AB v MN [2017] WSSC 79 (31 May 2017)

SUPREME COURT OF SAMOA
AB v MN [2017] WSSC 79

Case name:	AB v MN
Citation:	[2017] WSSC 79
Decision date:	31 May 2017
Parties:	AB of China. AND CD incorporated in the British Virgin Islands AND: MN of China. AND PR incorporated in Samoa A N D THIRD RESPONDENT incorporated in Samoa.
Hearing date(s):	17, 24 May 2017
File number(s):	CP 46/17
Jurisdiction:	Civil
Place of delivery:	Supreme Court of Samoa, Mulinuu
Judge(s):	CHIEF JUSTICE SAPOLU
On appeal from:
Order:	- The motion by the first and second respondents to rescind the ex parte interim injunction granted on 2 May 2017 is dismissed. - Parties to file submissions as to costs in 7 days if agreement cannot be reached.
Representation:	F Ey for first and second applicants/plaintiffs L R Schuster for first and second respondents/defendants Third Respondent /defendant unrepresented
Catchwords:	Appropriate forum – full and fair disclosure – international companies – oppression of minority shareholder – motion for an ex parte interim injunction – motion to rescind ex parte interim injunction – reciprocal enforcement of judgments – security for costs – undertakings as to damages –
Words and phrases:
Legislation cited:	International Companies Act 1988 Reciprocal Enforcement of Judgments Act 1970
Cases cited:	China Construction Realty Ltd v China International Club Ltd [2007] WSSC 52, Dive and Fly Ltd v Schmidt [2006] WSSC 40 DB Baverstock Ltd v Haycock [1986] 1 NZLR 342: (1986) 1 PRNZ 139, Electrical Equipment Co Ltd v Pace Network Services Ltd [2006] NZHC 76 ENRC Marketing AG v LJS “Magnitokorsk Kombinat” [2011] FCA 1371, Foodtown Supermarkets Ltd v Tse (1987) 2 PRNZ 545, Guinness Mahon & Co [1939] 4 A11 ER 16, Harbottle (Mercantile) Ltd v National Westminister Bank Ltd [1978] 1 QB 146 Hughes v Williams [2009] NZHC 2263, Lauano v Samoa National Provident Fund Board [2009] WSCA 3, Lazard Bros v Midlands Bank [1933] AC 289, Myring v Beale (1899) 20 NZWLR 6 at 7, Marribee Pastrural Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; (1998) 72 ALJR 1055, PS Chellerson & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321, Ryde Holdings Ltd v Sorrenson (1995) 8 PRNZ 339 Rose House International and Rose House China v D and X [2013] WSSC 18; Sun v Peninsula Round Ltd [2012] NZHC 1209, The Proprietors of Otakanini Topu Block v Uruamo [2007] NZHC 404, Westminister Bank Ltd [1978] 1 QB 146 West Harbour Holdings Ltd v Waipareira Investments Ltd [2013] NZHC 402
Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

AB of China.
First Applicant/Plaintiff

A N D:
CD incorporated in the British Virgin Islands
Second Applicant/Plaintiff

A N D:
MN of China.
First Respondent/Defendant

A N D:
PR incorporated in Samoa

Second Respondent/Defendant

A N D:
THIRD RESPONDENT incorporated in Samoa.

Third Respondent/Defendant

Counsel:
F Ey for first and second applicants/plaintiffs
L R Schuster for first and second respondents/defendants
Third Respondent /defendant unrepresented

Hearing: 17, 24 May 2017

Judgment/Conclusion: 31 May 2017

Written Judgment with reasons: 23 June 2017

JUDGMENT OF SAPOLU CJ

Proceedings

1. These proceedings are concerned with a motion by the first respondent/defendant and the second respondent/defendant to rescind an ex parte interim injunction granted by this Court on 2 May 2017. After hearing counsel in chambers on 17 and 24 May 2017 on the motion to rescind, I gave judgment on 31 May 2017 and dismissed the motion by the second respondent/defendant. I indicated to counsel that my written judgment with reasons will be prepared and given to them in due course. This is that written judgment.
2. For convenience and reasons of confidentiality, I will refer to the first applicant/plaintiff as “the first applicant” or “AB”, the second applicant/plaintiff as “the second applicant” or “CD”, the first respondent/defendant as “the first respondent” or “MN”, the second respondent/defendant as “the second respondent” or “PR”, and the third respondent/defendant as “the third respondent”. The parties would of course be aware of their true identities.

Background

(a) Motion for an ex parte interim injunction

3. On 1 May 2017, the first applicant AB, who is one of the two directors of the third respondent, and the second applicant CD, which is a company incorporated in the British Virgin Islands, filed a motion for an ex parte interim injunction against the first respondent MN who is the other director of the third respondent, the second respondent PR which is a Samoan international company incorporated under the International Companies Act 1988 (ICA), and the third respondent which is also a Samoan international company incorporated under the ICA. The motion for an ex parte interim injunction sought orders: (a) to restrain the first and second respondents MN and PR from convening the extraordinary general meeting of the third respondent proposed to be held on 4 May 2017, (b) to restrain the second respondent PR from voting to (i) remove the first applicant AB as a director of the third respondent and (ii) to fix the quorum for the transaction of business of the directors of the third respondent to one, and (c) to restrain the third respondent from recording in its register of directors the removal of the first applicant as one of its directors. On 2 May 2017 the motion for an ex parte interim injunction was granted.
4. Three affidavits were filed in support of the motion for the ex parte interim injunction. These were the affidavit of the first applicant AB sworn on 26 April 2017, the affidavit of AB’s wife sworn on 26 April 2017, and the affidavit of one ST, a business partner of both AB and the first respondent MN, also sworn on 26 April 2017. A second affidavit dated 12 May 2017 was filed by AB in response to the motion to rescind the ex parte interim injunction.
5. According to the affidavit of AB of 26 April 2017, he, the first respondent MN, and their business partner ST had formed a joint venture to restructure and manage a bankrupt company in China. All three of them became shareholders and directors of this company with AB as its chief executive officer. This company is jointly owned by AB, MN, and ST. The company became highly successful. AB says that they agreed on certain terms about the ownership, management, and structure of their joint venture. This agreement is referred to in AB’s affidavit as the “Understanding and Agreement”. AB says that he did not feel it necessary to record the terms of the Understanding and Agreement in writing as he and the first respondent MN are brothers and there was a high degree of trust and confidence between the two of them. In terms of the Understanding and Agreement, all three parties ST, MN, and AB would have equal management and representation in the joint venture as a whole. To implement and give effect to the Understanding and Agreement, certain documents were prepared by MN’s secretary on instructions from MN. The arrangement that was contemplated under those documents was the use of various overseas investment holding companies for the purposes of the joint venture. These investment holding companies included the third respondent which was to be owned by the first applicant AB and the first respondent MN with both AB and MN as its directors.
6. After March 2008, AB and MN became the two shareholders and directors of the the third respondent which had been incorporated by MN in Samoa in 2007 as an international company under the ICA. AB holds 33% ordinary shares in the third respondent and MN holds 67% ordinary shares. Initially, AB and MN held their shares under their respective names. Subsequently, AB transferred his shares to the second applicant CD which is a company incorporated in the British Virgin Islands. As a result, CD became one of the two shareholders in the third respondent. The wife of AB is the sole shareholder and director of CD and she holds the shares of AB transferred from the third respondent to CD on trust for AB as the ultimate beneficial owner. Similarly, MN transferred his shares in the third respondent to the second respondent PR which is also an international company incorporated in Samoa so that PR became the other shareholder of the third respondent. CD the second applicant and PR the second respondent therefore became the two new shareholders of the third respondent.
7. At all material times, AB and MN were and continued to be the two directors of the third respondent. Then in 2012, the relationship between AB and MN started to deteriorate because of a rental dispute which involves a large sum of money between the company jointly owned by AB, MN, and ST of which AB is the chief executive officer and another company in China under the charge of MN and managed by MN. This dispute is currently the subject of legal proceedings which are still ongoing in China.
8. AB further says in his affidavit of 26 April 2017 that in mid-March 2017 he received a letter dated 15 March 2017 from the second respondent PR signed by MN and addressed to the directors of the third respondent requesting an extraordinary general meeting (EGM) to be convened for the purpose of passing ordinary resolutions to remove AB as a director of the third respondent with immediate effect and to change the quorum necessary for the transaction of business of the directors of the third respondent to one. There was no date specified in that letter for the EGM to be held. In his affidavit of 12 May 2017, AB says that by letter dated 23 March 2017, he requested MN to withdraw his request for an EGM of the first respondent to remove AB as a director. MN refused AB’s request by email dated 26 March 2017. AB further confirms that by email of 24 March 2017, he made a request to MN’s secretary to postpone the EGM but that request was also declined by email of 27 March 2017.
9. Then in mid-April 2017, AB’s wife received a notice of extraordinary general meeting dated 8 April 2017 signed by MN the first respondent for and on behalf of PR the second respondent. The express purpose of this notice was to convene an EGM to be held in Apia on 4 May 2017 at 2:00pm at the office of the solicitors acting for MN and PR in Samoa. The wife of AB immediately passed this notice of extraordinary general meeting on to AB. Again the purpose of the EGM was to remove AB as a director of the third respondent with immediate effect and to reduce the quorum necessary for the transaction of the business of directors of the third respondent to one.
10. AB says that the purpose of the proposal to remove him as a director of the third respondent and to reduce the quorum for directors meetings of the third respondent is to make MN the sole director of the third respondent which is a clear breach of the Understanding and Agreement relating to the joint venture. The Understanding and Agreement provides that AB and MN would have equal representation in the board of directors and management of the third respondent. The passing of the proposed resolutions would also be extremely detrimental to the business interests of the third respondent and is improper. The removal of AB as a director of the third applicant would also be oppressive of the second applicant CD as a minority shareholder of which AB is the ultimate beneficial owner.
11. Furthermore, AB says in his affidavit that it is his honest belief that the calling of the EGM to pass the proposed resolutions is the first step in a strategy for the first respondent MN to gain control in their in their jointly owned company that was restructured and established under their joint venture at the beginning and in that way for MN to gain advantage in the legal proceedings that are still ongoing in China regarding the rental dispute between their jointly owned company which is managed by AB and another company in China under the charge of MN and managed by MN.
12. AB further says that the memorandum and articles of association of the third respondent permit the removal of directors and change of quorum for directors meetings by ordinary resolution by a shareholder holding more than 50% of the issued shares. AB is concerned that once MN is the sole director of the third respondent, MN will be able to exercise the powers of the third respondent as the 60% shareholder of a joint venture company incorporated in the Cayman Islands to remove him and their business partner ST as directors of that company. MN will then be able to use his control of the company incorporated in the Cayman Islands to take control of their joint venture company in Hong Kong so that MN would then be able to exercise the shareholder rights of the Hong Kong company in their jointly owned company to remove AB and ST from the board of directors of their jointly owned company and AB as its chief executive officer. But their jointly owned company and a company under the charge of MN are the two opposing parties to the legal proceedings which involve a large sum of money that are still ongoing in China.
13. AB also says that his removal as director and the change of quorum for directors meetings in the third respondent will have a significant detrimental effect on his interests not only in the third respondent but also in the entire corporate group of the joint venture. AB then sets out the financial losses he will be at risk of incurring. AB further says that his right and entitlement to equal representation in the board of directors and management of the holding companies of the corporate group of the joint venture pursuant to the Understanding and Agreement would also be put at risk.
14. AB also says that he had used his business skills, experience, and business relationships to build up and develop the joint venture which is now highly successful. ST, on the other hand, had made a significant financial contribution through initial capital to setting up their joint venture.
15. ST in his affidavit of 28 April 2017 says that he, the first applicant AB, and the first respondent MN had originally discussed the setting up of a joint venture for the purpose of restructuring a bankrupt company in China. This became their jointly owned company which has been highly successful and they all agreed to set up other companies to pursue their venture together. In particular, they agreed, for convenience of operation, to set up other overseas companies as investment holding companies for their joint venture. They also agreed that AB and MN would set up a company to hold a 60% interest in their jointly company. This company which was to be set up by AB and MN is the third respondent. ST, on the other hand, was to set up a different overseas investment holding company which was to hold the other 40% interest in the jointly owned company. According to ST, AB and the first respondent MN agreed that they would both be directors of their overseas company with equal management representation despite their difference in shareholding. It was also agreed between all three of them that they would all be directors of their jointly owned company and that they would have equal rights in all the major decisions of that company.
16. ST says that recently, a rental dispute involving a very large sum of money arose between their joint company managed by AB and a company under the charge of MN. This company under the charge of MN has initiated legal proceedings against their joint company managed by AB even though it owes rent to their joint company. These legal proceedings are still ongoing.
17. In ST’s honest belief, AB has done nothing wrong and he does not understand why MN has proposed to remove AB as a director of the third respondent. ST also says that removing AB as a director of the third respondent would mean that MN would gain control of AB’s asset in their jointly owned company.
18. AB’s wife in her affidavit of 26 April 2017 says that at all material times she has been the sole director and shareholder of the second applicant CD which is a company incorporated in the British Virgin Islands. That the shares she holds in CD are held by her in trust for her husband.
19. AB’s wife also says that her husband represents the interests of the second applicant CD in the board of directors of the third respondent. In mid-April 2017, she received in her capacity as the director of CD a notice of extraordinary general meeting dated 8 April 2017 and signed by the first respondent MN for and on behalf of the second respondent PR. The notice seeks to convene an EGM of the third respondent on 4 May 2017 at 2:00pm at the office of MN’s solicitors in Apia. She immediately passed this notice on to AB.
20. AB’s wife also does not support the passing of the proposed resolutions at an EGM of the third respondent to remove AB as a director and to fix the quorum for directors meetings to one. She says that that would be extremely detrimental to the business interests of the third respondent and is improper. Further, the removal of AB as a director would be oppressive of the second applicant CD as minority shareholder.
21. On the basis of the affidavit evidence I have set out, I decided on 2 May 2017 to grant the first and second applicants motion for an ex parte interim injunction filed on 1 May 2017 to stop the EGM of the third respondent set for 4 May 2017 in Apia.

(b) Motion to set aside the ex parte interim injunction

22. Following the ex parte interim injunction granted on 2 May 2017, a motion was filed on 3 May 2017 on behalf of the first respondent MN and the second respondent PR to rescind the injunction. The grounds in support of the motion to rescind are as follows: (a) the first and second applicants when filing their motion for an ex parte interim injunction have not acted bona fide by making full and fair disclosure of all material facts, (b) the effect of the non bona fide actions of the first and second applicants displaces the first and second respondents from their pre-injunction position that cannot be rectified by damages given the circumstances of the parties arriving from Hong Kong to hold an extraordinary general meeting (EGM) in Samoa on 4 May 2017, (c) the first and second applicants have not acted bona fide in filing their motion for an ex parte interim injunction under the guise of legitimate urgency as they have not disclosed the reason for the delay in bringing these proceedings since receiving the notice for an extraordinary general meeting dated 15 March 2017, (d) being foreigners, the first and second applicants have failed to provide security for costs and the undertaking as to damages is insufficient according to the circumstances of this matter, and (d) Samoa is not the appropriate forum for these proceedings.
23. In support of the motion to rescind the interim injunction, the first respondent MN filed an affidavit sworn on 4 May 2017. In his affidavit, MN says that he incorporated the third respondent as an international company under the Samoan International Companies Act 1988 (ICA) in 2007. He was then the sole director and shareholder of the third respondent. Sometime after March 2008, the first applicant AB became a director and shareholder of the third respondent. AB then held 33% of the shares in the third respondent while he retained 67% of the shares.
24. MN says that he sent a letter dated 15 March 2017 as chairman of the third respondent to the first applicant AB and the second applicant CD requesting an EGM of the third respondent to be convened for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the third respondent: (a) that AB be removed as a director of the third respondent with immediate effect and (b) to fix the quorum necessary for the transaction of the business of the directors to one. By email dated 24 April 2017, AB enquired with the third respondent’s secretary about postponing the proposed extraordinary general meeting without stating any reason for the request.
25. When MN did not receive from AB any response to his letter of 15 March 2017 to show whether AB is in support or opposition to the proposed EGM or the proposed resolutions, he signed a notice of extraordinary general meeting dated 8 April 2017 on behalf of the third respondent for an EGM to be held on 4 May 2017 at 2:00pm at the office of the solicitors for MN in Apia. The resolutions sought were restated in the notice.
26. MN says that the first applicant AB and the second applicant CD did not act bona fide or in good faith in their motion for an ex parte interim injunction by not making full and fair disclosure of the material facts as to the reason why they waited until the last hour to file their motion. By not doing so, the Court was not placed in a position where it could make a full and fair assessment whether the motion should be on notice or ex parte. As a result of the non bona fide actions of AB and CD, MN has incurred financial costs and suffered personal inconvenience in having to travel to Samoa with an expectation to hold an EGM of the third respondent in Samoa on 4 May 2017. In this connection, MN also says that on 1 May 2017 he was advised by his solicitors in Samoa that the first and second applicants have filed proceedings in Samoa to stop the EGM.
27. MN also says in his affidavit of 4 May 2017 that his pre-injunction position together with that of the second respondent PR cannot be rectified by the unenforceable undertakings as to damages provided by AB and CD given their foreign alien status and physical absence from these proceedings.
28. MN further says that AB and CD have not acted bona fide by filing their motion for an ex parte injunction under the guise of legitimate urgency as they have not disclosed the reason for the delay in bringing these proceedings, especially given that a notice of requisition to convene an EGM dated 15 March 2017 was received by AB and CD in or about mid - March 2017. The Court should therefore disregard that the alleged delay in granting injunctive relief would cause irreparable harm to AB and CD.
29. In addition, the first and second applicants AB and CD as foreign aliens must also provide security for costs.
30. Furthermore, AB and CD have not demonstrated in their affidavits that: (a) they have the means to substantiate their undertakings as to damages, (b) the business of the third respondent would be detrimentally affected if the proposed resolutions were accepted, and (c) the resolutions if passed would be tantamount to hostile takeovers of the business interests of AB and CD and would thereby be oppressive towards their minority shareholding in the third respondent.

(c) Supplementary affidavit evidence of the first respondent in support of the motion to rescind the interim injunction

31. The first respondent MN filed a supplementary affidavit sworn on 16 May 2017 in support of the motion to rescind the interim injunction granted on 2 May 2017. In that affidavit, MN corrects what he says in his affidavit of 4 March 2017 that he had incorporated the third respondent as an international company in Samoa in 2007 registering himself and AB as the only two directors and shareholders with himself holding 67% of the issued shares and AB 33%. MN says that the he incorporated the third respondent in 2007 few months before any alleged Understanding and Agreement mentioned by AB in his affidavit of 26 April 2017.
32. In para 13 of his affidavit, AB says that the first respondent MN incorporated the third respondent in 2007 and after March 2008, the shareholders and directors of the third respondent were changed to implement the terms of the Understanding and Agreement. In substance, what both MN and AB are saying here appears to be consistent with one another.
33. MN also says in his affidavit that ST claims in para 3 of his affidavit of 26 April 2017 that he had met MN in the latter half of 2007 and that MN encouraged him to enter into an agreement to “set up companies” but that he, MN, had already incorporated the third respondent in January 2007. If one refers to para 3 of ST’s affidavit, what ST says there is that in the latter part of 2007 the first respondent MN encouraged him in a business opportunity to acquire creditors rights in relation to the debts owed by a certain company in China. ST also says in para 3 of his affidavit that MN also introduced him to a business associate. And as he trusted MN, he acquired his first batch of creditors rights in December 2007 through MN’s business associate. So what is said in para 3 of ST’s affidavit is somewhat different from what MN is saying. It is in para 5 of his affidavit where ST says that he first met AB about March 2008 and after discussions with AB and MN, they agreed to “set up companies” to pursue their joint venture together.
34. MN further says that the main ground of the motion for an ex parte interim injunction relies on the alleged Understanding and Agreement made about March 2008 for the purpose of a joint venture to restructure a particular company in China. This is the company which is jointly owned by ST, AB, and MN. ST’s affidavit is to the same effect. According to MN, the alleged Understanding and Agreement to restructure a particular company in China has no relevance to the ability and right of the third respondent under its articles of association to call an EGM to address its internal affairs and business interests as it sees fit.
35. MN then opposes para 27 of AB’s affidavit by saying that: (a) there was no Understanding and Agreement for AB to have equal representation in the board and management of the third respondent because he, MN, had already incorporated the third respondent prior to the time period suggested by AB; (b) alternatively, even if there was an alleged Understanding and Agreement, AB has conceded in his affidavit that the alleged Understanding and Agreement was for the purpose of restructuring a bankrupt company in China which has nothing to do with the third respondent; (c) there is no basis or substantial evidence for the suggestion that the resolution proposed by the third respondent would be “extremely detrimental to the business interests of the third respondent and is improper”; and (d) there is no basis to show that the proposed resolutions would be oppressive to the second applicant CD as a minority shareholder as he had already assured AB and CD in his first affidavit that their shareholding in the third respondent will remain undiluted and unaffected.
36. In para 12 of his supplementary affidavit, MN says that he has a right as majority shareholder of the third respondent to call an EGM of the third respondent to effect the passing of the proposed resolutions and this is accepted by AB in his affidavit. I think AB is not challenging the right of MN but the way in which that right is being exercised and its potential consequences for AB and ST and their business interests in the corporate group of their joint venture. MN also says that he would exercise his right as majority shareholder in a reasonable manner following the procedures outlined in the articles of association.
37. MN then further says that the removal of AB as a director of the third respondent is necessary for the well being of the third respondent as the actions of AB have had a detrimental effect on the operation and business interests of the third respondent. The actions alleged by MN are AB’s refusal from June 2014 to January 2015 to sign certain documents to allow MN to transfer his shares in the third respondent to the second respondent PR and AB frustrating MN’s efforts to get a buyer to buy out the interests of AB and ST in the corporate group of their joint venture as the corporate group was not functioning because of AB.
38. MN also rejects the concerns expressed by AB in paras 30-31 of his affidavit regarding the ramifications on his position as director in the other companies of the joint venture and as chief executive officer of their jointly owned company if he, MN, is to become sole director of the third respondent. Perhaps AB’s concerns are also related to what MN says that he has tried very hard to get a buyer to buy out the interests of AB and ST in the corporate group of the joint venture.
39. MN then refers to the affidavit of AB dated 12 May 2017. MN says that on Monday morning 1 May 2017, he was notified by telephone by the solicitors acting for him in Samoa that there were impending proceedings filed in Samoa by an interested party to stop the third respondent’s EGM. He then immediately instructed the solicitors acting for him in Samoa to file an opposition to the motion for an interim injunction if it is ex parte and for such a motion to be on notice.
40. On Tuesday 2 May 2017, MN was advised by his solicitors in Samoa that they have received at about 10:00am in the morning papers for the interim injunction. Copies of these papers were scanned and sent to him by email. Around that time, MN says that he was about to leave for the airport in Hong Kong to depart for Samoa. So when he left Hong Kong for Samoa, he has had no notice that an exparte criteria injunction had actually been granted. It was upon his arrival in Samoa on Wednesday night 3 May 2017 that he discovered that an interim injunction was issued on Tuesday afternoon 2 May 2017. So MN says that the contention by the first applicant AB that he had sufficient time to cancel his trip to Samoa is misconceived and AB’s actions were deliberate and in bad faith.
41. MN further says in his affidavit that he is not aware of the financial standing of AB and the second applicant CD to support their undertakings as to damages.

(d) Summary of the evidence

42. All of the evidence in these proceedings has been by affidavits and there are some material conflicts in that evidence. There has been no examination in chief, cross-examination or re-examination to try and resolve those conflicts by testing the reliability and credibility of the evidence. Consequently, what I am about to say here does not represent conclusive findings of fact based on that evidence.
43. According to the evidence adduced for the first and second applicants, AB, MN, and ST set up a joint venture to restructure and manage a bankrupt company in China which became highly successful. AB had used his business skills, experience, and relationships to buid up the joint venture and to develop the said company whilst ST made a substantial contribution to the initial capital of the same company. This is the company which is jointly owned by AB, MN, and ST in which they are all shareholders and directors with AB also being the chief executive officer. They then agreed on the terms about the ownership, management, and structure of their joint venture in the form of an Undertaking and Agreement. In terms of this Undertaking and Agreement, AB, MN, and ST would have equal rights in all the major decisions of their jointly owned company. To implement and give effect to the Understanding and Agreement, the parties decided to establish investment holding companies overseas. One of these investment holding companies is the third respondent which is an international company already incorporated in 2007 in Samoa by MN under the ICA. The third respondent was to be owned by AB and MN with both of them as directors with equal management representation. After March 2008, AB came to hold 33% shares in the third respondent with MN holding the other 67% of the shares. The third respondent holds a 60% interest in the jointly owned company in terms of the Understanding and Agreement. ST on the other hand was also to set up on his own a separate investment holding company which was to hold the other 40% interest in the jointly owned company. This was duly done by ST.
44. Subsequently, AB transferred his shares in the third respondent to the second applicant CD. AB’s wife is the sole shareholder and director of CD and she holds the shares of AB in CD on trust for AB as the ultimate beneficial owner. MN on the other hand transferred his shares in the third respondent to the second respondent PR. So CD the second applicant and PR the second respondent became the new shareholders of the third respondent with AB representing the interests of CD and MN representing the interests of PR.
45. In 2012, the relationship between AB and MN started to deteriorate due largely to a rental dispute which involves a large of sum of money between the jointly owned company of which AB is the chief executive officer and another company in China under the charge of MN and managed by MN. This dispute is the subject of legal proceedings which are still ongoing.
46. In mid-March 2017, AB received a letter dated 15 March 2017 from the second respondent PR and signed by MN requesting an EGM of the third respondent for the purpose of passing ordinary resolutions to remove AB as a director of the third respondent with immediate effect and to change the quorum necessary for the transaction of business of the directors to one. There was no specified date for the EGM to be held. Then in mid-April 2017, AB’s wife received a notice of extraordinary general meeting dated 8 April 2017 and signed by MN on behalf of the second respondent PR for the purpose of convening an EGM to pass resolutions to remove AB as a director of the third respondent with immediate effect and to reduce the quorum necessary for the transaction of the business of directors to one. This notice was immediately passed on to AB.
47. AB is very concerned that if the proposed resolutions are passed in an EGM of the third respondent that will have a significant detrimental effect on his interests not only in the third respondent but the entire corporate group of the joint venture and he sets out the financial losses he will be at risk of incurring. His right and entitlement to equal representation in the board of directors and management of the holding companies of the joint venture would also be put at risk. AB’s position is supported by his wife who also says that the removal of AB as a director of the third respondent would be oppressive of the second respondent as minority shareholder. ST is also in support of AB’s position and says that he believes that AB has done nothing wrong and he does not understand why MN has proposed to remove AB as a director of the third respondent.
48. The affidavit evidence adduced by the first respondent MN is in substance consistent with the affidavit evidence of AB that the third respondent was incorporated by MN in 2007, but sometime after March 2008 AB became a shareholder and director of the third respondent holding 33% ordinary shares while MN holds the other 67% ordinary shares.
49. MN’s evidence in his supplementary affidavit claims that there was no Understanding and Agreement to have equal representation in the board and management of the third respondent but even if there was such an Understanding and Agreement upon which AB relies, that Understanding and Agreement does not provide for AB to have equal representation in the board and management of the third respondent. Furthermore, even if there was such an Agreement, that Agreement was for restructuring the company which came to be jointly owned by MN, AB, and ST and it has nothing to do with the third respondent. MN also says that there is no basis or substantial evidence for the suggestion by AB and his wife that the proposed resolutions would be extremely detrimental to the business interests of the third respondent and are improper. In addition, there is no basis that the proposed resolutions would be oppressive to the second applicant CD as minority shareholder as MN had offered assurance in his first affidavit to AB and CD that their shareholding in the third respondent would remain undiluted and unaffected.
50. In relation to the removal of AB as director of the third defendant, MN claims that this is necessary for the well-being, future interests, and growth of the third respondent as AB’s actions have had a detrimental effect on the operation and business interests of the third respondent. Such actions are the alleged refusal of AB from June 2014 to January 2015 to sign certain documents to allow MN to transfer his shares in the third respondent to the second respondent PR which is wholly owned by MN, and AB frustrating MN’s efforts to get a buyer to buy out the interests of AB and ST in the corporate group of their joint venture as the corporate group was not functioning because of AB.
51. Under the articles of association of the third respondent, MN has a right as majority shareholder to call an EGM to effect the proposed resolution to remove AB as director of the third respondent by ordinary resolution. MN says that he had reasonably followed the procedure outlined in the articles of association in calling for an EGM.
52. MN’s supplementary affidavit also shows that AB had sent to MN an email on 24 March 2017 raising his concerns about the notice of extraordinary general meeting to remove him as a director of the third respondent and requesting that the notice be withdrawn. MN refused to withdraw the notice and responded by assuring AB that his fears and assumptions were unfounded.
53. MN then states that AB did not act in good faith by waiting until the last hour to file a motion for an interim injunction to stop the EGM of the third respondent set for 4 May 2017 in Samoa without making full and fair disclosure of all relevant circumstances.

(e) Notice of opposition by the first and second applicants to the motion to rescind the ex parte interim injunction

54. Counsel for the first applicant AB and the second applicant CD filed a notice of opposition on 12 May 2017 to the second respondent’s motion to rescind the ex parte interim injunction. The grounds of this notice of opposition may be stated as follows: (a) the matter was properly dealt with by way of a motion for an ex parte interim injunction as the delay caused if the proceedings were on notice would have entailed irreparable harm to the applicants; (b) it would not be just in all the circumstances to set aside the interim injunction as that would cause irreparable harm to the applicants if the proposed resolutions to remove AB as a director of the third respondent and to reduce the quorum for directors meetings of the third respondent to one were passed in the proposed EGM; (c) the first and second applicants have acted bona fide and have made full and fair disclosure of all material facts required to enable the Court to make a full and fair assessment of their motion for an ex parte interim injunction in order to hold the status quo; (d) any damages to the pre-injunction position of the first respondent MN and the second respondent PR could be remedied by damages awarded pursuant to the undertakings as to damages; (e) the first and second respondents had sufficient notice of the applicants motion for an interim injunction to cancel their travel from Hong Kong to Samoa prior to the EGM being held on 4 May 2017 and thereby failed to mitigate their damages; (f) the applicants have not delayed in bringing their proceedings as the timeframe between them being notified of the date of the EGM and bringing their urgent proceedings for an ex parte interim injunction is reasonable in all the circumstances given the cross-jurisdictional and complex nature of the dispute; (h) the applicants have provided adequate and enforceable undertakings as to damages which are further supported by sufficient assets within the jurisdiction of the Samoan Court being the 33% of the issued shares in the third respondent which are legally owned by the second applicant for the benefit of the first applicant; and (i) the appropriate forum for this matter is Samoa.

Discussion

55. As it would appear from what has been said, there are significant conflicts between the material parts of the affidavit evidence for the first and second applicants and the affidavit evidence for the first and second respondents. AB says that he, MN, and ST had initially entered into an oral Understanding and Agreement about certain terms regarding the ownership, management, and structure of their joint venture. To implement and give effect to that Understanding and Agreement in which all three parties AB, MN, and ST would have equal management representation in their joint venture, various overseas investment holding companies would be established. These investment holding companies included the third respondent which was to be owned by AB and MN with both of them as its directors. ST in his affidavit evidence says that AB and MN agreed that they would both be directors of their overseas company with equal management representation despite the difference in their respective shareholdings. These parts of the affidavit evidence of AB and ST are in conflict with the affidavit evidence of MN that there was no Understanding and Agreement for AB to have equal representation in the board and management of the third respondent. But MN says that even if there was such an Understanding and Agreement, it was for the purpose of restructuring a bankrupt company in China which has nothing to do with the third respondent which is incorporated in Samoa. This significant conflict in the affidavit evidence cannot be resolved in terms of credibility without cross-examination of the deponents. I am also concerned that the evidence may be incomplete in some respects because of the urgency that was involved in this matter.
56. AB also express in his affidavit evidence his concerns if the proposed resolutions are passed in an EGM of the third respondent as they will have a significant detrimental effect not only on the third respondent but the entire corporate group of the joint venture. More specifically, he will incur financial losses as described in his affidavit evidence and his right and entitlement to equal representation in the board and management of the holding companies of the joint venture pursuant to the Understanding and Agreement will be put at risk if the proposed resolutions are passed.. AB further says that the calling of the EGM of third respondent is a first step in a strategy for MN to gain control of the company jointly owned by himself, MN, and ST and managed by him as its chief executive officer. But their jointly owned company and a company under the charge of MN are the opposing parties in the legal proceedings regarding a rental dispute that are still ongoing. By gaining control of their jointly owned company, MN will thereby gain an advantage in those ongoing legal proceedings. AB’s wife in her affidavit evidence says that the removal of her husband as a director of the third respondent will be oppressive towards the second applicant CD as minority shareholder in the third respondent. ST in his affidavit evidence says that he believes AB has done nothing wrong and he does not understand why MN has proposed to remove AB as a director of the third respondent.
57. MN, on the other hand, says in his affidavit evidence that there is no basis or substantial evidence for the suggestions by AB and his wife that the proposed resolutions will be extremely detrimental to the business interests of the third respondent and will be oppressive to the second applicant CB as minority shareholder in the third respondent. MN says that he has offered assurance in his first affidavit to AB and CD that their shareholding in the respondent will remain undiluted and unaffected. He further says that he has a right under the articles of association of the third respondent being the majority shareholder to call an EGM to pass the proposed resolution to remove AB as a director of the third respondent. MN also says in his supplementary affidavit that the removal of AB as a director of the third respondent is necessary for the well-being, future interests, and growth of the third respondent as AB’s actions have had a detrimental effect on the business interests and operation of the third respondent. The first of these actions is AB’s alleged refusal from June 2014 to January 2015 to sign certain documents to allow MN to transfer his shares in the third respondent to the second respondent PR. As MN’s shares have been transferred to PR, I assume that AB has already signed those documents. The second action alleged by MN against AB is that AB is frustrating MN’s efforts to get a buyer to buy out the interests of AB and ST in the corporate group of the joint venture as the corporate group is not functioning because of AB.
58. The factual allegations and counter-allegations made between AB, his wife, and ST on one hand and MN on the other cannot, in my view, be satisfactorily resolved on the affidavit evidence alone without cross-examination. What is involved, namely, the proposed removal of AB as a director of the third respondent and reduction of the quorum necessary for the transaction of the business of directors of the third respondent from two to one, is also so important considering any consequences that may follow if the resolutions are passed that the Court has to exercise caution about coming to any conclusive findings of fact based on conflicting affidavit evidence. I am also concerned, as earlier mentioned, that the evidence may be incomplete in some respects because of the urgency that was involved in this matter.
59. I will come to the issues of oppression of a minority shareholder, the adequacy of the undertakings as to damages, and security for costs raised in MN’s evidence later in this judgment.
60. MN also deposes in his affidavit that AB and CD did not act in good faith when filing their motion for an ex parte interim injunction by not making full and fair disclosure of all material facts. Essentially, the relevant evidence is that in mid-March 2017 AB received a letter dated 15 March 2017 from the second respondent PR and signed by MN requesting an EGM of the third respondent for the purpose of passing ordinary resolutions for the removal of AB as a director of the third respondent with immediate effect and for the reduction of the quorum necessary for directors meetings of the third respondent to one. There was no date specified for the proposed EGM. According to MN, AB responded by requesting a postponement of the proposed EGM. Then in mid-April 2017, AB received from his wife a letter dated 8 April 2017 for the purpose of convening an EGM of the third respondent in Samoa on 4 May 2017 to pass the same proposed ordinary resolutions. On 1 May 2017, AB’s counsel filed a motion for an ex parte interim injunction to stop the EGM. On 2 May 2017, MN was informed by telephone by his lawyers in Samoa that they have received papers at about 10:00am in the morning on 2 May 2017 for the motion for the interim injunction. At that time, MN was about to leave Hong Kong for Samoa for the EGM. MN only discovered that an ex parte interim injunction had been granted on 2 May 2017 when he arrived in Samoa on Wednesday night 3 May 2017. MN says in his motion to rescind the interim injunction that AB was not acting bona fide and in good by waiting until the last hour to file his motion for an ex parte interim injunction.
61. Counsel for AB and CD in her notice of opposition to the motion to rescind says that: (a) the applicants AB and CD have not delayed in bringing their ex parte motion for an interim injunction as the timeframe between them being notified about mid-April 2017 of the date of the EGM and bringing their urgent proceedings for an ex parte interim injunction is reasonable in all the circumstances given the cross-jurisdictional and complex nature of the dispute; (b) the delay that would result if the motion for an interim injunction was on notice would have entailed irreparable harm to the applicants; and (c) the applicants have acted bona fide and have made full and fair disclosure of all material facts required to enable the Court to make a full and fair assessment of their motion for an ex parte interim injunction in order to hold the status quo.
62. What is said by counsel for the applicants in the notice of opposition to the motion by the first and second respondents to rescind the interim injunction is, of course, not evidence. But it is based on the affidavit evidence adduced by the applicants. On that evidence, it is difficult to see at this stage how it can be said that the applicants did not make a full disclosure of all material facts or were not acting in good faith. It is also not to be overlooked that there was an element of urgency involved when the applicants learnt about mid-April that an EGM of the third respondent was to be held on 4 May 2017. Their ex parte motion was then filed on Monday 1 May 2017. It could not, of course, have been filed on Saturday or Sunday 29 or 30 April.

The law

(a) Jurisdiction to rescind an interim injunction

63. An interim injunction is an equitable remedy which lies in the inherent equitable jurisdiction of the Court. Just as the Court has an inherent equitable jurisdiction to grant an interim injunction, it should also have the same jurisdiction to rescind or discharge an interim injunction. In Harbottle (Mercantile) Ltd v National Westminister Bank Ltd [1978] 1 QB 146, 158, Kerr J said:
    • “The Courts have a discretion to grant interlocutory injunctions wherever it is just or convenient to do so. They must equally have an inherent jurisdiction to discharge them on the same basis when the matter comes back to them for a further order”.
64. In the New Zealand case of West Harbour Holdings Ltd v Waipareira Investments Ltd [2013] NZHC 402, para [11], Venning J said:
    • “[Where] the order is regarded as of an ongoing nature or obligation, as in the case of an injunction, the Court has accepted it has inherent jurisdiction to rescind or vary the order should circumstances change...It appears that the orders setting aside or varying orders for security have been made in the exercise of the Court’s jurisdiction on a similar basis”.
65. In Electrical Equipment Co Ltd v Pace Network Services Ltd [2006] NZHC 76, para [32], Allan J said:
    • “[32] It therefore becomes necessary to turn to the inherent jurisdiction of the Court. It is not in dispute between the parties that in the absence of contrary legislation the Court has an inherent power to control its own procedures: Ryde Holdings Ltd v Sorrenson (1995) 8 PRNZ 339, 345. The inherent jurisdiction of the Court to review the terms of an interim injunction was discussed by Greig J in Foodtown Supermarkets Ltd v Tse (1987) 2 PRNZ 545, 546:
      • “There remains, however, a coexistent right in the case of a continuing order like an interim injunction to apply for its dissolution or rescission and that is not curtailed by the rules of the High Court that I have mentioned or the rule against review or reconsideration. It is, I think, consistent with the nature of an interim injunction which is a temporary but continuing matter restraining, for the time being and until the resolution of the substantive proceeding, any further or particular action or conduct by the defendant. The defendant must be entitled, without having to go to the Court of Appeal, to seek rescission of the order and a variation of it should the circumstances change and so require in justice that rescission or variation. Moreover, such an order, as was done in this case, is made subject to the further order of the Court so that it remains within the purview and authority of the Court to supervise and to vary or to rescind the order as circumstances require”.
66. With respect to counsel, there is nothing in the Supreme Court (Civil Procedure) Rules 1980 which provides jurisdiction for bringing a motion to rescind, discharge, or vary an interim injunction. Rule 197 provides only the procedure to be followed in a motion to rescind an ex parte order. The motion to rescind the interim injunction in this case would therefore have to be considered on the basis of the Court’s inherent jurisdiction.
67. I am also not able to agree with counsel for the applicants that the proper basis for the motion to rescind the ex parte interim injunction is rules 140 and 141 of Supreme Court (Civil Procedure) Rules 1980 as discussed by the Court of Appeal in Lauano v Samoa National Provident Fund Board [2009] WSCA 3. That case was concerned with a motion to set aside a default judgment. Because a default judgment is entered by the Court against a defendant who has been served by the plaintiff with a claim for a liquidated sum but does not appear at the hearing or when the claim is called for mention, that is different from a motion for an ex parte interim injunction which is not served on the defendant unless ordered by the Court. Should the Court decide to grant the interim injunction on an ex parte basis, the defendant could not have been expected to appear at the time the interim injunction was granted because no prior notice had been served on him.
68. Rule 140 applies to proceedings where a defendant “does not appear at the hearing and a judgment or order is given or made against him in his absence”. This implies that the defendant has been notified by summons of the proceedings by the plaintiff but he fails to appear at the hearing of the proceedings. It would be unrealistic to expect the defendant to appear at the hearing of the plaintiff’s claim if the plaintiff has not notified him about it. With an ex parte motion for an interim injunction, the plaintiff does not give prior notice to the defendant. It will be contrary to the purpose of an ex parte motion if the plaintiff is to notify the defendant about it before the Court decides whether to grant the motion. So without any prior notice, the defendant could not be expected to appear at the hearing of an ex parte motion. Rule 140 therefore does not apply to a motion to rescind an ex parte interim injunction. It also follows that the approach to a motion to set aside a default judgment adopted in Lauano v Samoa National Provident Fund Board [2009] WSCA 3 does not apply here. Rule 141 also does not apply.

(b) Approach to the motion for rescission of the interim injunction in this case

69. The motion to rescind the ex parte interim injunction is based on the following grounds: (a) absence of full and fair disclosure of all material facts, (b) absence of good faith, (c) absence of security for costs, (d) inadequacy of the undertakings as to damages, and (e) Samoa is not the appropriate forum for these proceedings. I will refer to this part of my judgment to the usual approach to a motion to rescind an interim injunction and where such a motion relies on the absence of full and fair disclosure of all material facts by the party which applied and obtained an interim injunction. I will deal with the other grounds of the motion to rescind the interim injunction later in this judgment.
70. In the usual motion to rescind an interim injunction granted ex parte, the approach that has been applied is whether there is not a serious question to be tried or that the balance of convenience does not favour the granting of the interim injunction. Such an approach was applied in Dive and Fly Ltd v Schmidt [2006] WSSC 40 to a motion to set aside an ex parte interim injunction. The same approach was also stated in The Proprietors of Otakanini Topu Block v Uruamo [2007] NZHC 404, para [14], where Rodney Hansen J said:
    • “[14] The interim injunction may be rescinded if the defendants can show that there is not a serious question to be tried and/or that the balance of convenience does not favour the grant of an injunction”.
71. For the approach to a motion to rescind an ex parte interim injunction on the ground of absence of full and fair disclosure of all the material facts, I refer to Hughes v Williams [2009] NZHC 2263 which dealt with such a motion. At paras [19] and [20], Clifford J said:
    • “[19] The law as to the duty of full disclosure on a party seeking an interlocutory order without notice is clear. As set out in McGechan on Procedure at para HR7.49.03 (3):
      • “ ‘The applicant for a without notice order owes the Court a duty of utmost good faith (uberrima fides) to make the fullest disclosure to the Court of all facts relevant to the application. The duty extends to all matters relevant to the application, whether or not the applicant considers them important. In particular, the applicant has a duty to disclose to the Court any known defence to the application, together with the facts on which it is based. This duty is firmly established on the authorities...
      • “The duty is to make full disclosure of all relevant information in the applicant’s possession, including that which does not assist the application”.
    • “[20] McGechan on Procedure goes on to note, at para HR7.49.03 (5), that reflecting ‘the duty of utmost good faith in making complete disclosure, the Court may rescind an order obtained upon an interlocutory application without notice if non-disclosure or mis-statement subsequently emerges. On that approach, the Court will, in the event of an important mis-statement, discharge the without notice order to impress upon the parties the importance of proceeding in good faith. McGechan on Procedure notes further (paragraph HR7.49.03(5):
      • “However, a more liberal line of authority also exists. The choice as to rescission was put quite simply as a discretionary matter in Lazard Bros v Midlands Bank [1933] AC 289, at p.307. In Ellinger v Guinness Mahon & Co [1939] 4 A11 ER 16, at p. 25, the Court squarely rejected as wrong an argument that a without notice order obtained through non-disclosure of any material fact ought to be set aside, even if the Judge thought that the order was properly made.
      • “The more liberal approach is reinforced by the current trend to regard review of a without notice order as establishing a hearing de novo in the presence of the other party: DB Baverstock Ltd v Haycock [1986] 1 NZLR 342; (1986) 1 PRNZ 139. On that approach, the basis on which the original without notice order was obtained assumes relatively less importance.

“In the rare case of mis-statement or omission with deliberate intent to mislead the Court, it will invariably rescind upon r7.49 review. In such a situation, however, application under r7.51 is more likely”’.

72. In China Construction Realty Ltd v China International Club Ltd [2007] WSSC 52, this Court referred to Equity and Trusts in Australia and New Zealand (2000) 2nd ed by Dal Pont and Chalmers where the learned authors said at p.813:
    • “In any ex parte application, the plaintiff must act bona fide and make a full and fair disclosure of all material facts, the importance of which can scarcely be overemphasised. An ex parte injunction obtained without such disclosure is liable to be dissolved so as to restore the defendant to her or his pre-injunction position (although the plaintiff may apply de novo for an injunction upon the merits). This is because it is no defence to the dissolution of an ex parte injunction that the plaintiff was unaware of the importance of certain undisclosed facts which the plaintiff should have known had he or she made proper inquiries. To this end, it has been said that the applicant should err on the side of excessive disclosure, such that if a matter is of uncertain relevance, it ought to be the Judge and not the applicant or her or his solicitors who determines relevance.
    • “Two riders must be added to the foregoing statements. First, an injunction granted ex parte will not be automatically discharged; rather ‘there needs to be a consideration of whether or not the materiality was sufficient to justify discharge without examination of the merits and of the circumstances generally. Whether the fact not disclosed is of sufficient materiality to justify or require the immediate dissolution of the order without examination of the merits depends on its importance to the issues which were to be decided by the Judge on the application. Where, for instance, the lack of disclosure does not stem from a deliberate lack of candour, and is not of a major character overall, such that the injunction would in any event have been granted, the Court may exercise its discretion to uphold it...
    • “Secondly, the disclosure obligation does not extend to facts outside of which the applicant knew or should have known. The extent of the requisite inquiries depends on the circumstances of each case, including the type and probable effect of the order on the defendants, the degree of legitimate urgency and the time available for the making of inquiries”.
73. As it would appear from the above authorities, the duty or obligation to make full and fair disclosure is part of the overall duty to act in good faith. But not every non-disclosure will inevitably result in a without notice order or ex parte injunction being set aside. It is a matter of discretion.

(c) Security for costs and undertaking as to damages

74. Rule 30 (1) of the Supreme Court (Civil Procedures) Rules 1980 provides that “in any civil proceedings and at any stage thereof” the Supreme Court may require a plaintiff resident outside of its jurisdiction to deposit any sum of money as security for costs and may stay proceedings pending the making of that deposit. In these proceedings, counsel for the first and second respondents has sought in his submissions an order for security for costs claiming that the undertakings as to damages provided by the first and second applicants are insufficient. Counsel for the applicants in response submits that the second applicant CD has assets in Samoa in terms of its shares in the third respondent which are of a substantial value and more than sufficient to meet any potential costs incurred by the first and second respondents should they succeed in these proceedings.
75. In this context, it is clear from the authorities cited by counsel for the first and second applicants that the Court has inherent jurisdiction to require a foreign plaintiff to provide security for costs where an undertaking as to damages may be insufficient or difficult to enforce. In the case of ENRC Marketing AG v LJS “Magnitokorsk Kombinat” [2011] FCA 1371 Rarers J in the Federal Court of Australia said at para 11 of his reasons for judgment:
    • “11. The Court has an inherent or implied power to require security for an undertaking as to damages as an incident of its ability to condition the making of its own orders. The provision of security can be required as a condition of the Court acting on an undertaking as to damages given by a person who is not present in the jurisdiction, or alternatively, does not appear to have sufficiently disclosed a substantial financial basis on which to meet any liability on the undertaking in the event that it is called upon.
    • “Long ago, in Myring v Beale (1899) 20 NSWLR 6 at 7, Simpson CJ in Eq said that:
    • “...this Court ought not to be satisfied with an undertaking which may possibly prove to be illusory. The Court of Equity imposes this undertaking on a plaintiff as a condition of his injunction, and it ought to see that the condition is not a mere form, as it would be in cases where the plaintiff is out of the jurisdiction, especially where there is no evidence that the plaintiffs have any property in the jurisdiction”.
76. In PS Chellerson & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321, 323, McHugh J said:
    • “To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the Court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstances depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstances which may have great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction has been seen as a circumstances of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstances that that person is resident out of and has no assets within the jurisdiction.”
77. In Marribee Pastural Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; (1998) 72 ALJR 1055; (1998) 155 ALR 1, Kirby J at pp 1062 – 1063 set out the following considerations relevant to the exercise of the discretion to order security for costs:

“(1) The governing consideration is what is required by the justice of the matter;

“(2) There is no absolute rule that the impecuniosity of a party will entitle its opponent to an order for security for its costs;

“(3) The strength of the case of the party resisting an order for security for costs and an evaluation of its prospects of success:

“(4) Further considerations including whether the trial is close at hand, whether the parties are legally aided, whether the proceedings raise matters of general public importance, whether an order for costs might ultimately be made in any event, whether any prior costs orders ought to be taken into consideration , citing Chellaram, that a party to the proceedings is or will at judgment be or be likely to be absent from the jurisdiction and has no or few assets within the jurisdiction, and whether the making of an order will shut a party out of relief”.

78. In the New Zealand case of Sun v Peninsula Round Ltd [2012] NZHC 1209, the plaintiffs who were overseas litigants from Singapore and Malaysia had obtained a without notice interim injunction in relation to the defendants. The issue for consideration by the Court was whether the plaintiffs should be ordered to provide security for their undertaking as to damages as a condition of the interim injunction remaining in effect. At para [56] of his judgment, Gilbert J said:
    • “[56] Any applicant for an interlocutory injunction is required to file an undertaking to comply with any order to pay compensation for any damage caused by the injunction. Overseas applicants may be required to provide security if there might otherwise be difficulty enforcing the undertaking: Pop-A-Shot Inc v Filtration and Pumping (Commercial) Ltd [1989] NZHC 15; (1989) 3 TCLR 225. The adequacy of the undertaking is a factor to consider when weighing the balance of convenience in any given case and therefore whether an injunction should be granted.”
79. In Sun v Peninsula Round Ltd [2012] NZHC 1209, Gilbert J held that those plaintiffs with sufficient assets in New Zealand did not have to provide security to support their undertaking as to damages. But the plaintiffs without sufficient assets in New Zealand were ordered to provide security for their undertaking.

(d) Appropriate forum

80. The law on the issue of appropriate forum in proceedings involving international companies incorporated in Samoa was extensively discussed by this Court in Rose House International and Rose House China v D and X [2013] WSSC 18. I need not repeat that discussion here as it will further prolong this judgment which is already lengthy but the parties are waiting.
81. Suffice to say that the third respondent is an international company incorporated in Samoa under the Samoan International Companies Act 1988 (ICA). Its proposed extraordinary general meeting (EGM) was to be held in Samoa on 4 May 2017. The first and second applicants moved for an ex parte interim injunction on 1 May 2017 to stop the EGM. On 2 May 2017 this Court granted an ex parte injunction to stop the EGM. In the circumstances, I am of the view that this Court was the appropriate forum to deal with the interlocutory motion for an ex parte interim injunction. Firstly, because the EGM was to be held in Samoa, not in any other country. Secondly, if the applicants had moved for an ex parte interim injunction in China, as the first and second respondents seem to suggest, to stop the EGM to be held in Samoa, it is highly unlikely that such an injunction would be enforceable in Samoa to stop the EGM because, as far as I know, there are no reciprocal enforcement of judgments arrangements made pursuant to our Reciprocal Enforcement of Judgments Act 1970 between China and Samoa. And, thirdly, there was real urgency in the matter.
82. Furthermore, counsel for the first and second respondents has persuasively submitted on the basis of the law discussed in Rose House International and Rose House China v D and X [2013] WSSC 18 that the appropriate forum for these proceedings is China. This would have to be the substantive proceedings because I have already dealt with the interlocutory proceedings for an ex parte injunction for which I am of the view that Samoa is the appropriate forum. If it turns out that the appropriate forum for the substantive proceedings is China as submitted for the first and second respondents, then the substantive proceedings would have to be tried in China. This would mean that the only costs incurred by the respondents for the purpose of the proceedings in Samoa would be the costs of the interlocutory the proceedings for the interim injunction which should not be very substantial. That being so, can it be said that the undertakings as to damages given by the applicants, if the substantive proceedings are tried in China, are insufficient to meet the costs of the interlocutory proceedings in Samoa. Should the applicants be required to provide security for costs to support their undertakings for the purpose of the interlocutory proceedings in Samoa when they have been successful in those proceedings. I think the obvious answer must be no. The normal practice is for the unsuccessful party to pay or make an appropriate contribution to the costs of the successful party and not the other way round.
83. With respect, I have had difficulty with the submissions by counsel for the first and second respondents. He says that the undertakings as to damages given by the applicants are insufficient and therefore seeks security for costs to support the undertakings as to damages. But he then argues with persuasiveness that the appropriate forum for these proceedings is China. But this Court cannot order security for costs for the substantive proceedings if tried in China because it has no jurisdiction to do so and its order will also not be enforceable in China as there are no reciprocal enforcement of judgments arrangements between China and Samoa. In addition, if the substantive proceedings are tried in China, the first applicant AB would not be a foreign plaintiff in those proceedings because he resides in China.

(e) Oppression of a minority shareholder

84. Because of the allegations in the affidavits of the first and second applicants against the first and second respondents that the passing of the resolutions to remove the first applicant AB as a director of the third respondent and to reduce the quorum necessary for directors meetings of the third respondent to one, would be oppressive of the second applicant as minority shareholder, I have decided, in the interests of a fair hearing, to allow counsel for the first and second respondents to respond to those allegations in his additional written submissions even though oppression of a minority shareholder is not mentioned in the motion to rescind.
85. Essentially, the argument by counsel for the first and second respondents is that the third respondent is an international company incorporated under the ICA. It is different from a private domestic company incorporated under the Companies Act 2001. Whilst there are provisions under s.102 of the Companies Act 2001 for a shareholder to apply for relief in relation to oppression, there are no such provisions in the ICA. It follows that the remedies provided to a minority shareholder in a private domestic company under s.102 of the Companies Act 2001 do not apply to a minority shareholder in an international company. As I understand counsel, he does not go so far as to say that a majority shareholder in an international company is therefore free to oppress a minority shareholder in such a company. It seems to me that what counsel is essentially saying is that if such an oppression occurs, the ICA provides no remedy for the minority shareholder in an international company.
86. Even if what counsel for the first and second respondents is saying is correct, an interim injunction is an equitable remedy which lies in the equitable jurisdiction of the Court. That is an inherent and not a statutory jurisdiction. In the exercise of this equitable jurisdiction, the Court has to do equity between the parties and is guided by the principles of equity. I have not been referred to any provision of the ICA which excludes an alleged oppression of a minority shareholder in an international company from the exercise of the Court’s equitable jurisdiction to grant or refuse an interim injunction. It is therefore at least arguable that the Court may take into consideration an alleged oppression of a minority shareholder in the exercise of its equitable jurisdiction in these proceedings. This does mean that I have decided to accept as conclusive fact that there is in fact a potential oppression as alleged by the applicants.
87. MN says that under the articles of association of the third respondent, he has a right to convene an EGM of the third respondent. Whilst that may be so, the exercise of that right may be subject to law. The purpose of the EGM was to remove AB as a director of the third respondent and to reduce the quorum for directors meetings to one. AB has explained his concerns in his affidavit of 26 April 2017 that if the said resolutions are passed it would eventually lead to MN removing him and ST from the board of directors of the companies of their joint venture including their jointly owned company and himself as its chief executive officer. But their jointly owned company and a company under the charge of MN are the opposing parties to ongoing legal proceedings in China which involve a large sum of money.

Discussion

(a) Non-disclosure and delay in bringing proceedings

88. The first ground of the motion to rescind the ex parte interim injunction is that the applicants AB and CD did not make full and fair disclosure of all material facts as to why they waited until the last hour to file their motion for an ex parte interim injunction as a result of which the Court was not placed in a position to make a full and fair assessment whether the motion should be on notice or ex parte. In addition, AB and CD have not acted bona fide by filing their ex parte motion under the guise of legitimate urgency without disclosing the reason for the delay in bringing their motion.
89. As earlier mentioned, AB in his affidavit of 26 April 2017 says that in mid-March 2017 he received a letter dated 15 March 2017 from the second respondent PR signed by the first respondent MN requesting an EGM of the third respondent to pass resolutions to remove AB as a director of the third respondent and to reduce the quorum for directors meetings of the third respondent to one. Then in mid-April 2017, AB received a notice of EGM dated 8 April 2017 signed by MN. The purpose of this notice was to convene an EGM of the third respondent in Apia on 4 May 2017 for the same purpose of removing AB as a director of the third respondent and reducing the quorum for directors meetings of the third respondent to one. So between mid-April 2017 when AB received the notice of EGM and 1 May 2017 when the ex parte motion for an interim injunction was filed is about sixteen days. It also appears from the first affidavit of AB and the affidavits of his wife and ST that those affidavits were sworn in Hong Kong on 26 April 2017 about eleven days after AB had received the notice of EGM in mid- April. The reasons for seeking an ex parte interim injunction are set out in the motion and supporting affidavits of AB, his wife, and ST. I therefore do not accept that AB and CD did not make full disclosure of all the material facts. But even if there was a material fact that AB and CD did not disclose, I am of the view that, in the circumstances, the ex parte interim injunction was still properly granted to hold the status quo until the real issues in dispute have been determined in a substantive hearing.
90. As to whether AB and CD filed their ex parte motion under the guise of legitimate urgency without disclosing the reason for the delay, I think the affidavit evidence for the applicants speaks for itself. AB’s affidavit of 12 May 2017 shows that the period between mid-March when AB received the request from the second respondent signed by MN for an EGM and mid-April when AB received a notice of EGM was not without activity. In an email dated 24 March 2017, AB requested MN to withdraw his request for an EGM. AB’s request was refused. AB’s request by email of 24 March 2017 to MN’s secretary to postpone the EGM was also declined by return email of 27 March 2017. At that time, AB was seeking legal advice about his rights as a director of the third respondent and as ultimate beneficial owner of the shares in the second applicant CD, which is the minority shareholder in the third respondent, based on the Understanding and Agreement. When AB received the notice of EGM in mid-April 2017, he then engaged solicitors in Hong Kong who subsequently engaged solicitors in Samoa to file a motion for an interim injunction to prevent the holding of the EGM. That was done on Monday 1 May 2017.
91. Affidavits were then prepared for AB, his wife, and ST which were sworn on 26 April 2017. This was about ten or eleven days after AB received the notice of EGM in mid-April. This was, in my view, a reasonable time for AB to instruct solicitors in Hong Kong and have affidavits prepared given the complexity of this matter . The affidavits were then sent to the solicitors in Samoa. Those affidavits might have been received in Samoa late Wednesday 26 April given the time difference between Hong Kong and Samoa or on Thursday 27 April. On Monday 1 May 2017, the motion for an ex parte interim injunction with the supporting affidavits was filed. In these circumstances, the ex parte motion could not have been filed under the guise of legitimate urgency. AB and his solicitors in Hong Kong and Samoa acted with proper speed in the circumstances. There was no delay. So AB could not have given a reason for any delay in bringing proceedings for an interim injunction because there was no delay. There was also no bad faith or absence of good faith.
92. The grounds of non-disclosure and delay are therefore without merit.

(b) Undertakings as to damages

93. MN claims that the undertakings as to damages given by the first applicant AB and the second applicant CD are insufficient. As earlier mentioned, AB says that the value of the shares of CD, of which he is the ultimate beneficial owner, in the third respondent is quite substantial. This is not denied by MN who merely says in his affidavit of 16 May 2017 that he is not aware of the financial standing of the first and second applicants.
94. The other difficulty with the claim that the applicants undertakings as to damages are insufficient is that it has been contended for the first and second respondents that the appropriate forum for these proceedings to be tried is China and not Samoa. I am satisfied that the appropriate forum for the interlocutory proceedings for an ex parte interim injunction is Samoa. That leaves the question of whether the appropriate forum for the substantive proceedings is China or Samoa. If it is China as cogently argued by counsel for the first and second respondents, then there is no need for this Court to order security for costs for the substantive proceedings if they are to be tried in China. If, on the other hand, the appropriate forum for the substantive proceedings is Samoa, then the value of CD’s shares in the third respondent are very substantial and that is not contradicted by the evidence from MN. There is, of course, some uncertainty here as I have not made a final decision on the issue of appropriate forum. But for the purpose of the motion to rescind the interim injunction, if the first and second respondents are correct that China is the appropriate forum, that will undercut their submissions for security for costs and that the undertakings as to damages are insufficient.
95. There is also no clear estimate of the costs that the first and second respondents are likely to incur if these proceedings are to continue in Samoa. But I would be greatly surprised if such costs exceed the value of CD’s shares in the third respondent. The applicants have also been successful in the interlocutory proceedings and there is no suggestion that they should pay the costs of the unsuccessful first and second respondents. It can be the other way round. So I do not expect the first and second respondents to call upon the undertakings as to damages by the applicants to pay for the costs they have incurred in relation to the interlocutory proceedings. There is therefore no issue about the sufficiency or otherwise of the undertakings as to damages in that regard.

(c) Security for costs

96. Perhaps if there was a separate motion for security for costs the issues involved would have been more clear. As it is, the issue of security for costs has become somewhat blurred by including it in the motion to rescind the interim injunction. Anyhow, similar difficulties arise in relation to the undertakings as to damages. If, as contended for the first and second respondents, the appropriate forum for these proceedings to be tried is China, then that must mean the substantive proceedings because I have already dealt with the interlocutory proceedings. But I cannot order security for costs from the applicants for substantive proceedings to be tried in China, firstly, because I have no jurisdiction to do so and, secondly, because such an order will not be enforceable in China there being no reciprocal enforcement of judgments arrangements between China and Samoa as far as I know.
97. Furthermore, if the substantive proceedings are to be tried in China, the first applicant AB would not be a foreign plaintiff in those proceedings because he resides in China.
98. There is also no estimate provided of the amount for which security is sought. AB has also given affidavit evidence of the substantial value of the shares held by CD in the first respondent which is incorporated in Samoa which as submitted by counsel for the applicants would obviate the need for security.

(d) Appropriate forum

99. With respect, if the persuasive submissions by counsel for the first and second respondents that China is the appropriate forum are correct, that will not support but weaken the motion to rescind the ex parte interim injunction. I have already shown how that will be so.
100. From all of the above discussion, the motion to rescind the ex parte interim injunction should be dismissed.

Conclusion

101. The motion by the first and second respondents to rescind the ex parte interim injunction granted on 2 May 2017 is dismissed.
102. Parties to file submissions as to costs in 7 days if agreement cannot be reached.
103. I regret that there has been much repetition of the evidence. That has been because of the complex nature of the evidence which is conflicting in several respects and which I have tried to simplify.

CHIEF JUSTICE