Hong Kong Solicitor Jason Karas Sued in Australia and Lost - Ordered To Pay Millions in Damages - LK Law Pty Ltd v Karas (No 4) [2025] FCA 1461 (26 November 2025)
Hong Kong Solicitor Jason Karas Sued in Australia and Lost - Ordered To Pay Millions in Damages - LK Law Pty Ltd v Karas (No 4) [2025] FCA 1461 (26 November 2025)
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2025/1461.html
The Managing Partner of Mishcon de Reya’s associated office in Hong Kong, Jason Karas, has been ordered to pay A$27.5M (£13.5 million) for moving his practice to Mishcon without his former business partner’s knowledge.
Mishcon de Reya was ordered to pay A$7.8 million (£3.8m) for its role in the secret deal, and has told RollOnFriday it will appeal the verdict.
Karas and Skip Lipman co-founded their law firm Lipman Karas in 2004 and together they built up offices in Australia, Hong Kong and London.
Their relationship deteriorated in 2019 when Karas continually stalled Lipman’s attempts to open up their 100% equity stake to the firm’s salaried partners.
As the friendship foundered, Karas approached Mishcon de Reya’s then-chairperson, Kevin Gold, to see if he could join as a senior equity partner and bring across the Hong Kong branch of Lipman Karas.
Mishcon, which already had an office in Singapore, was prepping for its (subsequently aborted) IPO, and Gold expressed enthusiasm at the prospect of obtaining a greater foothold in the Asian market.
However, Karas did not inform Lipman about his negotiations and in 2021 he signed an association agreement with Mishcon without Lipman's knowledge. Two months later, Karas skipped on Skip and executed a separation agreement with Lipman Karas which allowed him to resign and take the Hong Kong business with him.
He now heads up Mishcon’s Hong Kong branch, which is currently named ‘Karas So LLP in association with Mishcon de Reya’.
The case revealed that Lipman learned of his former friend’s deal in September 2021 thanks to an ill-timed gift of cupcakes.
Emailing a colleague in London at the time, Lipman explained, “A tray of cup cakes were delivered to the HK office of Karas legal a short time ago with a note ‘congratulations on our new association from Mishcon de Reya’”.
“No one other than Jason knew a thing about this and Jason went off his nut at the receptionist for leaving the note on the gift and for putting the cupcakes out for everyone on the reception desk.”
(The case also revealed how Karas received a heady brew of guidance and encouragement from two personal advisors, Dr Beaton and Ms Beaton. “The relationship between Skip and you has degenerated in spite of your conciliatory language”, they messaged him on one occasion. “If you want to separate from Skip and ADL go your own way, what are you waiting for?" they told him on another occasion. "What’s holding you back?”)
Once Lipman realised that Karas had negotiated the Mishcon deal while still a director of Lipman Karas, he sued his former friend for breaches of fiduciary and statutory duties.
In a damning verdict in the Federal Court of Australia, Justice Patrick O’Sullivan ruled that Karas’s “calculated decision not to disclose his conduct to Mr Lipman strikes at the very heart of fiduciary duties given Mr Lipman and Mr Karas were in the process of negotiating how to separate their business interests”.
“This was no trivial or innocent breach of duty”, said O’Sullivan, ruling that Karas “engaged in dishonest and fraudulent design”.
The judge described Karas as an “unsatisfactory” and “evasive” witness whose denials that his agreement with Mishcon constituted a financial merger “stretched credulity to the point where I entertain a significant concern as to whether, both in relation to this issue and other issues, he was consciously seeking to mislead the Court.”
“I was left in no doubt that Mr Karas believes fervently that he is correct in all things notwithstanding compelling evidence to the contrary”, said O'Sullivan.
O'Suillivan decided that Mishcon de Reya had also erred by not investigating who the firm should bring into the discussions.
Gold and fellow board member Bambo Georgiou “either wilfully shut their eyes to the obvious, recklessly failed to make inquiries that an honest and reasonable person would have made, or had knowledge of circumstances indicating Mr Karas’ breach of fiduciary duty”, said O’Sullivan.
He criticised Gold’s approach to record-taking, stating that “Remarkably, for an experienced commercial law practitioner, he said that he kept no notes”.
As such, he determined that Mishcon “knowingly assisted Mr Karas in his breaching of fiduciary duties” and ruled that Lipman “has established an entitlement to an account of profits from MdR in the sum of A$7.8 million [£3.8m]”.
O’Sullivan said that Lipman’s renamed firm, LK Law, “is entitled to equitable compensation in the sum of A$27.5 million [£13.5m] from Mr Karas, reflecting the loss suffered as a result of Mr Karas’ breaches of statutory and equitable fiduciary duties, his equitable duty of confidence, his misleading and deceptive conduct and misrepresentation”.
A Mishcon de Reya spokesperson told RollOnFriday, “We are disappointed by this judgment. We will be appealing and our legal team in Australia advise we have very strong grounds”. ROF understands that Karas has also been advised he has strong grounds of appeal.
Lipman told ROF, “this whole episode was the saddest and most unpleasant in my life”.
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