KOMAL PATEL AND OTHERS v. CHRIS AU AND OTHERS

HCA 183/2014 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 183 OF 2014 ________________________ BETWEEN KOMAL PATEL 1st Plaintiff JASON MARK COHEN 2nd Plaintiff HARILAOS APOSTOLIDES 3rd Plaintiff ROCKY CAPE INTERNATIONAL LIMITED 4th Plaintiff and CHRIS AU 1st Defendant HO CHING YI ELSA 2nd Defendant RETRIBUTION LIMITED 3rd Defendant (by Original Action) BETWEEN CHRIS AU Plaintiff and KOMAL PATEL 1st Defendant JASON MARK COHEN 2nd Defendant HARILAOS APOSTOLIDES 3rd Defendant ROCKY CAPE INTERNATIONAL LIMITED 4th Defendant ESSENCE INVESTMENTS LIMITED 5th Defendant YEW KUAN CHEONG 6th Defendant RETRIBUTION LIMITED 7th Defendant (by Counterclaim) ________________________ Before: Hon Zervos J in Chambers Date of Hearing: 15 June 2015 Date of Decision: 28 July 2015 D E C I S I O N Introduction This is an application by the plaintiffs for an Order that the 1st, 2nd and 3rd defendants: procure the removal of the 1st defendant as a director of Kudeta Ltd BVI; procure the reinstatement of the 1st plaintiff to the Kudeta Ltd Board; and procure the appointment of the 1st and 3rd plaintiffs being beneficial shareholders of the 3rd defendant to the 3rd defendant’s Board. This decision is to be read in conjunction with the judgments that I have handed down in this case on 1 April 2014 and 11 July 2014, which dealt with previous applications for an injunction order. Background I have previously set out the relevant underlying facts to his case but provide this brief background to put the current application in context. This case concerns a dispute between investors in the British Virgin Islands holding company, Kudeta Ltd (KDT BVI), which owns through its 100% shareholding of the Singapore company, Ku De Ta Pte Ltd (KDT SG), the restaurant and bar in Singapore known as Ku De Ta. The registered shareholders of KDT BVI prior to 30 January 2014 were Essence Investments Ltd (Essence), holding an interest of 27.5% and Retribution Ltd (Retribution) holding an interest of 72.5%. After 30 January 2014, the registered shareholders of KDT BVI were L Capital KDT Ltd (L Capital), holding an interest of 51% and Retribution holding an interest of 49%. Komal Patel (Patel) through the corporate vehicle Rocky Cape International Ltd (Rocky Cape), and Chris Au (Au) through the corporate vehicle Retribution, concluded a joint venture agreement dated 20 July 2009 for the establishment of KDT BVI as the joint venture vehicle to operate the KDT business. The authorised share capital of KDT BVI was divided into 10,000 shares. It was agreed that 5,100 shares were to be issued and allocated to Retribution (then representing the interests of Au) and Rocky Cape (then representing the interests of Patel) on the proportions of 2,550 shares each, but this did not eventuate. It was intended that the remaining 4,900 shares would be allocated to a third-party investor, but this also did not eventuate. The 5,100 shares in KDT BVI were in the name of Ho Ching Yi Elsa (Ho) who held them for the equal interests of Au and Patel and it was intended that this was to be done through their respective corporate vehicles. It appears that at the time Patel was holding a portion of his interest on trust for Jason Mark Cohen (Cohen). Sometime in 2010, Essence acquired an interest of 27.5% in the KDT business leaving Retribution with an interest of 72.5%. This resulted in Ho transferring 3,698 shares to Retribution and 1,402 shares to Essence. It appears that the 72.5% interest held by Retribution included a 25% interest held by or for Rocky Cape. This was to be represented by a transfer of shares but no such allotment took place. It appears at this time that Patel was holding a portion of his interest on trust not only for Cohen but also for Harilaos Apostolides (Apostolides). As a result of the transfer to Rocky Cape not taking place, the various interests of the parties in KDT BVI were held by or through Retribution. Ho was the nominee shareholder and director of Retribution. From around late 2011 until around January 2013, Apostolides on behalf of KDT BVI negotiated with L Capital for it to acquire a major interest in the business. On 30 January 2013, a Convertible Loan Agreement (CLA) and a Share Purchase Agreement (SPA) were executed with L Capital. Also on that date, a Declaration of Bare Trust was executed by Ho as trustee for Patel, Apostolides and Au in relation to the shares she held in her name in Retribution. Under the Bare Trust agreement each of them was to hold one third of the shares in Retribution and a third of Retribution’s 72.5% interest in KDT BVI. The Bare Trust agreement is a key document in this dispute and reads as follows: “DATE 30 January 2013 PARTIES Ho Ching Yi Elsa — holder of Hong Kong passport number HA0728059 and residing at Unit 2 G/F Guardian House 32 Oi Kwan Road Wan Chai, Hong Kong, (the “Nominee”) and Karl Patel — holder of UK Passport No. 761269173 and residing at 100 Beach Road, #23-04/06, Shaw Towers, Singapore 189702; Chris Au — holder of Hong Kong Passport No. G8349014N and residing at 1 Newton Road, #12-02, Singapore 307943 and Harry Apostolides — holder of Australian passport number E4064247 and residing at 7 Claymore Road, #D9-03, Singapore 229538 (the “Beneficial Owners”). RECITALS Retribution Limited of P.O. Box 933, Road Town, Tortola, BVI (the “Company”) was incorporated in the British Virgin Islands on 30 July 2009 with company number 1542303. The Nominee is the registered owner of 1,000 shares in the Company (the “Shares”). The Nominee is entering into this deed at the request of the Beneficial Owners to confirm the terms on which the Nominee holds and has always since 30 January 2013 held the Shares and on which she agreed to act as Nominee. OPERATIVE PROVISIONS 1 The Nominee hereby declares that: 1.1 the Nominee holds the Shares and all dividends and interest accrued or to accrue on the Shares or any of them on trust in equal shares for the Beneficial Owners; 1.2 the Nominee agrees to transfer, pay and deal with the Shares and the dividends and interest payable in respect of the Shares in whatever manner the Beneficial Owners may from time to time direct; and 1.3 the Nominee has no beneficial interest in, or any claim, right or lien in respect of, the Shares other than as arising pursuant to this Deed. 2 The Nominee: 2.1 will vote at all meetings of shareholders or otherwise which as registered owner of the Shares the Nominee may attend in whatever manner the Beneficial Owners shall have previously requested in writing and in default of and subject to that direction (if any) at the discretion of the Nominee; and 2.2 will, if so required by the Beneficial Owners, execute all proxies or other documents that shall be necessary or proper to enable the Beneficial Owners to vote at any of those meetings in place of the Nominee. 3 The statutory power to appoint a new trustee of this deed is vested jointly in the Beneficial Owners. 4 This Deed is constituted and governed in accordance with the laws of the British Virgin Islands.” The deal that had been struck between the parties did not go ahead and L Capital renegotiated its agreement with KDT BVI. It was agreed between them that L Capital would acquire a 51% interest in KDT BVI which included purchasing all of Essence’s 27.5% interest and 12.6% of Retribution’s interest in KDT BVI. As a result, an Amended and Restated Convertible Loan Agreement (ARCLA) and an Amended and Restated Shareholders’ Agreement (ARSHA) were executed on 31 December 2013. The plaintiffs contend that as at the conversion date of 30 January 2014 under the agreements with L Capital, Ho held the shares in Retribution on trust for Patel, Cohen, Apostolides, Au, and others in the proportion stated in the Representation Letter of 29 January 2014 and that Ho in breach of the trust failed to act in the best interests of the beneficiaries, in particular Patel and Apostolides. The plaintiffs also contend that the defendants by their conduct have wrongfully interfered with the plaintiffs’ contractual rights under the ARCLA and the ARSHA. The following representation letter of 29 January 2014 which was signed by Ho was submitted to L Capital. “From: Kudeta Limited. To: L Capital KDT Ltd. Date: 29 January 2014 Dear Sirs Amended and Restated Convertible Loan Agreement dated 31 December 2013 (“the Agreement”) We refer to the Agreement. Terms defined in the Agreement shall have the same meaning in this letter. We hereby represent and warrant to you that the following individuals will hold interests in the KDTL Shares through Retribution immediately upon Conversion and the performance by all Parties of their obligations in Clause 5 of the Agreement: 1 Arthur Chondros 2.0% 2 Justin Todd and Chris 10.1% 3 Jason Cohen 5.7% 4 Harry, Karl and Yew Kuan Cheong 81.2% We acknowledge that you are proceeding with Conversion on the basis of the above representation and warranty being true and accurate as of the Conversion Date.” The 1st and 2nd defendants contend that the Declaration of Bare Trust was executed in anticipation of L Capital’s acquisition in January 2013, which was not completed and therefore did not reflect Au’s shareholding in KDT BVI. It is claimed that Au held a 35.5% interest in KDT BVI by December 2013 and an oral agreement was made on 26 December 2013 with Patel, Apostolides, Essence, and Yew Kuan Cheong, for Au to be bought out of his interest with the proceeds of the L Capital acquisition in January 2014 and that Au would receive SGD33,732,539.50 for his shares in Retribution which would be effected by L Capital’s payment of SGD11,984,782.89 to Retribution and of SGD21,747,606 of the SGD26,115,755 payment to Essence. It is also claimed that upon the conclusion of the oral agreement, Au was to hold 1 share in Retribution or KDT BVI and that Retribution was to continue to hold a 10% beneficial interest in KDT BVI on trust for Balaji Singh Teeka (Teeka), which had been acquired from Au in about April and August 2013. The issues in dispute between the parties are (1) whether Au misappropriated funds from KDT BVI contrary to agreed dividend distribution or profit-sharing between the investors; (2) whether Au failed to account or distribute to the other investors their entitlements to the profits and dividends of the KDT business; (3) the percentage interest that the investors held in KDT BVI before and after the L Capital acquisition; and (4) whether the parties had made an agreement on 26 December 2013 to buy out Au’s interest on the terms as claimed. In the course of submissions, Mr Chua Guan-Hock SC for the plaintiffs, referred to Clause 20.1 of the ARCLA which reads: “20.1 If (a) Ho Ching Yi Elsa ceases to be the sole legal shareholder of Retribution, (b) Ho Ching Yi Elsa creates any Encumbrance over any of her shares in Retribution, or (c) Harry, Chris and Karl cease to be the beneficial holders of all the issued shares of Retribution, then Retribution shall be deemed to have made an offer to LCap (a “Deemed Offer”) of all of its Shares at a price which is the discount of 50% to the net asset value of its Shares as at the date of the Transfer.” At this stage of the proceedings, I consider this to be of significance to the existence of the Bare Trust agreement and of relevance to the application before me. It refers to Harry, Chris and Karl being the beneficial holders of all the issued shares of Retribution. This is a clause in the ARCLA which was executed on 31 December 2013. The 1st and 2nd defendants were parties or subject to this agreement. Relevant legal principles An injunction commands or prohibits an act that the court regards as essential to justice and is probably more aptly described as the balance of the risk of doing an injustice. It is an ancillary remedy in the action before the court and is usually granted in cases where irreparable injury to the rights of the claimant would otherwise result, in that, it could not be adequately compensated by an award of damages. The legal principles in relation to mandatory interlocutory injunctions are well settled and succinctly summarised by Ma J (as the Chief Justice then was) in Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041 at 1026 to 1048. He emphasised that whilst the general approach employed a higher standard of proof than the case of a prohibitory interlocutory injunction, there may be exceptions to this general approach. A mandatory interlocutory injunction requires the defendant to do a specified act, as compared to a prohibitory injunction, which restrains a defendant from doing a specified act, and hence a higher standard of proof is required from the plaintiff so that the court feels a high degree of assurance that at trial it would be shown that the injunction was rightly granted. This is generally the court’s approach. However, a mandatory interlocutory injunction may still be granted, notwithstanding a court is in doubt as to the inadequacy of the respective remedies and damages. This occurs when the balance of convenience is tilted so much in the plaintiff’s favour that justice requires the grant of an injunction. What a court seeks to achieve is that a state of affairs in relation to the parties is preserved as much as possible to ensure that it will be able to do justice to the case once it is decided on the merits. See National Commercial Bank Jamaica v Olint Corp [2009] 1 WLR 1405; and Judgment of 1 April 2014. In Nottingham Building Society v Eurodynamics Systems PLC [1993] FSR 468 Chadwick J (as he then was) provided the following guidance when considering an application for a mandatory interlocutory injunction. He said at 474: “In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding considerations is which course is likely to involve the least risk of injustice if it turns out to be ‘wrong’ in the sense described by Hoffmann J. Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage, may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo. Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish his right at trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted. But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted.” It has been observed that mandatory interlocutory injunctions are more likely to be issued when the order requires a defendant to revert a course of conduct which was pursued before the occurrence of the acts or omissions which provoke the litigation. See Ocean Dynamics Charter Pty Ltd v Hamilton Island Enterprises Ltd [2015] FCA 460, unreported, 14 May 2015 (Federal Court of Australia). Basis of the application It was contended by the plaintiffs that the two agreements dated 31 December 2013 and Ho’s representation letter dated 29 January 2014 contemplated and intended that the plaintiffs would be majority shareholders in Retribution, beneficially owning total interests of 75.3% of Retribution and 36.9% in KDT BVI respectively. In consequence, it was intended Patel and Apostolides would be Retribution’s two appointees on the KDT BVI Board. As a result of this action instituted on 29 January 2014, Ho as Retribution’s sole director requested KDT BVI by written resolution dated 14 February 2014 for Au and Teeka to be appointed as directors of KDT BVI in place of Patel and Apostolides. On 25 March 2014, the plaintiffs applied by summons seeking amongst other things an order for the defendants to procure the reinstatement of Patel and Apostolides on KDT BVI Board and that the defendants are restrained from acting in a manner which was not in accordance with the plaintiffs’ written intentions and instructions. By order of this Court dated 26 March 2014, it was ordered amongst other things, that the defendants be restrained from (a) doing or causing anything to be done that would dispose of, deal with, or diminish, the value of the shares in Retribution, or in KDT BVI, without the written consent of the plaintiffs or an order of this Court; (b) without 7 days’ written notice to the plaintiffs’ solicitors, causing Retribution to issue any notices or exercise any rights under the two agreements; (c) acting in a manner which is contrary to the interests of Retribution, KDT BVI and the KDT business, and not in accordance with the written intentions and instructions of all the beneficial shareholders of Retribution, including the plaintiffs. The plaintiffs had previously sought a mandatory interlocutory injunction in the same terms as contained in the present application but this was declined in a judgment I handed down on 11 July 2014, although the plaintiffs were given liberty to apply. I should point out that I was dealing with a different set of circumstances and at different stage of the proceedings when the application was then considered. I appreciated that given the nature of the dispute and the acrimony between the parties there was likely to be tension or issues arising that may have brought about a change in circumstances. The plaintiffs argued that they and KDT BVI’s majority shareholder L Capital have legitimate concerns about Au’s conflicts of interest and suitability to sit as a director on KDT BVI and this is the principal basis for the mandatory interlocutory injunction in the terms now sought. It appears that the working relationship between Au and representatives of L Capital has deteriorated and may be acting against the interests of the KDT business. I refer to the recent email from L Capital dated 13 May 2015 and the response from Au which clearly demonstrates that there is tension between Au and the L Capital Board members. The plaintiffs argued that there has been a material change in circumstances which has led them to make the present application and why they submit that the relief sought was just and appropriate. They set out three main reasons. The first reason was that Au has belatedly and finally admitted that the clauses of the agreement are binding. It was pointed out that Au has now clarified his own pleaded case that the ARSHA and the ARCLA, and the entire agreement clauses there are binding on the parties thereto. The entire agreement clauses are set out Clause 33 of the ARSHA and Clause 23 of the ARCLA which read as follows: “33. ENTIRE AGREEMENT This Agreement, and the documents referred to in it, constitutes the entire agreement and understanding among the Parties relating to the subject matter of this Agreement and no Party has entered into this Agreement in reliance upon any representation, warranty or undertaking of the other Parties which is not set out or referred to in this Agreement. Nothing in this Clause 33 shall however operate to limit or exclude liability for fraud.” “23. ENTIRE AGREEMENT The terms and provisions of this Agreement contains the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements, understanding, promises, covenants, representations and communications between the Parties, whether written or oral, with respect to the subject matter hereof. Each of the Parties acknowledges that, in agreeing to enter into this Agreement, it has not relied on any representation, warranty, collateral contract or other assurance (except those set out in this Agreement) made by or on behalf of any other Party before the signature of this Agreement. Each of the Parties waives all rights and remedies which, but for this Clause 23, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance, provided that nothing in this Clause 23 shall limit or exclude any liability for fraud.” It was argued that giving effect to such agreements and clauses, and Ho’s own representation letter dated 29 January 2014, meant that the plaintiffs are taken to beneficially own over 50% of the shares in Retribution. They argued that they are therefore entitled to nominate Patel and Apostolides to Retribution’s Board and Patel to KDT BVI’s Board. The second reason was that the defendants, in particular Au, have persistently not complied with the injunction order of this Court of 26 March 2014. It is submitted that the defendants have acted in plain breach of the injunction order in a persistent manner and without any credible excuse for having done so. They listed a number of matters which they say evidenced breaches of the injunction order by the defendants. They were as follows. First, Au’s companies owed significant debts to KDT BVI’s subsidiaries which they have failed to repay. Secondly, Au has poached key employees of the KDT business for his own ventures. Thirdly, Au has sold vehicles belonging to KDT SG at a gross undervalue, to entities controlled by him contrary to KDT BVI’s best interests. Fourthly, Au has entered into a large number of highly questionable transactions with affiliated companies and individuals connected to him. Fifthly, Au has a clear conflict of interest while a board member of both Catalunya and KDT BVI, by abusing KDT BVI’s intellectual property rights in promotional materials of his own business of Catalunya, without KDT BVI’s consent. Sixthly, Au has failed to advise the plaintiffs concerning the issue of the KDT Bangkok Circular Resolution, KDT St Tropez Circular Resolution, and his intention and actions on the same. Seventhly, Au has failed to properly inform, advise, or take instructions from the plaintiffs on any agreement with L Capital concerning the Debt Extinguishment Shares, which resulted in Retribution’s shareholding in KDT BVI being reduced from 49% to 45% to the plaintiffs’ detriment. The third reason was that it was just and appropriate to grant the mandatory interlocutory injunction as a result of these matters because the current injunctive order has been ineffective to preserve the status quo and to protect the interests of Retribution, KDT BVI and the KDT business. It was submitted by the plaintiffs that it was more than likely that the defendants would continue to exploit and misuse their position, power and authority by taking further action to the plaintiffs’ prejudice in order to suit Au’s own personal agenda. It was submitted that this would not be in the best interests of the KDT business and Retribution’s beneficial shareholders. It was also submitted that the relief sought was just and appropriate, and necessary to prevent a serious risk of injustice pending trial. It was finally submitted that the mandatory interlocutory injunction sought is intended to revert the parties back to the commercial position before the removal of Patel and Apostolides from, and their replacement by Au and Teeka on, the KDT BVI Board. As to this matter, the plaintiffs argued that Au’s interests would be protected if necessary by retaining Teeka on the Board. The plaintiffs relied on the effect of the detailed agreements and the entire agreement clauses. Entire agreement clauses are intended to identify the terms of a contract and exclude any evidence or argument to the effect that the terms of the contract are to include any mutual understanding that is not recorded in the contract. Support for this proposition is contained in Barclays Bank v UniCredit Bank [2014] 1 BCLC 417 (CA) where Longmore LJ said at paragraph 27: “This entire agreement clause is concerned with identifying the terms of the contract. The use of the phrase ‘constitute the entire agreement and understanding’ is intended to exclude any evidence or argument to the effect that the terms of the contract are to include any mutual understanding that is not recorded in the contract.” From this statement of principle, the legal effect of entire agreement clauses is to deny what would otherwise constitute a collateral warranty of legal effect. The intention of entire agreement clauses is to ensure certainty and to save time and costs so that the full contractual terms to which parties agree to bind themselves are to be found in the written agreement and nowhere else such as a side agreement or collateral warranty. This was explained by Cheung JA in Glory Gold v Star Play Development [2008] 2 HKLRD 416 (CA) at paragraphs 16 and 17. Cheung JA made the point that any argument of mutual understanding not recorded in such a written contract is bad in law even if the assertion is believable. This issue is ultimately a matter to be resolved at trial but I can take into account for the purpose of this application the key agreements and their clauses. The plaintiffs further argued that in this case there have been serious breaches of the court order by the defendants that warrant the imposition of a sanction. They referred to the English authority of Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] 1 WLR 4495 (UK Supreme Court) where the court espoused a tougher approach to deal with non-compliance with court orders where the burden is on the defaulting party to persuade the court not to grant a sanction in such circumstances. In deciding what sanction to impose for non-compliance with a court order, it was said that the court considers amongst other things whether there is a credible excuse, whether the non-compliance involves persistent and repeated failures to comply with court orders and whether there are extraneous circumstances and no deliberate or wilful flouting of the court order. The plaintiffs argued that the relevant authorities involved unless orders and it is submitted that similar considerations apply to injunctions. I do not think it is necessary at this stage to take this approach, for the non-compliance of a court order would naturally be taken into account and properly evaluated in the context of the matter under consideration. Opposition to the application The major thrust of the 1st defendant’s opposition to the plaintiffs application for further injunctive relief was that the plaintiffs had previously applied for the injunctive relief now sought which had been rejected by the Court in its judgement of 11 July 2014 and therefore unless there was a substantially material change in circumstances it would be an abuse of process for the Court to revisit the same application and decide differently. This point has to be considered in light of the findings and reasons of the judgment of the Court. Mr Christopher Chain for the 1st defendant, relies on the comments of Colman J in Laemthong International Lines Co Ltd v Artis [2015] 1 Lloyd’s Rep 100 at 105. “… In the field of without notice applications for a pre-trial discretionary remedy, such as a freezing order, if a claimant’s first application is refused, he may if he chooses, appeal to the Court of Appeal. That, at least, is clear. If, however, he then issues a second application to a judge, the judge would have to take a threshold decision, namely whether the character of the second application made it appropriate that he should entertain it. That would be a discretionary exercise. Normally a factor of great, if not determinative, weight would be whether on that second application new evidence or other matters were to be brought to the court’s attention which had not been before the court on the first application and which were substantially material to the exercise of the court’s discretion in favour of the claimant. In such a case the judge might conclude that the interests of justice under the CPR overriding objective outweighed the public policy considerations of conservation of judicial resources in the interests of other court users under the overriding objective. Where, however, a second application introduced nothing that was not before the court on the first application it would normally be the case that the discretion to hear that application would not be exercised in favour of the claimant. He had made the identical application on the same materials. That had been rejected and he had not availed himself of the opportunity to appeal that decision. Any further hearing would therefore simply be in substance an appeal from the first decision. In as such as it would simply be a re-run of the previous hearing in the hope that another judge would arrive at a different conclusion, it would be using a commercial judge to provide a facility which was properly the function of the Court of Appeal. That, in my view, would be an abuse of process in the sense that it would be an impermissible use of the resources of the court.” Mr Chain submitted that the onus was on the plaintiffs to clearly identify and demonstrate what the material changes in circumstances relied upon were and why they would justify the Court exercising its discretion differently from before when the injunctive relief sought was rejected. He addressed his response by examining the three alleged material changes in circumstance which he submitted did not justify the further injunctive relief sought. The first change of circumstance was that Au had now made a concession on the pleadings which allowed the plaintiffs to rely on the entire agreement clauses within the ARCLA and the ARSHA. He submitted that this had been fully argued before the Court and Au’s rejoinder did not raise anything new which amounted to a material change in circumstances; and in any event, the plaintiffs’ submission that the entire agreement clauses present an insurmountable obstacle rendering Au’s case completely unarguable was wrong as a matter of law. In relation to the plaintiffs’ entire agreement clause argument, Mr Chain submitted that Au accepted the ARCLA and ARSHA as the agreements governing the relationship between L Capital and the signatories thereto. He noted that it was on this basis that the plaintiffs argued that the effect of the entire agreement clauses within those agreements meant that the defendants had no arguable defence. In response, he said that the entire agreement clauses were an issue that had already been fully argued before the Court and did not constitute a material change in circumstance. I do consider, however, that the entire agreement clauses strengthen the plaintiffs’ position in showing that there was a serious question to be tried which was likely to be successful at trial. It is also apparent that as the case has progressed, matters have come into sharp and stronger focus and as a consequence they have acquired a higher degree of significance than previously appreciated. It was submitted by Mr Chain that Au has always accepted that the ARCLA and the ARSHA are valid agreements but he also acknowledged that this did not preclude the beneficial owners of KDT BVI from making other agreements amongst themselves. He submitted that the argument put forward by the plaintiffs that the effect of the entire agreement clauses was to substantially extinguish any other agreement or understanding the parties may have was not necessarily the case. He argued that each entire agreement clause must be interpreted in its own context and the Court may construe the subject matter of the agreement to which the entire agreement clause relates respectively if the circumstances warrant it. Mr Chain referred to cases where an entire agreement clause was limited to the subject matter and did not necessarily preclude other agreements between the parties. He also referred to Clause 23 of the ARCLA and Clause 33 of the ARSHA where the scope of the entire agreement clauses is limited with respect to the subject matter. He further referred to the proportions of beneficial ownership in KDT BVI through Retribution as agreed between the various beneficial owners, and argued that this was an entirely different subject matter which was not the subject matter of the agreements and was therefore beyond the scope of the entire agreement clauses. On this point, he submitted that he need not go further than to say that this interpretation of the effect of the entire agreement clauses was at the very least reasonably arguable. The second alleged material change of circumstances was that the defendants failed to inform, advise, or take instructions from the plaintiffs for the issuance of the debt extinguishment shares, which resulted in the solution of Retribution’s shareholding in KDT BVI and that this was in breach of the injunctive order granted on 11 July 2014. Mr Chain argued that there was no act of non-compliance as it would appear that what happened was that the L Capital appointed directors took the view that they are entitled to, and actually went ahead and caused the issuance of the debt extinguishment shares on their own, without informing Au or Teeka. The issue as I see it is the obligation on Au and Ho to inform and take instructions from the plaintiffs as to the affairs of KDT business which they have failed to fulfil. I accept that Au may not have been informed of the L Capital debt extinguishment shares matter but there appears to be no communication as required by him when he found out or in relation to any other matters relative to the affairs of the KDT business. The third alleged material change of circumstance consists of a number of allegations as to acts amounting to breach of fiduciary duty by the Au in his capacity as a director of KDT BVI. Mr Chain submitted that none of these matters amounted to a material change of circumstance. I have noted the response from Au but it would appear that there have been various matters that have been the subject of issue with the board members of KDT BVI and that may act to the detriment of the plaintiffs’ interests in KDT BVI. It was submitted by Mr Martin Ho for Ho and Retribution that there are two reasons why the application should be refused. The first reason was that there was no evidence of wrongdoing by them. Mr Ho argued that in all the material in support of the application there are no specific allegations against them. That is not entirely correct. The main complaint against Ho which is one of the reasons for the application is that she acts on the instructions of Au and as a consequence is not acting independently or in the best interests of the plaintiffs. I have previously made a finding to this effect on the material before me. Ho is the legal holder of the shares in Retribution, which in turn is the legal holder of the shares in KDT BVI. By the Bare Trust agreement, Ho held the shares equally for Patel, Apostolides and Au. It was pointed out by Mr Chua that under Clause 20.1 of the ARCLA the terms of the Bare Trust agreement were implicitly acknowledged in that it is provided that if the three of them cease to be the beneficial holders of all the issued shares of Retribution, then Retribution would be deemed to have made an offer to L Capital of all of its shares at a price which would be the discount of 50% to the net asset value of its shares as at the date of the transfer. This clause does give strong support to the plaintiffs’ argument bearing in mind this matter is at the centre of the dispute between the parties and is ultimately a matter to be resolved at trial when the court has had the benefit of the presentation of evidence and submissions. The second reason was that the court has no jurisdiction to grant the injunction because the application does not mirror any pre-existing cause of action pleaded. I do not accept this submission and I am satisfied that the interlocutory injunctive relief is ancillary and incidental to the pre-existing cause of action. Findings I am satisfied on the material presently before me that there has been a material change of circumstances to warrant my reconsideration of the application for a mandatory interlocutory injunction against the defendants. As previously noted in judgments that I have handed down, I have found that there is a serious question to be tried and given the dispute between the parties, and what is at stake, damages awarded at trial would not provide an adequate remedy to the plaintiffs if they were successful. There is a bitter dispute taking place between the polarised interests of the investors in KDT BVI through Retribution. In the current circumstances, Au is in control of Retribution and the representative director of Retribution in KDT BVI. This is to the exclusion of the plaintiffs and to the interests that they claim they have in the two companies which at this stage appears to be substantial. I note however at this stage of the proceedings there is a conflict in the evidence that cannot be resolved on this interlocutory application, and clearly this will ultimately depend on a consideration of all the evidence that is presented at trial. On the material currently before me, I am satisfied that the plaintiffs have a substantial interest through Retribution in KDT BVI. I note in particular that the Bare Trust agreement which is pivotal to the plaintiffs’ claim is implicitly acknowledged in Clause 20.1 of the ARCLA. I am also satisfied that there has been non-compliance of the injunctive order by the defendants, in particular Au and that the situation is deteriorating to the point that the plaintiffs’ interests are at serious risk. In this regard, it is not without significance that I have previously found that Ho acts on the instructions of Au and there is nothing before me to indicate that the situation has changed. There was an obligation on both of them in their respective corporate capacities to keep the plaintiffs informed of any material developments in relation to their interests in KDT BVI. Whilst information has come to the plaintiffs about the debt extinguishment shares, it was not from or through them. It seems that since the injunction order there has been little if any communication from Au or Ho to the plaintiffs about the affairs of KDT BVI. I feel a high degree of assurance that the plaintiffs will establish, at the very least, that they have a significant beneficial interest in KDT BVI by or through Retribution which entitles them to the order they seek. In my view there would be very significant prejudice to the plaintiffs if the mandatory interlocutory injunction was not granted. I should add that in contrast, the prejudice to the defendants is limited and can be confined. In all the circumstances, I consider that there would be a greater risk of injustice if the injunction was refused. Conclusion I will now turn to address each of the three matters the plaintiffs seek by way of interlocutory mandatory relief in this application. I will address the first two matters together. This requires that the defendants to procure the removal of Au and the reinstatement of Patel as a director of KDT BVI. Part of the agreement with L Capital, is that Retribution is entitled to have two seats on the board of directors of KDT BVI. They are currently occupied by Au and Teeka. In light of the foregoing matters, I see the force in the plaintiffs’ argument that a representative of their interests should occupy one of the seats set aside for Retribution on the board KDT BVI. I accordingly grant the order in terms of the second matter and as to the first matter requiring the removal of Au as a director, I will leave it up to Au and Teeka to determine which one of them will relinquish his seat on the board, failing any agreement between them within seven days of the date of this judgment as to who it should be, then I order that the defendants procure the removal of Au as a director of KDT BVI. I make such an order in these terms because on the material before me it would appear that (1) Au had agreed to relinquish his role and interest (although the percentage of the interest and any buyout agreement in relation to it with the other investors is the subject of dispute) in KDT BVI prior to this dispute arising; (2) Au has interests in other entities or businesses which compete or conflict with the interests of KDT BVI (I note that the plaintiffs also have interests in other businesses but appear not to have created the sort of issues that are claimed to exist with Au); (3) Au appears not to have a good working relationship with his fellow directors on the Board of KDT BVI which could cause irreparable harm to the interests of KDT business. At this stage I am unable to ascertain whether this is as a result of this dispute and the acrimony between himself and his fellow investors or his intended departure from the operations of KDT BVI and the development by him of other business interests. The third matter seeks the appointment of Patel and Apostolides as directors on the board of Retribution. According to Clause 20.1, it is stated that Au, Patel and Apostolides are the beneficial holders of all the issued shares of Retribution or at least as at 31 December 2013. I am therefore prepared to make an order in these terms but subject to Au also being appointed to the board if he should so wish. I note that Ho is currently the sole director of Retribution. Order I grant the plaintiffs’ application subject to the foregoing matters and views. I will hear from the parties on the terms of the order if they are unable to agree to them and on the question of costs. (Kevin Zervos) Judge of the Court of First Instance High Court Mr Chua Guan-Hock SC and Ms Ebony Ling, instructed by Robertsons, for the plaintiffs Mr Christopher Chain, instructed by Tanner De Witt, for the 1st defendant Mr Martin Ho, instructed by Au & Vrijmoed, for the 2nd and 3rddefendants