A former Sakae Holdings director and two associates failed in their bid to get sushi chain founder Douglas Foo to indemnify about $37 million in penalties they are facing.
An adverse ruling would have forced Mr Foo to contribute towards paying for damages assessed against the three men.
The latest development in the long-running dispute goes back to April when Mr Andy Ong was found to have breached his fiduciary duties while he was a director and ordered by the High Court to pay $2.64 million to Singapore-listed Sakae.
Mr Andy Ong, Mr Ong Han Boon and Mr Ho Yew Kong were also ordered to pay about $35 million to Griffin Real Estate Investment Holdings, in which Sakae is a minority shareholder. They have appealed against the ruling.
In the meantime, they tried to get Mr Foo to pay their liabilities by claiming that he was also in breach of his fiduciary duties to Griffin. They claimed that these breaches contributed to certain transactions that Sakae had complained about.
Sakae had sued Mr Andy Ong and others who allegedly conducted the affairs of Griffin "in a manner that is oppressive and prejudicial" to the interests of Sakae. They were accused of treating Griffin's funds as their personal stash and diverting them for the benefit of Mr Andy Ong's ERC group.
The High Court's decision issued on May 4 found that the three men had no legal basis to make third- party claims against Mr Foo. Instead, High Court Justice Judith Prakash ordered them to pay a higher than the standard rate for Mr Foo's costs after "unreasonably" pursued claims that had no legal basis.
The men claimed that if Mr Foo "had been a good boy and done what he was supposed to do, they could not have been bad boys, and done what they were not supposed to do", according to the ruling.
But Judge Prakash said the contention does not have any weight. "The whole complaint against Mr Foo is not that he actively did something, but that he did nothing," she noted.
The three men have offered no evidence that Mr Foo had knowledge of their various "oppressive" activities, she said. "All they have said is that if he had been a more active director, he would have found out what was going on and stopped it," Judge Prakash added.
On the other hand, she found that the harm done by Mr Andy Ong and Mr Ho to Griffin was deliberately inflicted. Judge Prakash noted that, in one instance, the defendants acted in "clear disregard of" Sakae's interests when they siphoned off $16 million from Griffin under the guise of prematurely terminating a lease agreement, which she found to be a "sham document".
Judge Prakash also dismissed Mr Ho's claims for liability against Mr Foo, noting that Mr Ho had a duty to act in the interests of Griffin, but did not alert Mr Foo to what was going on. "Instead, he connived with Mr Ong and did whatever the latter wanted him to do without applying an independent mind. He was not merely a sleeping director but was an active party to sham documents," Judge Prakash said.
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