Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383

Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383

The correct measure of equitable compensation for breach of fiduciary duties is based on the commercial opportunities lost by the plaintiff as a direct result of deliberate and serious breaches, but confined by objective findings regarding the likelihood of the plaintiff retaining or obtaining those opportunities but for the breaches. The expert report used to quantify lost legal fees did not meet the threshold for admissibility or probative weight, requiring compensation to be assessed by reference to actual invoices and reasonable inferences from available evidence, subject to discount for contingencies. Compensation for a lost chance of a success fee or share allocation must be modest...

Jurisdiction
Australia
Judgment Date
28 November 2012
Procedural Posture
Appeal / Court of Appeal Judgment After Remitter From High Court
Outcome
Appeal and cross-appeal allowed in part; orders of primary judge varied to reduce equitable compensation and substitute new figures; declarations of liability stand; quantum reduced; interest to be determined by consent or further order.
Legal Topics
['breach of Fiduciary Duty' 'equitable Compensation' 'assessment of Compensation' 'admissibility of Expert Evidence']
['equity'] ['breach of Fiduciary Duty' 'equitable Compensation' 'assessment of Compensation' 'admissibility of Expert Evidence']

Case Brief

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Procedural Posture

Appeal / Court of Appeal Judgment After Remitter From High Court

Legal Issues

  1. 1 ['Whether equitable compensation was properly assessed for breach of fiduciary duties by employees and consultants of a legal and consulting firm' "Whether causal connection existed between breaches and plaintiff's losses" 'Whether expert report on fees was admissible and probative under Evidence Act 1995 s 79' 'Whether plaintiff was entitled to compensation for lost opportunity to participate in success fees or share placements']

Ratio Decidendi

The correct measure of equitable compensation for breach of fiduciary duties is based on the commercial opportunities lost by the plaintiff as a direct result of deliberate and serious breaches, but confined by objective findings regarding the likelihood of the plaintiff retaining or obtaining those opportunities but for the breaches. The expert report used to quantify lost legal fees did not meet the threshold for admissibility or probative weight, requiring compensation to be assessed by reference to actual invoices and reasonable inferences from available evidence, subject to discount for contingencies. Compensation for a lost chance of a success fee or share allocation must be modest...

Court Disposition

Appeal and cross-appeal allowed in part; orders of primary judge varied to reduce equitable compensation and substitute new figures; declarations of liability stand; quantum reduced; interest to be determined by consent or further order.

Orders

  • ['Within 14 days the parties file agreed short minutes of order, including provision for interest, costs and any other outstanding issues.' 'In absence of agreement, appellants to file and serve draft orders and brief submissions in support within 14 days; respondent to respond within a further 14 days.' 'Orders of...