Dear Colleagues,

A short point but last week the High Court of Australia gave judgment in Michael Wilson & Partners Limited v Nicholls [2011] HCA 48 - http://www.austlii.edu.au/au/cases/cth/high_ct/2011/48.html. The question was whether proceedings in New South Wales against accessories alleged to have knowingly assisted in a breach of fiduciary amounted to an abuse of process, given that the proceedings against the fiduciary were subject to an arbitration in London. (There was also a question of bias). The High Court concluded that there was not an abuse of process and allowed the appeal. The joint reasons of Gummow ACJ et al contain some observations as to the relation of "accessorial" liability to the main wrong, and the available remedies, which might be of interest:

"105. The claim that there was an abuse of the process of the Supreme Court of New South Wales was flawed for a more fundamental reason than the three particular matters that have just been examined. No matter how the allegation of abuse of process was formulated, the allegation depended upon treating the liability of the respondents as necessarily confined by the extent of Mr Emmott's liability to MWP. This was said to be because the respondents' liability to MWP was no more than accessorial to the principal wrongdoing of Mr Emmott. That is not so. The claims against the respondents, as knowing assistants, were not dependent upon the claims made against Mr Emmott in the fashion asserted by the respondents.
106. As MWP rightly pointed out, this Court has held that liability to account as a constructive trustee is imposed directly upon a person who knowingly assists in a breach of fiduciary duty. The reference to the liability of a knowing assistant as an "accessorial" liability does no more than recognise that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. It follows, as MWP submitted, that the relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum. So, for example, the claimant may seek compensation from the defaulting fiduciary (who made no profit from the default) and an account of profits from the knowing assistant (who profited from his or her own misconduct). And if an account of profits were to be sought against both the defaulting fiduciary and a knowing assistant, the two accounts would very likely differ. It follows that neither the nature nor the extent of any liability of the respondents to MWP for knowingly assisting Mr Emmott in a breach or breaches of his fiduciary obligations depends upon the nature or extent of the relief that MWP obtained in the arbitration against Mr Emmott."

Best wishes,

James
--
James Lee
Lecturer and Director of Careers
Academic Fellow of the Inner Temple
Birmingham Law School
University of Birmingham
Edgbaston
Birmingham
B15 2TT, United Kingdom

Tel: +44 (0)121 414 3629
E-mail: j.s.f.lee@bham.ac.uk<mailto:j.s.f.lee@bham.ac.uk>



Web: http://www.birmingham.ac.uk/staff/profiles/law/lee-james.aspx

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