. 611 Only during the course of the hearing of the arbitral proceedings (at or about the time Mr Wilson served his first Witness Statement, Exhibit "MEW 21", dated 22 September 2008, in those proceedings) did the plaintiff first disclose to Mr Emmott the alleged existence of the putative deed dated 22 September 2004, a putative Loan Agreement dated 23 July 1998 (referred in clause 1 of the Deed) and a putative Charge dated 23 November 1998 (referred in clause 1 of the Deed as a "pledge" related to the Loan Agreement) between the plaintiff and Kazholdings Incorporated. Each of the Loan Agreement the Charge was ostensibly executed by Mr Wilson on behalf of the plaintiff and by his wife Mrs Carol A Wilson on behalf of Kazholdings Incorporated. The Deed was ostensibly executed by Alexander M Gusev and Dilyara Alimbayeva (employees of the plaintiff) as directors of Kazholdings Incorporated and by Mr and Mrs Wilson as directors of the plaintiff. By a letter dated 12 January 2009 addressed by the London solicitors of the plaintiff (Holman Fenwick Willan) to the solicitor of Mr Emmott (Michael Robinson), the plaintiff asserted that the Deed, the Loan Agreement and the Charge were authentic transactional documents. Nevertheless, the following factors suggest that they are a recent invention designed to obstruct, defeat or delay any attempt to enforce a judgment or order against the plaintiff: (A) the existence of the putative Deed and Mrs Wilson's alleged directorship of the plaintiff were not disclosed to Mr Emmott until belatedly during the course of the arbitral proceedings; (B) the effect of the documentation, in the context of the plaintiff's "reconstruction" of its accounts for the purpose of the arbitral proceedings and these NSW proceedings, is that the plaintiff is financially dependent upon Kazholdings Incorporated and possibly other entities that are, or might be, beyond the reach of ordinary court process and about which the plaintiff and Mr Wilson refuse to make disclosures in these proceedings; (C) the Charge describes the plaintiff as having a postcode (namely, "0500059") which was not in existence as at the date of the Charge (namely, 23 November 1998) or until December 2004; (D) the plaintiff did not exist as at the date of the putative Loan Agreement (namely, 23 July 1998) and, upon incorporation, it was not known by the name attributed to it in the putative Agreement as it was only incorporated on 17 August 1998 (with the name "Michael E Wilson & Co Ltd"), changing its name to "Michael Wilson & Partners Ltd" on 9 September 1998. Ground 3: Improper Ex parte Applications 612 The proceedings are an abuse of the processes of the Court in that the plaintiff has obtained coercive orders against the defendants, on ex parte applications to the Court, without full or proper disclosure of facts bearing upon those applications. 613 On 9 October 2006 the plaintiff obtained Freezing Orders against the defendants in an ex parte hearing in which it represented (by paragraph C8 of a commercial list statement filed on that date and by paragraph 5 of an Affidavit sworn by Mr Wilson as a principal of the plaintiff on 6 October 2006) that a family structure of Mr Wilson was the ultimate beneficial shareholder of the plaintiff. It did not disclose to the Court that Mr Emmott (against whom the plaintiff alleged wrongdoing in which the defendants were alleged to have participated) was entitled to 33.3% of the shares in the plaintiff or that Mr Wilson had, on or about 20 February 2006, signed a certified copy of the Share Register of the plaintiff to the effect that the shareholders of the plaintiff were himself (as to 67.7%) and Mr Emmott (as to 33.3%). 614 On 9 October 2006, 26 March 2007, 12 April 2007 and 18 October 2007 the plaintiff obtained ex parte orders, relying upon evidence that the principal of the plaintiff (Mr Wilson) was a former partner of Baker & McKenzie, solicitors, without disclosing to the Court that: (A) whilst a partner of that firm, Mr Wilson had, on his own admission, engaged in "unethical activities" involving "ghost tenders" and overcharging; or (B) that the termination of his relationship with the firm occurred amidst allegations by the firm that he had engaged in further unethical activity. 615 On those same occasions the plaintiff obtained ex parte relief from the Court without disclosure to it that a report of Mr Wilson's unethical activities (characterised as fraud) whilst at Baker & McKenzie was published in The Almaty Herald (a newspaper circulating in Kazakhstan) in and about June and July 2005, and that a written admission of "unethical activities" by Mr Wilson dated 28 May 1997 was in the public domain in Kazakhstan from June or July 2005 or thereabouts. 616 On the same occasions the plaintiff obtained ex parte relief from the Court without disclosure to it that any contract of employment made between the plaintiff and the First and Second defendants respectively was made without disclosure of Mr Wilson's admission of engagement in unethical activities to either the First or the Second defendants. 617 In or about March and April 2007 the plaintiff obtained ex parte orders from the Court, granting leave to the plaintiff to use material obtained in these proceedings for the purposes of a criminal investigation overseas (in Switzerland), based upon a false assertion that the affairs of the plaintiff were managed by Mr Emmott. 618 In or about March, April, June and October 2007 the plaintiff obtained ex parte confidential orders from the Court to facilitate the making of a Criminal Complaint overseas without disclosing to the Court that the terms of the Complaint proposed to be made (and made) falsely asserted that Mr Emmott was the managing director of the plaintiff in Kazakhstan and misrepresented the terms of clauses 1.1, 2.1 and 2.2 of the Agreement dated 7 December 2001 (between Mr Emmott and the plaintiff) in aid of that assertion. In Exhibit "D19" see the expression "managing director" (in paragraph 2 on page 3; in paragraph 12 on page 7; in clauses 1.2 and 2.2 extracted on page 8; and in paragraph 17 on page 10) and the expression "full-time employed basis" (in the purported extract of clause 2.1 on page 8) and compare those expressions with the terms of clauses 1.1, 2.1 and 2.2 of the Agreement (Exhibit "D9" at Tab 18). The plaintiff induced the Court to maintain the confidentiality of orders made ex parte without disclosing to the Court the terms of the Complaint or discrepancies between those terms and the Agreement dated 7 December 2001. At no time since the Complaint was filed with the Swiss Prosecutor has the plaintiff brought that discrepancy to the attention of the Court or admitted it. Ground 4: False and Misleading Statements 619 The proceedings are an abuse of the processes of the Court in that on 17 June 2009 Mr Wilson swore an Affidavit in these proceedings on behalf of the plaintiff in which he swore, inter alia, that: (i) Kazholdings Incorporated is not involved in these proceedings, either as a party "or otherwise"; (ii) the plaintiff is not and never has been a shareholder in Kazholdings Incorporated; (iii) the plaintiff does not have and has never had possession or custody of any documents "howsoever" relating to Kazholdings Incorporated; (iv) Mr Wilson is not a director, officer or shareholder of Kazholdings Incorporated; and (v) Mr Wilson does not have possession or custody of any documents relating to Kazholdings Inc. Those statements are false or misleading in that: (A) in evidence given by Mr Wilson in other proceedings (including paragraphs 98, 305, 354(3), 356(3), 365(3), 430(2), 431(5), 673 and 680 of the First Witness Statement of Mr Wilson, being Exhibit "MEW1" dated 22 September 2008, in the arbitral proceedings) he has made statements to the effect that Kazholdings Incorporated is, and has been throughout the life of the plaintiff a financier of the plaintiff and under the control of Mr Wilson; (B) by a letter dated 12 January 2009 addressed by the London solicitors of the plaintiff (Holman Fenwick Willan) to the solicitor of Mr Emmott (Michael Robinson) the plaintiff, expressly or by implication, asserted that the putative Deed dated 22 September 2004, the putative Loan Agreement dated 23 July 1998 and the putative Charge dated 23 November 1998 between the plaintiff and Kazholdings Incorporated were authentic; and (C) if authentic, those documents evidence a close and long association between the plaintiff and Kazholdings Incorporated. Ground 5: Constraint of the defendants' Capacity to Defend the Proceedings 620 The proceedings are an abuse of the processes of the Court in that the plaintiff has sought in its conduct of these proceedings to constrain the defendants' capacity to defend the proceedings and to limit or interfere with the legal representation available to the defendants in the proceedings. 621 Between 18 October 2006 and 6 November 2006 or thereabouts the plaintiff (by letters dated 18 October 2006, 27 October 2006 and 3 November 2006 addressed by Clayton Utz to Blake Dawson Waldron) objected to the First defendant's representation in these proceedings by Blake Dawson Waldron. The objection was based upon representations by the plaintiff to Blake Dawson Waldron that: (A) Blake Dawson Waldron was once instructed by the plaintiff (as a client of Blake Dawson Waldron) to act for clients of the plaintiff in a particular matter relating to Emperor Mines Ltd; (B) in the course of that matter information confidential to the plaintiff was imparted to Blake Dawson Waldron; (C) the plaintiff proposed to amend its Commercial List Statement to include allegations of negligence against the First defendant (in contract and tort), including an allegation that, whilst in the employ of the plaintiff, the First defendant was negligent in handling the Emperor Mines matter; (D) several members of Blake Dawson Waldron would be required to give evidence in these proceedings material to the determination of the Emperor Mines negligence allegation; and (E) by reason of r.19 of the Revised Professional Conduct and Practice Rules 1995 (NSW), Blake Dawson Waldron was obliged to cease acting for the First defendant. In response to the plaintiff's objection, on 6 November 2006 Blake Dawson Waldron filed a Notice of Intention to Cease to Act. On 29 January 2007 the plaintiff filed (pursuant to leave granted on 8 December 2006) an Amended Commercial List Statement which incorporated, in paragraphs 75-80, allegations of negligence against the First defendant. Having secured Blake Dawson Waldron's withdrawal from the proceedings by a representation that it had been a client of that firm: (F) on or about 23 July 2007 the principal of the plaintiff (Mr Michael Wilson) swore an Affidavit in proceedings numbered 307 of 2006 in the Eastern Caribbean Supreme Court (in the High Court of Justice of the British Virgin Islands) in paragraph 11(d) of which he denied that the plaintiff owed any moneys to Blake Dawson Waldron in respect of the Emperor Mines matter because, he said, Blake Dawson Waldron had contracted directly with the clients and the plaintiff was not itself a client of Blake Dawson Waldron; and (G) on 26 November 2007 the plaintiff filed a Further Amended Summons and a Further Amended Commercial List Statement in which all allegations of negligence against the First defendant were abandoned. 622 On 12 June 2009 (the last working day before the commencement of a trial listed to commence on 15 June 2009) the plaintiff served on the defendants a Notice to Produce bearing that date demanding production of records relating to the defendants' retainer of solicitors and counsel. On the same date the solicitors for the defendants (Henry Davis York) notified the plaintiff's solicitors (Clayton Utz) that, in the contention of the defendants, the Notice to Produce was an abuse of process. On the morning of 15 June 2009 (shortly before the scheduled commencement of the trial) each of Henry Davis York and counsel retained in the proceedings on behalf of the defendants received a letter (Exhibit "D2") dated 12 June 2009 from the office of PriceWaterhouseCoopers in Almaty, Kazakhstan, (where Mr Wilson of the plaintiff is resident) requesting, under cover of an order apparently made in the British Virgin Islands proceedings on the application of the plaintiff, substantially the same information as demanded in the plaintiff's Notice to Produce. 623 On or about 17 June 2009 the plaintiff (by a facsimile transmission described as a "Fax Message" bearing that date and addressed to the Managing Director of Cheviot Asset Management Ltd and Cheviot Capital (Nominees) Ltd) intermeddled in a sale by the Second defendant of shares held by him in Roxi Petroleum Plc designed to obtain funds for transmission to the solicitors for the defendants (Henry Davis York), to be held in trust on account of costs and disbursements referable to these proceedings. Under cover of its Fax Message, the plaintiff provided to the addressee of the Fax an incomplete copy of Freezing Orders made in the proceedings, omitting to provide or refer to an order made by Bergin J on 20 October 2006 that provided for Freezing Orders to be continued on the basis that "each of the defendants is entitled to pay out of his assets all reasonable legal expenses and costs associated with his defence of these proceedings." Ground 6: No Connection with Australia 624 The proceedings are an abuse of the processes of the Court in that the plaintiff has conducted these proceedings notwithstanding that it has no presence in Australia apart from the proceedings, no assets in Australia and no connection with Australia apart from the fact that its principal (Mr Wilson, a non-resident Australian citizen) is, or purports to be, an Australian lawyer. The undertakings as to damages given by the plaintiff in these proceedings in support of coercive orders obtained against the defendants are illusory to the extent that they are not, or might not be, supported by security ordered in favour of the defendants by the Court, bearing in mind that: (A) the "reconstructed accounts" of the plaintiff produced by the plaintiff at the hearing of the arbitral proceedings suggest that, during the course of these proceedings, the plaintiff has been trading whilst insolvent or near insolvency; (B) the putative Deed dated 22 September 2004, the putative Loan Agreement dated 23 July 1998 and the putative Charge dated 23 November 1998 made between the plaintiff and Kazholdings Incorporated suggest that, commercially, the affairs of the plaintiff can be dictated by Kazholdings Incorporated as a financier of the plaintiff entitled to a first charge over "all present and future assets" of the plaintiff and (C) the plaintiff and Mr Wilson refuse to make disclosures about ownership and control of Kazholdings Incorporated notwithstanding evidence given by Mr Wilson in the arbitral proceedings to the effect that he exercises control over Kazholdings Incorporated. Ground 7: The plaintiff's Objections to Making Disclosures 625 The proceedings are an abuse of the processes of the Court insofar as the plaintiff has objected to making disclosures, in the course of these proceedings or in the course of the arbitral proceedings, about its financial circumstances or ownership and control of it. Ground 8: Concealment of "Unethical Activities" 626 The proceedings are an abuse of the processes of the Court insofar as the plaintiff claims relief against the defendants referrable to obligations said to have been owed to the plaintiff by Mr Nicholls and Mr Slater as its employees in circumstances in which, prior to engagement of Messrs Nicholls and Slater respectively, the plaintiff concealed from them that its principal (Mr Wilson) had engaged in "unethical activities" whilst acting as a lawyer in Kazakhstan in partnership with Baker & McKenzie, thereby inducing each of Mr Nicholls and Mr Slater to undertake work for the plaintiff. Dealing with the respective abuse of process contentions 627 It is trite that it is unnecessary for the Court to record in its reasons each and every piece of evidence adduced during the hearing. For that reason the rulings in relation to the respective abuse of process contentions are unable to be fairly shortly made. Ground 1 Collateral, Improper Purposes 628 Notwithstanding the concerted efforts of the plaintiff and Mr Wilson to use many jurisdictions in the attempt to obtain freezing orders and similar against the defendants, nothing in the evidence before the court negates the proposition that they were perfectly entitled to so approach what they regarded as their litigious rights. To the extent, if at all, that the defendants are able, following the handing down of these reasons, to establish that in relation to any pleaded issue, the plaintiff stance taken during the hearing in ultimately not pursuing that issue, proves that the issue was pursued with an anterior motive, that matter may be the subject of argument in terms of costs. However that simply does not establish, [on its own or in conjunction with any of the other grounds put forward by the defendants] that these proceedings constitute an abuse of the process of this Court. Nor are any of the other claims pursued in ground 1 of substance or proved to the necessary level as to engage a finding of an abuse of process. Ground 2 Vexatious and Oppressive Conduct of the proceedings 629 The circumstances in which the plaintiff was unable to join Mr Emmott in these proceedings are common ground. Mr Emmott was entitled to require that the plaintiff comply with the contractual rights provided for in the contract between these parties. He in fact did so: [cf Mr Emmott's evidence that he was asked to join in the New South Wales proceedings and threatened an anti-suit injunction in response (T1704-5)] 630 Nothing in the extensive complaints set out in ground 2 suffices to establish an abuse of process of this Court. None of the claims of wrongdoing justifies a finding of an abuse of process. Ground 3 Improper ex parte applications 631 The issues raised in ground 3 are of very specific importance for obvious reasons. The duties of a party making an ex parte application to make full disclosure to the Court are well-known: cf Meagher Gummow & Lehane's Equity. Doctrines and Remedies Fourth Ed at21-425. The authors observe that an ex parte injunction may be dissolved ex parte or on an inter partes application. They further observed as follows: "Because of its exceptional nature, particular care should be taken to put all the facts (favourable and unfavourable to the plaintiff) to the Court. Failure to do this will … involve the dissolution of the injunction… However, this will be without prejudice to the making of a further application" 632 On the other hand Equitable Remedies - Injunctions and Specific Performance by I C F Spry, 1971 puts the matter as follows at pages 450 - 451: The rule that if there is an insufficient disclosure the injunction in question will be refused or dissolved, as the case may be, is often stated in quite general form, so as to suggest that it is invariably applied as a matter of course. Doubtless it is a rule that will be applied in all but the most exceptional cases, but it is difficult to believe that it is altogether inflexible and that courts of equity do not here have a discretion, especially since matters which are material in the sense which has been discussed may vary between those of great and little weight and the hardship which will be caused the plaintiff if he is refused relief may vary in the same manner. There is indeed authority that in very exceptional circumstances an injunction will be granted despite a material non-disclosure and that the court may sometimes consider that an applicant who has not made a full disclosure will be sufficiently penalised by an appropriate order as to costs. Thus, for example, if an injunction has already issued questions of hardship and of the degree of promptitude which the defendant has shown in seeking to have it subsequently dissolved will sometimes be found to be relevant in deciding whether it should be allowed to continue. 633 As I see the matter were the defendants found to have been correct in their contention of the failure by the plaintiff to comply with its onerous obligations to make full disclosure to the Court, the matter would likely sound in indemnity costs. 634 The freezing orders initially made in these proceedings by Palmer J on 9 October 2006 are said to have been based on an incorrect affidavit made by Mr Wilson on 6 October 2006. The affidavit was cross-examined upon [transcript 665-694]. Having examined that cross examination and the nuances concerning the meaning of "family structure" I am not satisfied that the plaintiff claim as to intentional misleading of the Court in the person of Justice Palmer is made out. 635 There is no substance in the suggestion that the matters concerning failure to disclose Mr Wilson's so-called unethical activities would require that these proceedings be dismissed on the ground of an abuse of process. 636 The complaints concerning the proposition that the plaintiff obtained ex parte orders from the Court granting leave to it to use material obtained in these proceedings for the purposes of the criminal investigation in Switzerland based upon a false assertions: i. that the affairs of the plaintiff were managed by Mr Emmott; ii. misrepresenting the terms of certain clauses of the 7 December 2001 Agreement [between Mr Emmott and the plaintiff); do not justify these proceedings being dismissed on the grounds of an abuse of process. 637 Much time was taken in examination of the events leading to the final complaint lodged in Switzerland. Both Mr Wilson as well as Mr Radosavlejic, the latter being a lawyer resident of Kazakhstan, had worked on the Swiss complaint. 638 A number of documents required to be examined in terms of the iterative circumstance from the commencement of work on the Swiss complaint until the lodging of the final complaint. The cross examinations traversed the manner in which English drafts were ultimately translated into German. Nothing in those cross-examinations justifies the proceedings being dismissed on the grounds of an abuse of process. Ground 4 False and misleading statements 639 Nothing in these grounds merit the proceedings being dismissed on the ground of an abuse of process. Ground 5 Constraint of defendant's capacity to defend the proceedings 640 Nothing in these grounds merits the proceedings being dismissed on the ground of an abuse of process. Ground 6 No connection with Australia 641 Nothing in ground 6 merits the proceedings being dismissed on the ground of an abuse of process. It must never be forgotten that both Slater and Nicholls filed submitting appearances. Nor that the defendants' pleadings [literally up to the commencement of the final hearing] had not sought to suggest that the law operating in Kazakhstan was different to the law in this present jurisdiction. Ground 7 The plaintiff's objections in making disclosures 642 Nothing in this ground merits the proceedings being dismissed on the ground of an abuse of process Ground 8 Concealment of so-called 'unethical activities' 643 No doubt this ground is put last for obvious reasons. It is a fine example of the general lack of merit running through all of the grounds referred to above. Indeed it suggests a lack of understanding of the principles first set out in these reasons in so far as dealing with this subject. As those authorities made clear, the power to exercise a stay in civil proceedings is only to be exercised with the 'utmost caution'. Conclusion 644 Notwithstanding that in my view none of the above grounds is shown on close examination to have had any merit at all, I have endeavoured resisted the temptation to simply dismiss all of them out of hand. As will have been observed, some of them have been fairly closely analysed and in other instances that form of analysis is simply unnecessary. Restraints against public policy/non-solicitation restraints 645 In light of the defendant's conduct exposed in these reasons, the defendants submissions contending that the alleged breaches of the restraint of trade provisions were against public policy and/or were and reasonable are seen to be misconceived. Consideration of those matters are: i. simply otiose in light of the Court having upheld MWP's accessorial liability cases; ii. trumped by the rigours which protect the principles of fiduciaries by nullifying temptation. 646 In this regard one need travel no further than the reasons given by Heydon JA in Harris v Digital Pulse Ply Ltd (2003) 56 NSWLR 298 at 406-409: and in particular at 413 and 414: 413 The rules that a plaintiff need not show damage and need not show that the fiduciary has taken a profit which the plaintiff could have gained are prophylactic in the sense that they tend to prevent the disease of temptation in the fiduciary –they preserve or protect the fiduciary from that disease. The temptation might be assisted if the fiduciary had in contemplation the possibility of escaping liability by arguing that the principal was caused no loss, or that the profit made was never available to the principal. 414 The prevention of or protection from the relevant disease is assisted by the strictness of the standard imposed and the absence of defences justifying departures from it.. Remaining matters 647 There were sundry loose ends or remaining matters left for the courts decision. These were as follows: i. A decision as to the defendants endeavour to tender particular documents [cf transcript 1807-1814]; ii. The matter was dealt with in a table where under the parties identified their positions in relation to the proposed tenders. That table was furnished to the court by e-mail from the defendants on 11 September 2009; iii. The rulings in relation to part A of that table are as follows: MFI P 1 was not pressed MFI P3 was not pressed the second MFI P3 was not pressed the facsimile message noted as order of 18 June 2009 is rejected MFI P7 is allowed MFI P15 is allowed MFI P16 was not pressed MFI P23 is allowed MFI P27 had been dealt with and admitted initially on a voir dire basis MFI P 39 is allowed MFI P26 had already been dealt with and admitted initially on a voir dire basis pending final determination of its admissibility by the court MFI D1 was not pressed The second MFI D1 was not pressed MFI D 3 was not pressed MFI D 5 was not pressed MFI D12 is allowed MFID 13 is allowed MFI D 15 is allowed MFI D18 is allowed MFI D 20 is allowed MFI D 20 is not pressed MFI D 21 had already been dealt with when the Court dealt with MFI P27 MFI D22 is not pressed MFI D 28 is allowed iv. The rulings with respect to Part B of that table are as follows: a) allow the tender of the affidavits of Mr Radosavljevic; b) allow the e-mail dated 17 August 2006 from Sharon Hegarty to Mr Slater. 648 Furthermore the court having reserved a decision on the admissibility of MFI P27 has determined to reject that material: the evidence before the court from Mr Butler [transcript at 958] was that the translators of the document now sought to be placed into evidence had erred in not correctly translating the document and that evidence is accepted as reliable. Nor was the genealogy of MFI P27 appropriately identified. There simply was no verification nor authentication of the translation so that the Court is not even in a position to know the identity of the author of the translation. In the circumstances the probative value of the document is substantially outweighed by the danger that the admission of this MFI evidence would be misleading or confusing, and/or would result in an undue waste of time, and would further be unfairly prejudicial to the plaintiff. MWP's rights to elect as between remedies 649 Outside of the finding against MWP that it is disentitled to the remedy of a constructive trust, the Court will permit MWP to address on the remedies in respect of which it contends that it is entitled to an election. That will include its entitlement to address on the so-called 'split election' option. Naturally the defendant will also be entitled to make submissions on these matters. At the same time the parties will be permitted to address on questions relating to the propriety of provision being made for just allowances. Matters not litigated 650 During the hearing the plaintiff successfully moved to strike out: i. a misrepresentation defence as well as ii. and unclean hands defence. 651 The strike out application was dealt with formally and the judgment [2009] NSWSC 721 was delivered on 6 August 2009. 652 In consequence these defences fail in limini. That matter not withstanding, the defendants in final submissions sought to maintain their contention that they were entitled to rely upon these defences. They had no entitlement so to do but presumably were merely wanting to keep alive prospects of succeeding on one or both of these defences in the Court of Appeal. Other outstanding issues? 653 Bearing in mind the very extensive causes of action and defences relied upon it is appropriate to reserve to the parties liberty, should either wish to contend that the reasons have omitted to deal with a pleaded cause of action or defence, to make submissions accordingly. If those submissions proved to be of substance, the Court may give short additional reasons to cover any such hiatus. Summary table concerning elective rights or negating elective rights Transaction Remedy General Cut-Off Date 6 February 2007 Chilisai Phosphate Election granted for all Temujin invoices up to and including 30 November 2007. Urals Gold Election granted for all Temujin invoices up to and including the General Cut-off Date. Benkala Copper No election granted. Election granted for all Temujin invoices for the following transactions up to and including General Cut-off Date: (a) Karamandybas (b) Ravninnoye (c) Beibars Munai Roxi Petroleum No election granted for Project X. No election granted for Temujin invoices for the Roxi re-admission transactions including: (a) Eragon (b) ADA No election granted for Roxi shares held by any defendant resulting from Temujin work. Ablai Election granted for all Temujin invoices up to and including the General Cut-off Date. Maersk Oil Election granted for all Temujin invoices up to and including the General Cut-off Date. Kangamiut Seafoods Election granted for all Temujin invoices up to and including General Cut-off Date. Miscellaneous No election granted. Short minutes of order 654 The parties will be required to bring in short minutes of order on which occasion they will be given an opportunity to address on costs. *********** 1 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.