CellOS Software Ltd v Huber [2018] FCA 2069 | Case summary

CellOS Software Ltd v Huber [2018] FCA 2069 | Case summary | Zoe

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BEACH J: 1 The applicant, CellOS Software Limited (CellOS), an Australian unlisted public company, is a software development company in the field of data analytics. CellOS has brought these proceedings against numerous respondents. Primarily it has brought these proceedings against its former chief executive officer and director, Mr Jason Huber, the first respondent. Mr Huber was CEO of CellOS from 19 December 2005 to 3 September 2015. He was a director from 19 December 2005 to 12 May 2010 and from 1 March 2012 to 3 September 2015. 2 CellOS alleges that Mr Huber carried out a scheme against it, and in carrying out this scheme breached various statutory and fiduciary duties owed to CellOS, particularly under ss 181, 182 and 183 of the Corporations Act 2001 (Cth). Broadly, CellOS alleges that the scheme carried out by Mr Huber consisted of the following steps. 3 At all relevant times CellOS was not generating sufficient revenue and was reliant upon new equity capital or debt funding to continue its operations and its business of software development. Mr Huber was personally responsible for securing this funding. 4 From late 2012, Mr Huber instructed a corporate secretarial services provider to establish a web of offshore companies registered in Belize, Panama, Anguilla, British Virgin Islands and Samoa, which Mr Huber was to control, and which were designed to disguise Mr Huber's involvement in his planned scheme and in those vehicles. Mr Huber established a web of offshore companies to hold his CellOS shares (Huber controlled entities) with the corporate secretarial assistance of Mr Chua Min Wee and his company Grandeza Corporate Services Pte Ltd (Grandeza), a Singaporean company, and Mr Harveen Singh Narulla. The Huber controlled entities disguised Mr Huber's involvement in what later occurred. 5 From at least late 2012, Mr Huber procured through these Huber controlled entities at least 47,872,063 CellOS shares from early investors in CellOS, without disclosing his involvement to the vendors or to CellOS; it is said that these transactions were entered into without CellOS' knowledge. It is known that Huber controlled entities purchased 19,059,834 shares (out of 47,872,063 shares transferred from private investors) for AU$4,848,094. The price for the remainder is not known. 6 From at least late 2012, Mr Huber sought out potential investors for CellOS, ostensibly to raise funds for CellOS' ongoing operations. But instead of CellOS issuing shares directly to new investors, Mr Huber procured investors to purchase shares from Huber controlled entities at prices between US$2 and US$10. Between late 2012 and mid-2015, the Huber controlled entities sold 51,945,132 shares in CellOS to 355 private investors. It is known that Huber controlled entities sold 22,832,921 shares out of 51,945,132 shares transferred to private investors for AU$50,353,076. The price for the remainder is not known. 7 Mr Huber directly or indirectly lent part of the proceeds from these share sales back to CellOS in order to fund its operations. 8 In or around May 2013, Mr Huber arranged for CellOS to enter into a loan agreement with one of his offshore companies, LGA Energy Investments Ltd based in Belize (LGA) to loan CellOS up to SG$25 million (LGA loan) without disclosing his interest in LGA or the LGA loan to either CellOS' board or its shareholders, on terms that the loan could be converted to shares at SG$1.80. Mr Huber wearing his CellOS hat would call for loans from LGA and then convert those loans to shares. At the time, CellOS was able to issue new shares at US$5 per share and CellOS shares were on the secondary market at up to US$5 per share. 9 LGA is not a party to the proceedings. The LGA loan operated such that: (a) The loan operated retrospectively to cover money advanced since 1 March 2012, that is, over a year earlier and included advances by third parties nominated by LGA; (b) LGA or third parties would loan money to CellOS; and (c) LGA had an option to convert the loan amount into CellOS shares at the price of SG$1.80 per share, which was favourable to Mr Huber and LGA but disadvantageous to CellOS and the other shareholders. 10 The effect of the LGA loan allowed: (a) Mr Huber to immediately benefit from the funds he had been lending CellOS since March 2012 by converting them into new CellOS shares at the favourable strike price of SG$1.80 per share; and (b) Mr Huber to, first, prospectively sell CellOS shares held by the Huber controlled entities, second, then lend the funds to CellOS under the LGA loan and, third, obtain more shares at SG$1.80 per share by exercising the conversion option. 11 Significant proceeds from the sale of shares by the Huber controlled entities were paid to CellOS and attributed to the LGA loan. In all, Mr Huber procured payments into CellOS of SG$29,143,387.90 and AU$1,228,786.85, which were attributed to the LGA loan, and through LGA converted those loan funds into 17,477,204 shares in CellOS at SG$1.80 per share. 12 Mr Huber directed LGA to transfer 16,815,157 of those shares to Huber controlled entities for no consideration and then procured the on-sale of 4,265,157 of those shares, of which 2 million were sold at US$2 per share, 399,000 at US$10 per share, and the remainder at unknown prices. 13 As I say, between 28 June 2013 and 27 March 2014, LGA came to hold almost 17 million CellOS shares by way of its conversion option under the LGA loan. In May 2014, LGA transferred these shares to seven of the Huber controlled entities. 14 On 1 July 2014 Mr Huber arranged for CellOS to enter into another loan arrangement with another associated company, Pized Management Ltd (Pized) (Pized loan). Pized is the fourteenth respondent. The Pized loan was similar to the LGA loan, and Mr Huber again failed to disclose his interest. Significant proceeds from the sale of shares by the Huber controlled entities were advanced to CellOS and attributed to the Pized loan. When Mr Huber was removed from his position in September 2015, amounts under the Pized loan in the order of SG$2.5 million and US$8.3 million had not been converted and still remain a liability owing to Pized on CellOS' books. 15 CellOS alleges that Mr Huber's scheme, which it characterises as fraudulent, generated significant profits for him. 16 But Mr Huber's response to CellOS' claims is that Mr Min Wee and particularly Mr Narulla went rogue and set up and used the Huber controlled entities to buy and sell CellOS shares without Mr Huber's knowledge and for their own profit. Further, in respect of the LGA loan and the Pized loan, Mr Huber says that both of these arrangements were entered into with proper disclosure being made to CellOS that he was the controller of both companies. 17 As I say, Mr Huber's defence is that the fraud perpetrated against CellOS was not by him, but by his personal assistant Mr Narulla. Mr Huber says that he instructed Mr Narulla to sell off some of Mr Huber's personal shares to raise funds for CellOS through the LGA loan and the Pized loan, but that Mr Narulla went rogue and bought and sold shares using the Huber controlled entities. But CellOS says that the contemporaneous record establishes that Mr Huber did carry out the fraudulent scheme. In any event it says that even if the evidentiary foundation of Mr Huber's defence were to be accepted, nevertheless because Mr Narulla was his agent and Mr Narulla directed the profits from the fraudulent scheme to Mr Huber's personal benefit both for the purchase of assets and for payment into the LGA loan and the Pized loan, Mr Huber is still liable for that conduct and required to account to CellOS for any profits. 18 Let me turn to the other respondents. The second to thirteenth and fifteenth respondents include some of the Huber controlled entities that it is said were involved in Mr Huber's scheme. They are the following: (a) Birinc Centre Corp (Birinc) is the second respondent, although it has been incorrectly described as "Birinc Trade Corp" in CellOS' originating process. Its alleged involvement is the receipt of CellOS shares from LGA as part of the LGA loan scheme. (b) Sky Wealth International Ltd (Sky Wealth) is the third respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the LGA loan scheme. (c) Rex Investors Ltd (Rex Investors) is the fourth respondent. Its alleged involvement is the purchase of CellOS shares from early investors, the sale of those shares to private investors and the receipt of CellOS shares from LGA as part of Mr Huber's scheme. (d) Sun Way Global Group Limited (Sun Way) is the fifth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme. (e) Aura Finance Limited (Aura Finance) is the sixth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme. (f) Harvest Sky Holdings Limited (Harvest Sky) is the seventh respondent. Its alleged involvement is the purchase of CellOS shares from early investors, the sale of those shares to private investors and the receipt of CellOS shares from LGA as part of the scheme. (g) Rich Max Investments Limited (Rich Max) is the eighth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme. (h) Nesterland Services Ltd (Nesterland) is the ninth respondent. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors. There is a contest between the parties as to which of Mr Huber or Mr Narulla truly controlled Nesterland and the identity of its ultimate beneficial owner. (i) Willow Financial Limited (Willow) is the tenth respondent. Its alleged involvement is the sale of early investor shares to private investors, which it received by way of transfers from other Huber controlled entities. (j) Lighthouse Investments Limited (Lighthouse) is the eleventh respondent. Its alleged involvement is the sale of early investor shares to private investors, which it received by way of transfers from other Huber controlled entities. (k) Leario Overseas Corp (Leario) is the twelfth respondent. Its alleged involvement is the purchase of CellOS shares from early investors. (l) Stardust Financial Corporation (Stardust Financial) is the thirteenth respondent. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors. (m) Blue Delorite Investments Pty Ltd (Blue Delorite) is the fifteenth respondent; it has also been incorrectly described in CellOS' originating process. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors. 19 Now defences have only been filed by the first and fifteenth respondents, that is, by Mr Huber and by Blue Delorite. The second to fourteenth respondents are variously registered in Belize, Anguilla, Samoa, Panama and the British Virgin Islands. Service out of the jurisdiction has been effected on some of these respondents, but they have otherwise taken no role in these proceedings. 20 The proceedings have been dismissed as against the sixteenth respondent. I need say nothing more about him. 21 Let me turn to a separate group of respondents, who are alleged to have been accessories to Mr Huber's breaches of his statutory duties as a director of CellOS. Mrs Constance Peck and Mr Alan Peck are the seventeenth and eighteenth respondents, respectively. They purchased CellOS shares through the Huber controlled entities or through Mr Melvin Tan at US$2 per share and sold those shares to friends, associates and members of their church network, usually at the price of US$2 or US$5 per share. Mr Tan is the nineteenth respondent, and was a broker for CellOS at one point. 22 CellOS alleges against Mr and Mrs Peck and Mr Tan that they were knowingly involved in Mr Huber's breaches of his statutory duties. CellOS at trial abandoned its case against them under the second limb of Barnes v Addy. 23 CellOS says that Mr Huber was assisted in his fraudulent scheme by Mrs Peck and Mr Peck, who were introduced to Mr Huber as potential investors in CellOS in or about March 2013. It is said that in order to sell around 50 million shares in CellOS, Mr Huber was helped by the Pecks. Mr Huber agreed to sell them shares at US$2 per share, at times when the market value of those shares was at least US$5, and in all sold them 18,842,000 shares on the understanding that they would assist Mr Huber to sell his shares to third parties and that they would also be able to sell their shares at a profit. Mrs Peck and Mr Peck sold around 9 million of their shares to investors, many of whom were members of their church community. CellOS says that by assisting Mr Huber, Mrs Peck and Mr Peck generated profits from the sale of the 9 million shares. 24 Further, CellOS says that in or about 2014, Mrs Peck and Mr Peck reached an agreement with Mr Tan to assist him in the sale of further CellOS shares purchased from Mr Huber at US$2 per share and to split the profit. Mrs Peck and Mr Peck generated further profit from these sales, which indirectly allowed Mr Huber to continue selling shares to Mr Tan. 25 In essence, the elements of the accessorial claims against them are the following. 26 First, each of the Pecks knew that between September 2013 and July 2014: (a) there were willing buyers of CellOS shares at US$5 per share and up to US$10 per share; and (b) CellOS could issue new shares to willing investors at more than US$2 per share and indeed did issue shares at US$5 per share. 27 Second, each of them procured from September 2013 to July 2014 the sale of shares in CellOS to investors at various prices and improperly diverted third party investors from taking up shares in CellOS under CellOS' actual, contemplated or possible equity raisings. 28 Third, by doing so each of them: (a) benefited by procuring the sale to themselves of shares in CellOS at US$2 per share and on-selling at a profit; and (b) caused detriment to CellOS being the difference between the amount CellOS actually raised and the amount CellOS would have raised if the shares had been issued by CellOS to investors. 29 CellOS says that Mr Huber was also assisted in his scheme by Mr Tan, who was CellOS' broker and who facilitated the sale of Mr Huber's shares to investors. Further, in or about 2014, Mr Tan reached an agreement with Mrs Peck and Mr Peck in relation to selling further CellOS shares purchased from Mr Huber at US$2 per share, and sharing the profit. It is said that Mr Tan's involvement generated a significant profit for himself. 30 Now the Pecks and Mr Tan raise similar matters in their defences. First, they submit that CellOS' case against Mr Huber fails and therefore without any principal being liable their liability as accessories falls away. Second, they say that even if CellOS' case against Mr Huber were to be made out, they are not liable as accessories because they did not have the requisite knowledge of Mr Huber's scheme. 31 Further, not only is the Pecks' defence that they did not know about Mr Huber's scheme, but they say that they were carrying out another scheme whereby they, with Mr Tan, were fooling Mr Huber into selling them shares at US$2 per share, which they were then on-selling to their church community and others for a significant profit. 32 Now the present trial has proceeded on the basis of liability only at this stage. And it has been significantly fragmented for three reasons: (a) first, the parties significantly exceeded the initial two weeks allocated to the trial based upon counsels' estimates; (b) second, the re-scheduling had to take into account the availability of overseas witnesses who the parties insisted could not be disposed of on a video link; and (c) third, counsels' and the Court's availability. 33 In summary and for the reasons which follow, CellOS' principal claims against Mr Huber and the Huber controlled entities succeed. But the claims against the Pecks and Mr Tan fail. They did not hold the relevant knowledge to be liable as accessories to Mr Huber's scheme and his statutory breaches. Before getting into the detail, let me make a few preliminary observations. 34 I should state at the outset that there is nothing wrong per se with a director entering into buy and sell transactions in relation to shares in the company of which he is a director, putting to one side for the moment insider trading questions or the take-over or change in control type scenarios. Moreover, such activity is usually undertaken by the director qua shareholder and has nothing to do with his statutory or fiduciary duties qua director. Further, there is no diversion of any business opportunity by the company by such activity as, of course, the company is usually not in the business of buying and selling shares in itself. It is not an opportunity that a company can or should avail itself of, putting to one side lawful reductions of capital including share buy-backs. 35 Now take a different scenario. What if the director is the CEO and is charged with raising equity funding for the company as its principal if not sole source of essential capital? And what is the situation where instead of discharging that duty the CEO goes off and creates a large secondary or grey market in the company's shares by and for himself and through off-shore vehicles in exotic locations created for that purpose? And what happens if by doing so he diverts investors who otherwise would have participated in an equity raising by the company? And what happens if by that scheme there is a diversion of the company's business opportunity to raise equity funds? And what happens if the CEO uses the profits he achieves from the sale to such investors through the secondary or grey market that he has created to make advances of such profits to the company as debt funds by entities related to him but which relationship is not disclosed to the board? So, instead of equity subscribed with dividends payable normally out of profits, the company is saddled with debt and an interest bill. But there is more. What happens if the loan agreement(s) allow the CEO related creditor to convert the debt into equity, but at a strike price per share well below what the company could have issued the shares for to the investors that were originally diverted by the CEO's scheme? Does such conduct overall amount to a breach of the CEO's statutory duties? And is this also an occasion where equity is useful to both impose a fiduciary duty and condemn the CEO for its breach? 36 I will answer all of these questions later, including explaining why my case is quite different to that dealt with by Chancellor Chandler in the Court of Chancery of Delaware in Beam v Stewart 833 A 2d 961 (Del Ch, 2003). But in doing so it will be necessary to embark upon a lengthy evidentiary odyssey. My case is rich in facts, including the application of Singaporean law proved as a foreign fact. Now brevity may be desirable where one is intellectualising on a legal issue stripped of the complexity of intricate commercial dealings over a lengthy period. But it is a luxury I cannot afford in the present case. 37 Let me make one other related point at this stage. A tricky feature of the present case has been that although on the one hand Mr Huber is said to have been the principal contravener with the Pecks and Mr Tan as his accessories, on the other hand the so called accessories were running their own agendas and making profits in tension at times with what Mr Huber knew or intended. So, although their objective conduct may have facilitated Mr Huber's scheme, the so-called accessories' intentions and knowledge did not have the same boundaries and content as Mr Huber's intention and knowledge. And therein lies one important flaw in the foundations of CellOS' case against the alleged accessories, which I will develop later. 38 For convenience, I have divided my reasons into the following sections: (a) The Huber controlled entities ([39] to [157]). (b) Chronology ([158] to [416]). (c) The witnesses ([417] to [495]). (d) Singaporean law on share issues ([496] to [526]). (e) Diversion of equity investment ([527] to [595]). (f) LGA and Pized loans ([596] to [717]). (g) The claims against Mr Huber and related entities ([718] to [842]). (h) The claims against the Pecks and Mr Tan ([843] to [1056]). (i) Conclusion ([1057] to [1058]).

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Basalt Pte Ltd (Basalt) 44 Basalt is not a party to these proceedings. Basalt purchased 25,152,717 CellOS shares from early investors, over half the total shares purchased by the Huber controlled entities. 45 Mr Huber gave evidence that Basalt was one of Mr Narulla's companies. Mr Narulla's involvement is also shown from Basalt's company address being the same as for Maitreya Mandala Pte Ltd. 46 Mr Wolfenden gave evidence regarding the circumstances in which Basalt purchased around 20 million CellOS shares. First, at CellOS' AGM on 1 June 2012, Mr Narulla approached an early investor and said to him that he knew of a buyer and that he could connect him and then step out of the transaction. Mr Wolfenden acted for that early investor. Second, Mr Wolfenden also negotiated the sale of shares of other early investors. Some of those investors had bought in 2005 and 2006 for around AU$0.10 per share, and others in 2008 and 2009 for around AU$0.35. The known consideration paid by Basalt for these shares was between AU$0.11 and AU$0.74. 47 By 11 November 2012, Basalt went from a holding of 0 to a holding of 23,538,717 shares, and thereby became the registered holder of around 12% of the issued shares in CellOS. 48 Mr Wolfenden dealt only with an intermediary for the undisclosed principal, and that whilst he did not know the identity of the principal, he thought that it was Mr Huber. 49 Mr Huber's denial that he directed Mr Narulla to purchase these shares on his behalf should be rejected for the following reasons. 50 First, Mr Narulla was undertaking consulting work relating to fundraising work for CellOS between June and December 2012, and Mr Narulla issued invoices to CellOS for this work. Mr Huber personally approved the payment of these invoices. CellOS was paying Mr Narulla to facilitate the purchase of shares from early investors on behalf of Mr Huber. 51 Second, the evidence indicates that Mr Narulla did not personally have the funds to purchase the shares. In relation to Mr Narulla's invoices for the above consulting work, Mr Narulla's covering emails twice stated that he was short of funds and asked that his fees be paid without delay. When asked how it was that Mr Narulla could purchase these shares, and yet be so short of funds, Mr Huber's answer was only that it was a good way for Mr Narulla to hide the trading. I agree with CellOS that this answer should be rejected. The documentary evidence is contrary to any inference being drawn that Mr Narulla was hiding his involvement with Basalt from Mr Huber, and that when then pressed as to how Mr Narulla got the money in the first place to buy the shares from the early investors, Mr Huber had no explanation. 52 Third, Mr Huber personally signed the share statement for Basalt dated 30 November 2012 that showed these transactions. Mr Huber also accepted that he knew most of the sellers listed on Basalt's share statement, and knew that they were early investors. Further, Mr Huber accepted that at that time he knew that these people had sold their shares to Basalt, that is, Mr Huber admitted that at this time he knew that Basalt had bought 12% of the issued shares in CellOS. 53 Fourth, on or around 21 November 2012 Mr Narulla effected a payment to the intermediary who negotiated the share purchase on behalf of Basalt in the sum of US$10,000. Mr Huber's own evidence was that Mr Min Wee, independently of Mr Narulla, was administering his CellOS shares through offshore companies as his agent. But Mr Narulla forwarded this email to Mr Min Wee and there was no reason for Mr Narulla to forward this email to Mr Min Wee unless acting for and on behalf of Mr Huber in buying the shares for Basalt. 54 Fifth, Mr Huber personally gave instructions to Computershare to transfer shares from Basalt to Rex Investors and other companies that he controlled. 55 Sixth, Basalt transferred shares to offshore companies that Mr Huber admitted are his. Mr Huber said that the first three companies he set up to hold his shares were Prestongate Foundation, Palgrave Foundation, and Grand Maidstone Foundation. On or around 18 April 2013, transfers of 8,252,717 CellOS shares from Basalt to Prestongate Foundation (2,500,717 shares), Palgrave Foundation (2,252,000 shares) and Grand Maidstone (3,500,000 shares) were registered. 56 Seventh, significant payments to CellOS attributable to the LGA loan (and hence claimed by Mr Huber as his contributions) derived directly from the shares purchased by Basalt from these early investors, that is, the proceeds from the sale of Basalt shares were applied to Mr Huber's benefit. 57 Eighth, Mr Huber admitted that shares Mr Narulla was selling on his behalf were not shares that he had transferred to Mr Narulla (or Mr Narulla's controlled entities) for that purpose. The necessary inference is that Mr Huber knew where the shares were being sourced, namely from early investors.

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Stardust Financial 72 Stardust Financial as I have said is the thirteenth respondent in these proceedings. It purchased 1,588,181 CellOS shares from early investors and sold 477,181 CellOS shares to private investors. 73 Stardust Financial was incorporated in Belize on 19 April 2013, and at the time a certificate of incumbency was issued on 10 May 2013 its sole shareholder was Dinastia Limited and its sole director was Majestic Limited. 74 I would note that Dinastia Limited is not a party to these proceedings and was incorporated in the British Virgin Islands on 24 October 2012. Grandeza was its sole shareholder and director when a certificate of incumbency was issued on 29 October 2012. 75 I would note further that Majestic Limited is not a party to these proceedings and was incorporated in Belize on 29 October 2012. Grandeza was its sole shareholder and director when a certificate of incumbency was issued on 11 April 2013. 76 Mr Huber admitted that he controlled, and is the ultimate beneficial owner of, Stardust Financial, though Mr Huber says that he was not aware of this until July 2014. There was evidence that Stardust Financial was being administered to hold Mr Huber's CellOS shares on his behalf. 77 Mr Huber also admitted that he directed Mr Min Wee in relation to Stardust Financial's transactions. 78 In May 2013, Stardust Financial directly purchased 775,000 shares from Mark and Sandra Evers for US$0.15 per share. When it was put to Mr Huber that it had bought 775,000 shares from the Evers at US$0.15 in May 2013, Mr Huber denied any knowledge of the purchase. But Mr Huber's affidavit in the Singapore proceeding expressly states that he bought the 775,000 shares because the Evers wanted to exit the company. When asked whether evidence that Mr Narulla bought these shares without his knowledge, or he bought them, was correct, Mr Huber said the former. As to how he then knew of the Evers' motivation for selling, Mr Huber could not say. 79 The above is direct evidence of Mr Huber's personal knowledge that his companies were buying CellOS' shares at well below market price. Mr Huber's denials should be rejected.

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(d) Mr Huber's submissions concerning Mr Narulla 140 Mr Huber says that he did not instruct a corporate secretarial services provider to establish a web of offshore companies to disguise his involvement from CellOS' shareholders and directors. The reason Mr Huber instructed Mr Narulla to meet with Heritage Fiduciary Services was based on advice given to him that if he was going to sell his personal shares to fund CellOS that he should do so via a corporate structure. 141 Mr Huber says that with the exception of the three companies that Mr Narulla told Mr Huber that Heritage Fiduciary Services had recommended he set up, the Huber controlled entities were established by Mr Narulla and Mr Min Wee without Mr Huber's knowledge. 142 Mr Huber says that despite the assertions of CellOS, the procurement of some 30 million shares from early investors in CellOS was undertaken by the offshore companies established by Mr Narulla without Mr Huber's knowledge. Mr Huber says that he did not become aware of what Mr Narulla was doing because the names of the purchasing shareholders were unknown to him. He therefore did not discover that these "new shareholders" were companies that Mr Narulla had established. 143 It is said that both Mr Huber's lack of knowledge and Mr Narulla's purchase and on-sale of early investor shares is evidenced in an email from Mr Narulla to Mr Min Wee dated 30 September 2016 in which he states "the lawyers in Melbourne seem to have assumed that whatever is held by these companies [Rex Investors and Nesterland] was Huber's. This is not correct, but I can understand them making this mistake." I would note that CellOS released Mr Narulla from any claims it may have had against him. 144 Further, Mr Huber says he was also unaware that the Pecks were purchasing shares from Mr Narulla which he had in turn purchased from early investors. Mr Huber was simply unaware of this having occurred. It is said that Mr Huber's lack of knowledge or involvement in this scheme is supported by the evidence including his direction to Computershare to refuse to allow share transfers without his approval. But I would note that the direction in evidence dated 25 February 2015 was not general in nature, and appears to have concerned shares concerning three particular individuals. 145 Further, Mr Huber contends that Mr Huber's lack of knowledge of the purchase and sale of early investor shares by Mr Narulla, the Pecks and Mr Tan is also supported by Mr Tan's witness statement at paragraphs 26 to 28, which stated: "Harveen took the opportunity to tell me that he had a lot of shares to sell… Harveen then said that he would sell to me on one condition - I was never to let Jason or anyone else know that he was selling CellOS shares". This evidence was uncontested. Mr Tan's evidence was that he believed that from early June 2013 he was purchasing shares sourced from Mr Narulla, despite the fact that some payments were directed to Huber controlled entities. 146 Mr Tan's evidence was that Mr Narulla hid the sale of his shares from Mr Huber and further that Mr Tan did not disclose to Mr Huber or the Pecks that Mr Narulla was selling shares to Mr Tan. Mr Tan's evidence suggested that Mr Tan and the Pecks attempted to hide from Mr Huber the on-sale of Mr Tan's shares. 147 Mr Huber referred to other evidence from Mr Tan which he contends supports the proposition that the share trading with Mr Narulla was covertly conducted without Mr Huber's knowledge. 148 So, Mr Tan gave evidence under cross-examination (see also his amended witness statement at [28] to [32]) as follows: (a) "You know, from Constance because it - Jason Huber would know about it. So she would transfer to my wife's name because my wife's name is Sao Chat Ing in Chinese. Jason Huber would not be able to identify this name. Therefore, the name - the - the shares were transferred to my wife and for her to on-transfer to her buyers, and it's true if it's the amount that's shown." (b) "Narulla told me that he has a lot of shares in his name and his wife's name, his family name and his friends' name, and that if I'm interested he can sell it to me. Yes. But he says that on the one condition that I must never ever let Jason Huber know that he is selling sell-of shares. As a matter of fact, he has repeatedly sworn me to secrecy that this will be the only condition that he's willing to sell the shares to me and to my clients. Thank you." (c) "I was not given a copy of the engagement letter, at all. I'm not privy to the commercial terms, but what has been verbally put across to me is that it's strictly meant for financial institution and PE funds. That's it. Who do you say told you that, Mr Tan?---Sorry? Who do you say told you that?---Jason Huber, as well as - wait - Jessie Wong Mei Lee, who is the dealing director of UOB Kay Hian. Now, during 2013 - after March 2013 when this letter was entered into, you're aware, aren't you, that there was a number of presentations that were given by Mr Huber and by you, in many cases, in respect of prospective investors in CellOS; that's right, isn't it?---Yes, sir. And you understood that those presentations were being done for at least a purpose of people investing under the UOB offer; that's right, isn't it?---Are you talking about the meeting with UOB Kay Hian, or the meeting at his office? I'm talking about presentations that were given during the course of 2013 either by your or Mr Huber or Mrs Peck; you understood a purpose of those presentations was for investors to invest in the UOB offer; that's right, isn't it?---Absolutely - absolutely no, because UOB Kay Hian is only strictly meant for financial institution and private equity funds. It's not open to private individuals." (d) "- - - you knew that UOB - through UOB, CellOS was offering people to subscribe for shares in CellOS at $5 a share in 2013; you knew that, didn't you?---Yes. I know. But I would like to stress it is meant for financial institution and PE funds only. Well, I want to put to you that that's false, Mr Tan, and you know it to be false. That's right, isn't it? You knew - - -?---No, I - - - - - - the UOB offer was open to wealthy people?---I beg to differ. It is absolutely meant for financial institution as well as PE funds only." (e) "MR CRUTCHFIELD: … What I want to suggest to you, Mr Tan, is that you well knew in 2013 that you introducing investors to CellOS and arranging for those investors to receive existing CellOS shares at $2 per share had the effect of diverting investors from CellOS and those investors might have invested at $5 a share. That's right, isn't it?---No, I - I disagree. Like what I say, I reiterate UOB Kay Hian PE fundraising is only meant for financial institution and PE funds. That's it." (f) "Mr Anthony Cooper, I do not know him. I don't - I don't talk to him during that time at all. When this letter came to me - this email was forwarded to me, I rang Jessie Wong Lee - Wong Lee Mei of UOB Kay Hian and Jessie Wong told me that Melvin - we would only accept PE funds as well as financial institution. So any private individuals we would not take." (g) "And a company called Irrika Centre Corporation?---Yes. This I know. This company belongs to Harveen Narulla Singh. And a company called Apex - - -?---Yes. - - - Pte Ltd?---Yes, this is one of Harveen's company. In fact, I also invested in this particular company. You did. Yes. That's right?---Yes, sir. Well, I want to suggest to you that Irrika Centre Corporation and Apex Pte Ltd, you don't know one way or the other whether or not Mr Narulla was the ultimate beneficial owner of those companies, do you?---Mr - Harveen told me that, "Please invest in my company. I have a few companies." And Apex Peak is one of the company, Gilcrux Holding, Click Central are his company. And also there's one logistic company in Africa. In fact, time and again, he's trying to ask me to bring clients, investors, to invest in his companies." (h) "Look, I will withdraw the question - I apologise, Mr Tan - in the interests of time. It's in your defence. I will move on. So the last thing I wanted to - I think the last thing I wanted to ask you about is I just wanted to put it to you squarely that you understood, didn't you, that the effect of Mr Huber making available shares by way of one of these vendor entities at $2 and then those shares being on-sold of between US$5 and US$10 was causing CellOS to be disadvantaged because investors were buying shares from you or from the Pecks that they might otherwise have subscribed for in CellOS. You understood that, didn't you?---No, I - I think if the market is upbeat and there are people who are prepared to pay $10, $25 - I do not know who sold at $25, but if there is a market for that kind of price every shareholder would be very, very happy, and it's also very good for the company because we are all very hopeful that the company would go IPO, even above US$25. All right. When you sold shares with Mrs Peck or for Mrs Peck in 2013 and 2014, can you just explain to his Honour how the profits were split between you and the Pecks?---Okay. Your Honour, basically, the process is if Constance client were to purchase shares at $5 and I'm able to get shares below $5 the difference I would split with Constance. Fifty/fifty?---Not quite 50/50 because some of the clients are Constance's friend and they also want to have a cut of the commission. It is their friends, so we split in many ways." (i) "I want to suggest to you that you knew that those shares were shares that were either owned by Mr Huber or shares that he could otherwise facilitate the sale of. That was right, isn't it?---No, that's incorrect. That's incorrect, sir. Well, some of the companies that you were - that were the vendors of the shares after June 2013 were the very same entities that you have already agreed were Huber-controlled entities - I withdraw that - were entities that were associated with Mr Huber, such as Nesterland?---Yes, sir. Well, how do you explain the fact that magically Nesterland becomes - those shares become owned by Mr Narulla? How does that happen?---Okay. When I purchase shares from Harveen, Harveen told me that this are shares of his company, his friends, his family and himself, and my cheques are all issued to Harveen, to Harveen's wife, just Nicole, to Click Central, Gilcrux and to Nesterland, and I believe that these are his company and he swore me to secrecy that Melvin - if you want to buy these shares, this - my shares and never ever to let Jason Huber know that I am selling CellOS shares. And how many shares did you - - -?---So I believe that these - - - I'm sorry, Mr Tan?---Yes, sir. How many shares, roughly, did you - - -?---Yes, sir. - - - did you acquire from, you say, Mr Narulla after June 2013?---I - I didn't calculate because there's a lot of shares. In fact, I have given some cheque butts to - to - as a - - Okay. But millions of shares; you agree?---Sorry? Millions of shares?---Millions. Yes. That's right. Yes. And you well knew, didn't you, that Mr Narulla was not in a position to be owning millions of CellOS shares?---On the contrary, I think he should be able to, because he owns many companies. And I think he has a lot of money. He owns many company. And I - I believe that he - he has the money. And, also, he was telling me that he is able to - to go to the market to look for more shares if I want more. Well, I suggest to you, you well knew that these shares were coming from a Jason Huber-controlled - or company, or companies associated with Jason Huber after June 2013?---No. Absolutely - I - I strongly believe there's no inkling between Jason Huber and - and Harveen, because he swore me to secrecy time and time and again that, "Melvin, please, never, ever - if you want to buy my shares, never, ever to let Jason Huber know that I am selling CellOS shares." So I strongly believe that it's nothing to do with Jason Huber. He is completely out of the loop." 149 Mr Huber contends that some of this evidence constitutes an admission that Mr Tan and Mrs Peck used Mr Tan's wife to hide transactions from Mr Huber to prevent him from discovering and from blocking the share transfers. 150 Further, Mr Huber referred to Mr Douglas Reid's affidavit dated 8 September 2017 attaching a number of emails from Mr Narulla to various parties that Mr Huber says shows that he regarded a number of the "Huber Controlled Entities" as his own companies and that he had used Grandeza for various services for his own companies. But I would note that many of these emails were well after the event and of doubtful veracity or probative value. 151 For example, in an email dated 30 September 2016, between Mr Narulla and Mr Min Wee, Mr Narulla writes to Mr Min Wee stating that Grandeza had "managed (Mr Narulla's) CellOS assets" and that while the lawyers in Melbourne (i.e. the Applicant's present lawyers) "seem to have assumed that whatever is held by these companies was Huber's", "(t)his is not correct" and that should CellOS claim against Mr Huber, "any award now may overlap with the shares that were mine and do not belong to Huber". 152 Mr Huber refers to another part of the same email: Fast forward to 2015, and Huber and I had not been close for some time, it made sense for me to ensure that my shares were managed discretely, with no reference to him. Hence on one of my trips back from Africa, we went through an exercise where I took control of 2 entities, without reference to their previous transacting history, which I am not privy to. Consequently, the shares in Rex Investors Ltd ('RIL') and Nesterland Services Ltd CNSL') were mine. I accordingly instructed for them to be transferred respectively to be held by Kwik Vaish Ltd (C0000002l12) and by me (SRN C0000000715). Unfortunately, I note RIL and NSL have been named by the Melbourne lawyers as respondents in Cellos' action against Huber. 153 Mr Huber submits these documents show that Mr Narulla has admitted he used the services of Mr Min Wee and Grandeza to set up and manage companies for himself. He then recruited the main CellOS share broker, Mr Tan, to stop raising capital for Mr Huber and CellOS and instead to join Mr Narulla in trading shares which evidently was a lot more profitable for Mr Tan than the commission he was earning as a broker for Mr Huber and CellOS. 154 Further, he says that Mr Narulla purchased many shares and mixed them with Mr Huber's shares which Mr Huber had entrusted to Mr Narulla to manage for the benefit of CellOS. As a result Mr Narulla was able to clandestinely trade millions of shares he purchased on the side and accumulate sizeable wealth for himself. 155 Further, Mr Huber refers to an email that Mr Narulla sent to Mr Huber and his lawyers Oon & Bazul on 6 October 2015. The email refers to a further attached email addressed to Mr Min Wee which lists various Huber controlled entities. Mr Narulla admits to Mr Huber that Nesterland is his own entity and further states that "[t]o the extent that the other companies listed hold Cellos shares, these would be held for [Mr Huber]." The entities listed are: Aura Finance Limited Birinc Centre Corp Blue Delorite Harvest Sky Holdings Limited Lighthouse Investments Ltd Rich Max Investments Ltd Sky Wealth International Ltd Swallow Limited Willow Financial Limited Pized Management Ltd Stardust Financial Corp 156 Further, Mr Huber refers to an email from Mrs Peck dated 8 October 2013 in which Mrs Peck says to Mr Huber in respect of vendors selling early investor shares in CellOS "no one knows who the sellers are, and Melvin is not at liberty to disclose who they are." This document is more comprehensively extracted later in my reasons. 157 What should be made of all of this? I am prepared to accept in favour of Mr Huber that there were some dealings engaged in by Mr Narulla, which may also have involved Mr Tan, that were unknown to Mr Huber. I am also prepared to accept that some dealings between Mr Tan and Mrs Peck were kept from Mr Huber. But to so accept does not substantially detract from my finding that Mr Huber set up and engaged in the relevant scheme. And more generally, as I have said, Mr Huber set up and ultimately controlled the Huber controlled entities, subject to the qualification I have already made concerning Nesterland.

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(a) Events prior to 2011 159 On 8 June 2005, CellOS was incorporated under the name "Indoaust Investments Pty Ltd". Notwithstanding that the company retained the name Indoaust until 2013, I have used the name "CellOS" to describe the company throughout. 160 On 19 December 2005, Mr Huber became a director and CEO of CellOS. 161 On 20 February 2007, the company held its AGM, at which it was resolved that the status of the company be changed to a public company, known as "Indoaust Investment Ltd". 162 Now, in evidence before me is an undated copy of the CellOS' constitution, titled "Constitution of IndoAust Investments Ltd" and prepared by Middletons. Let me set out some relevant extracts: 2. Capital 2.1. Power of Directors to Issue Shares and other securities (a) The issue of Shares, options and other securities of the Company is under the control of the Directors. (b) Any Share, option or other security may be issued with preferred, deferred or other special rights or restrictions, whether with regard to dividends, voting, return of capital, payment of calls or otherwise, as the Directors decide. (c) Clause 7.1(a) has effect without prejudice to any special rights conferred on the holders of any issued Shares, options or other securities. … 2.4. Non-recognition of equitable or other interests Except as otherwise provided in this Constitution, the Company must treat the registered holder of any Share as the absolute owner of the Share and must not, except as ordered by a court or as required by statute, recognise (even when having notice) any equitable or other claim to or interest in the Share on the part of any other person. … 8. Transfer of Shares 8.1. Transferability of certificated Shares (a) Subject to this Constitution, the Act, the Listing Rules and ASTC Settlement Rules, a Member's Shares may be transferred by instrument in writing in any form authorised by the Act or in any other form that the Directors approve. (b) No fee may be charged by the Company on the transfer of any Shares. (c) A transferor of Shares remains the holder of the Shares until the transfer is registered. 8.2 Registration of transfers (a) Subject to this Constitution, the Act, the Listing Rules and ASTC Settlement Rules, where Shares are transferred, the following documents must be lodged for registration at the registered office of the Company or the location of the relevant Share register: (i) the instrument of transfer; (ii) the certificate (if any) for the Shares; and (iii) any other information that the Directors may require to establish the transferor's right to transfer the Shares. (b) On compliance with clause 8.2(a), the Company must, subject to any powers of the Company to refuse registration, register the transferee as a Member. (c) The Directors may waive compliance with clause 8.2(a)(ii) on receipt of satisfactory evidence of loss or destruction of the certificate. … 8.6 Cases where registration may be refused In any case here the Company is entitled to refuse registration of the transfer in accordance with the Act and this Constitution, the Company may do any or all things permitted by the Act. … 11. Alteration of capital 11.1. Power to alter capital The Company may, by resolution, do any one or more of the following: (a) increase its share capital by the creation of new Shares; (b) consolidate all or part of its share capital; (c) subdivide all or any of its share capital; and (d) cancel Shares that at the time of the resolution have not been taken or agreed to be taken by any person or that have been forfeited and reduce its share capital by the amount of the Shares so cancelled. … 15.1. Appointment and removal [of Directors] (a) There must be at least 4 Directors, or such greater number of Directors not exceeding 10 as the Directors think fit, in office at all times. (b) Subject to the Act, the Company may at any time by resolution passed in general meeting: (i) appoint any person to be a Director; or (ii) remove any Director from office. (c) Subject to the Act, the Directors may at any time appoint any person to be a Director. That person holds office until the end of the next following general meeting and is eligible for election at that meeting. 163 On 28 May 2007, there was a meeting of directors, at which it was resolved that Mr Narulla was to be employed by the company: 3. Singapore … d. It was resolved that appointment of Harveen Singh Narulla as General Counsel to manage all legal work of the company at a rate of AU$220K p.a. A job description will be required for this role of Legal Counsel and Business Development. 164 On 19 July 2007 there was a meeting of directors, which minutes record: c. CEO Position • Jason Huber provided his formal resignation as CEO to the Board which is accepted with thanks for the significant contribution he has made to the company • The Board hereby assumes the role of CEO and shall continue to do so until a replacement is found with the appropriate attributes and experience to take the company to a listing on the Nasdaq. … d. Director appointments … • Jason Huber was appointed Chairman of the Board until January 2008 subject to the affirmative resolution of Jesbir Narulla. 165 From March 2009 to mid-2011, as a consequence of the global financial crisis, CellOS effectively ceased operating due to lack of funds. 166 On 8 May 2009, Mr Ramchandra Hegde was appointed a director of CellOS. This appointment was ratified by a meeting of the directors on 7 October 2009. 167 As at 30 June 2009, CellOS had 179,220,714 ordinary shares on issue, with an increase of 12,855,595 shares since 30 June 2008 (taken from the financial statements dated 26 July 2011): (a) 13,263,529 shares had been issued; (b) 793,242 shares had been created by the conversion of debt into equity; and 1,201,176 shares had been cancelled. 168 On 7 October 2009 a board meeting was held, the minutes of which record as follows: 4. Fundraising The Board of Directors noted the latest Information Memorandum that was tabled at the meeting. Mr Jason Huber gave the meeting an update on the current fundraising efforts: a. The present focus for short term funding was 3 investors that had shown serious interest in investing sums up to USD 250,000 each. Aside from this there was also a list of telecommunications investment funds provided by Merrill Lynch that would be studied to identify potential target investors. b. The Company had received industry endorsement from operators for CellOSTM and was planning its approach to Network Equipment Manufacturers. 169 From 2009 onwards, CellOS had a form of information memorandum for use in its fundraising activities. This document was continually being updated for this purpose: for example, in evidence before me was a copy of the information memorandum dated 26 April 2013, which KPMG Corporate Finance Pty Ltd had assisted with preparing (Information Memorandum). The Information Memorandum is extracted later in the chronology, in accordance with its date. 170 From 13 May 2010 to 29 February 2012, Mr Huber was subject to a sequestration order. 171 As at 30 June 2010, CellOS had 179,708,714 ordinary shares on issue, with an increase of 488,000 shares from 30 June 2009 (taken from the financial statements dated 8 March 2012): (a) 433,000 shares issued by subscription; (b) 5,000 shares created by the conversion of debt into equity; and (c) 50,000 shares issued by allotment. 172 On 14 December 2010, there was a meeting of the directors, with the minutes recording: Resignation - Mr Harveen Narulla • The Board of Directors noted the resignation by Harveen Narulla as Company Secretary. Mr Harveen Narulla is stepping down to pursue other interests. The Board of Directors accepted the resignation … … 7. Fund Raising and Commercial Development • The Board agreed that the Global Financial Crisis has made the fund raising effort more difficult, yet noted that the last 5 months from July 10 have seen more positive activity. • The Board agreed that major funding is dependent on Indoaust getting contract(s) and that the Indonesia project is currently the most realisable contract. The JV between Indoaust and Telemedia will have a 15% stake in the Indonesian public company of which Indoaust will have a 50% share. A CellOSTM demo is planned for Q1 2011 followed by a road show to demonstrate the technology to the operators. • The Board noted the other business opportunities being pursued, they are: • China Satcom • Boeing - to re ignite • Aeromobile - to re ignite • Nokia - to re ignite • CISCO • The Board noted that Public Equity (PE) firms have shown some interest in Indoaust but none of them have furnished Letters of Intent. • Mr. Daniel informed the board that he has had discussions with SF Funds who informed him that they are looking to invest between USD50M - USD100M which they need to invest by end of Q1, 2011 and are considering Indoaust. At this stage Daniel cannot verify if this is true or just talk. • Other PEs that have shown an interest in Indoaust are: • Torus • Bentleigh Capital • EQ Ventures • Swiss Funds Management • CK … Settlement of Jason Huber's HSBC debt of $15,574.52 • The Board of Directors by unanimous agreement passed a resolution that Indoaust will settle a debt of Jason Huber to HSBC of AUD15,574.52. The Board agreed to Company Secretary's proposal to offset this amount against Jason's loan in the Company accounts.

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(b) Events in 2011 173 From at least January 2011, Mr Huber was in the marketplace raising funds for CellOS in order to recapitalise the company. 174 According to the Information Memorandum, between 2011 and 2012, CellOS raised an amount of close to US$10 million at US$2 per share. 175 On 4 January 2011, CellOS engaged Mr Tan to act as CellOS' broker selling shares to raise funds. Let me set out the terms of Mr Tan's engagement, which was signed by him and by Mr Huber: MANDATE AND ADVISORY AGREEMENT This MANDATE AND ADVISORY AGREEMENT ("Agreement"), dated this 04 day of January 2011, is entered into by and between Tan Choon Huat, Melvin, (hereinafter referred to as "Advisor"), NRIC: S1296406D and Indoaust Investments Ltd (hereinafter referred to as "Indoaust"), a corporation duly organized and existing under the laws of the Victoria, Australia, with office address at the Level 4, 43 Hardware Lane, Melbourne, Victoria 3000, Australia. 1. Mandate Defined INDOAUST hereby mandates the Advisor, on a non-exclusive basis and according to the terms and conditions set out below to seek and refer to INDOAUST one or several potential investors (hereinafter commonly referred to as "Investor") for investment in its upcoming fundraising exercise. Indoaust's goals in connection with this mandate include, but are not limited to, securing an investment of up to USD 20 Million from Investors. This mandate applies only to Indoaust's upcoming round of fundraising and Investment accepted from referrals by the Advisor shall be limited to the aggregate investment amount of USD 20 million. 2. Consultancy Services The Advisor's duties under this Agreement shall include, but not be limited to providing advice and assistance in raising equity as defined above. 3. Compensation Subject to the proviso below in this clause, with respect to any Investor introduction by Advisor and in recognition of any successful transaction taking place as a result of Advisor's introductions, whether direct or indirect, INDOAUST shall pay to Advisor a commission which shall be earned upon a benefit (hereinafter commonly referred to as "Investment") received by INDOAUST as follows: For the total amount of equity, either by way of issue of fresh shares/sale of existing shares, the fee (all inclusive) shall be 5% (five percent) of the equity below USD 1mil; plus an additional 10% commission paid in shares for investment up to $5 mill ["1mill" has been crossed out and amended to "5mill"]. A 5% (five percent) of the equity above USD 1mil up to USD 20mil, which shall be the total fee paid out by INDOAUST for any funds raised by the Advisor. The Advisor will arrange compensation for any intermediaries connected with it whose assistance is used in the course of raising funds pursuant to this Agreement. INDOAUST shall not have any obligation to compensate such intermediaries. … 6. Term Subject to the proviso below In this clause, this Agreement and the right to earn compensation on Investment as set out above shall be valid and enforceable until 28 February 2011, and may be extended upon mutual agreement, INDOAUST however reserves the right to terminate this Agreement without having any obligation to provide any reasons or explanation therefore, upon giving the Advisor 21 days' written notice of the same. In the event of termination, any discussions in progress for the raising of funds for INDOAUST shall be allowed to continue and complete, with fees payable as agreed above, upon successful conclusion of the said discussion(s) irrespective of the time/date limitation. Proviso: Upon the completion of the Indoaust fundraising exercise to raise USD 20 million, the parties agree that INDOAUST shall have the option of terminating this Agreement irrespective of the stage of discussions with any proposed Investor referred by the Advisor. In the event that any discussions are ongoing between any proposed Investor referred by the Advisor and INDOAUST. INDOAUST may at its option continue with such discussions, with the result that if any Investment is received by INDOAUST the Advisor shall nonetheless be compensated as set out above. 7. Investor Disclosure In conjunction with each prospective Investor referral to INDOAUST by Advisor, Advisor will obtain in writing, signed by the prospective Investor a Non-Disclosure Agreement provided by INDOAUST or satisfactory to INDOAUST prior to release of any proprietary and confidential information of INDOAUST Upon receipt of a signed NDA from a prospective investor introduced by Melvin, Indoaust shall extend exclusive rights to Melvin to that prospective investor in relation to this Mandate. Indemnification Advisor hereby indemnifies and holds harmless INDOAUST its affiliates and its and/or their respective directors, officers, employees, agents and controlling persons from and against any and all losses, claims, damages, liabilities and expenses whatsoever, joint or several, as incurred, related to or arising out of or based upon any act or omission of Advisor in connection with any Investor referral by Advisor to INDOAUST. 8. Governing Law and Jurisdiction This Agreement shall be governed by and construed in accordance with the laws of Victoria, Australia, and the parties agree that the Courts of Victoria, Australia, shall have exclusive jurisdiction over any dispute arising in connection with this Agreement. 9. Miscellaneous provisions Any taxes or contributions levied by State or local authorities on a party shall be paid by and shall be the exclusive liability of that party and shall in no way be chargeable to the other party to this Agreement. None of the parties hereto shall act or have the power to act for the other in any respect whatsoever, and the relationship between the parties hereto shall be deemed to be that of independent contractors (and not of agent and principal) and neither party has any authority to commit or bind the other party in any manner whatsoever. All persons employed or engaged by each of the parties hereto in connection with the performance of this Agreement shall in no way, either directly or indirectly, be considered employees or agents of the other party hereto. This Agreement and any of the terms hereof may not be disclosed to or relied upon by any party other than the parties hereto. This Agreement, and the rights and obligations of Advisor, may not be assigned by Advisor without the prior written consent of INDOAUST. This Agreement contains the entire agreement between the parties, and all prior agreements, whether oral or written, are merged herein. This Agreement may not be amended, altered or changed in any way except in writing executed by the parties hereto. The invalidation or unenforceability in any particular circumstance of any of the provisions of this Agreement shall in no way affect any of the other provisions hereof, which shall remain in full force and effect. 176 On 1 June 2011, Mr Wolfenden was appointed a director of CellOS, which appointment was ratified by the board at a meeting on 25 and 26 July 2011. 177 As at 30 June 2011, CellOS had 197,834,286 ordinary shares on issue, an increase of 18,125,572 shares from 30 June 2010 (taken from the financial statements dated 5 April 2012): (a) 3,139,297 shares had been issued by subscription; (b) 55,025 shares had been created by the conversion of debt into equity; and (c) 14,931,250 shares had been issued by allotment. 178 On 25 and 26 July 2011, there was a meeting of directors, which minutes record: 9. Fund Raising • The Board noted that the company has received offers from some of the investors in Singapore and raised over S$ 5 million upto June 30, 2011. The Board directed the Company Secretary to get a confirmation that the offers to buy shares received in Singapore do not contravene Section 708 of the Corporation Act of Australia. • The Board noted the report from the CEO [Mr Huber] that some of the sophisticated investors based in Singapore, would be interested in subscribing to the shares in the company after the audit of financials of the company are completed. • The Board instructed the Company secretary to submit to the Board at every Board Meeting a statement of new shareholders approved since previous Board meeting for ratification and latest statement of shareholders. 179 On 26 July 2011, CellOS' financial report for the year ended 30 June 2009 was finalised and signed off by HLB Mann Judd. Let me set out some relevant matters: (a) The company's after tax loss was AU$3,489,160. (b) From July 2009 to 26 July 2011, CellOS had raised AU$6.2 million. 180 On 23 August 2011, Mr Hegde wrote to Mr Krishna Ramachandra, managing director of Duane Morris & Selvam lawyers, requesting an advice regarding the "the parameters of the current fund raising regime in Singapore (from a regulatory perspective) and if there are any particular steps we need to take in respect of a future IPO". 181 On 20 September 2011, transfers of CellOS shares were registered from Melior Otzara Pte Ltd and Mr Narulla to Child and Family Foundation, totalling 1 million shares. This seems to be the earliest transfers to a Huber controlled entity. Now I should observe at this point that I am not going to list every single transfer of shares to, from or between the Huber controlled entities, but I have noted some particularly relevant or large transactions in this chronology. Further, I have already discussed these entities earlier in my reasons. 182 From around 20 September 2011 until around 13 June 2013, Child and Family Foundation was selling CellOS shares to individual purchasers. The total number of shares sold over this period was 9,125,755 CellOS shares. I note the long time frame of Child and Family Foundation's sales because most other Huber controlled entities only began selling CellOS shares to individual purchasers from late 2012 or early 2013 (see schedule 3 of 5FASOC). 183 On 3 November 2011, Mr Huber presented a report on fundraising to a meeting of the CellOS board. The minutes of that meeting state: 9. Fund Raising • The Board noted the report of the CEO that some of the sophisticated investors based in Singapore, would be interested in subscribing to the shares in the company after the audit of financials of the company are completed. It was decided to expedite the audit of financial statements for both 2009 and 2010. 10. The Bankruptcy Proceedings of Jason Huber • Jason Huber, CEO submitted a letter and explained to the Board concerning the bankruptcy proceedings against him. It was noted that the proceedings were brought by one of the investors who lent money to Jason who in turn used the same to fund the company. Jason informed the Board the he has now arranged for funds to clear all the dues and he is advised by the Lawyers that after the payment the bankruptcy shall be declared null and void in about two to three months' time. • The Board deliberated in detail on the issue and having considered the letter and facts of the case decided to allow time for Mr. Jason to clear the case and report to the Board. The Board requested Jason to obtain a letter from his Lawyers indicating time required for this settlement. 184 Let me set out the letter described in the minutes above, also dated 3 November 2011: Clarification on personal Bankruptsy and status My personal bankruptcy was the result of one of my creditor Mr. John Buhagiar from whom I borrowed money to fund Indoaust. I did this to protect the company in case of any claim in the future. However, Blue Deloroite had given 1,000,000 million shares held in Indoaust to him as security against this borrowing, the value of which was enough to cover fully the amount of the loan and interest. But he filed for my bankruptcy when I was unable to pay the amount when he demanded it back but he had not disclosed to the Court that he is holding the shares as security. At the same time, subsequent to the liquidation of Star Intellect, the liability regarding ATO of about $300,000/- also got included in my liability as I was the sole director of Star Intellect. As can be seen from above, both the dues were related to Indoaust and not my personal credit. I was unable to fight this as I was more focused on raising funds for Indoaust and protecting the interest of Indoaust shareholders. As the Board is aware, in 2011 I have been able to raise enough funds to secure Indoaust business. I have also arranged for funds to clear the dues of both John Buhagiar and the ATO and initiated steps to annul my bankruptcy through solicitors. I expect the process to take about 2 to 3 months and this would clear my bankruptcy by annulment. I would try to get in writing from my solicitor the reasonable time frame within which the bankruptcy could be annulled and inform you of the same. In view of the above I request the Board to understand this unusual situation of bankruptcy which I got into in the process of protecting the company and its shareholders and the steps I have taken to get this wrongful bankruptcy annulled. I request the Board to give me a reasonable time to clear this issue based on the letter from the solicitors. In the mean time, I would continue to my role as CEO under the guidance of the Board to make Indoaust strong and successful. 185 On 15 November 2011, legal advice from Duane Morris & Selvam was provided to the board of CellOS. Let me set out some salient conclusions. First, fundraising in Singapore had to comply with the requirements set out in the Securities and Futures Act (Singapore, cap 289), and the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations (Singapore). Second, the issue of a prospectus is necessary when there is an offer of shares that is not an excluded or exempt offer. Now there are number of categories of excluded or exempt offers that do not require the issue of a prospectus that I will address later in these reasons.

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(c) Events in 2012 186 In February 2012, Mr Patel joined CellOS as chief operating officer. From 1 March 2012 he was also a director of CellOS. From February 2012 to late 2013, Mr Patel attended around 20 potential investor presentations with Mr Huber. There were about 10 to 20 potential investors at each, and they were held in CellOS' Singapore offices. The format of each of the investor presentations Mr Patel attended was as follows: (a) Mr Huber opened the presentation; (b) Mr Patel discussed the technology that CellOS was developing, for between 30 to 60 minutes; and (c) Mr Huber then presented on financial matters, projected revenue, listing on an exchange and share price projections. 187 On 1 March 2012, Mr Huber was appointed a director of CellOS once more and as Managing Director & CEO, and Mr Kamlesh Patel was appointed a director. This was done by a circular resolution and both appointments were ratified by a meeting of the board on 8 March 2012. 188 On 2 March 2012 Cellos Pte Ltd was incorporated in Singapore. 189 On 8 March 2012, CellOS' financial report for the year ended 30 June 2010 was finalised and signed off by HLB Mann Judd. Let me set out some relevant matters: (a) The company's loss after tax was AU$998,393. (b) From July 2010 to 8 March 2012, the company had raised AU$7.77 million. 190 On 5 April 2012, CellOS' financial report for the year ended 30 June 2011 was finalised and signed off by HLB Mann Judd. Let me set out some relevant extracts: Operating Results The loss of the Company for the financial year after providing for income tax amounted to $1,817,897. Review of Operations A review of the operations of the Company during the financial year and results of those operations found that during the year, the company continued to engage in its principal activity, the results of which are disclosed in the attached financial statements. Significant Changes in State of Affairs Significant changes in the Company's state of affairs that occurred during the financial year, other than those referred elsewhere in this report, are as follows: On 1 September2010, an order was issued by the Supreme Court of Victoria for Star Intellect Pty Ltd, a subsidiary of the Company, to be wound up under the provisions of the Corporations Act 2011 and Liquidator be appointed for the purpose of the winding up. On 2 September 2010, due to the winding up of Star Intellect, the Company terminated the Intellectual Property Licence Agreement with Star Intellect, which was executed on 15 March 2006. In December 2010, the company purchased Star Intellect's assets for $25,000 from the Liquidator. Principal Activity The principal activity of the Company during the financial year was the development of base stations and leading edge Software Defined Radio technology. No significant change in the nature of these activities occurred during the year. After Balance Date Events … • During the period July 2011 to the date of this report, the Company has raised A$1.799 million. 191 On 28 May 2012, Mr Tan wrote to Mr Kenneth Sam Coong Seng, a potential purchaser of CellOS shares. Mr Tan explained that he could source CellOS shares through Child and Family Foundation in the following terms: We have already place out all the latest shares of Indoaust at USD2.00 per share. Good news, I am still able to secure Indoaust Investments Ltd shares at USD2.00 through Child and Family Education Foundation Pte Ltd. These are shares donated by the Founder of Indoaust, Jason Huber. At present, Child and Family Education Foundation still have about 200,000 shares available. Minimum purchase of shares is 5,000 shares@USD2.00 per share. 192 On 1 June 2012, CellOS held its annual general meeting. Let me set out some extracts from the minutes that illustrate the company's position and direction at that time: 4. Chairman's speech The Chairman welcomed the members to the AGM and thanked all the members for their patience and support due to which the company was able to come back strongly after the Global Financial Crisis. He expressed his sincere apology for the delay in holding the AGM due to circumstances beyond Management's control, but he expressed confidence that the members would understand the circumstances and appreciate the concrete steps taken for the future of the Company. With sufficient resources in hand, a good Management Team in place and clear strategy for commercialisation, the Chairman expressed that the Board is confident of delivering on the promises made by the Company. Thereafter, the Chairman made a brief presentation taking members through the progress made in terms of technology, Management and future direction. The Chairman also drew the attention of the members to the Agenda Item 4 which is to authorise the Board to take steps for IPO in the next 12 months to provide exit to the shareholders. However, he cautioned the members that the timing, price and size etc would depend on the market conditions, getting contracts signed, and the advice of Bankers, Financial Advisors, Lawyers who are specialists in the field. … Item 3: Appointment of Auditors " Resolved that pursuant to the provisions of the Corporations Act, the Constitution of the company and subject to ASIC approval, Price Waterhouse Coopers be and are hereby appointed Auditors of the company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company and the Board of Directors of the Company be and they are hereby authorised to fix their remuneration. Item 4: Authorisation for the listing of the Company's American Depository Receipts and/or other securities on the NASDAQ Stock Market "Resolved that the listing of the Company's American Depository Receipts and/or other securities on the NASDAQ Stock Market, or such other stock exchange to be selected by the Board of Directors based on professional advice( the "invitation"), upon such terms and conditions and to such persons to be set out in the final prospectus be and is hereby approved, and further, that any Director be and is hereby authorised to issue the prospectus and other necessary documents to be issued and published under or in connection with the invitation, to sign and execute all such documents under or in connection with the invitation and to take all other such steps and to do all such things as he may deem necessary or desirable in connection with the invitation" 7. Other Business: Questions from the Floor and Answers by the Chairman Several shareholders raised questions on the dissemination of information to shareholders on a regular basis, company's ability to sustain with limited resources upon recruitment of top management, IPO date and pricing, outlook for the future constitution of the Board of Directors, Type of development contracts expected, revenue stream for the company, exit options for the shareholders etc. There were certain questions raised by certain shareholders which were very personal in nature and were not objective. However, Chairman took all the questions and replied each of them. The Chairman's reply in summary is as given below: i. The Chairman agreed that there was some lack of communication to shareholders as the company could not afford a professional to deal as Investor relations officer. However, as the CEO met from time to time the shareholders and updated them with the status of the company and developments. This also led to some shareholders using the information to the detriment of the company. However, now the company has appointed an Investor Relations Officer and the shareholders could look forward to receiving regular communication from him. He assured that all the shareholders shall be given the same information at the same time so that no one is deprived of the information. ii. The Chairman stated that he understood the anxiety of shareholders who have waited for a long time and supported the company. To provide them proper and rewarding exit, the Board has taken steps to go for IPO. He said that he could not commit an exact date or price for IPO as this would depend on the Advice of professionals and the market conditions. But he said the Board is doing its best to go for an IPO at the earliest possible time. iii. The Board keeps evolving and he said the constitution of the Board shall be based on the requirement of the company based on the time and nature of development at the time. The Board would also decide on C Level management taking into account the suitability of the candidates depending on the requirement of the company. iv. The Chairman stated that the resources are sufficient in the short term, the company needs to continue to raise funds before IPO as the company needs to incur expenses on top management, hiring of professional advisors, development of products to a stage to achieve contracts from major companies etc. But the Board is confident that with the current management team and the product, it could raise further funds required by the company. v. He replied to the question on delay in holding AGM and audit and said that these delays were due to paucity of funds after Global Financial Crises and that once the company raised enough funds it focussed on audit and other compliance and holding of the AGM as the Board was very keen to update the shareholders and provide information about the company. He assured that going forward, the Audit and AGM would be timely and that the shareholders are provided with additional comfort with PWC being recommended to be the Auditors. vi. The Chairman thanked the members for recognising his role and perseverance in getting the CellOS demonstration completed in January 2009 and protecting and maintaining the company during the Global Financial Crisis and bringing the company to the current stage. He thanked the Board for their collective support in this regard. 8. Ramchandra Hegde, Director informed the shareholders that the company must be grateful to Mr. Jason Huber because but for his perseverance and commitment the company could not have survived the Global Financial Crisis. Mr. Jason Huber single handed raised funds needed by the company and has helped to get the top Management for the company. With the resources available to the Company, the highly qualified and experienced Management Team, he assured the shareholders that the charted goals could be accomplished. 193 Also on 1 June 2012, after the annual general meeting, CellOS held a meeting of its directors. The minutes of that meeting record, inter-alia, that Mr Wolfenden ceased to be a director on this date: 2. Changes to Board of Directors • Mr. Mark Wolfenden - Cessation as Director of the Company • The Board of Directors noted the resignation dated 31 May 2012 by Mr Wolfenden as Director of the Company. However, the Board noted that his name was included for re-appointment in the notice of the AGM which was scheduled for 1 June 2012 and the Board could not act on the resignation before the AGM as only one day was left before the AGM. • The Board noted that shareholders overwhelmingly rejected the resolution re-appointing Mr. Mark Wolfenden as the Director of the Company and accordingly his cessation as Director of the company with effect from the date of the AGM … … 9. Share Register The Board noted that there were lot of gaps, errors and delays in handling the share register by PKF and the process was not meeting the shareholders' and company's requirements. It was noted that Mr. Harveen Singh Narulla, former Company Secretary, was deployed to update the share register as well as prepare new share certificates for new subscriptions and transfers. The Board noted that the company is evaluating proposals to outsource the handling of the share registry to third parties and authorised Managing Director and CEO [Mr Huber] to proceed with the appointment after evaluating the proposals. … 11. Issue of Equity Shares: Issue of Partly paid shares Managing Director and CEO informed the Board that there are several proposals received from investors willing to invest in the shares of the company provided that they are allowed to make partial payment against their subscriptions and to pay the balance at a later date. The Board deliberated extensively on the issue and decided that the company may accept application for shares with partial payment as may be agreed by the Managing Director & CEO. It was decided to record the balance amount receivable as outstanding from the respective shareholders. 194 On 15 June 2012 the Melbourne development team of CellOS moved to larger premises in Melbourne which also comprised a software development laboratory. 195 As at 30 June 2012, CellOS had 203,784,186 ordinary shares on issue, an increase of 5,949,900 shares from 30 June 2011 (taken from the financial statements dated 27 March 2013): (a) 1,987,400 shares had been issued by subscription; and (b) 3,962,500 shares had been issued by allotment. 196 On 23 July 2012, Mr Huber wrote to Mr Shane Heffernan, a potential purchaser of CellOS shares. The subject line of the email is "Child and Family Transfer Form Indoaust Shares at US$2 per share" and it attached a share transfer form called "IA Child and Family Transfer form 2011-1". 197 On 24 August 2012, CellOS held a meeting of its directors. The minutes of that meeting record: 2. Share Register The Board noted that pursuant to the decision taken by the Board, the company has evaluated proposals to outsource the handling of the share registry to third parties and decided to select Computershare. The Board noted that steps are taken for handover of the share registry and the board would be informed of the progress in the next meeting. … 4. Finance & Accounts • Fund raising, cash flow and strategy Jason Huber reported that fund raising is slower than expected. However, he reported that the funds are enough to cover the expenses on month to month basis. He reported that keeping in view market situation, long holidays, he expected that the company would be funded by the end of first quarter of 2013. 198 On 10 September 2012, transfers were registered from Mark and Sandra Evers to Maitreya Mandala totalling 400,000 CellOS shares. 199 On 12 September 2012, Mr Jonathan Chan was appointed a director of CellOS, which appointment was ratified by the board at a meeting of directors on 4 and 25 February 2013. 200 In October 2012, CellOS signed its first contract with a major network equipment manufacturer. 201 On 24 October 2012, Dinastia Limited was incorporated in the British Virgin Islands. As noted earlier, the company's sole director and shareholder was Mr Min Wee. Dinastia Limited acted as sole director and shareholder of the tenth and eleventh respondents and was the sole shareholder of the thirteenth respondent. 202 On 29 October 2012, Majestic Limited was incorporated in Belize. As noted earlier, the company's sole director and shareholder was Mr Min Wee. Majestic Limited was the sole director of the thirteenth respondent. 203 On 11 November 2012, transfers were registered from a number of CellOS shareholders to Basalt, totalling almost 9 million CellOS shares. 204 On 27 November 2012, Mr Tan wrote an email to Mr Huber, telling him that "we should have quite a lot of potential clients who have the financial capability to take up the USD5 per share". 205 On 30 November 2012, further transfers were registered from a number of CellOS shareholders to Basalt, totalling around 14 million CellOS shares. 206 In December 2012, Ms Sharon Tapner commenced at CellOS. She was CellOS' office manager initially, but would become company secretary in December 2014 after Mr Douglas Reid resigned. 207 On 19 December 2012, Mr Huber wrote a letter to the Singapore National Service Reservist authority requesting deferment of Mr Narulla's National Service. Relevant extracts of the letter include as follows: 1. Harveen has informed me of his callup for National Service Reservist training that is upcoming in January 2012. 2. I request that you defer his National Service liability until after 3rd quarter 2013. My reasons for this request are set out below. 3. I am Managing Director of Indoaust Investments Ltd ('Indoaust'), which is an Australian public unlisted corporation with over 700 shareholders. The company is managed out of Singapore with its management functions organized under a Singaporean subsidiary CELLOS PTE LTD ('CellOS') (based at #19‐02, 6 Battery Road, Singapore 049909). 4. Indoaust is in the business of telecommunications technology R&D and has in 2012 secured contracts with among others, Nokia‐Siemens Networks (NSN') to embed analytics software into its networks that it provides to telecommunications operators around the world. Its first contract with NSN is valued at between US$100 to 300 million. It is negotiating others like this with NSN and other parties. It has also secured a contract to roll out a telecommunications network in Indonesia. 5. The company has 50 staff and consultants now, across Singapore, India and Australia. It will spend over SGD 5 million in personnel cost alone in 2013. 6. At the price of the last capital received into the company, it is valued at approximately US$ 400 million. 7. Indoaust is seeking a listing on the NASDAQ exchange in the USA in 2013. 8. Harveen has been a key part of the management team of Indoaust since 2007, and is currently handling the transition of the company's share registry to Computershare (Australian registry services provider), which is a necessary step before we apply for a public listing. 9. After the share register transitions out, the next step is to transition all non‐ R&D functions to the Singapore office, and shift the business headquarters to Singapore under the Singapore subsidiary, which will then become the parent company in the group. This is expected to happen between January and June 2013 and I have last week instructed KPMG Singapore to advise us on this. 10. Due to the needs of our business, the timing of the transition of the share register could not be finalized until recently, and Harveen is currently in Melbourne for meetings concerning this. This exercise will continue until late January and is expected to be completed by early February 2013. 11. Harveen has also worked closely with me to keep the company funded via private fundraising as a precursor to large venture funding via placements with venture funds and sovereign wealth funds that is expected to be secured in H1 2013.

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(d) Events in 2013 208 From 2013 to 2015, Mr Huber admits that he engaged Mr Narulla to assist in managing CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights, and making them available for CellOS' short term fundraising needs. 209 At some point in 2013, Mr Huber engaged Grandeza, a business providing corporate secretarial services. Mr Huber's primary contact at Grandeza was Mr Min Wee, and Grandeza provided these services until 2015. Mr Min Wee was the sole shareholder and director of Grandeza, and Mr Huber paid him directly. Mr Huber says in his defence that Grandeza and Mr Min Wee provided the following services: (a) assisting managing CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights, and making them available for CellOS' short term fundraising needs; (b) setting up and managing, in its discretion, external intermediary companies and structures to facilitate the provision of funding, approved by the CellOS board, through loan facilities; (c) regularly visiting CellOS' offices and communicating with CellOS staff in relation to Grandeza's involvement with fundraising activities being undertaken for CellOS; and (d) buying, selling and transferring CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights; as to this last point, I would note that Mr Huber submits that relevant transfers were carried out without his knowledge, approval or authority. 210 On 21 January 2013, Computershare was engaged to manage and maintain CellOS' share register. 211 On 4 February 2013, there was a meeting of the directors of CellOS that was continued on 25 February 2013. The minutes of that meeting record: 2. Update by CEO Jason Huber briefed the progress made by the company in recruiting world class staff, development of company's product and marketing efforts. Kamlesh updated the Board on Technical Development, Delivery of version 1.1 of the product contracted to Nokia Siemens for evaluation, recruitment of engineers both in Melbourne and India. Jason informed that efforts to raise funds from bigger investors are still in process and discussion is ongoing with the Banks to act as advisors for the current fund raising. … 4. Share Register The Board noted that pursuant to the decision taken by the Board, the company has completed the handover of the share registry to Computershare and they have issued the new share certificates to all the existing shareholders. The board noted that some of the addresses and contact details of shareholders are not available as they are not updated by the shareholders. 5. Response to ASIC and PWC: Reporting by PWC under section 311 of the Corporation Act ASIC regarding issue of the Companies shares to the Directors, staff and Suppliers The Board noted the letter written by the Company's Auditors, Price Waterhouse Coopers to ASIC concerning the valuation of Share Issue to Employees, Directors and Suppliers in the Annual Reports for the financial years ended June 2007 to June 2011. The Board also noted and considered the note submitted by Mr. Jason Huber, Chief Executive Officer of the Company with regard to grant of shares to Employees, Directors and the Suppliers. The Board deliberated in detail on the above note and concluded that the methodology and the valuation of shares as disclosed in the Annual Reports for the financial years ended June 2007 to June 2011 and approved by the shareholders during the AGMs of the Company is reasonable and reflects the valuation of shares at that time. The Board also noted that the valuation reflected the Intrinsic value and the Book Value of Shares. The Board thereafter passed the following resolution: RESOLUTION Resolved that the methodology of issue of shares to the employees, directors and the suppliers and the valuation of these shares and the valuation method as detailed in the Note submitted by the Chief Executive Officer be hereby ratified and approved. Further Resolved that the Chief Executive Officer be hereby authorised to write to Price Waterhouse Coopers and submit the copy of Minutes of the Board of Directors and the Note, and request the auditors to complete the Audit of Financial Reports for 2012 at the earliest as there has been delay in completing the audit. Indoaust has obtained an extension of time to file the audited financial report for 2012, on or before March 25, 2013. Further Resolved that the Chief Executive Office be hereby authorised to submit the copies of the Board Resolution and the Note relating to the share issue and valuation to ASIC. 6. Finance & Accounts • Fund raising, cash flow and strategy Jason Huber reported that KPMG has completed the preparation of Information Memorandum it is helping in current tranche of fund raising. He reported that the company has been able to obtain sufficient funds to cover the burn rate on month to month basis thanks to an arrangement of short term loans personally from him and from a company. • Jason Huber submitted a draft loan agreement with the company which has agreed to provide loan to Indoaust and its subsidiaries at their request which is repayable immediately upon large/pre-IPO fund raising by Indoaust. The Board authorised Jason Huber to sign the Agreement on behalf of Indoaust. 212 Now the minutes record four directors attending these meetings on 4 and 25 February 2013: Mr Huber, Mr Hegde, Mr Patel and Mr Chan. This is important, because there is a dispute between CellOS and Mr Huber regarding whether Mr Huber disclosed that he controlled the company providing the loan. I will deal with this dispute later, but I would note now that the minutes of the meetings do not make explicit any disclosure of Mr Huber's interest in the loan, the loan agreement or the lender, and nor do they record the name of the lender. 213 As at 11 February 2013, the holdings of CellOS shares and the distribution of shareholders had the following features: (a) There were approximately 212 million shares on issue. (b) There were 720 shareholders. (c) The top 10 shareholders held approximately 64% of the shares. (d) Mr Huber was the largest shareholder. (e) The distribution of the 720 shareholders by size of holding was: (i) 1 to 10,000 shares: 323 shareholders; (ii) 10,001 to 100,000 shares: 266 shareholders; (iii) 100,001 to 5,000,000 shares: 125 shareholders; and (iv) 5,000,001 or greater: 6 shareholders. (f) The distribution of the 720 shareholders by country was: (i) Singapore: 456 shareholders; (ii) Australia: 95 shareholders; (iii) Malaysia: 84 shareholders; and (iv) Others: 85 shareholders. 214 In early 2013, a "Loan and Option Agreement" was entered into between CellOS (signed on its behalf by Mr Huber and Mr Hegde) and LGA (signed on its behalf by Mr Min Wee) (the LGA loan described above). It is dated 1 March 2013, but CellOS submits that it was actually executed in or after May 2013. I will put that issue to one side for the moment and set out some relevant extracts: Whereas: A. The Borrower is a technology company in active research and development (R&D) and commercialization phase, and required significant funding to complete this prior to a commercial outcome; B. The Borrower requires substantial funding of up to SGD 25 million (Singapore Dollars Twenty-Five Million Only) to achieve its goals, which was unavailable to through commercial loans from financial institutions and similar lenders; C. The Lender is prepared to allow the Borrower access to funds that it can draw down on from time to time, as needed to sustain its activities, in the way of an unsecured loan facility, on the conditions herein; … Facility 3. The Lender grants the Borrower the right to request sums totaling up to the Facility Amount [S$25 million]. 4. Drawdown on the facility shall be by way of a Funds Request. Drawdown and advance of funds made with effect from 1st March 2012 shall form part of this agreement. … 6. The Borrower accepts that Drawdown Amounts advanced by the Lender pursuant to Funds Request may be advanced to it by third parties but nevertheless they shall be treated as having been advanced by the [Lender]. Interest 7. Funds drawn under the Facility shall carry simple interest at the rate of 10% (ten per cent) per annum from the date they are advanced to the Borrower. 8. The Lender may in its absolute discretion choose to waive the interest or any part of it. Option to convert outstanding amounts to equity in the Borrower 9. The Borrower grants the Lender an Option as follows. 10. The Lender may at any time before 31 December 2013 at its election and in its absolute discretion exercise an option to convert any part or all of the Outstanding Loan into equity in the Borrower. 11. Should the Lender so elect to exercise the Option: a. it should give written notice to the Borrower of the Option Amount, supported by a certificate showing the then Outstanding Loan. b. Within 7 days of receiving notice of such election, the Borrower shall cause the Lender (or such other party as it directs) to be issued the Shares. c. Shares shall be issued at the Option Price [defined as S$1.80 per fully paid ordinary share] and shall be for the Option Amount. 12. Exercise of the Option at any time within the Option Exercise Period does not preclude subsequent exercises of the Option. 13. Upon issuance of the Shares following on the exercise of the Option, the debt corresponding to the Option Amount shall be extinguished. 14. Exercise of the Option is irrevocable and the amount corresponding to the Option Amount cannot subsequently be resurrected as a debt owing by the Borrower to the Lender. … Termination and extension of this Agreement 17. Subject to the following clauses this Agreement shall terminate on 31 December 2013. 18. The Parties may however choose to extend this Agreement on terms and for a period that they see fit. 19. The Agreement shall automatically terminate on the occurrence of an Insolvency Event as set out below. 215 Let me draw particular attention to cl 4 of this LGA loan. It operated retrospectively to cover any funds lent by LGA to CellOS since 1 March 2012. 216 In early March 2013, Mr Daniel Tan, Mr Tan's brother, arranged for members of CellOS' management to present to Mr and Mrs Peck about investing in CellOS. The Pecks were introduced to Mr Tan, to Mr Huber and to Mr Patel. 217 The day after this initial meeting, the Pecks attended a further meeting at the office of CellOS' lawyers, Duane Morris & Selvam. Mrs Peck recalls that the meeting was attended by Mr Huber, Ms Irene Chan (CellOS' vice president) and Ms Ng (CellOS' group financial controller). 218 At this meeting, the Pecks agreed to purchase 600,000 shares in CellOS at a price of US$2 per share for a total price of US$1.2 million. A share transfer was entered into, with the date of purchase listed as 6 March 2013, with the transferees as Mr and Mrs Peck and the transferor as Child and Family Foundation. The transfer was registered on 18 April 2013. 219 This was the first of 17 purchases of CellOS shares by the Pecks from one of the Huber controlled entities. The final purchase would be on 1 July 2014. I am going to set out each occasion where the Pecks received or sold CellOS shares for several reasons. First, an understanding of their transactions is necessary in order to make an assessment regarding their knowledge at various times. Second, the pattern of their transactions is relevant to the Pecks' assertions regarding "backfilling" and "piggybacking". For this purpose, I have relied upon the supplement to exhibit A2 provided by senior counsel for the Pecks, Mr Daniel Crennan QC that was particularly useful to me. 220 Before proceeding further in the chronology let me say something on "backfilling" and "piggy-backing". 221 The "back-filling" of shares involved Mrs Peck transferring her own shares to investors who wanted to purchase CellOS shares. Mrs Peck then back-filled her shareholding by acquiring shares originating from Mr Tan's vendors, which Mr Tan arranged to transfer to Mrs Peck via his wife Ms Seah Chye Tin. The back-filling was driven by Mrs Peck's desire to maintain the Pecks' own shareholding in CellOS. 222 Mrs Peck also often acted as an "intermediary" seller to purchasers in circumstances where the purchaser did not feel comfortable buying shares through Mr Tan, or Mr Tan was not able to source the full volume of shares required for purchase at that time. 223 In either case, Mrs Peck would transfer her own shares to the purchaser and the purchaser would make a payment to the Pecks directly. The Pecks would immediately forward the money to Mr Tan, who would then locate vendor shares in the market to provide to Mrs Peck by way of back-filling. Accordingly, not all of the money received from purchasers within this 'category' of back-filling was profit, but Mrs Peck does not deny that some profit may have been made on those transfers. 224 As to "piggy-backing", at various times between July 2013 and July 2014, Mrs Peck allowed certain friends to, as she described it, "piggy back" on her further purchases of US$2 shares through Mr Huber. This involved friends of the Pecks who wanted to acquire a quantity of CellOS shares at US$2 agreeing to provide funds to the Pecks which the Pecks would use to increase the quantity of US$2 shares they were themselves purchasing through Mr Huber. The additional shares acquired on behalf of those friends at US$2 (and for which those friends had already paid or would subsequently pay) were then transferred into their names. No profit was made on these transactions. The piggy-backing of shares sometimes took place with Mr Huber's agreement and sometimes without. 225 One example of piggy-backing was the transfer of shares by Mrs Peck to Mr Anthony Cooper and his relatives for US$2 per share. A further example of piggy-backing was the transfer of shares at US$2 per share to Yong Weng Kong (also known as Mr Albert Yong), Mr Yong's wife Heng Mui Kheng (also known as Ms Lillian Heng), KA Chang and Thio Gim Hock as a "reward" for their efforts in introducing high net-worth investors to CellOS. 226 Let me return to the chronology. 227 On 11 March 2013 there was a meeting of directors. The minutes of that meeting record: 2. The deliberation & decision of the Board • The Board considered the communication from PWC and deliberated the consequences stated in the communication. The Board understood that the audit of financials 2012 has to be completed for filing with ASIC before March 25, 2013. The Board also noted that any qualification of the Financial Report by the Auditors would jeopardise the IPO process of the company. • The Board noted that it stands by its decision on the valuation of shares as reflected in the Financial Reports already audited and filed with ASIC. The Board is of the opinion that the audited financial statements for the period 2007 to 2011 complied with the Accounting Standards. The Board also noted the opinion of PWC, the new Auditors engaged to do the Audit of 2012 financial statements of the Company and the need to modify the valuation method based on PWC advice. • The Board decided that even though it has complied with the accounting standards, the Company must engage with PWC on Valuation of shares and come to a common understanding with PWC as it does not wish to jeopardise the IPO prospects. The Board authorised Mr. Ramchandra Hegde to communicate with PWC for this purpose and revert to the Board on final decision. • The Board places on record that going forward it is willing to consider the advice of PWC on the new method of valuation of shares issued for other than cash, if required by PWC. 228 On 12 March 2013 there was a further meeting of directors held by conference call. The minutes of that meeting record: 1. The discussion with PWC Mr. Ramchandra Hegde informed the Board that pursuant to the directive of the Board he had a discussion with Mr. Andrew Barlow, Partner of PWC in charge of Audit of Indoaust, concerning the issue of valuation of shares issued to directors, employees and suppliers. According to Mr. Andrew's opinion if the valuation of shares is not changed it would have serious implications and the matter which is very complex, must be resolved before the audit. The summary of PWC position as told by Mr. Andrew is given below: • Mr. Andrew informed that upon receiving the letter from Indoaust which enumerated Indoaust position on the issue, PWC had conducted a high level review and had concluded that the valuation of shares cannot be nil. • He stated that the share price paid the new investors (which was at $2/- in 2012) must be taken into consideration. Perhaps some discount could be considered to this price while doing valuation if certain premium is assumed in the price paid by the new investors. • In case of shares issued to the employees in lieu of wages, the shares could be valued at the cost of wages or services rendered. • The shares issued to the suppliers in lieu of payment could be valued at the value of service provided or equivalent to the payment due. • All other shares issued for other than cash must be valued at $2/-. 229 On 12 March 2013, Mrs Peck sent a WhatsApp message to Shiou Hee Ko regarding the Pecks' recent investment: Hi Shiou Hee - I can understand your "insecurity" and lack of confidence. We have more knowledge than you. Alan n I had the luxury of going to the Indoaust office in Spore to meet the management team as well as to the lawyers office the next day to sight the signed contracts n the company P&L n balance sheets n other relevant documents. As u know, AP [Mr Peck] is v cautious but he is satisfied that this is a bona fide investment n we are committing another 500k by mid/end April when some monies come back from sale of a commercial property. 230 On 15 March 2013, Mr Jonathan Chan sent an email to Mr Huber which stated, inter-alia: I understand the efficacy of using UOB as the carrot for roping-in the investors for the current fund raise. But I believe we are going past that phase now. 231 Mr Huber replied on the same day, stating: Thanks Jon, Let's discuss tomorrow . My concern is that the business prospects are advancing much quicker than expected such that we may have already outgrown the proposed UOB relationship. Originally we were planning to raise the 100m by the end of last month at the $5 price . That need has passed . We were so blessed that We were able to fund the business without the need of UOB or any other mid sized bank And in the last two weeks the major customers have commenced discussion with us for the full business offering. From the developments this week I am very confident that the major banks will take us seriously come July August . We just need to hold out and deliver the planned milestones by then and we should be able to get into the drivers seat to negotiate a deal with the big three Banks. 232 On 16 March 2013, Mr Chan concurred with the above email and copied in the email chain to fellow directors. 233 On 18 March 2013, CellOS had a meeting of its directors concerning, inter-alia, a private equity mandate with brokerage and funds management company UOB Kay Hian (UOB). The minutes record: 1. Private Equity (PE) Mandate: UOB Kay Hian Pte Ltd The Board noted that the Company was in discussion with UOB Kay Hian Pte Ltd (UOBKH), a leading Brokerage and Private Fund Management Company to be considered for appointment as Placement Agent for the proposed PE fund raising of upto US$100 million. The Board considered and reviewed the draft Letter of Engagement received from UOBKH and agreed with the recommendation of the CEO to appoint UOBKH and accept the Letter of Engagement. After discussion, the Board: Resolved that - • The Company appoint UOB Kay Hian Pte Ltd as the Placement Agent for the Proposed Fund Raising of up to US$100 million; • The CEO be and is hereby authorised to accept the Letter of Engagement issued by UOBKH for the above fund raising do all other things and acts to give effect to this Letter of Mandate. 234 On 19 March 2013, CellOS and UOB entered into the letter of engagement signed by Mr Huber. Let me set out some relevant excerpts: This Letter of Engagement is made with reference to the proposed fund raising of up to US$100 million in private equity fundraising ("PE fundraising") to certain private investors on a best efforts basis. References to the Company and the Shares include references to any company which is to be listed pursuant to a restructuring of Indoaust Investments Limited and/or its group of companies and/or its business and assets and the shares of such company, respectively. 1. SCOPE OF SERVICES (the "Engagement") 1.1 UOB Kay Hian Private Limited ("UOBKH") is offering the services as the placement agent for the Company's PE fund raising for an amount of up to US$100 million on a best effort basis on the following terms and conditions. 1.2 The issue price of the PE shares for the PE fundraising will be subject to mutual agreement between the Company and the PE investors and market condition nearer to the signing of definitive agreements. 1.3 For the avoidance of doubt, UOBKH shall not be responsible for providing or reviewing specialist advice or services of third parties involved in the PE fundraising, including without limitation legal, regulatory, auditing, accounting or taxation matters, due diligence or any other investigative services. 2. TERM OF ENGAGEMENT 2.1 UOBKH's appointment will commence upon the acceptance of this Letter of Engagement by the Company and will expire at the end of six (6) months thereafter or upon completion of the PE fundraising, whichever is the earlier. UOBKH and the Company reserve the right to extend the term of the Engagement beyond such date and they both reserve the right to re-negotiate the terms of the Engagement. 3. FEE ARRANGEMENT 3.1 PE fundraising Commission and Praecipium In the event that UOBKH secures PE investors for the Company's PE fundraising, the Company agrees to pay UOBKH a commission based on 4% of the value of the PE investment ("PE Commission") made by the PE investors introduced by UOBKH ("PE Investors"). For the avoidance of doubt, there is no minimum aggregate value of PE investment made by PE Investors introduced by UOBKH before the PE Commission of 4% is payable. In the event the aggregate value of PE investment made by PE Investors introduced by UOBKH is less than US$100 million, the Company agrees to pay UOBKH the PE Commission of 4% due to UOBKH on any quantum of funds raised by UOBKH. The Company agrees that it will not itself attempt to solicit for or negotiate with PE Investors introduced by UOBKH (and its affiliates) to conclude any sale agreement directly but if the Company does, then for the purposes of this Letter of Engagement, UOBKH shall be entitled to the PE Commission as if UOBKH had earned it, in accordance with the paragraph above. For the avoidance of doubt, any such introduction by UOBKH of a PE Investor to the Company must be clearly stated and made in writing and accordingly, acknowledged by the Company as being a UOBKH introduction. In the event that the Company secures PE investors for the Company's PE fundraising through their own contacts, the Company agrees to pay UOBKH a praecipium of 1% of the value of the PE investment made by the PE investors sourced by the Company ("PE Praecipium"). This PE Praecipium does not apply to the list of potential PE investors who are in the process of closing their commitment as set out in Appendix 1. For the avoidance of doubt, these potential PE investors have been introduced to the Company by various placement agents and advisers. The PE Commission and PE Praecipium will be deducted from the proceeds of the PE fundraising. For the avoidance of doubt, in the event that this Engagement is terminated by either parties in accordance with Clause 9 below, the Company shall, for a period of twelve (12) months from termination, remain liable to pay UOBKH the PE Commission for any PE Investors successfully introduced by it, but UOBKH shall not be entitled for any PE Praecipium from the date of termination of this Engagement. 4. EXCLUSIVITY UOBKH's Engagement in relation to the provision of its services is on an exclusive basis in relation to the investors introduced by UOBKH unless aborted by mutual agreement. Notwithstanding the above, nothing herein shall prohibit UOBKH from performing the same I similar services for other parties. The Company shall not solicit, appoint, authorize or retain other persons or institutions as a placement agent for the PE fundraising from the date hereof up to the completion of the proposed PE fundraising or the termination of UOBKH's Engagement hereunder (whichever is the case). For the avoidance of doubt, this Clause shall only apply to the PE fundraising contemplated under this Letter of Engagement and shall not apply to any other or future fundraising exercises of the Company. 235 On 27 March 2013, CellOS finalised its financial report for the year ending 30 June 2012, signed off by PWC. Let me set out some relevant extracts: Operating Results The loss of the group and Company for the financial year after providing for income tax is $11,113,223. … After balance date events … A master agreement has been signed between Nokia Siemens Networks Oy and Indoaust Investments Limited for the delivery of Licenced product and Professional services on 1st October 2012. Computershare Investor Services Pty Limited, Australia was engaged to manage and maintain the company's share register on 21st January 2013. An engagement letter was signed with UOB Kay Hian Private Limited, a securities trading and investment company for Asian financial markets, headquartered in Singapore, on 19th March 2013 for a future private equity fundraising exercise up to the amount of US$100 million. Since 30 June 2012 250,000 shares have been issued for aggregate consideration of US$650,000. … CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 2012 2011 [AU]$ [AU]$ CASH FLOW FROM FINANCING ACTIVITIES Proceeds from share issue 2,262,056 5,942,611

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… NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES … (i) Going concern basis of preparation For the year ended 30 June 2012, the Company incurred a loss before tax of $11,113,223 (2011: Loss: $16,252,165) and an operating cash outflow of $4,345,230 (2011: $1,426,432). As at year end the net assets of the Company stood at $3,348,163 (2011: $3,619,014) and the cash position has decreased to $1,223,165 from $4,384,098 at 30 June 2011. The continuing viability of the Company and its ability to continue as a going concern and meets [sic] its debts and commitments as they fall due are dependent on the Company being successful in the following matters within 3 - 6 months at the current rate of expenditure: • The Company will continue to seek fundraising sources through its normal sources, principally though [sic] continued private equity investment. • On 19th March 2013 the Company signed an engagement letter with UOB Kay Hian Private Limited ('UOB'), a securities and investment company for Asian financial markets, for a private equity fundraising exercise. UOB will use commercially reasonable efforts to sell new shares in the Company. At the date of approval of the financial statements no shares had been issued through UOB. However, the Directors expect to raise approximately $20 million through UOB in the 6 months ahead. • The company continues to be in the research and development phase in respect of development of the core CellOS products. A master agreement was signed on 1st October 2012 between Nokia Siemens Networks Oy and the Company for the delivery of licenced products and professional services. This agreement outlines the terms under which the parties will engage. As at the date of the approval of the financial statements no orders for licenses [sic] or services had been made under the agreement. However, the Director's [sic] expect that orders generating a net cash inflow will begin to be received within the next 3 - 6 months. • In the event the Company cannot raise the required funding, the Company has the ability to further reduce expenses around certain current commitments. The Company retains the ability to curtail other planned, but not committed expenditure, in order to ensure the Company continues to have adequate funds to pay all liabilities as and when they fall due. As a result of these matters there is a material uncertainty related to events or conditions that may cast significant doubt about the company's ability to continue as a going concern and whether it will realise its assets and settle its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors remain confident that they will be successful in raising the additional funding required to complete planned research and development activities to bring additional products to market and accordingly have prepared the financial statements on a going concern basis. … NOTE 26: SHARE BASED PAYMENTS … As part of the remuneration package of certain key employees shares are allotted for nil consideration upon approval by the remuneration committee. The allotted shares rank equally with other ordinary shares and there are no restrictions once the shares have been allotted. Share awards are generally only contingent on employees achieving a set time period of employment. 2012 2011 … … Shares allotted in the year 3,587,500 7,131,250 Weighted average US$ share price $2.00 $2.00 Fair value of shares allotted (US$) $7,175,000 $14,262,500 Average foreign exchange rate USD:AUD 1.0319 0.9881 Share based payment recognised in profit and loss (AUD$) $6,953,193 $14,434,268

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The fair value of each share allotted was determined by reference to the average price of shares issued for consideration to 3rd party investors in arms length transactions prior to the allotment of shares. 236 In around April 2013, Mrs Peck decided upon a profit "pledge" whereby an investor would tithe or donate 10% of the net profit of their CellOS investment (after the IPO) to "Kingdom Work", i.e. Christian charity work. Let me set out a form of the pledge dated 3 April 2013: Pledge: Purchase of Shares in IndoAust Limited at USD2.00 per share Investor acknowledges the preferential circumstances under which Shares are offered and has expressed a desire to apply a measured portion of Any Gain on Investment to further the purposes of the Kingdom of God in the manner stated below. Investor also affirms that in arriving at the decision to purchase Shares, Investor was not relying on any inducements or representations (including the illustration below) made by anyone in relation to IndoAust or Shares. Investor pledges to tithe (give 10%) of Any Gain on Investment. For this purpose, Any Gain on Investment means the difference between the sum invested and Either (1) If Shares are sold within Calculation Period, the net value of Shares sold Or (2) if Shares are not sold by the end of the Calculation Period, the net value of Shares based on the last traded price of Shares at the end of the Calculation Period. Calculation Period means the 28-day period following the start of trading of Shares following the IPO. If only part of Shares are sold within Calculation Period, Any Gain on Investment on the Shares sold shall be determined according to (1) above and Any Gain on Investment on Shares remaining unsold as at the end of the Calculation period shall be determined according to (2) above. *** Please see Illustration next page [the illustration shows an example of calculating the pledged amount] The sum pledged shall be paid as soon as reasonably possible but no longer than one months following the end of the Calculation Period to an account to be nominated and administered for Kingdom use by Canon Derek Hong, Alan Peck and/or anyone else nominated by them jointly. This pledge is not intended to be legally binding. 237 On 19 April 2013, the thirteenth respondent Stardust Financial was incorporated in Belize. 238 On 22 April 2013, Enorme Ltd was incorporated in Belize. As noted above, the company's sole director and shareholder was Grandeza, and it was the sole director of the tenth respondent. 239 On or around 25 April 2013, there was a share transfer with a registration date of 22 May 2013 between Mr and Mrs Peck as the purchasers and Child and Family Foundation as the vendor. The Pecks purchased 400,000 shares at a price of US$2 per share, for a total price of US$800,000. The Pecks now had 1 million CellOS shares 240 On or around 26 April 2013, there was a share transfer with a registration date of 27 May 2013 between Mr and Mrs Peck as the purchasers and Money Max Foundation as the vendor. The Pecks purchased 50,000 shares at a price of US$2 per share, for a total price of US$100,000. The Pecks now had 1,050,000 CellOS shares. 241 On 26 April 2013 a version of the 'confidential' Information Memorandum was prepared to be used for fundraising, extracts of which are set out below: This confidential information memorandum ("Memorandum") has been prepared by Indoaust Investments Limited and its subsidiaries and associated companies (collectively known as "Indoaust" or the "Company") with the assistance of KPMG Corporate Finance Pte Ltd ("KPMG") for delivery to a limited number of parties (the "Recipient" or "Recipients" as the case may be) who may be interested in understanding the business of the Company (the "Purpose"). … EXECUTIVE SUMMARY … Key highlights As of the date of this Memorandum, the Directors believe the key highlights of the Company are as follows: • Enormous growth potential in the US$250 billion communications infrastructure and telecom data analytics market; • The Company began commercializing its intellectual property with its first contract signed in October 2012 where revenue generation is expected to follow in the first half of 2013; • Strong management team comprising individuals possessing extensive industry experience (Alcatel-Lucent, Bell Labs, Ericsson, NEC, Nokia Siemens Networks, Reliance Communications and Telstra); and, • Clear development roadmap for the CellOSTM platform and applications. … Historical use of proceeds To date, Indoaust has raised US$22 million in seed capital and private equity. Of this, US$2 million was incurred in acquiring intellectual property from Advanced Communications Technologies Pty Ltd and Global SDR Capital Technologies Pty Ltd in 2006. Further, US$20 million has been incurred in research and development of CellOSTM technology and demonstrating the viability of the technology. … RISK FACTORS Any potential investor should understand that an investment into the Company should be considered speculative because of the nature of the commercial activities of the Company. Potential investors should be aware that an investment in the Company involves risks, which may be higher than the risks associated with an investment in other companies. There is a range of specific risks associated with the Company's activities and its involvement in this field of R&D work. There is also a broad range of risk factors largely beyond the control of the Company. Prospective investors should consider whether the Company is a suitable investment opportunity for them having regard to their own investment objectives and financial circumstances and the risk factors set out below. Investment in Indoaust is speculative and involves risk. Investors should note that any investment in the Company would be at a stage of development of the Company in which it has not yet achieved significant earnings or profit. Commercial success will depend largely on acceptance by the telecommunications industry of Indoaust's technology and its products incorporating this, which cannot be reliably predicted. Neither Indoaust, nor its Directors, nor any other party associated with the preparation of this Memorandum warrants that any specific objective or particular target of Indoaust will be achieved. There is no guarantee that the value of the Company's Shares will go up and they may go down in value, or the entire investment may be lost. 242 The Information Memorandum also indicates that there was proposed fundraising to take place in the second quarter of 2013. 243 From 27 April to 10 May 2013, Mr Min Wee was in communications with Mr Andreas Karasamanis, CEO of KappaTrust, a Cyprus-based company. The chain of emails in evidence before me shows Mr Min Wee negotiating the purchase of a "matured Belize company that is incorporated before June 2012". By email on 4 May 2013, Mr Andreas gave Mr Min Wee the details of LGA, which Mr Min Wee selected. The minutes of meeting approving the transfer of LGA's shares to Twenty-five Intertrade Inc. (Mr Min Wee's company) is dated 8 August 2011. 244 I will address the significance of these emails and documents later in my reasons. It is enough to say here that these emails support a finding that the LGA loan was executed at some time in May 2013 onwards rather than 1 March 2013. 245 On 30 April 2013, the tenth respondent Willow was incorporated in Belize. 246 On 14 May 2013, CellOS sent a letter to Computershare instructing them to process a number of share transfers. This letter was signed by Mr Patel and Mr Huber. The transfers described included transfers from Nesterland and Child and Family Foundation to a number of individual purchasers. Mr Huber and Mr Patel wrote: Indoaust Investments Ltd is aware that processing the form(s) is outside of CIS's standard policies and procedures as certified identification documents for the seller(s) have not been provided and agrees to indemnify and keep indemnified CIS against all liabilities, losses, expenses, damages and costs that CIS may incur in connection with any demand, claim, action or proceeding made or brought by a third party against either Indoaust Investments Ltd or CIS (or both) by reason of compliance with this instruction. We also authorise that in all cases of the above transfers the security checking fee should be charged to Indoaust Investments Ltd, to appear upon our next invoice. 247 There was a further share transfer with a registration date of 22 May 2013 between Mrs Peck as the purchaser and Child and Family Foundation as the vendor. Mrs Peck purchased 5,000 shares at a price of US$2 per share, for a total price of US$10,000. The Pecks now had 1,055,000 CellOS shares. 248 On 22 May 2013, there was a share transfer that was subsequently registered on 29 July 2013 with Mr and Mrs Peck as the purchasers and Money Max as the vendor. The Pecks purchased 800,000 shares at a price of US$2 per share, for a total price of US$1.6 million. The Pecks now had 1,855,000 CellOS shares. 249 On 31 May 2013, Mr Peck sent an email to Mr Eugene Tan, attaching a photograph of the front page of the UOB letter of engagement. He wrote that "[a]t a presentation we zapped a page of the UOB Kay Hian set of documents that we were given the privilege to sight". 250 In late May 2013, the materials for CellOS' 2013 AGM were circulated to shareholders. These materials included a copy of the financial report for the financial year ending 30 June 2012, which I have described above. 251 On 11 June 2013, Mr Mark Rodrigues, a CellOS employee, circulated a draft question and answer sheet to Mr Huber, Mr Hegde, Mr Patel and Ms Ng, for use at the upcoming AGM. Let me set out some relevant extracts: 4. How has the company been financed over the last 12 months? The company has loaned funds from an 'Angel Investor' … a company in the Middle East. The loan is secured against Jason Huber's own shares. 5. Does the Company have enough funds to continue? The Company plans to attract additional investor funding (Angel investors as well as through UOB Kay Hian) to continue operations. In addition, we expect to become revenue generating later this year. 252 On 12 June 2013, Mrs Peck forwarded to Mr Huber an email that she had received from a potential CellOS investor, requesting some answers from Mr Huber to her questions. Mrs Peck's annotations to the investor's email are in capitals: HI JASON HOPE IT IS NOT TOO MUCH TROUBLE FOR YOU TO GIVE ME QUICK ANSWERS TO THE QUESTIONS BELOW. TKS CONSTANCE ---------------------------------- Hello Constance Just thought I will pen down my concerns about IndoAust investments, since we never had time to actually sit down and talk for some time. 1. Initial Markets - During the presentation, (ON SAT, 1 JUNE) they stated that their initial markets were India, Indonesia, Middle East and Africa. My personal thoughts are that while it is true that India and Indonesia are huge markets just by virtue of its population, the money is in the US and Europe. Europe and the US are more technologically placed to accept an advanced technology like what CellOS has. 2. In any case, if their products are really good and they sign up hardware manufacturers like IBM and CISCO and Telcom integrators like Nokia and Ericsson, they cannot choose the market. The market will choose them. 3. Jason Huber says Cellos could be the next Google. In comparing with such companies, there are a few things that come to mind: a. In companies like Microsoft, Apple, Facebook, Google, they all have a product that is already accepted by the public before IPO. b. These companies all have a technological wonderkid behind them so that their ideas and intellectual property cannot be stolen. Jason is not a technology person. (I THINK HAVE THE ANSWER TO THIS BUT GOOD TO HEAR FROM YOU IF NOT TOO MUCH TROUBLE) 4. A technology company will not choose a name like IndoAust Investments. I know he did mention changing. (I HAVE THE ANSWER TO THIS) 5. For the wonderful product he preaches, he is asking for very little money and he is coming to Constance Peck when he should be going to the many Angel Investors. (I THINK HAVE THE ANSWER TO THIS BUT GOOD TO HEAR FROM YOU IF NOT TOO MUCH TROUBLE) 6. A technology company will not have an office in Robinson Road. He will probably have his office in Chai Chee technopark. Imagine the cash he is already burning by having an office there. The only reason to have an office there … to impress people who do not know. He should only have his office there if he is already listed and money is not an issue. (I HAVE THE ANSWER TO THIS) 253 On or around 17 June 2013, there was a share transfer with a registration date of 29 July 2013 between Mr and Mrs Peck as the purchasers and Money Max Foundation as the vendor. The Pecks purchased 700,000 shares at a price of US$2 per share, for a total price of US$1.4 million. The Pecks now had 2,555,000 CellOS shares. 254 On 18 June 2013, Mrs Peck sent Mr Huber a WhatsApp message: …It was good to hear direct from you as up until yesterday, all info was relayed via Daniel everything (sorry incomplete message) … all info relayed via Daniel n some things began not to make sense. That's why i felt i needed to catch u at this juncture b4 u go away. Please don't misunderstand - Dan n Mel have been v helpful to me and I know to you as well. They are good n earnest brothers in Christ. Just needed that one session with u to clear up matters directly. For one, I couldn't understand why the USD2.00 share continued to be so freely available as Dan kept telling me they were. That was one thing that did not make sense to me. As for ourselves, bcos of that session yesterday, I know where we stand n made it v clear to Alan last night … It is not clear what occurred at the meeting that Mrs Peck is referring to. 255 On 27 June 2013, CellOS held its 2013 AGM. At this meeting the company formally changed its name from "Indoaust Investments Ltd" to "CellOS Software Ltd". The minutes of this meeting also record the following: The company as noted in the financial statements have appointed an investment bank UOB Kay Hian Private Limited, for the purposes of raising capital. UOB requires the company to be earning revenue in order to be able to raise the required capital so the company is focused on completing product to commence sales. The company is still developing product, but still expects to earn sales in the short term, and expects that the financial statements for the 2014 financial year will reflect the commencement of sales. … Other Business: Questions from the Floor A number of shareholders raised questions on the effect of the change in company name for shareholders and why the change, when the company expected to make sales, the number of employees and monthly churn rate, where the company is at in the development phase of the company, what the raised funds are being used for, if future funding will be required, whether Head Office was being relocated to Singapore, the current price of shares, the likely priced of an IPO listing, the shares issued to management and the timing of the AGM. The Chairman responded as follows: The name change for the company has no implications for shareholders. It is the same entity and shareholders still have shares in the same entity. The new name if passed reflects a more appropriate name, and is relevant to the industry. The company received favourable feedback from the industry before resolving to change the company name. In respect of sales, the company has obtained a frame contract only and until [Nokia Siemens Networks] produces an order sales will not commence. The product is not yet completed, but the company expects the completion soon and sales will then follow. The company is also seeking contracts from similar companies. The company has reached agreement with UOB who will commence raising capital after the company has commenced receiving sales. The company remains hopeful about an IPO, but this may only occur when revenue streams have been established from [Nokia Siemens Networks] and other parties. The revenue stream will increase the valuation of the business for the IPO. The company is therefore focussed on further development of the products and the securing of income. The company's updated website has been updated and communications will be provided via the website. In order to bridge the gap in raising funds through the sale of shares in the last 12 months, short term loan funds have been arranged. 256 Also on 27 June 2013, Mr Narulla sent Mr Huber an email attaching the following items that I will discuss. Mr Narulla told Mr Huber: Hi Jason Here is the doc to get signed by the Directors. Minutes of the meeting authorising the entry into the agreement are also here: Please have both signed by yourself and Kamlesh and bring back to Singapore. best, Harveen Mr Huber then forwarded this email to Ms Mei Lan Ng. 257 First, he attached unsigned minutes of a meeting of the directors of CellOS, dated 1 March 2012. It is unclear who is said to have attended this meeting, though I note there is space for the signatures of Mr Huber and Mr Patel. The minutes record: Proposed funding 3. The Board considered the offer before the Company of unsecured financing of up to SGD 25 million from LGA Energy Investments Ltd. The Board noted the proposed cost of funds at 10% per annum simple interest, and the proposal for conversion of outstanding amounts at the election of the lender into fully paid ordinary shares at the price of SGD 1.80 per share. Resolution adopted 4. The Board adopted the following resolution unanimously RESOLVED THAT: A. Indoaust Investments Ltd ("the Company") accept the proposed unsecured financing arrangement of up to SGD 25 million (Singapore Dollard Twenty-Five Million). B. The Company execute a Loan and Option Agreement setting out the terms of the financing. C. Any 2 Directors of the Company be authorised to execute this agreement. 258 Second, he attached a version of the LGA loan, dated 1 March 2012 and signed by Mr Min Wee for LGA. This version of the LGA loan did not include a cl 4 that covered amounts advanced retrospectively from 1 March 2012. 259 Also on 27 June 2013, Mr Narulla sent an email to Mr Mark Rodrigues, a CellOS employee, writing: Heads up: All the funds that have been loaned to Indoaust over the past couple of years to keep the business funded will be converted on Friday 28 June 2013 into shares. Mei Lan is finalising the amount of the loan (she's using SGD for this). It will be about SGD 12 million. The Option Price is SGD 1.80 per share. The amount of shares will be determined once Mei Lan finalises the amount. Docs will be signed off today by the directors. (I have sent Jason the resolutions necessary for this). The docs are dated 28 June. … The details are below: Name of shareholder: LGA Energy Investments Ltd … 260 On 28 June 2013, there was a conversion event under the LGA loan, where an amount of SG$11,616,791 was converted into 6,453,773 CellOS shares. This was the first of six conversion events. 261 Also on 28 June 2013, Mrs Peck sent an email to Mr Huber regarding the opportunity to sell CellOS shares to Mr Anthony Cooper, a friend of hers. Mrs Peck had previously written to Mr Cooper regarding the opportunity on 25 June 2013. 262 On 29 June 2013, Mr Huber forwarded Mrs Peck's correspondence regarding Mr Cooper to Mr Tan, telling him: I told Constance that he would need to work through Jessie at UOB. Can you please manage the relationship and have Jessie work with him and Constance. This is a $5ps investment .he would have to apply and basically we will consider all applications in early August with UOB advising us on who and what to accept. The same procedure applies to all other applications. 263 On 9 July 2013, Ms Sandra Dierstein, a broker, sent Mr Huber an email, asking inter-alia: How did the AGM go and how is everything else? I had a call from Ben asking me about some Middle East investors who backed Indoaust with a loan and I had no clue what he was talking about…. He mentioned that he had a one-on-one with you in Melbourne and you told him that. Seems like he believes I am still working with you… Whats this all about? Mr Huber replied: At the AGM I told the shareholders that I funded the company through a loan from the Middle East. I did not discuss this with ben. I also did not discuss anything about our work together or that you had any influence. 264 As at 30 June 2013, CellOS had 209,200,912 ordinary shares on issue, an increase of 5,416,726 shares from 30 June 2012 (taken from the financial statements dated 27 November 2013): (a) 250,000 shares had been issued by subscription; (b) 5,791,726 shares had been created by the conversion of debt into equity; and (c) there was a downwards adjustment of 625,000 to account for a prior period error. 265 On 19 July 2013, the eleventh respondent in these proceedings Lighthouse was incorporated in Samoa. 266 On 20 July 2013, there was a share transfer of 10,000 shares with Ms Seah Chye Tin (Mr Tan's wife) as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. This was the first purchase of shares by Mrs Peck from Ms Tin, which dealings would continue until 22 January 2014. The Pecks now had 2,565,000 CellOS shares. 267 Also on 20 July 2013, Mrs Peck sold 106,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,459,000 CellOS shares. 268 On 23 July 2013, Mrs Peck sold 15,000 CellOS shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,444,000 CellOS shares. 269 On 24 July 2013, Mrs Peck sold 134,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,310,000 CellOS shares. 270 On 26 July 2013, Mrs Peck sent a WhatsApp Message to Cher Hung Seet, regarding a CellOS presentation on 27 July. Mrs Peck wrote: This presentation is for a last batch of investors and they are all buying in at SGD5.00 per share. UOBKayHian has sold all their 20 million shares at USD5.00 per share. After 31 July, no more shares to be bought till Nasdaq listing date which will be btwn end 2013 n first half 2014. Opening price is expected to climb above USD100.00 per share. IBM signed up as global partner this week to integrate CellOS Software into IBM system. 271 Also on 26 July 2013, there was a share transfer of 236,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,546,000 CellOS shares. 272 On 30 July 2013, Mrs Peck sold 147,500 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,398,500 CellOS shares. 273 On 31 July 2013, there was a share transfer of 153,500 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,552,000 CellOS shares. 274 On 1 August 2013, Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,547,000 CellOS shares. 275 On 2 August 2013, there was a share transfer of 232,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,779,000 CellOS shares. 276 Also on 2 August 2013, Mrs Peck sold 224,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,555,000 CellOS shares. 277 On 6 August 2013, Mrs Peck sold 50,000 CellOS Shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,505,000 CellOS shares. 278 On 7 August 2013, Mrs Peck sold 80,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,425,000 CellOS shares. 279 On 12 August 2013, there was a share transfer of 332,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,757,000 CellOS shares. 280 Also on 12 August 2013, Mrs Peck sold 27,000 CellOS shares (registered on 16 October 2013) and Mr and Mrs Peck sold 150,000 CellOS shares (registered on 25 November 2013) to a number of purchasers, a total of 177,000 CellOS shares. The Pecks now had 2,580,000 CellOS shares. 281 On 15 August 2013, Mrs Peck sold 200,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 2,380,000 CellOS shares. 282 On 21 August 2013, Mr Cooper wrote to Mrs Peck, confirming that he was prepared to purchase a further 100,000 CellOS shares at US$2 per share. Mrs Peck responded to Mr Cooper, copying in Mr Tan, writing: I informed Melvin/Daniel Tan yesterday that our (the Pecks') funds for the balance of the shares reserved for us will be in on Friday this week or Monday/Tuesday next week. At the same time, I asked if you and another friend who bought USD1 million worth of shares at USD5.00 per share last week could "piggy back" on my purchase of the USD2.00 shares to buy additional shares? Melvin is very supportive of the idea as both of you are greatly involved in missions/charity work. … As I mentioned, Melvin will take care of the paperwork - the forms, the registering of the shares and the handing of the monies/cheques to CellOS. Which account our monies go into will be told to us. Jason hires a man full time to take care of the registering of the shares and in approximately 2 months from the time we put our application in, we get our share certificates from Computer Share in Australia. Basically, and as you know and I discovered, we do not deal with Jason Huber directly in regard to any transaction of shares. Conversely, Jason Huber does not talk directly to us about how any shares we wish to buy, at how much and when is our money available. He deals with Melvin (and Daniel) only. If Melvin is informed, and he says this is okay, we will just proceed. That is the protocol - and that became clear to me when you came on the scene in June/July. Jason NEVER EVER enquired of me about you. From Day One he handed your case to Melvin (and Daniel) and has never "interfered". Melvin told Jason that "Constance is taking care of her friends" and Jason is happy and satisfied with that. Melvin, please confirm that this is the case. Mr Tan responded to Mr Cooper and Mrs Peck, confirming: "Yes indeed, the protocol in handling of the transfer of shares are correct". 283 Also on 21 August 2013, Mrs Peck sold 126,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had a total of 2,254,000 CellOS shares. 284 On 22 August 2013, there was a share transfer of 326,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 2,580,000 shares. 285 On 26 August 2013, Mr and Mrs Peck sold 169,000 to Mr Cooper and members of his family, which transfers were registered on 25 November 2013 and 9 December 2013. The Pecks now had 2,411,000 CellOS shares. 286 On 27 August 2013, there was a share transfer of 244,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 2,655,000 CellOS shares. 287 On 29 August 2013, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 2,500,000 shares at a price of US$2 per share for a total price of US$5 million (although the share transfer form does not list any consideration). The transfer was registered on 1 October 2013. The Pecks now had 5,155,000 CellOS shares. 288 Also on 29 August 2013, Mr and Mrs Peck sold 31,000 CellOS shares to a number of purchasers, including members of the Cooper family. The transfers were registered on 25 November 2013 and 9 December 2013. The Pecks now had 5,124,000 CellOS shares. 289 On 3 September 2013, there was a share transfer of 71,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,195,000 CellOS shares. 290 Also on 3 September 2013, Mrs Peck sold 41,000 CellOS shares to a number of buyers, which transfers were registered on 18 December 2013. The Pecks now had 5,154,000 CellOS shares. 291 On 5 September 2013, Mrs Peck sold 50,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 5,104,000 CellOS shares. 292 On 9 September 2013, Mrs Peck sold 80,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,024,000 CellOS shares. 293 On 10 September 2013, Mrs Peck sold 4,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 5,020,000 CellOS shares. 294 On 11 September 2013, there was a share transfer of 227,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,247,000 CellOS shares. 295 Also on 11 September 2013, Mrs Peck sold 57,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,190,000 CellOS shares. 296 On 16 September 2013, an adjustment was processed for 662,047 CellOS shares incorrectly allocated to LGA under its conversion on 28 June 2013. LGA now held 5,791,726 CellOS shares. 297 On 19 September 2013, Mrs Peck sold 79,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,111,000 CellOS shares. 298 Also on 19 September 2013, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 500,000 shares at a price of US$2 per share for a total price of US$1 million. The transfer was registered on 29 October 2013. The Pecks now had 5,611,000 CellOS shares. 299 On 20 September 2013, there was a share transfer of 121,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,732,000 CellOS shares. 300 Also on 20 September 2013, Mrs Peck sold 40,000 CellOS shares to a single purchaser, which transfer was registered on 20 September 2013. The Pecks now had 5,692,000 CellOS shares. 301 On 24 September 2013, there was a share transfer of 53,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,745,000 CellOS shares. 302 Also on 24 September 2013, Mrs Peck sold 53,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,692,000 CellOS shares. 303 On 29 September 2013, Mrs Peck sold 39,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,653,000 CellOS shares. 304 Mr Huber gave evidence that in late September or early October 2013, he was approached by Mr Eric Lee, who told him that he had purchased shares from Mrs Peck for US$5 per share from a seminar that she was running. In early October 2013, Mr Huber spoke with Mrs Peck about this matter, although the content of their discussion is disputed. 305 On 2 October 2013, there was a conversion event under the LGA loan, converting SG$6,242,179 into 3,467,877 CellOS shares. LGA now held 9,259,603 CellOS shares. This was the second of six conversion events. 306 On 3 October 2013, Mrs Peck sold 13,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013. The Pecks now had 5,640,000 CellOS shares. 307 On 4 October 2013, Mrs Peck sold 118,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013 and 27 December 2013. The Pecks now had 5,522,000 CellOS shares. 308 On 7 October 2013, there was a share transfer of 13,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 17 December 2013. The Pecks now had 5,535,000 CellOS shares. 309 On 8 October 2013, Mrs Peck sent an email to Mr Huber, copying in Mr Peck. This seems to have been prompted by the discussion that Mr Huber and Mrs Peck had had in early October. The subject line was "I have done wrong and an injustice and I need to set the record straight". Let me set out what it said: Sorry this took longer to get written - hence the delay. ------------------------------------------------------------------------------------------------------- PRIVATE & CONFIDENTIAL Dear Jason I have done a great wrong and an injustice to Melvin Tan (and Daniel) and I need to set things right. I know a lot of time has been spent on this - and it has been my fault. I don't wish to take up more of anyone's time - but it is necessary for me to write this - I will keep this as short as possible. After many hours of questioning Melvin (and Daniel) on Friday afternoon and over the last weekend, the conclusions I have arrived at are: 1. MELVIN TAN (and DANIEL) Melvin is your best friend and ally. He loves the company and you, and has your best interest and the best interest of CellOS in his heart and mind all the time. He is a man of integrity and a God-fearing man. God has dealt with him and allowed him to go through many years of pain and he has come out of it loving God more, and more determined to bless people and extend God's kingdom. He knows his work as a broker well and I (we) need to learn from him the ground rules in Singapore. Jason - please accept this conclusion about Melvin from me and may I suggest you keep an open mind and have a heart-to-heart talk with Melvin at some stage - I hope soon. I know you said that you do not like "confrontation" - but honest communication is necessary so as to establish a healthy (business) relationship with your best broker - for the sake of Christ and for the sake of CellOS. What I heard from you last week about what you think of Melvin - and what you've always thought of Melvin - that things at CellOS really changed and took off when the Chinese Christians came - troubles me. A common trick the devil always plays is to divide from within - sow seeds of discord and suspicion - and hence destroy the organisation. I am sorry that I contributed to you having a poor opinion of Melvin (and Daniel). What I did was not fair. By going to you with bits of information without the full facts, and without understanding the USD5.00 transactions caused you to conclude that they were cheats. I should have waited to get clarification from Melvin rather than "squeal on them" with my inadequate and partial understanding and put them in bad light and upset you. I will take my place behind Melvin (and Daniel assisting him) as an investor in CellOS and observe the protocol. Systems and ground rules are set up so that things work - I should not have "short circuited the system" by going to you with information which resulted in you getting unnecessarily upset. Please accept my deep and sincere apologies. 2 "VENDOR" SHARES Absolutely NONE (zero) of the shares that were sold at USD5.00 were yours or from the "Stephen" shares. And Melvin has not submitted any claim for commission - and you have not paid any commission for these shares. These are facts that you can verify easily. 3 THE USD5.00 SHARE TRANSACTIONS - ARE THEY ETHICAL? These are shares that belong to investors who bought many shares in the past but expected the listing on Nasdaq to take place this year. Since it is not likely to happen in 2013, they need to offload some to realise the cash tied up for other pressing needs. They still hold many CellOS shares. They are/were willing to recover their money (at USD2.00 per share) and we are/were in a position to buy and then sell to our investors at prices ranging from USD2.00 to USD5.00 (not always USD5.00). Melvin didn't think it was right to sell shares below USD5.00 (because of UOBKH and because the shares are worth more than USD2.00 now). And you also instructed that there are no more USD2.00 shares available - though you made an exception in my case "because of Chua Hock Lin". No one knows who these sellers (vendors) are - only Melvin does and he is not at liberty to disclose who they are and we have to respect that. That is one of the conditions for him to handle the transaction. The 4 "benefits" that arose from these transactions are: a) The sellers could cash out and they are relieved. Otherwise they go to loan sharks. (BTW they still have CellOS shares). b) The new buyers get a chance to buy CellOS shares. They are grateful and really happy to be able to get CellOS shares. (They can't buy from UOBKH - they are small investors and private individuals - not PE funds and institutional clients.) c) They are also happy to participate in the Pledge for funds for Christian missions, humanitarian projects and Christian education - hence they fulfil my requirement. d) The "profit" went back to CellOS, to Christian work, to charity and to the same of the people who bought at USD5.00. Melvin gave away all and more than the money that he made from these transactions - to Anthony Cooper and Andrea's charities, to Thio Gim Hock's missionary outreaches, and to many needy people and church needs - I can absolutely vouch for that. He has kept nothing of the profit - and the Lord has just been blessing him immeasurably. Let him tell you his stories of the goodness of God to him. The new BMW that Melvin now drives are indeed a gift from a grateful investor in stocks that have already made them a lot of money, As for Daniel, I know that Daniel is serious about his walk with the Lord and has also given away a lot of his "profit" (to Pastor Samuel for his work in India, to other pastors and church workers - including buying a watch for you - : ) because he does care a lot for you. In my case, because of this unexpected "profit", I have been able to coax Alan to buy more CellOS shares. I have never worked so hard in my life - selling USD2.00 CellOS shares to raise funds directly for CellOS and then selling USD5.00 shares to raise funds indirectly for CellOS. (Of course for me, the Pledge - and therefore raising funds for the church is a great motivation). As I mentioned, none of us have gone out to "splurge". The money has gone back to CellOS (in my case) and to Christian work and the poor and needy (Melvin) and Daniel - in part to CellOS shares, and to Christian work and the poor and needy. 4. RAISING FUNDS FOR CELLOS If you wish to raise funds again for CellOS because UOBKH is slower in coming through than expected, please tell Melvin that you need to raise funds and I have no doubt that he will "swing into action" again - and support you as he did in the past. Up until now, the signal to raise funds has not come. In fact, the contrary is true. You have declared for the past few months that CellOS has enough funds to get to IPO.)= As for me, I humbly offer you my services and will work with Melvin to bring in heavy weight investors. I do not want any commission nor should I receive any as I am not a licensed broker. I am just very grateful that you are still letting me buy USD2.00 shares every time I gather more money. I am a CellOS shares fanatic! I have two tag lines - "Redeemed and eternally grateful" AND the latest is "Jesus and CellOS shares are all I want!! : ) The difference is that Jesus gave Himself freely to me (my salvation is free - I did not/do not have to work for it. Jesus paid for my redemption) …… BUT for CellOS shares, I have had to work very hard indeed!! Ha, ha, ha!! I WOULD LIKE TO REQUEST THAT THE ABOVE INFORMATION BE PASSED TO KAMLESH AND JONATHAN CHAN TO SET THE RECORD STRAIGHT. [5] YOUR MOVING TO "MARINA COLLECTION." I am committed and standing by to help. But I don't want to be intrusive - I will act only when you let me know what, when and how you want me to help. 310 Also on 8 October 2013, Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 20 December 2013. The Pecks now had 5,530,000 CellOS shares. 311 On 10 October 2013, there was a share transfer of 147,500 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 17 December 2013. The Pecks now had 5,677,500 CellOS shares. 312 Also on 10 October 2013, Mrs Peck sold 24,500 shares to a number of purchasers, which transfers were registered on 20 December 2013. The Pecks now had 5,653,000 CellOS shares. 313 On 11 October 2013, there was a transfer of shares with Nesterland Services as vendor and Mrs Peck as purchaser. Mrs Peck purchased 200,000 shares at a price of US$2 per share for a total price of US$400,000. The transfer was registered on 5 December 2013. The Pecks now had 5,853,000 CellOS shares. 314 Also on 11 October 2013, Mrs Peck sold 249,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013 and 27 December 2013. The Pecks now had 5,604,000 CellOS shares. 315 On 14 October 2013, there was a meeting of the directors of CellOS. The minutes of that meeting record the following: • Share Registry: The Board noted that the share reconciliation has been completed and all changes implemented with Computershare. All existing transfers in the Computershare system are expected to be processed by 18 October 2013. There are however a large number of transfers outside the system (estimate 60) which are still awaiting supporting documentation or for shares to come in so that sufficient units are available for transfer. Several complaints have been received regarding delay in processing the transfer of shares due to internal processing procedure adopted by Computershare. Computershare will be asked review the process and expedite the transfers. • Information Memorandum: Latest update was completed in August 2013 to reflect the company name change from Indoaust Investments Ltd to CellOS Software Ltd. New company branding including the CellOS logo and brand colours were also incorporated. Revenue and financial forecasts were revised to reflect the latest developments in the sales pipeline resulting in a slight upward revision to the company valuation. … 4. Report on Fund Raising • Jason Huber reported that agreement with a private investor helped the company to raise sufficient funds to meet the current requirement. There is still a balance of about US$5 million which could be drawn upon. • The Board noted that Shares have been issued based on the Agreement upon the exercise of the option. • The Board noted that no further funds may be raised once the company starts generating revenue. 316 On 21 October 2013, Mrs Peck wrote a WhatsApp message, apparently sent to a certain "Chang" in which she relayed that: Jason mentioned that he will be quite happy if we sell min USD5 million n max USd10 million at USD5.00. Goldman Sachs told him USD5.00 is too cheap. But he wants this comfort (USD5 million to 10 million in the kitty) to tide him over till march 2014. 317 On 23 October 2013, Mrs Peck wrote a WhatsApp message to Mr Huber, which message suggests that Mr Huber had told Mrs Peck that she must sell CellOS shares at US$5: Jason - my meeting is still on but I can't help but feel we need to talk. I want to help you n CellOS n I m upset because suddenly I m made to look dishonest n disloyal n ungrateful n maybe scheming. I m a v loyal n grateful person n i don't take advantage of any situation for self gain. I don't want to be associated or be involved in anything that is not fair n not honest. But as I explained to u, I m caught n the solution u suggested will not work. As I said, I have been v troubled n disturbed since having been told that we must sell at USD5.00 etc etc, etc. I m also confused hearing from Melvin n Daniel n then hearing u say that u don't need money n that u can raise money anytime. But on Saturday (as i dropped u off) u said "Constance, why don't u get Gim Hock's boss to buy CellOS shares?" I said i could but why do we need to go through UOBKH? You said these guys will never buy without a big name like UOBKH. HERE'S THE PROBLEM. I want you (Jason Huber) AND CellOS to benefit. 318 On 28 October 2013, there was a transfer of shares with Rex Investors as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 250,000 shares at a price of US$2 per share for a total price of US$500,000 (although there is no consideration listed on the share transfer form). The transfer was registered on 25 November 2013. The Pecks now had 5,854,000 CellOS shares. 319 On 30 October 2013, Mrs Peck sold 337,000 CellOS shares (registered 27 December 2013) and Mr and Mrs Peck sold 80,000 CellOS shares (registered 9 December 2013) to a number of purchasers, being a total of 417,000 shares. The Pecks now had 5,437,000 CellOS shares. 320 On 6 November 2013, there was a transfer of shares with Nesterland Services as vendor and Mrs Peck as purchaser. Mrs Peck purchased 337,000 shares at a price of US$2 per share for a total price of US$674,000 (although there is no consideration listed on the share transfer form). The transfer was registered on 5 December 2013. The Pecks now had 5,774,000 CellOS shares. 321 Also on 6 November 2013, Mrs Peck sold 10,000 CellOS shares to a single purchaser, which transfer was registered on 7 January 2014. The Pecks now had 5,764,000 CellOS shares. 322 On 8 November 2013, Mr Huber sent an email to Mrs Peck, Mr Tan and Mr Daniel Tan, writing: Dear Constance, Melvin and Daniel, I wish to thank you for the big job in getting the supporters to come to our presentations this week. I know you have worked really hard to gather and interest them and also to follow up with them after the meetings We are so blessed to have your support!! 323 On 10 November 2013, Mrs Peck sent Mr Tan and Mr Daniel Tan a copy of her text messages with Mr Huber, copying in Mr Peck. The messages themselves are undated. In the first message, Mrs Peck describes to Mr Huber the status of several potential purchasers of CellOS shares. She later tells Mr Huber: … BTW Melvin Tan is helping me a lot. Without Melvin, I don't know enough n i m not licensed n have no credibility. Melvin is still your best n most capable supporter n we both work v long hours n odd hours - early morning n late at night n weekends n we do a lot of "entertainment" of customers. Always at "customers" disposal. Always patient n polite. Also, Melvin is doing a lot to manage the many existing investors who can "turn nasty" n we cannot afford that. That's why I see the critical importance of you keeping those who have helped you v much on your side. Furthermore, Melvin also has A LOT of high net worth investors - I met them - we need to discuss this. Melvin does not know how to sell himself to you nor defend himself. Please let me speak up for him for your sake n for the sake of CellOS. I may have caused problems. Please let me make amends. Regards, Constance. Mr Huber responded: Sure thank you :-) Thank you Constance. I appreciate and know how hard you and melvin are working for cellos. We are all very grateful. I look forward to catching up with you and melvin next week. We will have more time for each other then. In between the investor meetings I have also had many admin and operational matters to attend to this week as I was away for two weeks. But all is settled now and we are really blessed with a clear path to success. Praise The Lord!! 324 Also on 10 November 2013, Mrs Peck sold 30,000 CellOS shares to a number of purchasers, which transfers were registered on 7 January 2014. The Pecks now had 5,734,000 CellOS shares. 325 On 17 November 2013, Mr Huber told Mrs Peck that he had almost raised enough funds for CellOS from private individuals so that he did not need the UOB capital raising any more, which he said was being hampered by onerous due diligence requests by the private equity potential investors. 326 On 18 and 20 November 2013, Mrs Peck sent emails to Mr Huber and Mr Patel, copying in Mr Peck and Mr Tan, regarding the status of potential purchasers of CellOS shares. One of the potential investors was Mr Tang Wee Loke, a director of UOB: 9 Tang Wee Loke - Director of UOBKH. Not obliged to invest through UOBKH - will invest directly with CellOS if he decides to invest. But I received an SMS from him last night. I had this text exchange with him last night. TWL -Hi Constance, thk u for the opp to invest in cellos. I hv decided not to invest bcos I think the valuation of USD1.1b is too rich as a pre ipo co without any contracts or track record. I sincerely hope for ur sake that I will regret this decision. I hope u will make multiple times on ur investment. God bless, weeloke CP - Why don't you come. Tomorrow the company will be sharing on the many contracts in the pipeline, the value of the contracts, how they arrive at the valuation, what the international bankers say who want to do the IPO, the milestones they have achieved in the development of the product, the roadmap to IPO n so on. Please give it a chance n ask your questions. It is probably a different ball game to the "traditional" type stock? Really hope u will come n take a look. 327 On 20 November 2013, Mrs Peck sold 2,000 CellOS shares to a single purchaser, which transfer was registered on 7 January 2014. The Pecks now had 5,732,000 CellOS shares. 328 Also on 20 November 2013, there was a share transfer of 42,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 19 February 2014. The Pecks now had 5,774,000 CellOS shares. 329 On 27 November 2013, Ms Mei Lan Ng sent Mr Simon Zannis (of Deloitte) an email attaching a representation letter dated 28 November 2013 and addressed to Mr Roche. That letter stated inter-alia: 10. We have disclosed to you the identity of the entity's related parties and all the related party relationships and transactions of which we are aware. 11. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of Australian Accounting Standards. 330 On 28 November 2013, CellOS' financial report for the year ended 30 June 2013 was signed off by Mr Huber and Mr Hegde for the company and by Mr Roche for Deloitte. The company's revenue from continuing operations was only AU$2,767, and its loss after tax was AU$11,800,914. Let me set out the following relevant extracts: After balance date events On 13 November 2013, 2,100,000 ordinary shares to the value of $3,190,320 (SGD $1.80 per share) were allotted to management personnel under the terms of their employment contracts for meeting certain performance criteria as approved by the Board. During the September 2013 quarter, the company drewdown $5,386,238 in two tranches under its loan facility with LGA Energy Investments Ltd. These borrowings were subsequently converted to 3,467,877 ordinary shares on 2 October 2013. Aside from the above, there has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of CellOS Software Ltd. … CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 Notes 2013 2012 [AU]$ [AU]$ Revenue from continuing operations 4 2,767 78,149 … Loss after tax (11,800,914) (11,113,223)

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… NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES … (i) Going concern basis of preparation For the year ended 30 June 2013, the Company incurred a loss after tax of $11,800,914 (2012: Loss: $11,113,223) and an operating cash outflow of $8,296,620 (2012: $4,368,773). As at year end the net assets of the Company stood at $2,401,976 (2012: $3,348,163) and the cash position has increased to $1,960,461 from $1,199,622 at 30 June 2013. The ability of the Company to continue as a going concern, and meets its debts and commitments as they fall due, is dependent on the Company being successful in the following matters within 3 - 6 months of the date of this report, at the current rate of expenditure: • The Company will continue to seek funding from its loan facility arranged with LGA Energy Investments Ltd. Further drawdowns under this facility are at the election of the Company. • On 19th March 2013 the Company signed an engagement letter with UOB Kay Hian Private Limited ('UOB Kay Hian'), a securities trading and investment company for Asian Financial markets, for a private equity fundraising exercise. UOB Kay Hian will use commercially reasonable efforts to sell new shares in the Company. At the date of approval of the financial statements no shares had been issued through UOB Kay Hian. • The company continues to be in the research and development phase in respect of development of the core CellOS products. The company needs to commercialise and raise cash via revenue from its research and development spend, in order to be able to service any future debt funding and/or pay debts as and when they fall due. In the event the Company cannot raise the required funding, the Company has the ability to further reduce expenses around certain current commitments. The Company retains the ability to curtail other planned, but not committed expenditure, in order to ensure the Company continues to have adequate funds to pay all liabilities as and when they fall due. As a result of these matters there is significant uncertainty related to events or conditions that may cast doubt about the company's ability to continue as a going concern and whether it will realise its assets and settle its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors remain confident that they will be successful in raising the additional funding required to complete planned research and development activities to bring additional products to market and accordingly have prepared the financial statements on a going concern basis. … (n) Share-based payment transactions Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company. In prior year, the Company has issued shares to some of its advisers who have provided services valued at $26,546, and have received shares in the Company in lieu of cash at an issue price agreed to by both parties with reference to the fair value of the services rendered. Shares issued to employees and directors are recognised at fair value by reference to shares issued in the most recent arms length transaction to 3rd parties. The credit entry is recognised within the Share Based Payment reserve. … (o) Critical accounting estimate and judgements Estimated fair value of share based payments The Company is required to estimate the fair value of shares allotted to employees and contractors who provide services or goods to the Company. As there is no active market for the shares, the company uses recent issue of shares to 3rd party investors in arms length transactions as a proxy for fair value of the shares allotted. This estimate of fair value and the determination of appropriate share issues to use, require the use of material assumptions. … NOTE 24: RELATED PARTY TRANSACTIONS (a) The loans provided to and by entities within the Company are made under a resolution of the directors, and are interest-free and repayable within 12 months [sic] notice. All other loans between related parties are on commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Refer to Note 10 for details of loans with related parties. 331 On 9 December 2013, Mrs Peck exchanged emails with Mr Justin Lau, a potential purchaser of CellOS shares. Mrs Peck wrote, copying in Mr Huber: Jason confirms that he would like to raise between USD5 million to USD10 million before the end of 2013 and hence he is offering CellOS shares at USD5.00 per share and it is really on a first-come-first served basis. He reiterated that any time soon, the purchase order from a major operator will come in, followed closely by purchase orders from several other major operators. Hence the revenues will come in and CellOS will not need these funds. Also, other investors (apart from the prospects that have been introduced to Jason by us and who have been doing their due diligence) may come in with their investments. Jason is likely to have more funds than he needs in the next few weeks. … Jason conveyed that he would be pleased also to meet with your cornerstone investors in the new year but it will definitely be at a new price (to be determined) and he will be looking at those investors around March 2013 even if he presents the opportunity to them in January. With the foregoing information, please decide what you wish to do. Jason has asked me (a CellOS investor and friend of CellOS) together with Melvin Tan (CellOS' official licensed broker) to assist you in any way we can while he is on leave should you decide to go forward with this investment opportunity before 31 December 2013. 332 On 10 December 2013, there was a conversion event under the LGA loan, converting SG$600,000 into 333,333 CellOS shares. LGA now held 9,592,936 CellOS shares. This was the third of six conversion events. 333 Also on 10 December 2013, Mrs Peck exchanged further emails with Mr Lau. Mr Lau asked Mrs Peck about how to access the "grey market" in CellOS shares. Mrs Peck replied: Regarding a grey market, the company is aware there is a grey market but is not involved. We understand that the sellers look for their own buyers and transactions are on a willing buyer/willing seller basis. Also, we believe transaction amounts are small. 334 Also on 10 December 2013, there was a share transfer of 25,000 shares with Ms Tin as transferor and Mr and Mrs Peck as transferee. This transfer was registered on 5 February 2014. The Pecks now had 5,799,000 CellOS shares. 335 On 16 December 2013, there was a meeting of the directors of CellOS. The minutes of that meeting record: 4. Share Registry The Board noted that going forward the share certificates will be signed by one Director (Currently Chairman and CEO) and Company Secretary which is in line with standard corporate practice when digital signature is being used. As per Articles of Association any two directors or one director and company secretary must sign the share certificate. 5. Matters Arising of past decisions … • Information Memorandum: Further update is ongoing as per the request of UOB Kay Hian to reflect most recent developments. … 6. Finance & Accounts a. The Cash flow v/s budget for the Q 1 and 2 for the FY ending June 30, 2014 - The Board noted the statements presented at the meeting. b. The Board noted that the company's cash position will reduce to $90,000 at the end of Dec. 31, 2013. … 7. Report on Fund Raising • CEO reported to the Board that the company is still a non-revenue company and hopes to generate revenue in first quarter of 2014. • Latest fund raising through issue of shares is at $5/- per share. • Efforts still on to raise funds by issue of shares. 336 On 18 December 2013, Mrs Peck wrote again to Mr Lau, stating: Just to give you an update on the CellOS fund raising status - at this point in time, CellOS does not need to raise any more funds (i.e. at USD5.00 per share). What the company has and what has come in from investors leave CellOS in a very comfortable position. And as mentioned, the next price per share will definitely be above USD5.00. The cut off date for USD5.00 per share is 31 December and CellOS will let that remain unchanged for you as you already indicated your interest earlier. 337 On 21 December 2013, Mr Huber and Mr Patel (for CellOS) and Mr Min Wee (on behalf of LGA) executed a "Variation Agreement" in respect of the LGA loan. The variations were to: (a) extend the term of the LGA loan from 31 December 2013 to 30 June 2014; and (b) increase the loan amount to SG$40 million.

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(e) Events in 2014 338 On 2 January 2014, the twelfth respondent in these proceedings Leario was incorporated in Belize. 339 On 3 January 2014, the third, fifth and eighth respondents in these proceedings, Sky Wealth, Sun Way and Rich Max, were each incorporated in Anguilla. 340 On 5 January 2014, Mrs Peck sold 76,000 CellOS shares to a number of purchasers, which transfers were registered on 5 February 2014. The Pecks now had 5,723,000 CellOS shares. 341 Also on 5 January 2014, there was a share transfer of 76,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 7 March 2014. The Pecks now had 5,799,000 CellOS shares. 342 On 14 January 2014, Mrs Peck wrote to Ms Soo Khiang Bey, a potential purchaser of CellOS shares, telling her that "some off-market shares still available (at US$5 per share) - though I expect that it will not be for long". 343 On 15 January 2014, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 26 February 2014. The Pecks now had 6,799,000 CellOS shares. 344 On 21 January 2014, the second and sixth respondents in these proceedings, Birinc and Aura Finance, were each incorporated in Belize. 345 Also on 21 January 2014, Autumn Harmony Corp was incorporated in Belize. As noted earlier, Mr Min Wee was that company's sole director and shareholder. Autumn Harmony Corp was the sole director and shareholder of the second, third, fifth, sixth, eighth and twelfth respondents. 346 Also on 21 January 2014, Mr and Mrs Peck sold 496,000 CellOS shares to a number of purchasers, which transfers were registered on 12 March 2014. The Pecks now had 6,303,000 CellOS shares. 347 On 22 January 2014, Mrs Peck sold 14,000 CellOS shares to a number of purchasers, which transfers were registered on 28 February 2014. The Pecks now had 6,289,000 CellOS shares. 348 Also on 22 January 2014, there was a share transfer of 14,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 2 April 2014. This was the final purchase of CellOS shares by Mrs Peck from Ms Tin. The Pecks now had 6,303,000 CellOS shares. 349 On 27 January 2014, Mr Reid became a director of CellOS. 350 On 5 February 2014, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 2.5 million shares at a price of US$2 per share for a total price of US$5 million (although there is no consideration listed on the share transfer form). The transfer was registered on 14 April 2014. The Pecks now had 8,803,000 CellOS shares. 351 On 6 February 2014, there was a conversion event under the LGA loan, converting SG$3 million into 1,666,666 shares. LGA now held 11,259,602 CellOS shares. This was the fourth of six conversion events. 352 On 16 February 2014, Mrs Peck sold 2,500,000 CellOS shares to Ms Tin, which transfer was registered on 12 March 2014. The Pecks now had 6,303,000 CellOS shares. This transfer is relevant to the later transfer of 1.5 million shares by Ms Tin to Ms Janifer Yeo-Tan. 353 On 19 February 2014, there was a conversion event under the LGA loan, converting SG$2.5 million into 1,388,888 CellOS shares. LGA now held 12,648,490 CellOS shares. This was the fifth of six conversion events. 354 On or about 21 February 2014, there was a transfer of shares with Lighthouse as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 5 million shares at a price of US$2 per share for a total price of US$10 million (although there is no consideration listed on the share transfer form). The transfer was registered on 8 April 2014. The Pecks now had 11,303,000 CellOS shares. 355 On 24 February 2014, Mr and Mrs Peck sold 930,000 CellOS shares to a number of purchasers, which transfers were registered on 12 March 2014. The Pecks now had 10,373,000 CellOS shares. 356 On 25 February 2014, Mr and Mrs Peck sold 500,000 CellOS shares to a single purchaser, Ms Janifer Yeo-Tan, which transfer was registered on 12 March 2014. The Pecks now had 9,873,000 CellOS shares. 357 On 25 February 2014, Mrs Peck sent an email to Mr Peck with the subject line "The Albert Yong CellOS shares Saga - a post mortem". It is addressed to "Derek" and on 28 February 2014 Mrs Peck forwarded this email to Mr Cooper and Mr Vince. Let me set out some relevant extracts, which seems to be information provided to Derek by disgruntled CellOS share purchasers: "information" that they gave you and/or statements they made … Vendor sales are wrong Melvin has a criminal record Melvin does not have a licence We should not be doing presentations We are unethical - they cannot trust us … I was teaching them how to "flip" CellOS shares and to stockpile Janifer Yeo-Tan should buy straight from Jason Huber The above are points I recall - there may have been more that they told you and which either you did no tell us - or I cannot recall. 358 On 28 February 2014, the Pecks entered into a "Deed of Undertaking, Guarantee and Indemnity" with Ms Janifer Yeo-Tan in relation to the purchase of more than 2 million CellOS shares for more than SG$13 million. The agreement obliged the Pecks to ensure the transfer of the purchased shares by 31 May 2014. They also indemnified Ms Yeo-Tan against any loss. 359 On 9 March 2014, Mr and Mrs Peck sold 706,000 CellOS shares to a number of purchasers, including members of the Cooper family, which transfers were registered on 22 April 2014. The Pecks now had 9,167,000 CellOS shares. 360 On 27 March 2014, there was a conversion event under the LGA loan, converting SG$7.5 million into 4,166,666 CellOS shares. LGA now held 16,815,156 CellOS shares. This was the final of six conversion events. 361 On 8 April 2014, there was a meeting of the directors of CellOS. The minutes of that meeting record: 7. Fund Raising CEO informed the Board that company continued to raise funds to meet expenses as the company has yet to generate revenue. LGA Energy Investments Ltd: • CEO informed that the agreement with LGA Energy Investments L[t]d was renewed until June 30, 2014 and requested the Board to ratify the extension of the Agreement. • The Board considered the request and noted that the company still needed to borrow funds temporarily from LGA. The Board agreed to ratify the extension of the agreement upto June 30, 2014 to enable the company to raise funds from the LGA Energy Investments Ltd as short term unsecured loan. However, the Board decided that the Conversion Option granted to LGA to convert the loan into shares be terminated with effect from April 1, 2014. … 9. IPO Initiatives • Corporate Finance Advisor: The Board noted that Cellos Software Ltd has signed the Engagement Letter to engage Evercore Asia (Singapore) Pte Ltd as Corporate Finance Advisor. The Board ratified the terms an conditions stipulated in the Confirmation of the Engagement. • Legal Advisor: The Board noted that Duane Morris & Selvam LLP has been appointed to Legal Counsel for Cellos to provide advice with respect a public offering and listing of shares on the NASDAQ Market. The Board ratified the terms of the Engagement as per the Engagement Letter. 362 Now the minutes record that the meeting on 8 April 2014 was attended by Mr Huber, Mr Chan, Mr Patel, Mr Hegde and the company secretary, Mr Reid. But again, there was no explicit disclosure of Mr Huber's connection with LGA at this meeting. I will deal with this matter later. 363 On 9 April 2014, there was a transfer of shares with Marsh Commercial as vendor and Mr and Mrs Peck as purchaser. The Pecks purchased 2 million shares at a price of US$2 per share for a total price of US$4 million (although there is no consideration listed on the share transfer form). The transfer was registered on 2 May 2014. The Pecks now had 11,167,000 CellOS Shares 364 On 24 April 2014, Mrs Peck and Mr and Mrs Peck sold 50,000 shares to a single purchaser in two transfers, which transfers were registered on 14 July 2014 and 22 July 2014. The Pecks now had 11,117,000 CellOS shares. 365 On 5 May 2014, Mrs Peck sent a WhatsApp message to Mei Chan Wong, Allan Wong, Mr Tan and Mr Peck, saying about CellOS: … Very serious interest from overseas corporate investors via leading investment bank who obviously now hasto work with Evercore. Most important thing now is the revenue - once that comes, everything will become v upbeat I m told. 366 On or around 9 May 2014, and as I have said earlier, LGA transferred 16,815,157 shares to seven Huber controlled entities for no consideration (the transfers were registered on 9 May 2014), being: (a) 2,800,000 to Birinc; (b) 2,300,000 to Sky Wealth; (c) 1,681,516 to Rex; (d) 2,350,000 to Sun Way; (e) 2,800,000 to Aura; (f) 2,583,641 to Harvest Sky; and (g) 2,300,000 to Rich Max. 367 On 13 May 2014, Mrs Peck purchased 2,500 CellOS shares from Ms Sylvia Besa Pacina. It is unclear what consideration if any was paid for these shares. The transfer was registered on 28 May 2014. The basis for this transfer comes from the aide memoire presented by Mr Crennan QC. The Pecks now had 11,119,500 CellOS shares. 368 On 16 May 2014, a transfer of 1.5 million CellOS shares from Ms Tin to Ms Janifer Yeo-Tan was registered. Apparently, this transfer was for the balance of shares that the Pecks were obliged to transfer to Ms Yeo Tan by 31 May 2014. 369 On 19 June 2014, Mrs Peck exchanged WhatsApp messages with an investor who was seeking US$2 CellOS shares: Gim Hock - from where am I going to get USD 2.00 shares for you??? Right now, we are ourselves fighting hard to get money to buy the 2 million USD5.00 shares that Melvin's vendors need to sell to get money to pay the bank on 23 June … At USD5.00, it is a v good deal. Can get at that price bcos of Melvin's connections - we get first right of refusal. Market has moved up since u n I bought. Jason clearly said to Alan n me yesterday he is NOT selling anymore shares - n definitely not at USD2.00!! Mrs Peck later wrote in the same exchange: To buy n (later) sell shares or sell part of it at a higher price is NOT WRONG. When I kept buying shares from Jason at USD2.00 when Jason needed the money, he was very grateful and said to Alan n me that if we needed money b4 IPO, he will help us sell at USD25.00!! He didn't see it as wrong. Of course we never sold out shares bcos we are in this for the long haul - definitely want to wait for the IPO. We had the money n Jason had the shares. He needed the money so he sold shares at USD2.00. We had the money n the GUTS. We saw the business opportunity. 370 On 21 June 2014, Mrs Peck exchanged WhatsApp messages with Ms Teo Ly Seng. She wrote: Melvin has 2 million shares at USD5.00 to sell. Early investors pressed by the bank bcos lost money in stock market recently. I cannot buy anymore - fully invested. I m asking all my friends if they have capacity to take more? Short runway. She wrote later in the exchange: … I know so many people who want to buy at USD5.00 - I just haven't the time to ask them. And many will buy at USD10.00. If I m not going for the long haul, (talking about BILLIONS) I can make many MILLIONS now. 371 On 24 June 2014, there was a transfer of shares with Harvest Sky as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 11 July 2014. The Pecks now had 12,119,500 CellOS shares. 372 Mrs Peck said in her evidence before me that in or around mid-2014 she approached Mr Huber to seek permission to sell the shares she had purchased at US$2 per share through him. She says that she did this because Mr Huber had previously told her that he did not want her to sell the shares she had purchased through him. She says that Mr Huber agreed to this request, but said that she should not sell the shares for less than US$10 per share. Mrs Peck admits, however, that she sold shares at US$5 per share instead at that time as the shares were easier to sell at that price. 373 On 26 June 2014, CellOS held its AGM. The minutes of the AGM record the following: The board remains optimistic about a future IPO, but as indicated at the last AGM, this can only happen after the Company has established positive revenue streams, and action will be taken in line with advice received from the Company's professional advisors. Any IPO timing will also depend upon market conditions … … The Company has built and is in the process of building new software products. Some products are in field trials with key potential customers; no revenue-generating contracts have yet to be signed. 374 On 30 June 2014, the LGA loan terminated under the terms of the variation agreement. 375 As at 30 June 2014, CellOS had 224,455,843 ordinary shares on issue, an increase of 15,254,931 since 30 June 2013 (from the financial statements for that financial year dated, surprisingly, 22 December 2016): (a) 575,000 shares issued by subscription; (b) 11,029,931 shares created by conversion of debt into equity; and (c) 3,650,000 shares issued by allotment. 376 On 1 July 2014, there was a transfer of shares with Harvest Sky as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 11 July 2014. This was the final purchase of CellOS shares by the Pecks from one of the Huber controlled entities. The Pecks now had 13,119,500 CellOS shares. 377 In summary, the Pecks purchased 18,842,000 CellOS shares from Huber controlled entities over the relevant period that I have just described, paying US$37,684,000. 378 In respect of this final purchase, on 11 July 2014 The Pecks exchanged emails with Mr Huber regarding finalisation of the purchase. In a first email, Mr Huber wrote: Hi Constance and Alan … The principal of Harvest Sky Holdings Limited wishes to receive the payment by TT to the following account: Account details: USD Account Details Account name: Swallow Limited Mr Peck responded: … (Are we correct that although the beneficiary is mentioned to be Harvest Sky Holdings Limited, that the TT be addressed to just Swallow Limited, as indicated below ? Just wished to ascertain). Also from past experiences with TT'ing , we found from point of sending as conveyed via email and point of acknowledgement from the recipient, it could take 2 or 3 days - could you also kindly provide a contact no. or email address at the recipient end just to help in tracking and it would also be useful should either side be awaiting for the other's acknowledgement or the transmission go unexpectedly awry ? Will also ensure that all correspondence is copied to you too. To which Mr Huber replied: Dear Alan I have checked with the vendor. There is no problem with sending the funds to Swallow. I will make sure the vendor gives you a written confirmation of receipt of funds. 379 Also on 1 July 2014, CellOS entered into a "Loan Agreement" with Pized, a company registered in Belize. Mr Huber and Mr Patel signed this agreement on behalf of CellOS as "Borrower" and Mr Min Wee signed on behalf of Pized as "Lender". Let me set out some relevant excerpts: Whereas 1. The Borrower is a technology company in active research and development (R&D) and commercialization phase, and required significant funding to complete this prior to a commercial outcome; 2. The Borrower requires funding of up to SGD20,000,000 (Singapore Dollars Twenty Million Only); and 3. The Lender is prepared to allow the Borrower access to funds that it can draw down on from time to time, as needed to sustain its activities, in the way of an unsecured loan facility, on the terms and conditions herein. … b. "Conversion Price" of each Share shall be the price amounting to eighty percent (80%) of the price per Share as reported in the last audited financial statements of the Borrower. … 3. Facility 3.1 The Borrower may request the Lender for funds totaling up to the Facility Amount [S$20 million]. The Lender may elect, at its sole discretion, to advance any amount of funds up to the Facility Amount. … 3.4 The Borrower accepts that Drawdown Amounts advanced by the Lender pursuant to Funds Request may be advanced to it by third parties but nevertheless they shall be treated as having been advanced by the Borrower. 4. Option Grant 4.1 The Borrower grants the Lender an Option as follows: 4.1.1 The Lender may at any time during the Option Exercise Period at its election and in its absolute discretion elect to either: a) convert any part or all of the Outstanding Loan into equity in the Borrower ("Option 1"); or b) obtain repayment from the Borrower of any part or all of the Outstanding Loan ("Option 2"). 4.2 Should the Lender elect to exercise Option 1: 4.2.1 it shall give written notice to the Borrower of its election to convert the Option Amount, supported by a certificate showing the Outstanding Loan as of the date thereof and the Option Amount to be converted (if different from the Outstanding Loan); 4.2.2 within 14 days of receiving such notice, the Borrower shall cause the Lender (or such other party as it directs) to be issued the Shares; 4.2.3 Shares shall be issued at the Conversion Price [80% of the share price in CellOS' last audited financial statement] and shall be for the Option Amount; and 4.2.4 upon issuance of the Shares following the exercise of Option 1, the debt corresponding to the Option Amount shall be extinguished. 4.3 Should the Lender elect to exercise Option 2: 4.3.1 it shall receive simple interest at the rate of 5% (five per cent) per annum on each Drawdown Amount from the date the Drawdown Amount is advanced to the Borrower to the date of repayment. The Lender may in its absolute discretion choose to waive interest on any or all of the Drawdown Amounts; 4.3.2 it shall give written notice to the Borrower of its election to be repaid the Option Amount, and provide therein its bank account details into which repayments should be made. The written notice shall be supported by a certificate showing the Outstanding Loan as of the date thereof plus interest payable thereon and the Option Amount to be converted (if different from the Outstanding Loan); 4.3.3 within 14 days of receiving such notice, the Borrower shall repay the Option Amount to the bank account designated by Lender in the said notice; 4.3.4 repayments shall be made in Singapore Dollars; and 4.3.5 upon full repayment of the Option Amount following the exercise of Option 2, the debt corresponding to the Option Amount shall be extinguished. 4.4 Subject to the provisions of this Clause 4, the Lender may exercise its Option one or more times within the Option Exercise Period [1 July 2014 to 30 June 2015] so long as there is an Outstanding Loan under this Agreement. 4.5 Exercise of the Option is irrevocable and the amount corresponding to the Option Amount cannot subsequently be resurrected as a debt owing by the Borrower to the Lender. … 6. Termination and extension of this Agreement 6.1 Subject to the following clauses, this Agreement shall terminate on 30 June 2015: 6.1.1 the Parties may choose to extend this Agreement on terms and for a period to be mutually agreed in writing; and 6.1.2 this Agreement shall automatically terminate on the occurrence of an Insolvency Event as set out in Clause 7. 380 Between 9 July 2014 and 23 March 2015 SG$2,570,707 and US$8.3 million was advanced to CellOS and attributed to the Pized loan. There was no exercise of the option under the Pized loan to convert into CellOS shares. 381 On 14 July 2014, Mrs Peck sold 200,000 CellOS shares to a single purchaser, which transfer was registered on 28 August 2014. The Pecks now had 12,919,500 CellOS shares. 382 On 17 July 2014, Mrs Peck exchanged WhatsApp messages with Mr Chris Ho, who was a potential purchaser of CellOS shares. Apparently Mr Ho wished to bring a friend to an investor presentation, although the friend was not a Christian. Mrs Peck replied: The preferential price of USD5.00 per share is a friendly price for Christians n we will require them to do a pledge. Tithe on profit at listing. Non-believers - it's an arm's length commercial deal. We open at USD 10.00. Some brokers quote higher. I leave it to the brokers. Tomorrow we don't talk price. Jason will do the presentation. Melvin and/or I will do the signing up. Outsiders - USD10.00 minimum. 383 On 21 August 2014, Mrs Peck and Mr and Mrs Peck sold 299,000 CellOS shares to a number of purchasers. These transfers were registered on 2 September 2014, 13 October 2014 and 15 October 2014. The Pecks now had 12,620,500 CellOS shares. 384 There was a final undated purchase of shares registered on 1 September 2014. Mrs Peck purchased 10,000 CellOS shares from Mr Ho Weng Wah. It is unclear what consideration if any was paid for these shares. The basis for this transfer comes from the aide memoire presented by Mr Crennan QC. The Pecks now had 12,630,500 CellOS shares. 385 On 2 September 2014, there was a meeting of the directors of CellOS, at which the resignation of Mr Patel was accepted. The minutes of that meeting, which are unsigned, record: 1.3 Disclosure of Conflicts: the Board noted that there were no conflicts of interest. … 2.3 Loan Agreement The Board was advised that the company had signed a loan agreement with Pized [M]anagement Ltd on 1 July 2014 on the following terms: • Finance to be provided for upto S$20,000,000 • Interest charge is 5% simple interest per annum, calculated from the date of each draw down to the date of repayment • Term is from 1 July 2014 to 30 June 2015 • The lender has an option to convert any outstanding debt to shares based on 80% of the price per share of the last audited financial statement of the company. The Board ratified the signing of the loan agreement. … 3. Matters for Discussion 3.1 CEO's Report The CEO, Mr Jason Huber, appraised the Board of the current financial and business situation. The CEO advised that the Board had ratified the terms of agreement with Evercore Asia at the previous Board meeting and subsequent meetings and discussions with Evercore Asia remained positive. Evercore Asia remain committed to raising funds for the company and upto and including the IPO. Additionally the company had been approached by Morgan Stanley Asia, and they had asked that they be part of this process of raising the capital. It was necessary that the business plan be updated and this process had commenced. The business plan would provide the information necessary for the completion of a new Information Memorandum that would be required for Evercore Asia and Morgan Stanley Asia. … 3.2 Financial Report • Mei Lan Ng, Group Financial Controller, presented the March 2014 Financial Statements, and the Board ratified the signing of the Directors statement by Jason Huber and Jonathan Chan. • The Board was presented with the Budget papers for the 2015 financial year. The Board discussed the detail of the Budget and requested that the Budget be reviewed further particularly in regard to revenue. The Budget would be represented at the next Board meeting for sign off. • The current burn rate and cash position was advised to the Board, and the CEO advised that since the revenue forecasts were behind schedule that he will need to obtain further funding from shareholders. The CEO noted that he did not foresee a problem in raising additional funds. 386 On 17 September 2014, Mr Huber and Ms Mei Lan Ng signed a letter on behalf of CellOS which was addressed to Mr Roche of Deloitte. Let me set out some extracts of the letter: Dear Stephen, This representation letter is provided in connection with your audit of the financial report of CellOS Software Limited for the period ended 31 March 2014, for the purpose of expressing an opinion as to whether the financial report gives a true and fair view in accordance with the basis of preparation as set out in Note 2. We confirm that: 1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated 17 February 2014, for the preparation of the financial report in accordance with the basis of preparation as set out in Note 2; in particular the financial report gives a true and fair view in accordance therewith. 2. We have provided you with: • Access to all information of which we are aware that is relevant to the preparation of the financial report such as records, documentation and other matters; • Additional information that you have requested from us for the purpose of the audit; • Unrestricted access to the persons within the entity from whom you determined it necessary to obtain audit evidence; and • All information required by you and all requested information, explanations and assistance for the purposes of the audit. 3. All transactions have been recorded in the accounting records and are reflected in the financial report. … 11. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of Australian Accounting Standards. … We understand that your audit was conducted in accordance with Australian Auditing Standards and was, therefore, designed primarily for the purpose of expressing an opinion on the financial report of the entity taken as a whole, and that your test of the financial records and other auditing procedures were limited to those which you considered necessary for that purpose. Yours faithfully [Mr Jason Huber, Chief Executive Officer] [Ms Mei Lan Ng, Group Financial Controller] 387 On 23 September 2014, Mr and Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 2 October 2014. The Pecks now had 12,625,500 CellOS shares. 388 On 24 September 2014, Mr and Mrs Peck sold 225,500 CellOS shares to a number of purchasers, which transfers were registered on 2 October 2014. The Pecks now had 12,400,000 CellOS shares. 389 On 10 October 2014, Mr Reid resigned as a director of CellOS. 390 On 19 October 2014, Mr and Mrs Peck sold 345,500 CellOS shares to a number of purchasers, which transfers were registered on 19 November 2014 and 22 January 2015. The Pecks now had 12,054,500 CellOS shares. 391 On 29 October 2014, Mrs Peck sold 10,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,044,500 CellOS shares. 392 On 9 November 2014, Mrs Peck exchanged WhatsApp messages with Mr Patrick Loh. In her message Mrs Peck explained that she would not be selling CellOS shares to a certain Estee at US$5: Please understand that I will not be extending the same "scheme" to her as I have to you n Simon Tan n Vincent Sum n Li Wen where my price to you guys is USD5.00 n whatever you sell above USD5.00 is yours. I'm doing this to help you guys. It was a scheme I thought of to "motivate" Jonathan Shek AND he "opened it up" to his "little disciples". SO DO NOT TELL ESTEE OF THIS DEAL. If she knows n asks me about it, I will say that it is not something I want to do anymore. The price to "insiders" FOR NOW is USD5.00 n for "outsiders" is USD10.00. I say "for now" because if I do not need to help raise funds for Jason Huber, I do not intend to sell anymore shares until IPO. For example if Estee introduces anyone to me (eg the lady who owns 3A Leedon Park) it will be at USD10.00 n Estee does not get a cut. As a sales person, I will find a way to go direct to Jennifer - I do not need to use Estee. Hope this is clear. Please ring me if you want to discuss anything. But I will be w Melvin n Jason huber to see Goldman Sachs this morning until 2.30 pm. 393 On 17 November 2014, Mrs Peck sold 6,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,038,500 CellOS shares. 394 On 21 November 2014, Mrs Peck sold 30,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,008,500 CellOS shares. 395 On 24 November 2014, Mrs Peck sold 3,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,005,500 CellOS shares. 396 In December 2014, Mr Reid resigned as company secretary of CellOS and was replaced by Ms Tapner. Mr Reid would later resume as company secretary on 9 December 2015. 397 On 4 December 2014, CellOS sent a letter signed by Mr Huber to Mr Tan with the subject line "Notice to Cease and Desist": It has come to our attention that you are representing yourself as an advisor at or to CELLOS Software Limited (the "Company") to various third parties. We have also been informed that, despite several oral requests to you to stop, you have continued to hand out old business namecards of the Company representing yourself as an employee or advisor of the Company. Kindly take note that with immediate effect, you are not authorized to act for and/or on behalf of the Company or represent yourself in any manner whatsoever and/or howsoever as being related to or connected with the Company and/or any of its subsidiaries. Accordingly, take note that you must cease and desist immediately from: (i) acting for and/or on behalf of the Company; (ii) representing yourself in any manner whatsoever and/or howsoever as being related to or connected with the Company and/or any of its subsidiaries; and (iii) handing out, displaying or in any way utilizing the old business namecards or the Company. In this regard, please return all business namecards in your possession to us without delay. Furthermore, we note that you have represented yourself on www.linkedin.com as "Advisor at Indoaust Investments Ltd". As you know, "Indoaust Investments Ltd" is the former name of CELLOS Software Limited. Please delete this title and any other similar references from your webpage on www.linkedin.com within five (5) days from the date of this notice. Failure to do any of the above will result in the Company taking legal action to protect its rights, including, without limitation, civil proceedings against you. 398 On 5 December 2014, Mr Tan wrote the following letter addressed to Mr Huber: RESPONSE TO YOUR LETTER "NOTICE TO CEASE AND DESIST" DATED 4 DEC 2014 I was shocked to receive the above said letter. I need to respond to the following assertions in your letter in order to set the record straight. 1. YOUR PARAGRAPH 1 You have officially appointed me as Advisor to Indoaust Investments Ltd from December 2010. 2. YOUR PARAGRAPH 2 At no time did you inform me orally or in any written form that I was to stop handing out old business name cards and to stop representing the company as an Advisor. At Mrs Constance Peck's request to you, you have orally said in her presence as well as mine, that you would not be printing any more business name cards for me under CellOS Software Limited because "the company is no longer raising funds". THIS IS VERY DIFFERENT FROM STATING THAT YOU HAVE "DESPITE SEVERAL ORAL REQUESTS" to me to stop representing myself as an Advisor of the Company. a) On two other occasions recently- Wednesday, 5 November and Friday, 7 November 2014- there were at least 30 shareholders and prospective investors per date in your office where you gave an update and presentation on CellOS. I did the opening introduction as a CellOS representative in your presence. You did not stop me nor inform me that I was not to do so anymore as I was not to represent CellOS Software. b) Up until Monday, 24 November 2014, I was in your office as CellOS's representative with visitors from Korea and Hong Kong. 3. YOUR PARAGRAPH 4 (iii) I do not have any more Indoaust Investments Ltd business name cards in my possession. 4. YOUR PARAGRAPH 5 For the record, the Profile on my LinkedIn Web page says that I am "Advisor, Financial Services". (See attached copy of screen shot). As you can see, the company Indoaust Investments IS NOT NAMED. I have NEVER mentioned in Linkedln that I am "Advisor at Indoaust Investments Ltd". If you type in "Melvin Tan" there will be at least 25 Melvin Tan's that will appear. One of the Melvin Tans indeed claims that he is "Advisor Indoaust Investments Ltd." I am unable to delete that as it was not set up by me. I have gone as far as to delete my whole LinkedIn account. However the "Melvin Tan" that asserts himself to be Advisor, Indoaust Investments Ltd is still there. Please take the liberty to remove that "Melvin Tan Advisor Indoaust Investments Ltd" if you can do so. It will not affect me as I have deleted my entire Linkedln account. Finally, as requested in your said letter, I step down as Advisor to your company with immediate effect. I wish you and CellOS Software Ltd every success. 399 Mrs Peck recounts that in late December 2014, she received a call from Mr Tan in which he described a call that he had received from Mr Min Wee who he said had expressed concerns that Mr Huber was trying to acquire a 51% shareholding in CellOS so that he could control the business and oust the other shareholders.

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(f) Events in 2015 onwards 400 On 5 January 2015, Mr and Mrs Peck sold 30,000 CellOS shares to a number of purchasers. The Pecks now had 11,975,500 CellOS shares. 401 On 6 February 2015, Mrs Peck exchanged WhatsApp messages with Ong Benny Eng Leong, describing the current manner in which she was marketing CellOS shares: Wrt sharing the markup, bcos shares now cost USD6.00, selling at usd12.00 gives us a markup of usd6.00. We propose markup of usd6.00 to be shared equally by 4 pax - Melvin, me, Siew Yong n yourself. So that means Usd1.50 each. And you can buy shares w the profit money at usd6.00 per share. When asked why Siew Yong was receiving a portion of the sale proceeds, Mrs Peck explained: Bcos she is now working w Melvin n me in the new scheme that started in Jan 2015. And she introduced you. But never mind, let's do it this way - Melvin n I will give to her from our share. So we split the USD6.00 three ways? USD2.00 each for Melvin, me and you. Is this a deal? 402 On 27 March 2015, there was a meeting of Mr Huber and three individuals from Deloitte: Mr Stephen Roche (Audit Partner), Mr Simon Zannis (Audit Director) and Mr David McGuigan (Tax Director). The minutes of this meeting seem to have been prepared much later. The minutes record that Mr Roche questioned Mr Huber about the Pized loan. Let me set out extracts of the minutes: Funding Jason explained the funding situation of Cellos as follows: • Jason commenced by stating that he had no outstanding creditors and he had managed to keep the business going. • He does this on a month to month basis. • He has been raising $1m a month in equity funding to keep the business going • Jason advised that he found difficulty raising cash in the Jan/Feb period as a number of people go away or take leave during Chinese New Year • The cash burn rate has decreased from $2.3m a month to $1.3m a month due to a restructuring of the business: • Nearly everyone in the Singapore office has been made redundant The remaining staff members include: • Madu - Chief Technology Officer • Samanthia Chia - Legal Counsel • Linley Au - Finance Manager • Stephen enquired as to whether any termination payments were required • Jason advised that he paid out 3 months salary as notice for the staff terminated • Jason also advised he used the 3 month severance payment as leverage to get the employees to accept hanging on to only half of their shares • Jason explained that he has engaged Deutsche Bank to pursue a $500m capital raising • Jason had a folder with him in the meeting that had Deutsche Bank's logo that he referred to when he was talking about Deutsche Bank Restructure • Jason explained that he sacked the previous Board and the majority of the executive management team as they were not producing results … Pized Loan • In addition to the equity funding Jason has raised he has drawn down further on the Pized Loan at rates of about $5-$10 a share. • Stephen enquired as to the identity of the investors • Jason advised that there was "an active grey market" for CellOS shares that is operating • He further added that "he controls" this market • Stephen enquired as to the background of Pized and whether he was a Director • Jason advised that he wasn't a Director • Stephen asked for clarification of how the arrangement with Pized works • Jason explained that • An investor wants to buy shares • They pay for shares from another investor • This money is then given to Pized who in turn loan the money to CellOS • Stephen asked Jason whether he was selling his own shares and thus is this how he was controlling the market • Jason responded that this was true • David clarified the arrangement using the example of he and Simon to explain how it [works] i.e.: • David owns shares • Simon wants to buy shares • David takes the proceeds he receives from selling his shares to Simon, and loans that cash to Pized [which] lends the money to CellOS • Jason confirmed this was correct • He further added that he has structured the arrangement this way as he is selling these shares at a discount and he doesn't want this to restrict his ability to extract a higher price per share from other investors • Jason asked that we "don't write that down" 403 In early April 2015, Mrs Peck met with Ms Samantha Chia (CellOS' in-house counsel), who told her that CellOS was not taking any steps towards an IPO. 404 On 3 June 2015, Mrs Peck received a report that she had commissioned from Mr Phil Chynoweth, a former CellOS director, regarding CellOS' state of affairs. Let me set out some conclusions of the report: 2014 Summary 2014 has been characterized by changes in management, failure to reach revenues set in the budget, large cash over-runs leading to a critical need to restructure the company. Management approaches of the past have not worked and will drive the company to failure if pursued. There is evidence of shareholder fraud, misuse of funds and gross lack of governance with shareholder and company funds by the CEO and CTO. An assessment of the company was completed in February/March with a recommendation for a strategic review of the company in the context of revised business development outlook and increasing operation, research and development costs. Fundamentals that have come from the review process: 1. The company is in no position to pursue an IPO in the near future based on significant issues with company performance and management. This is despite the continued claims by the CEO that an IPO is imminent and will justify at share price of $US25 and a significant capital gain for existing and new shareholders. 2. The current cash burn of $US 1.2-1.5M is not sustainable and will need to be reduced significantly (to a level close to $500k) if the company is to survive with expected revenues of $US 7M for end of year 2015. 3. The approach of funding the company from shareholders equity has not assisted the company build a capability to sustain itself and the current level of funding to 'operations' and 'development' (90% of costs) is way out of proportion for a company that is seeking revenues of $US10 - 50M revenues per year. The company does not have the necessary skills or focus to achieve the revenues in the 2014 business plan and therefore the company has no basis to make commitments to shareholders and regulators on the revenues in the plan. 4. The management processes and decision making approach has been dysfunctional. Company planning documents and information have been geared towards the process of procuring investment and has little relationship to the actual activities and outlook of the business. There is no formal business and operational plan. The lack of funds has driven the company to a catch-22 where there was no need see to plan beyond the next funding window (1-2 months). There was also a lack of funding to perform the company restructuring required to reduce the monthly spend. The nature of the CEO is that they [sic] 5. The level of market engagement and verification work for the company's R&D outcomes has been inadequate/ non-existent. The drivers of the R&D roadmap do not appear to be aligned with customer needs and market testing for the company's R&D plans has been inadequate. There is a considerable gap between the perceived maturity of the products, level of competitiveness and market potential reflected in the CEO's emails and the reality. 6. The company's business development (sales and marketing) organization is inadequate for the business revenue expectations to reach break even and ultimately for an IPO. 7. The level of corporate governance is minimal. The Company's Constitution has a requirement for 4 directors to make decisions for the company. The CEO has added a provision handing over delegated responsibilities of the Directors to the CEO. Regardless, of whether this is legally binding, there have been key decisions with respect to company loans and share dealings, employee contracts which are questionable and open to dispute based on conflict of interest grounds as well as whether they are legitimate under Australian Corporations Law. This means that a new board could dispute a range of loans, employee contracts and decisions by the CEO (under the auspices of the board) over the past 2-3 years. 8. There is evidence of fraud and misrepresentation by the CEO. Company management and past directors see the CEO's behavior as consistent with a confidence man and manager of a "ponzi" scheme. [footnote omitted] 405 On 9 June 2015, Mr Huber sent Mr Min Wee a text message requesting: "Please get Pized to apply for 400,000 shares from cellos". I would note that this did not occur, as Pized never converted any of its loan into shares. The amounts loaned by Pized remain a liability on CellOS' books. 406 As at 30 June 2015, CellOS had 224,595,843 shares on issue, an increase of 140,000 since 30 June 2014 (taken from the financial statements dated 22 December 2016): (a) 540,000 shares issued by settlement; and (b) a reduction of 400,000 shares by way of a share buy-back. 407 In July 2015, Ms Tapner resigned as company secretary of CellOS. 408 On 3 September 2015, there was an extraordinary general meeting of the members of CellOS, at which meeting Mr Huber, Mr Hegde and Mr Chan were each removed as a director of the company. 409 On 6 November 2015, Mr Huber filed an affidavit in proceedings in the High Court of the Republic of Singapore. CellOS has made numerous references to the matters deposed to in this affidavit and has pointed to supposed inconsistencies between that document and Mr Huber's oral evidence before me. 410 On 9 December 2015, Mr Reid was reappointed company Secretary of CellOS. 411 In February 2016, Mr Reid became group financial controller of CellOS. 412 In April 2016, Ms Tapner recommenced at CellOS as group accountant. According to her affidavit, she had been assisting the company with bookkeeping duties for some months prior to this. 413 As at 30 June 2016, CellOS had 224,595,843 shares on issue, i.e. no shares were issued or cancelled between 1 July 2015 and 30 June 2016 (taken from the financial statements dated 22 December 2016). 414 On 22 December 2016, CellOS finalised its financial statements for the years ending 30 June 2014, 2015 and 2016, which were signed off by Deloitte. Let me set out relevant extracts from the report for the year ending 30 June 2014, which includes after balance date events that are included in the reports for 2015 and 2016: Operating Results The loss of the Group and Company for the financial year after providing for income tax is $21,679,435 (2013: $11,800,914). … After balance date events CellOS Software Ltd entered into an unsecured AUD$16,967,845 (SGD $20m) facility with Pized Management Ltd on 1 July 2014. To date, AUD$14,848,907 has been drawn down from this facility. … On 3 September 2015 an extra-ordinary general meeting was held, and the following directors were appointed: • John Buhagiar • Michael Hans-Koch At the same meeting Jason Joseph Huber, Ramchandra Hegde and Jonathan Vincent Chan were removed as directors. Subsequent to the extra-ordinary general meeting Janifer Yeo-Tan, Constance Peck, Kevin Kan and Andrew Ng were appointed directors of the company. The Board undertook a complete review of the company and its investigations revealed significant unpaid creditors in excess of $6m, including unpaid wages of staff for three months in the group, unpaid rental of premises and unpaid obligations to regulatory authorities, and had minimal funds in the bank account. There was an urgent need for an immediate injection of funding to prevent the company from being evicted from its premises in Melbourne, and from creditors applying to the Courts to have the company being wound up. The company raised $28mil from September 2015 to August 2016 through a combination of convertible debt and direct equity. In June 2016, after taking advice from the Company's lawyers, the Board agreed to commence legal action against the former Chairman Mr Jason Huber in the Federal Court of Australia. The Board has also now resolved to join Ms Constance Peck (a sitting director), Mr Alan Peck and Mr Melvin Tan to the proceeding, as well as Mr Mark Huber (Jason Huber's son). Further details of the proceeding are included in Note 21 of the financial statements. … NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been applied consistently to all of the years presented, unless otherwise stated. The financial statements are for the consolidated entity (the group) consisting of CellOS Software Ltd and its subsidiaries. (a) Basis of preparation and going concern These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. (i) Incomplete Records Following an extraordinary general meeting ("EGM") of the company on 3 September 2015, two new Directors of the company were appointed, with the incumbent Directors removed from office. Shortly after the EGM, three additional new Directors were appointed. Following the EGM, the Directors undertook a review of the company and identified significant unpaid creditors in excess of $6m. In addition, it was discovered that material related party transactions appeared to not have been identified and disclosed as such in the accounting records of the consolidated entity and company. As disclosed in Note 21 to the financial report, legal proceedings have been brought against the former CEO and Chairman of the Group, Jason Huber, for conducting an alleged fraudulent scheme to the detriment of the company. Through the discovery process for these legal proceedings, the directors determined that inadequate records had been maintained in relation to related party transactions from 2013 until Mr Huber's removal as a director and CEO. The financial report was prepared by Directors who were not in office for the full period presented in this financial report, nor were they parties involved with the company, except in their capacity as shareholders. The Directors who prepared this financial report were appointed on 3 September 2015 or later. Every reasonable effort has been made by the Directors to ascertain the true position of the company as at 30 June 2014. To prepare the financial report, the Directors have reconstructed the financial records of the Group using data extracted from the Group's accounting system for the entire financial year. However, there may be information that the current Directors are not aware of, the impact of which may or may not be material on the financial statements. … (ii) Going concern basis of preparation The accompanying financial statements have been prepared assuming that the company will continue as a going concern and contemplate the realisation of assets and the satisfaction of liabilities in the normal course of business. For the year ended 30 June 2014, the consolidated entity incurred a loss after tax of $21,679,435 (2013: Loss: $11,800,914) and a net operating cash outflow of $15,648,516 (2013: $8,296,620). On and around November 2015, the company entered into an agreement with Methuselah Pte Ltd and ProV 356 Pte Ltd (Singapore based companies) to raise funds. On 8 September 2016, a deed of termination of release was completed with Methuselah Pte Ltd and ProV 356 Pte Ltd as part of the repayment of funds to them. In conjunction with this, a number of investors subscribed to shares in the company. The remaining external debt of the consolidated entity at the date of this report is the borrowing from Pized Management Ltd, which is the subject of the legal proceedings as outlined in Note 21 and Note 22. As a consequence, the ability of the consolidated entity and the company to continue as going concerns, and meet their debts and commitments as they fall due, is dependent on: • The financial implications of the outcome of the legal proceedings related to the Mr. Jason Huber and the Pized loan; • The ability of the Company to generate sustainable operating profits and operating cash inflows; and • The ability of the Company to identify alternate sources of funding should it be required based on the outcome of the above matters. The Directors remain confident that they will be successful in their legal action against Mr. Jason Huber, and in raising the additional funding required to complete planned research and development activities to bring additional products to market and accordingly have prepared the financial statements on a going concern basis. In the event the consolidated entity cannot raise cash through commercialisation of its products, it has the ability to further reduce expenses around certain current commitments. The consolidated entity retains the ability to curtail other planned, but not committed expenditure, in order to ensure it continues to have adequate funds to pay all liabilities as and when they fall due. In the event the Company is unsuccessful in its proceedings against Mr. Huber, the Directors will explore capital options to repay the debt. As a result of the above matters there is significant uncertainty related to events or conditions that may cast doubt about the ability of the consolidated entity and the company to continue as going concerns and whether they will realise their assets and settle their liabilities in the normal course of business and at the amounts stated in the financial report. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or other adjustments that might be necessary should the consolidated entity and the company be unable to continue as going concerns. … (n) Share-based payment transactions Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company. Shares issued to employees and directors are recognised at fair value by reference to shares issued in the most recent arm's length transaction to 3rd parties. The credit entry is recognised within the Share Based Payment reserve. … NOTE 21: CONTINGENT LIABILITIES AND ASSETS The Company has instituted proceedings against its former CEO and director, Jason Huber (as well as other entities said to have been controlled by him). In the proceedings, CellOS alleges that Mr Huber diverted funds for the issue of shares, for his own profit and to the detriment of the Company. CellOS seeks the return of all illegitimate shares and profits from Mr Huber to restore value to the Company. It is not possible to identify the quantum of the claim, but the Company alleges that at least 51,783,632 shares were illegitimately procured by Mr Huber, many which were subsequently sold at between $2.00 and $10.00 USD. If successful, one result would be that the Company would not be required to repay a loan ostensibly owing to Pized Management Ltd, which the Company alleges was obtained in furtherance of the scheme. A substantial proportion of the funds advanced with respect to this loan were made from an entity controlled by Mr Huber, Swallow Ltd. CellOS's joinder of Constance Peck (a sitting director), Alan Peck and Melvin Tan to the proceeding means that, to the extent that those parties are found to have knowingly assisted the scheme, those persons may also be pursued for any loss to CellOS or ordered to return any assets knowingly held in breach of trust. The Company has commenced an action in the State Courts of Singapore against Mr Jason Huber for a sum of S$100,000.00. The Company's case is that Mr Huber had made an unauthorised transfer of this sum from the Company's bank account to his personal bank account. Mr Huber alleges that this was a loan and that there were payments that he made to offset this amount. The matter has not been finalised, and the company needs to file a Summons for Direction. … NOTE 25: SHARE BASED PAYMENTS Year ended 30 June 2014 Year ended 30 June 2013 [AU]$ [AU]$ Share based payment expense recognised in the income statement in the year. (5,695,831) (1,899,000)

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The fair value of each share allotted was determined by reference to the average price of shares issued for consideration to 3rd party investors in arm's length transactions prior to the allotment of shares. On 10th June 2014, the Company implemented the CellOS Software Employee Restricted Share Unit Plan ("RSU Plan") for employees of the Group in Melbourne, India and Singapore, in recognition for meeting key development milestones of the Group, as approved by the Board. In accordance with the terms of the plan, employees may be granted Restricted Stock Units ("RSU"). Each RSU is granted at nil consideration and represents a right to receive an ordinary share in the company in the future for no consideration. The RSUs will only vest if the Company or the holding company of the Company becomes listed on a stock exchange following an initial public offering of Shares or, in certain circumstances, a Change of Control occurs No RSU's have been granted during or since the end of the financial year. 415 The accompanying letter by Deloitte for the financial statements for the year ending 30 June 2014, signed by Mr Roche, notes: Basis of Disclaimer of Opinion 1. As disclosed in Note 2 (a) (i) of the financial report, the current directors of the company who were appointed on 3 September 2015, have identified a number of related party transactions which were not originally identified as such in the company's accounting records. In particular, certain transactions allegedly involving director-related entities of a former director have been identified that have a potentially material financial effect on the consolidated entity. However, at the date of signing this financial report, it has not been possible to identify all related party transactions which have taken place nor to quantify the financial effect, including the quantum of losses suffered by the consolidated entity, as a result of such transactions. Whilst the financial report has been prepared by the directors to the best of their knowledge based on the accounting records available to them, we are unable to determine the completeness and accuracy of the related party transactions and balances disclosed in the financial statements. 2. As disclosed in Note 21 of the financial report, the Company has initiated legal proceedings against a former and current director in relation to alleged fraudulent activities to the detriment of the Company. The circumstances of the case are such that it is presently not possible to identify the quantum of the claim and the ultimate outcome of the litigation proceedings cannot presently be determined with an acceptable degree of reliability. Disclaimer of Opinion Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion as to whether the financial report of CellOS Software Limited is in accordance with the Corporations Act 2001, including: a) Giving a true and fair view of the consolidated entity's financial position as at 30 June 2014 and of its financial performance for the year ended on that date; and b) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Emphasis of matter We draw attention to Note 2 (a) (ii) in the financial report, which indicates that the consolidated entity incurred a net loss of $21,679,435 and had net operating cash outflows of $15,648,516 for the year ended 30 June 2014. These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty that may cast significant doubt about the ability of the consolidated entity and company to continue as going concerns and therefore, the consolidated entity and company may be unable to realise their assets and discharge their liabilities in the normal course of business. 416 As I have said, on 22 December 2016, CellOS also finalised its financial reports for the years ending 30 June 2015 and 2016, signed off by Deloitte. Let me set out some relevant extracts from the financial report for the year ending 30 June 2016, it not being necessary for present purposes to set out anything from the 30 June 2015 report: Directors: The names of the directors in office at any time during or since the end of the financial year are: Janifer Yeo-Tan, Chair (Appointed 3 September 2015) Constance Peck, Non Executive Director (Appointed 3 September 2015) Michael Hans-Koch, Non Executive Director (Appointed 3 September 2015) Kevin Kan, Non Executive director (Appointed 3 September 2015) John Buhagiar, Non Executive director (Appointed 3 September 2015) Shung Toon Woon, Non Executive Director (Appointed 25 March 2016) Jason Joseph Huber (Removed 3 September 2015) Ramchandra Hegde (Appointed 4 May 2015, Removed 3 September 2015) Andrew Ng (Appointed 3 September 2015 Resigned 30 September 2015) Michael Dudley (Appointed 9 June 2015 Resigned 30 September 2015) Gim Hock Theo (Appointed 25 March 2016 Resigned 26 April 2016) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Operating Results The loss of the Group and Company for the financial year after providing for income tax is $16,001,569 (2015: $22,442,535). Review of Operations The Group continued to engage in its principal activity being research and development of leading edge software for the telecommunications industry, the results of which are disclosed in the attached financial statements. Significant Changes in state of affairs On 3 September 2015 an extra-ordinary general meeting was held, and the following directors were appointed: • John Buhagiar • Michael Hans-Koch At the same meeting Jason Joseph Huber, Ramchandra Hegde and Jonathan Vincent Chan were removed as directors. Subsequent to the extra-ordinary general meeting Janifer Yeo-Tan, Constance Peck, Kevin Kan and Andrew Ng were appointed directors of the company. The Board undertook a complete review of the company and its investigations revealed significant unpaid creditors in excess of $6m, including unpaid wages of staff for three months in the group, unpaid rental of premises and unpaid obligations to regulatory authorities, and had minimal funds in the bank account. There was an urgent need for an immediate injection of capital to prevent the company from being evicted from its premises in Melbourne and India, and from creditors applying to the Courts to have the company being wound up. The company raised $28million from September 2015 to August 2016. After taking advice from the company's lawyers, the Board agreed to commence legal action against the former Chairman Mr Jason Huber in the Federal Court of Australia, the details of which are included in Note 23 of the financial statements. During 2016, the company has been in the process of developing and commercialising six key products within the CellOS Knowledge portfolio. Additional products are planned for introduction in 2017. Apart from the above there was no significant change in the state of affairs of the company during the financial year ended 30 June 2016 however we refer you to the after balance date events. … CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Year ended 30 June 2016 [AU]$ … NET ASSETS / (LIABILITIES) (30,143,046) … TOTAL EQUITY (30,143,046)

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Mr Kamlesh Patel 418 Mr Kamlesh Patel was the chief operating officer and a director of CellOS for much of the relevant period. Mr Patel gave evidence about Mr Huber's failure to disclose to the board that the LGA loan and the Pized loan were related party transactions, as well as Mr Huber's failure to disclose the sale of his shares to fund CellOS. CellOS says that Mr Patel was an honest witness, and his evidence should be accepted. Generally speaking I am inclined to agree. 419 Now the Pecks submit that Mr Patel was generally an unsatisfactory witness. They submit that as chief operating officer of CellOS he had over extended periods drawn a large salary and had achieved little if anything for CellOS. They submit that in a number of respects his evidence was inconsistent with the documentary record, which is to be preferred. Further, they say that he conceded that he was aware that Mr Huber was funding the company in 2012 and 2013 by, he assumed, selling shares and then putting the money into the company. 420 Some of the Pecks' criticisms (as too Mr Huber's criticisms) have force. But I am satisfied that Mr Patel was a reliable witness. I accept his evidence that Mr Huber did not disclose that he was standing behind LGA and Pized. 421 Further, his knowledge of Mr Huber's share dealings was uncertain and based upon assumption. It hardly showed that Mr Huber had disclosed his activities to the board. 422 Mr Patel gave evidence as follows: MR CRENNAN: So what did you understand was going on?---Well, Mr Huber was putting money into the company. So I assumed that he was selling some of his shares. I wasn't privy to any detail of that. So he's putting money into the company in 2013. Is that correct?---Yes. And how was he doing that?---Well, I don't know. I mean, he was - - - Well, you must - - -?---There was money. I was - - - You must have some idea, Mr Patel. You were a - I don't meant to interrupt you but you were a director of a company. And you've given evidence to his Honour this afternoon for the first time that Mr Huber was putting money into CellOS during 2013. And I asked you, how was he putting money into CellOS?---He was putting money in - his personal money into the company. Sorry? HIS HONOUR: I think the - do you have any knowledge about how he was doing that? You know, short-term - - -?---No. - - - loans? Long-term loans?---No. See, your Honour - - - Subscribing for shares?---Your Honour, the money was coming in. I didn't look at where the money was coming in from. What I can tell you is that Mr Huber raised $10 million in 2011 which I know of - is what he said to me when I first joined the company. I can only assume that he had sold his shares to raise that money because I also recall that the board reimbursed him six million or so shares in 2012, which he said that he had given or sold to various people. So I assumed that what he was doing was he was selling his own shares and being compensated back with shares from the company. MR CRENNAN: Mr Patel, can I just ask you to concentrate on 2013 for a moment?---Yes. You said, when I asked you a series of questions before - and I think I've got this right - that "I assumed" - that is, you assumed - "that Mr Huber was selling some of his shares". Are you talking about 2013?---Yes. '12 and '13, whenever the money was coming in.

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Mr Jason Huber 435 I did not find Mr Huber to be a reliable witness. 436 At times his evidence was evasive and argumentative under the forceful cross-examination of Mr Philip Crutchfield QC for CellOS. 437 Further, in some aspects his evidence was inconsistent with his evidence given in legal proceedings in Singapore, particularly his case thesis before me that Mr Narulla was the "mastermind" which assertion was singularly missing from his Singapore evidence (see for example [30] to [41], [45] to [47] and [51] to [57] of his affidavit affirmed on 6 November 2015). 438 Further, much of his evidence was not consistent with contemporaneous documents and other objective evidence. 439 It is appropriate to set out some examples. 440 Mr Huber's evidence was that, in 2011, with Mr Tan's assistance, CellOS raised close to US$10 million. Mr Huber said that in around mid-2011, he was advised by his lawyer that Singaporean law limited the number of shares that could be issued by CellOS to 49 individuals or SG$5 million in a single 12 month period. He said that he directed Mr Narulla to transfer 4.5 million of his shares in CellOS that Mr Narulla was holding on trust for him, to Child and Family Foundation "so that I could sell the shares and raise funds for CellOS". Mr Huber said that Mr Tan assisted with the sale of the shares from Child and Family and the proceeds were injected into CellOS to fund its operating expenses. Mr Huber then said that by around the middle of 2012, CellOS needed more funds so he decided to sell some of his shares and lend the proceeds back to CellOS, having received legal advice to do so. He said that he therefore arranged to transfer 16.5 million of his shares to Nr Narulla between June 2013 and April 2014 to sell on his behalf to raise funds for CellOS through loans. He said that he also engaged Grandeza to establish offshore companies to effect those sales, and his main contact at that firm was Mr Min Wee. 441 First, CellOS did raise considerable funds from the issue of new shares in 2011, but less than US$10 million. 442 CellOS' audited accounts for 30 June 2011 record cash inflows from proceeds from the issue of shares at AU$5,942,611; and for 30 June 2012 cash inflows from proceeds from the issue of shares at AU$2,626,056, but the timing within the financial year is unknown. 443 Second, Mr Huber's evidence that he obtained legal advice to the effect that he could not continue to issue shares to new subscribers was unreliable if not false. 444 Mr Hue gave evidence, which I will elaborate on later, that CellOS could only offer shares by a prospectus satisfying prescribed requirements relating to the contents of the prospectus. But this was subject to the following specified exemptions: (a) Under the Small Offers Exemption (this and other capitalised terms I will define later), shares can be offered and issued to persons in Singapore without complying with the prospectus requirements if various conditions are satisfied, one of the most important being that the total amount raised does not exceed SG$5 million within any 12 month period. (b) Under the Private Placement Exemption, shares can be offered and issued to persons in Singapore without complying with the prospectus requirements if various conditions are met, the most important being that the number of persons to whom offers are made does not exceed 50 persons within any period of 12 months. (c) Under the Accredited Investors Exemption, shares can be offered and issued to any person whose net personal assets exceed SG$2 million or whose income in the preceding 12 months is not less than SG$300,000. (d) Under the Significant Consideration Exemption, acquisitions of shares at a consideration not less than SG$200,000 are exempt. 445 I will discuss this later, but Mr Hue stated that CellOS could have relied upon more than one of the exemptions to issue shares in any given period. Moreover, the restrictions that applied to the issue of new shares also applied to the offer of existing shares. 446 The legal advice that Mr Huber in fact obtained, emailed to him and other members of CellOS' board on 15 November 2011, was to the same effect as Mr Hue's expert evidence. 447 Mr Huber's evidence was misleading by suggesting that the reason he sold his shares and used the proceeds to fund CellOS through loans, as opposed to CellOS issuing the shares directly, was the legal advice he received. This is so for the following reasons: (a) In every year after 2011, CellOS did not get close to exceeding the Small Offer Exemption or Private Placement Exemption. (b) CellOS could have always issued a prospectus. Mr Hue's evidence was that the cost of preparing a prospectus might be a few hundred thousand dollars. But CellOS had already prepared an information memorandum that covered similar ground to a prospectus. From 2009, Mr Huber had a form of information memorandum that was being continually updated and that he used to raise money for CellOS throughout the period, not just in Singapore, but in India, Australia, Malaysia, and Thailand. Indeed, it was CellOS' practice to use this information memorandum with any investment offer it made. In particular, in early 2013, KPMG had assisted in updating the information memorandum, and later in 2013, UOB had advised on its revision. Mr Huber expressly accepted that there was no limitation upon CellOS' ability to at least try to raise capital by the direct issue of shares using a prospectus and that CellOS could have issued a prospectus. (c) Further, CellOS could have issued new shares to the Pecks and others under the Accredited Investors Exemption or the Significant Consideration Exemption. Between 6 March 2013 and 1 July 2014, Mr Huber personally sold 18,842,000 shares to the Pecks at US$2 per share. Mr Huber knew that accredited investors were exempt, and accepted that there was no limitation upon CellOS' ability to raise capital by the direct issue of shares relying upon these exemptions. 448 Mr Huber agreed that CellOS could and would have taken any money raised directly from investors subscribing to new shares so long as CellOS complied with Singaporean law. 449 Third, the shares Mr Huber directed Mr Narulla to transfer to Child and Family Foundation were not shares that Mr Huber had previously transferred to Mr Narulla to hold on trust for him. 450 Mr Huber's evidence was that between 2008 and 2010 he had transferred 4.5 million shares to Mr Narulla to hold for him and later sell. Mr Huber identified those transfers at annexure 5 of his witness statement. Mr Huber said that these shares were transferred to Child and Family Foundation and sold by mid-2012, at which point Mr Huber needed to and did transfer another 16 million of his shares to Mr Narulla to sell for him to raise more funds for CellOS. 451 But that evidence was shown to be false. Now there were transfers of shares from Blue Delorite, Mr Huber's own company, to Mr Narulla for services rendered by Mr Narulla. That such transfers were for this purpose was recorded in a share adjustment prepared for PWC in the course of conducting the company's audit. Blue Delorite was reimbursed for these shares on the basis that they were really being transferred on behalf of CellOS. The auditors acknowledged these transfers and Blue Delorite was reimbursed shares on that basis. Further, Mr Huber told the board of CellOS that these shares were being transferred by Blue Delorite as reimbursement. Under cross-examination, Mr Huber agreed that shares he said he transferred to Mr Narulla to be sold through Child and Family Foundation were in fact provided for services rendered, and he was reimbursed for these. Mr Huber further agreed that none of the 4.5 million shares Mr Huber identified as being transferred were being held by Mr Narulla on trust for him. 452 As to Mr Huber's evidence that he then transferred 16 million further shares to Mr Narulla to sell for him to raise more funds for CellOS, that too was false. Mr Huber personally sold 18,842,000 shares to the Pecks alone, and by his own admission used to keep a running list of all potential buyers of his CellOS shares on the board in his office. As explained elsewhere in my reasons, Huber controlled entities bought and sold around 50 million CellOS shares at significant profits, which were used in part to make loans to CellOS. 453 Fourth, the proceeds from the sale of shares held by Child and Family Foundation were not all injected into CellOS. 454 The shareholding statement for Child and Family Foundation shows that between September 2011 and February 2012, 879,500 shares were sold. Those shares were sold mainly at US$2. 455 The audited accounts for CellOS for the year ended 30 June 2012 do not show any loan relating to proceeds of these share sales or otherwise indicate that such proceeds were raised for or used by CellOS. The LGA loan was backdated only to funds lent since March 2012. 456 Indeed, Mr Tan was telling investors seeking to buy shares from Child and Family Foundation that they were being "donated" by Mr Huber. Mr Tan confirmed this in his evidence, saying that in 2011 Huber had asked him to again assist with fundraising by selling CellOS shares Mr Huber had donated to Child and Family Foundation. 457 Fifth, the proceeds from the sale of shares held by Child and Family Foundation up to February 2012 were used in part to discharge Mr Huber's bankruptcy in March 2012. Mr Huber paid out a total of AU$888,839.89. 458 Now Mr Huber stated that on 30 November 2010, CellOS' board opted to clear Huber's bankruptcy through the issue of shares. When challenged about this evidence, Mr Huber changed his evidence to say that he had borrowed the money to discharge his bankruptcy from Mr Narulla, and then sold 400,000 of his own shares to repay him for that loan. But when invited to identify these 400,000 shares from his holding statements, Mr Huber was unable to identify them. And there was no evidence that Mr Huber repaid any sum to Mr Narulla. Mr Huber accepted it was possible that Mr Narulla used the sale of shares through Child and Family Foundation to raise the funds that were used to discharge his bankruptcy. 459 Let me move to another more general topic. Mr Huber's explanation for the conduct the subject of this claim was that he transferred 20.5 million of his personal shares to Mr Narulla and Mr Min Wee (through companies they controlled) to be sold to investors (most of which were sold to the Pecks for US$2 per share), the proceeds of those sales were then to be loaned to CellOS to fund the company, and pursuant to an option agreement Mr Huber could convert that loan back to CellOS shares at SG$1.80. But he accepts that what in fact was occurring was that Mr Narulla was buying shares cheaply from early investors and it was these shares that were being sold. But Mr Huber says that he knew nothing about Mr Narulla's conduct, which was unauthorised and from which Mr Narulla took the bulk of the profit. 460 But this denial is false, for reasons including the following. 461 First, as set out above, Mr Huber admitted that the first tranche of 4.5 million shares sold through Mr Narulla were not his personal shares. 462 Second, there was no further transfer from Mr Huber's personal holdings of 16 million shares. 463 Third, Mr Huber knew that the shares that Mr Narulla was selling to raise funds for CellOS were not his personal shares. Mr Huber's evidence was that his total holding was close to 50%. And Mr Huber accepted that at all times he had a pretty good idea of how many shares in CellOS he held. That was because he wanted to maintain control. 464 Fourth, Mr Huber knew where the shares Mr Narulla was selling to raise funds for CellOS were coming from, and that they were being sold. In this respect, as CellOS rightly points out, Mr Huber personally knew the original investors in CellOS, Mr Huber was looking at who transferred their shares, and Mr Huber was signing statements for shares as a director. Mr Huber admits that he was at relevant times monitoring all transactions, and indeed controlling the transfers of his shares. 465 Mr Huber's denial that he was monitoring and was aware of Mr Narulla's trading between January 2013 and July 2014 should be rejected for the following reasons. After January 2013, Mr Huber was personally signing letters to Computershare approving transactions from Mr Narulla's companies, including from Nesterland, from Basalt, from Maitreya Mandala, to Rex Investors. Mr Huber was aware of these transactions because he said that the transactions involving Rex Investors and Money Max did not concern him because they were his shares. Further, in November 2013, Mr Canning from Computershare wrote to Ms Mei Lan Ng setting out the Computershare procedure whereby Mr Huber would be sent a query by phone or email following Computershare's vetting of the transfer form. Further, on 14 July 2014, Mr Rodrigues wrote to Mr Canning of Computershare to change the existing protocols of CellOS. Point three recorded: "Computershare is to continue to send reports covering (1) successful transfers including buyer and seller, and (2) transfers in progress at the end of every month to Jason Huber, copied to Mark Rodrigues and Mei Lan". Mr Huber was also shown an example of this report for July 2014. Nonetheless, Mr Huber denied that it was happening like this. Mr Huber then gave less than credible evidence that Mr Peter Renda, an officer of Computershare, accepted an instruction from a person who was not an officer of the company to withhold information from him. Counsel then put to Mr Huber that Mr Renda denied doing such a thing. Mr Huber then changed his story to say that it was not Mr Renda, but Mr Aaron Canning at Computershare. There followed an assertion that Mr Canning was being bribed. Later, Mr Huber reverted back and said that it was Mr Renda who said this. I reject this evidence. Further, when Mr Huber was shown an email dated 6 June 2014 in which Mr Huber approved a transfer from Rex Investors to Mr James See for US$10 per share, Mr Huber first said that the money went to CellOS. When asked to explain why he directed the broker to amend the invoices with the accompanying statement: "The transaction does not involve me or Mei Lan or CellOS", Mr Huber said the trade was not his shares that were being traded, but Mr Narulla's and that Mr Narulla had "pleaded" with Mr Huber to help him sell some of his shares because he needed money, and so Mr Huber had introduced Mr Narulla to Mr See and allowed Mr Narulla to sell some of his shares. But as well as showing that Mr Huber was monitoring and aware of Mr Narulla's trading prior to July 2014, Mr Huber's account is inconsistent with his evidence that Mr Narulla was trading large volumes of shares behind Mr Huber's back and in doing so had made a fortune. Further, Mr Huber's evidence that "Up until July'14 … I didn't use to approve any transfers or sign any" was not credible. 466 Fifth, Mr Huber knew about and hid his involvement in the transactions. In early 2014, Evercore requested that CellOS identify the ultimate beneficial owner of each shareholder holding more than 5% of issued shares. Mr Narulla was administering Blue Delorite, LGA and Lighthouse, each of which then held more than 5% of CellOS' shares. Mr Huber directed Mr Narulla to disclose to Evercore only the ultimate beneficial owner of LGA. Mr Huber denied that he had, but the evidence speaks for itself. 467 Sixth, Mr Huber kept various private email addresses in order to hide the share trades. He transacted business with Mr Min Wee through these private email accounts. I would note that there has been no discovery made in relation to these accounts. In one such email, annexed to Mr Huber's own statement, he directed Mr Min Wee in relation to a share transaction of shares Mr Min Wee was administering on behalf of Mr Huber to "[m]ake sure there is no reference to me in the documents". When asked why Mr Huber was trying to cover up his involvement, Mr Huber simply said "there's no reason". 468 Seventh, Mr Huber failed to admit to all the bank accounts involved in the flow of funds to him. Evidence was led about two bank accounts, those of Nesterland and Swallow. But these accounts did not record all funds flowing to him from the sale of CellOS shares. For example, there is a payment of US$900,000 for the balance of Mr Huber's personal property purchase in Dubai that is unaccounted for in the bank accounts of Nesterland and Swallow. 469 Eighth, although Mr Huber was careful not to create a paper trail, and used multiple email accounts from which very few emails have been discovered, he did leave behind some significant communications with Mr Narulla. In particular, on 7 July 2014 Mr Narulla wrote to Mr Min Wee, in relation to one of the offshore companies Irrika Center Corp. Mr Narulla forwarded this email on to Mr Huber, who replied to Mr Narulla: Thank you. Please stop working with him on such transactions altogether once you have closed this off. This could put us at risk. 470 This referred to Mr Tan's trading of CellOS shares. When Mr Huber was asked how this put him and Mr Narulla at risk, he said the "us" was CellOS. When then asked how Mr Tan's trading could put CellOS at risk, Mr Huber gave an incoherent answer that ended with the contention that he was concerned CellOS was put at risk by representations Mr Tan might be making. When asked if this answer was in his witness statement, he accepted that it was not. I agree with CellOS that the risk was plainly that Mr Tan's activities might cause questions to be asked revealing Mr Huber's and Mr Narulla's share trading. 471 Ninth, Mr Huber's allegations against Mr Narulla suggesting that he went rogue appear to be a recent invention. This proceeding was commenced in 2015. Contrastingly, Mr Huber swore an affidavit in the Singapore proceedings on 2 February 2016, yet that affidavit was silent about Mr Huber's claim that Mr Narulla bought and sold 30 million shares using Mr Huber's companies without his knowledge or authority. Mr Huber did not give a satisfactory explanation for this omission. 472 Tenth, Mr Huber was asked by me why he bothered to transfer his shares to Mr Narulla, via various companies and other entities, in order that the shares be sold by Child and Family Foundation or other companies, rather than Mr Huber retaining control of his shares himself. He could offer no plausible commercial explanation. 473 More generally, there were other aspects of Mr Huber's evidence that were quite problematic, including the documentation for the LGA loan, its timing and in my view the clear non-disclosure by Mr Huber to CellOS of his interest in LGA and Pized and the LGA and Pized loans. The contemporaneous documents clearly demonstrate that he did not make disclosure of his interest therein to CellOS at the relevant time. In fact, at the time of the LGA loan, misleading statements were made about foreign backers. 474 In summary, I have not found Mr Huber's evidence to be reliable, and have not accepted it unless independently corroborated by other probative evidence or it was otherwise adverse to his interest.

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Mrs Constance Peck 478 Mrs Constance Peck is a 72-year-old businesswoman who has enjoyed considerable success in her career. She is a very effective saleswoman and manager. She is a prolific user of the messaging application "WhatsApp". She is a committed Christian who appears to have poured out her heart in her WhatsApp messages and emails. 479 Undoubtedly, Mrs Peck was a difficult witness to cross-examine. Her answers were often vague and deflective. At times she avoided direct responses to questions or refused to accept matters which became obvious on the face of the record. But although some of Mrs Peck's answers were clearly incorrect, this does not mean that they were deliberately so. 480 CellOS submits that it is apparent that Mrs Peck has, in hindsight and with the passage of several years, formed an overarching internal narrative of her conduct in relation to CellOS. It says that that narrative was that her dealings were limited, legitimate, conducted without real knowledge and excused, because: (a) most of her profits were spent on the purchase of additional shares; and (b) her eventual financial position from trading involved losses. 481 But CellOS submits that Mrs Peck's answers during cross-examination were constrained by and constructed within this narrative. It says that this led her to giving formulaic answers, such as she "did not read financial statements" or that most sales involved so-called "backfilling". It says that some of her answers were contradicted by other witnesses and the contemporaneous record. It says that such answers should be rejected. 482 But I agree with the Pecks that in some respects she was inexperienced with respect to share dealings and share trading. In particular, before her first purchase of shares in CellOS, she had never invested or traded in shares. As a result she was unaware of features of company shares that someone with share investment experience would regard as basic. Notably, she did not initially understand the relevant difference between acquiring a share by transfer from an existing shareholder and acquiring it by new issue from the company. This relevant difference began to become apparent to her from about October 2013 when in the course of assisting Mr Huber to raise funds from new investors, she brought transfer forms for a new investor to sign, only to be told that a different and official CellOS form had to be used. Further, as late as 20 September 2014 she apparently believed that UOB had been engaged to market an existing parcel of 20 million shares which, when UOB failed to sell them, nevertheless had a continuing existence and could be sold to others. 483 I agree with the Pecks that her inexperience led to confusion not only between vendor shares and newly issued shares, but also as to how the sale of CellOS shares could or would raise funds for CellOS. 484 Now Mrs Peck was criticised for not always being responsive to the question, but in my view some allowance had to be made for her age and the fact that she was in the witness box for a lengthy period under detailed and close cross-examination by Dr Charles Parkinson. 485 Further, I reject CellOS' credit attack of Mrs Peck concerning her dealings with Ms Janifer Yeo-Tan, largely for the reasons that the Pecks submitted to me in their closing written submissions. 486 Now I will say something more about Mrs Peck's evidence when I come to discuss the issue of what knowledge she had of Mr Huber's activities. Suffice it to say for present purposes that although some of her answers were problematic, nevertheless I considered her to be a truthful albeit at times wily witness. Further, in some respects Mr Peck reinforced Mrs Peck's credibility. Further, even if I do reject some aspects of her evidence, it does not follow from this that she had sufficient knowledge of relevant elements of Mr Huber's breaches of duty such as to make her liable as an accessory to his conduct.

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SINGAPOREAN LAW ON SHARE ISSUES 496 The central issue in the case concerns whether Mr Huber by setting up a grey market in CellOS' shares diverted a business opportunity away from CellOS to raise equity capital. Before addressing that issue in detail, I need to say something about Singaporean law dealing with CellOS raising equity capital. An issue arose before me as to whether CellOS' capacity to issue shares was relevantly limited under Singaporean law during the relevant period. 497 As I have said, Mr Wilson Hue, a distinguished Singaporean lawyer specialising in corporate and securities law and currently a director of Genesis Law Corporation, gave evidence before me in relation to whether and to what extent Singaporean law limited CellOS as to the number or value of shares it could have issued in Singapore between 2010 and 2015. 498 Let me summarise his evidence, which I have accepted. 499 Singaporean law on companies and securities is contained mainly in the Companies Act (Singapore, cap 50) and the Securities and Futures Act (Singapore, cap 289) (SFA) of Singapore together with numerous subsidiary pieces of legislation passed under these Acts. The relevant issues relating specifically to the questions put to Mr Hue were governed by the SFA and its regulations. There were no Singapore court decisions that expressly addressed the questions. 500 The first question posed to Mr Hue was: "In the period 2010 - 2015, did Singaporean law apply to CellOS so as to limit the number or value of the shares that it could lawfully have issued in Singapore?". His answer, which I accept, was along the following lines. 501 In the period 2010 to 2015, Singaporean law would have applied to regulate the issuance by CellOS of its shares to persons in Singapore even though CellOS is an Australian company and was not incorporated in Singapore. However, the relevant laws did not limit the number or value of the shares that could have been issued by CellOS per se, but required that any offer of shares to persons in Singapore be accompanied by a prospectus registered by the Monetary Authority of Singapore (MAS). 502 The starting point was s 240(1) of the SFA which provided that: "No person shall make an offer of securities unless the offer … is made in or accompanied by a prospectus in respect of the offer … and complies with such requirements as may be prescribed by [MAS]" 503 Under the SFA and its regulations, there were strict rules governing the required prospectus including prescribed requirements relating to the contents of the prospectus and how it was to be signed, lodged and registered (the "Prospectus Requirements"). 504 Accordingly, if CellOS complied with the Prospectus Requirements, it could have lawfully issued its shares to persons in Singapore without limitation as to number or value so long as the shares were issued in accordance with the registered prospectus. 505 But if CellOS did not wish to comply with the Prospectus Requirements, it could still have made offers and issued its shares lawfully to persons in Singapore in accordance with one or more of the many specified exemptions under Subdivision 4 of Division 1 of Part XIII of the SFA (Exemptions). 506 Two common Exemptions relied on by entities who did not wish to spend the time and costs associated with complying with the Prospectus Requirements were the exemption relating to "small offers" under s 272A of the SFA (Small Offers Exemption) and the exemption relating to "private placement" under s 272B of the SFA (Private Placement Exemption). 507 Under the Small Offers Exemption, shares could be offered and issued to persons in Singapore without complying with the Prospectus Requirements if various conditions in s 272A of the SFA and the relevant subsidiary legislation were met (Small Offers Conditions). One of the most critical Small Offers Conditions (and from which the name of this Exemption was derived) was that the total amount raised within any period of 12 months pursuant to the Small Offers Exemption did not exceed SG$5 million (or its equivalent in foreign currency) (SG$5 million limit). 508 Similarly, under the Private Placement Exemption, shares could be offered and issued to persons in Singapore without complying with the Prospectus Requirements if various conditions in s 272B of the SFA and the relevant subsidiary legislation were met (Private Placement Conditions). The most critical Private Placement Condition was that the number of persons to whom offers were made pursuant to the Private Placement Exemption did not exceed 50 persons within any period of 12 months (50-offerees limit). 509 It is convenient to describe the SG$5 million limit and the 50-offerees limit collectively as the "Quantitative Limits". It appears that the assertion put to Mr Hue by Mr Huber that Singaporean law limited the number of shares that could be issued by CellOS to 49 individuals or SG$5 million in a single 12 month period alludes to these Quantitative Limits, but may have misconstrued the way in which the Quantitative Limits were supposed to apply as I will explain in a moment. 510 The second question posed to Mr Hue had three parts. The first part of the question, being question 2(a), was "What were those limitations?". His answer, which I accept, was along the following lines. 511 As already discussed, there were no Quantitative Limits as such if a company complied with the Prospectus Requirements and issued shares in accordance with a registered prospectus. But if a company did not wish to comply with the Prospectus Requirements, it could still lawfully offer and issue shares to persons in Singapore by relying on one or more of the Exemptions, including the Small Offers Exemption (subject to the SG$5 million limit as described above) or the Private Placement Exemption (subject to the 50-offerees limit described above), to do so. 512 But the Exemptions were not mutually exclusive. A company could rely on more than one Exemption concurrently. Accordingly, a company which had not complied with the Prospectus Requirements and which intended to rely on both the Small Offers Exemption and the Private Placement Exemption could lawfully, in any period of 12 months, concurrently offer and issue shares in Singapore to: (a) any number of persons without limitation so long as the final amount raised did not exceed the SG$5 million limit and the other Small Offers Conditions were met; and (b) at the same time, raise any amount without limitation from another group of persons so long as the total number of persons in this other group to whom the offer was made did not exceed the 50-offerees limit and the other Private Placement Conditions were met. 513 According to Mr Hue, the fact that the Small Offers and Private Placement Exemptions could be relied on concurrently was implicit from a reading of the provisions of the SFA and was put beyond doubt by the feedback and comments to and from the MAS when these Exemption provisions were first considered and then introduced in the SFA; for present purposes I do not need to delve into the detail of that "feedback" or its status as relevant extrinsic material, as Mr Hue's opinion seems readily supported by the text and context including structure of the relevant statutory provisions. 514 The second part of the question posed, being question 2(b), was: "How did the [limitations] apply to CellOS?". His answer, which I accept, was along the following lines. 515 If CellOS had decided not to comply with the Prospectus Requirements, it could still lawfully have issued its shares to persons by relying on one or more of the Exemptions under the SFA, including the Small Offers Exemption and the Private Placement Exemption. 516 In this regard, even assuming that the only Exemptions that could be relied on were the Small Offers Exemption and the Private Placement Exemption, it was incorrect to assert that the relevant limit of the number of shares that could be issued by CellOS was 49 individuals or SG$5 million, whichever limit was reached first. According to Mr Hue, by relying on both the Small Offers and Private Placement Exemptions, CellOS could lawfully have made offers of shares to up to 50 persons (and raised an unlimited monetary amount from that group) and, in addition, raised up to SG$5 million from a different group of persons (without limit as to the number of persons) concurrently. 517 In addition, the Quantitative Limits were specific to the Small Offers Exemption and the Private Placement Exemption. But there were other Exemptions that CellOS could rely on in which the Quantitative Limits were irrelevant as I will now explain 518 The third part of the question posed, being question 2(c), was: "[W]hat steps, if any, could CellOS have taken to avoid those limitations and issue additional shares?". Mr Hue's answer, which I accept, was along the following lines. 519 If CellOS wished to offer/issue more shares than the Quantitative Limits allowed, it could have issued a prospectus and complied with the Prospectus Requirements, in which case the Quantitative Limits would not have applied at all to the offer/issuance of shares in accordance with the prospectus. But even if CellOS did not wish to comply with the Prospectus Requirements but yet wanted to offer/issue more shares than the Quantitative Limits allowed, it could have relied on other Exemptions in lieu of or in addition to the Small Offers and the Private Placement Exemptions. 520 Two of the other Exemptions which were more likely to apply were the exemption granted in relation to a "relevant person"/"accredited investor" under s 275(1) of the SFA (Accredited Investors Exemption) and the exemption relating to an acquisition of shares at a consideration not less than SG$200,000 per transaction under s 275(1A) of the SFA (Significant Consideration Exemption). 521 The Accredited Investors and Significant Consideration Exemptions recognised that the provisions of the SFA that were intended to afford protection to retail investors may not be entirely appropriate for the investors eligible under these Exemptions. Accordingly, under these Exemptions, where the investors concerned were better able to protect their own interests in the absence of a prospectus, being "accredited investors" or investors who could afford to pay not less than SG$200,000 per transaction, the Quantitative Limits were not imposed at all. 522 In practice, the Accredited Investors Exemption was relied on extensively in the making of offers without a prospectus as the prerequisites to being an accredited investor were relatively simple to meet. Moreover, these were the persons who were more likely to be able to invest larger amounts. 523 CellOS could therefore have relied solely on the Accredited Investors Exemption and the Significant Consideration Exemption to avoid the Quantitative Limits, being applicable only to the offer/issue of shares under the Small Offers Exemption or the Private Placement Exemption, entirely. 524 In summary, even if CellOS did not wish to comply with the Prospectus Requirements, CellOS could have made offers of, and issued shares, without being constrained by the Quantitative Limits, by relying concurrently on: (a) the Small Offers Exemption, which had no limit on the number of persons to whom the offer could be made or shares issued, to raise up to SG$5 million; (b) the Private Placement Exemption, which had no limit as to the amount that could be raised, to make offers to up to 50 persons; (c) the Accredited Investors Exemption, which could be used to raise an unlimited amount from an unlimited number of accredited investors; and (d) the Significant Consideration Exemption, which could be used to raise an unlimited amount from an unlimited number of persons who were prepared to pay a consideration for the shares of not less than SG$200,000. 525 I found Mr Hue's evidence persuasive. Notwithstanding his cross-examination by Mr Huber's counsel, Mr Daniel Bongiorno, none of the above propositions were put in any doubt. Indeed, they accord with my own reading of the Singaporean legislation that was tendered in evidence. 526 In my view, Mr Huber's assertions of relevant constraints under Singaporean law to the issue by CellOS of new shares in the relevant volumes was substantially exaggerated. I will deal with these in more detail in a moment.

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(a) Mr Huber's contentions 528 Mr Huber points out that CellOS alleges that by selling certain CellOS shares under his control, Mr Huber breached his fiduciary and statutory director's duties. In particular, CellOS alleges that this conduct diverted third party investors away from the equity placement or any other possible capital raising that would have been to the benefit of CellOS or, in a similar vein, any other actual or contemplated equity raisings. 529 Mr Huber points out that it had been pleaded that: (a) CellOS was, at all material times, not generating sufficient revenue to meet its operational expenditure and was reliant upon, and sought to effect, equity raisings and loans. (b) In March 2013, CellOS appointed UOB to act as CellOS' placement agent to raise equity by raising new shares in CellOS for a period of nine months. (c) UOB was to raise up to US$100 million via 20 million shares in CellOS at US$5 per share. (d) The purpose of this equity raising was to provide CellOS with funds sufficient to meet its operational expenditure. 530 But Mr Huber has made the following points: (a) UOB was under the equity placement appointed to obtain investment from private equity firms. Accordingly any issue of shares was contingent on agreement with those investors. According to Mr Huber, by "private equity firms", it was meant that CellOS was looking to "institutional investors". (b) On this basis, according to Mr Huber, any sale of Mr Huber's CellOS shares to persons other than private equity, did not divert any investor away from the equity placement. Similarly, given the target of the UOB offering, no real conflict arose in Mr Huber's sale of shares to persons other than private equity firms or institutional investors. 531 According to Mr Huber, until the trial CellOS had not articulated any other actual or contemplated equity raisings. On 13 September 2017, CellOS provided particulars to the relevant pleading. Those particulars, spanning a four year period, were basically said to be in two categories: (a) references to the UOB equity placement; and (b) vague references to CellOS' intention to raise funds. 532 According to Mr Huber, the first of these categories falls within CellOS' allegations regarding the UOB equity placement. As to the second of these categories, Mr Huber says that they do not disclose a properly formulated fundraising effort from which anyone could have diverted third party investors or from which a legally relevant conflict could arise. Mr Huber submitted that the UOB equity placement was the predominant means by which CellOS sought to raise equity. It was the only equity raising from which Mr Huber could be alleged to have diverted third party investors, so Mr Huber contended. 533 Mr Huber submits that with respect to his fiduciary duties, three matters should be emphasised: (a) First, in the context of moulding Mr Huber's fiduciary duties to the present circumstances, it is important to recognise that, absent a particular identified conflict arising out of his directorship, his fiduciary obligations did not extend to his conduct when acting in the capacity of a shareholder, and in particular in the sale of shares under his control. (b) Second, to properly engage a fiduciary's duties, a person's conflict of interest or duty cannot be merely notional. Rather, there must be a "conflict or significant possibility of conflict" or "a real or sensible possibility of a conflict". According to Mr Huber, a theoretical possibility of a conflict is insufficient to constitute a breach. This is particularly important to those aspects of CellOS' case where it asserts Mr Huber diverted third party investors from any other actual or contemplated equity raisings. Mr Huber submits that contemplated, hypothetical or notional capital raisings, or the mere desire to raise capital, were all insufficient to pose a legally relevant conflict. CellOS' mere desire to raise capital was not, by itself, sufficient to engage Mr Huber's fiduciary duties so as to prohibit the sale of his shares, so Mr Huber contended. He said that he was a shareholder with the statutory right to alienate his shares. (c) Third, both pleaded statutory duties under ss 181 and 182 of the Corporations Act, as a matter of statutory wording, bind an officer and director when acting as such. Section 181 regulates a director's "exercise [of] powers and discharge [of] duties". Section 182, on the other hand, regulates a director's "improper use" of his or her "position". In both respects, as a matter of statutory interpretation, a nexus with the director's powers or position is required. Absent some special connection, they did not encompass Mr Huber's actions as a shareholder. 534 I will return to these legal points later. For the moment, let me just address the facts as to whether there was a diversion of, in essence, a business opportunity. Let me continue with how Mr Huber developed his case on the factual questions. 535 At its Annual General Meeting held on 1 June 2012, CellOS had resolved to list itself on the NASDAQ Stock Exchange. This remained CellOS' intention at its Annual General Meeting in 2013. 536 But prior to such an ambitious step, CellOS had to be adequately capitalised. On 18 March 2013, the Board resolved to appoint UOB to raise up to US$100 million. Like the intended listing, the UOB share placement was discussed at the Annual General Meeting in 2013. That the UOB share placement was to be a significant means of capitalising CellOS is reflected in its 2013 financial accounts, extracts of which I have set out earlier. The ability of the company to continue as a going concern and meets its debts and commitments as they fall due, is dependent on the company being successful in the following matters within 3 - 6 months of the date of this report, at the current rate of expenditure: • The company will continue to seek funding from its loan facility arranged with LGA Energy Investments Ltd. Further drawdowns under this facility are at the election of the company. • On 19th March 2013 the company signed an engagement letter with UOB Kay Hian Private Limited ("UOB Kay Hian") a securities trading and investment company for Asian financial markets, for private equity fundraising exercise. UOB Kay Hian will use commercially reasonable efforts to sell new share in the company. At the date of approval of the financial statements no shares had been issued through UOB Kay Hian. • The company continues to be in the research and development phase in respect of development of the core CellOS products. The company needs to commercialise and raise cash via revenue from its research and development spend, in order to be able to service any future debt funding and/or pay debts as and when the fall due. 537 When questioned on this aspect of the 2013 financial reports, Mr Patel's evidence was as follows: And if the company were seeking any other form of finance at that time it would have been in there, would it not?---Yes. It would. And that reflects what the company was considering at the time in terms of fundraising; were they not?---That is correct. 538 Now in addition to the UOB offer, Mr Huber points out that CellOS has sought to rely on broad suggestions that Mr Huber was looking to raise funds on an ongoing basis or was contemplating raising funds for the company. 539 But in this regard, Mr Huber submits that it is of fundamental importance that, under cl 2.1 of CellOS' constitution, raising equity is the board's, not an individual director's, responsibility. 540 Again, cl 2.1 of the CellOS constitution provides: 2.1. Power of Directors to Issue Shares and other securities (a) The issue of Shares, options and other securities of the Company is under the control of the Directors. (b) Any Share, option or other security may be issued with preferred, deferred or other special rights or restrictions, whether with regard to dividends, voting, return of capital, payment of calls or otherwise, as the Directors decide. (c) Clause 7.1(a) has effect without prejudice to any special rights conferred on the holders of any issued Shares, options or other securities. 541 Mr Huber submits that the UOB fundraising was the means of capital raising that the board had resolved to take. And that CellOS cannot point to any other relevant board ordained fundraising effort. Further, according to Mr Huber, CellOS was legally constrained in its fundraising options. Mr Huber contends that the exceptions to Singapore's prospectus requirements, emphasised and relied on by CellOS, did not apply. Rather, in the pursuit of the UOB offering, CellOS was confined to institutional investors. 542 Accordingly, Mr Huber submits that CellOS has not established any other actual or contemplated equity raisings from which Mr Huber could relevantly divert third party investors. 543 Further, Mr Huber contends that certain matters, taken together, establish that the UOB placement was directed to raising funds from private equity firms, being large institutional investors. Broadly, these matters include that: (a) the terms of CellOS' appointment of UOB targeted the capital raising of "private equity"; (b) the "Information Memorandum" to be used in the UOB offering confined UOB's offering, as a matter of Singaporean law, to institutional investors; and (c) the evidence of CellOS' board members at the time of UOB's appointment was to the effect that UOB's intended target was "private equity". 544 On 18 March 2013, the board resolved to appoint UOB to raise equity. According to Mr Huber, as that resolution made clear, the intended target of that raising was "Private Equity" or "PE". 545 Further, UOB's letter of engagement stated that UOB was to target "private equity" and referred to "certain private investors": This Letter of Engagement is made with reference to the proposed fundraising of up to US$100 million in private equity fundraising ("PE fundraising") to certain private investors on a best efforts basis. 546 Although the term "private equity" is not a term of art, Mr Huber submits that private equity investment is pursued by large institutional investors or wealthy individuals who can invest large sums; in this instance the intended total investment was US$100 million. Those investors will commonly combine, using an investment vehicle, to undertake a particular investment. The term "private" is used in contradistinction to "public" equity raised via a securities exchange. This is what was intended by the term "private investors", so Mr Huber contended. 547 Further, the "Information Memorandum", prepared with the assistance of KPMG, was drafted to be used in the UOB equity raising. When cross-examined, Mr Patel gave the following evidence on this document: And you said to the court before that you contributed to this document?---I contributed to the document in terms of reading the document and - yes, I did. Yes, I did contribute. Yes. Yes. Sure. And this is the information memorandum that was referred to in the minutes of the meeting of 25 February 2013, is that right?---Right. Yes. And - - -?---Sorry, 25 February - yes, the 14th - yes. The extended meeting. You're right. Yes. And this is to be used with the UOB share placement, isn't it, or the UOB share raising?---Yes. Correct. And obviously enough because you're using this document, you're deploying this document for people to give money into the company, it's a very important document?---Yes. Correct. You would agree with that?--Yes, it is. And for that reason, it has to be accurate. Would you agree with that?---It has to have forward looking statements. Sure?---And forward looking statements cannot be accurate. Okay. Sure. But you have to do your best - - -?---Yes. - - - in the preparation of the document to ensure that it's as critical as can possibly be?---Yes. 548 Mr Hegde's evidence concerning the Information Memorandum was as follows: - - - from 2009 onwards, Mr Huber had a form of an information memorandum that was being updated and changed from time to time?--Yes. It does seem, yes. You agree with that?---Yes. And the purpose of that document was to endeavour - to use it to endeavour to raise the money that this company needed. You agree with that?---Yes. And that need, so far as you're aware - you're a non-executive director. I accept that. But so far as you're aware, that was a need that the company had throughout this whole period, didn't it?---Yes. HIS HONOUR: And the sort of investor we're talking about, is that anybody that would fall within one of these exemptions?---No. That … no. This is 2009 we are talking. Yes. MR CRUTCHFIELD: All right. Well, let's go - - -?---That advice we took in 2011--- HIS HONOUR: I'm just trying to understand. We've got an information memorandum in 2009 that constantly gets - - -?---That information - - - Hold on. That constantly gets updated and used. So I just want to know what investors are being targeted by that information memorandum from time to time?---Actually, they used to give that information memorandum to the banks to find out if they can invest. Then - like credit … or Merryl Lynch, like institutions … to their clientele or - you know … from the private banking side. Yes?---So this information memorandum used to be used for that purpose, for fundraising. So initially it was done in-house, information memorandum, basically talking about the technology and what is the current situation - development in technology etcetera. But when it came to 2013 - 2012/13, then professional companies like KPMG were used to prepare the information memorandum so that we could appoint like UOBKH here. We used to discuss even - JP Morgan also we had approach at that time but they said that they will not be interested unless there is a revenue stream. But UOBKH at that time were willing to refer some of the fund managers to invest in the company. Yes?---Yes. But this 2009 minute refers to three investors. And it's describing those three investors as separate to the investment fund. So I'm just wondering what are the three investors we're talking about? Are we talking about just wealthy individuals or what sort of investors are we talking about at that time?---Some individuals. I think it should be individuals. I don't recollect exactly who. Yes?---But it should be individuals. 549 Mr Huber says that the Information Memorandum is important not just for what it contains, which should be taken as a credible reflection of the state of the company, but also for what it does not. In exploring the requirements of Singaporean law, I queried whether the Information Memorandum would allow for CellOS to offer securities via one of the Exemptions to the mandatory prospectus requirements. But Mr Huber submitted this was not the case. In particular, while the Information Memorandum contained high-level approximate information on investment and expenditure to date, importantly so Mr Huber contended, it did not contain detailed financial information (e.g. like that contained in its 2012 or 2013 financial reports). Mr Huber contended that understood in the context of Singapore securities law, this confined the UOB offering to "institutional investors" as defined under that law. 550 As I have said elsewhere in my reasons, any "offer of securities" by CellOS in Singapore was principally governed by the SFA. 551 Mr Huber says that under cl 2.1 (extracted above) of the CellOS constitution, raising share capital was in the board's discretion. Unsurprisingly, nothing under Singapore law changes this position. Mr Huber says that hypothetical equity raisings, which CellOS did not pursue, are not something from which Mr Huber could have diverted third party investors. To put the matter another way, no real conflict arose with respect to investors to whom CellOS would never have issued equity. 552 Now the SFA requires "an offer of securities" to be accompanied by a prospectus lodged and registered with the Monetary Authority of Singapore. But Mr Huber submits that apart from not being CellOS' chosen route, the notion that CellOS, a company with no assets, income or marketable product, would otherwise prepare, lodge and register a prospectus was remote. First, the directors were, along with the issuer's advisors, liable for the prospectus' contents. This was not a path the board had determined to take. Second, a prospectus would have been costly and time consuming. Third, a prospectus had to contain extensive information on the issuer. In CellOS' case, this would have included CellOS' financial state and CellOS' failure to commercialise any intellectual property to date. Generally, Mr Huber contended that I should reject any suggestion that Mr Huber's actions diverted investors from CellOS' issuing securities by way of a prospectus. I am prepared to partly accept Mr Huber's contentions on this point. 553 But importantly for present purposes, the prospectus requirement was subject to various relevant Exemptions, which I have already discussed above. 554 But Mr Huber contends that on the basis that CellOS intended to use the Information Memorandum to promote the UOB equity placement, it should be inferred, by reference to each Exemption's advertising provisions, that CellOS did not intend to rely on any of the Exemptions except the one pertaining to institutional investors pursuant to s 274 of the SFA. This is because the Information Memorandum failed to describe CellOS' "affairs". I am not sure that I agree with either the premise or the conclusion irrespective of the premise. But let me go on for a moment with Mr Huber's arguments. 555 Mr Huber addressed the Exemptions in the following terms: (a) Small Offers Exemption (s 272A) and Private Placement Exemption (s 272B): Both these Exemptions prohibit "an advertisement making an offer or calling attention to the offer or intended offer": see ss 272A(1)(c) and 272B(1)(b). Mr Huber submits that the use of the Information Memorandum would have breached this condition. First, the definition of "advertisement", including "a written or printed communication", prima facie covers a document of the type of the Information Memorandum: s 272A(10)(a); see also s 272B(6) incorporating the same definition for s 272B(1). Second, while a safe harbour exists in the sense of allowing certain such documents to be used, it allows for the use of such a "document - (A) purporting to describe the … affairs of the person making the offer, the issuer…" (s 272A(10)(i)(A)), being CellOS (emphasis added). But Mr Huber submits that the Information Memorandum made no attempt to describe CellOS' "affairs", including, among other things, CellOS' "liabilities (including liabilities owned jointly with another person or other persons and liabilities as trustee), profits and other income, receipts, losses, outgoings and expenditure of the corporation": see s 2(2), incorporated by s 272A(11). On this basis, so Mr Huber contended, it should be inferred that the UOB equity raising was not intended to, and could not, fall within the Small Offers Exemption (s 272A) and Private Placement Exemption (s 272B). Now even accepting Mr Huber's legal analysis, I make two key points. First, I am not satisfied that "affairs" of CellOS were not described or could not have been amended to so describe. Second, and in any event, an Information Memorandum may not need to have been used. The ban on "advertisements" excluded documents of the type of an Information Memorandum. But that did not mean that an Information Memorandum had to be used if there was no advertisement necessary. (b) Accredited Investors Exemption (s 275(1)) and Significant Consideration Exemption (s 275(1A)): Like the above Exemptions, these two Exemptions prohibit "an advertisement making an offer or calling attention to the offer or intended offer": see ss 275(1)(a) and 275(1A)(b). Again, Mr Huber contends that the use of the Information Memorandum would breach this condition for the same primary reason, albeit in a slightly different statutory context. First, again, the definition of "advertisement", including "a written or printed communication", covers the Information Memorandum: s 275(2)(a). Second, while a safe harbour exists, it allows for, among other things, the use of an "information memorandum" (s 275(2)(i)), being a "document - (a) purporting to describe the … affairs of the person making the offer, the issuer…" (s 275(2)(a)), being CellOS. But the Information Memorandum does not describe CellOS' "affairs". And so, while the Information Memorandum was fashioned as such, it omits a critical feature required under Singapore law. On this basis, so Mr Huber contends, it should be inferred that the UOB equity raising was not intended to, and could not, fall within either the Accredited Investors Exemption (s 275(1)) or Significant Consideration Exemption (s 275(1A)). But I would make similar points to what I have just said in sub-paragraph (a). 556 Further, according to Mr Huber, the Information Memorandum's failure to describe CellOS' "affairs" is not some trivial omission or mere oversight. Mr Huber submits that CellOS' board had turned their mind to the most expedient way to raise equity under Singaporean law. Mr Huber submits that given CellOS' financial state, it is understandable why its directors did not want to disclose its "liabilities … profits and other income, receipts, losses, outgoings and expenditure of the corporation". More importantly, however, the absence of that information from the Information Memorandum meant that, as a matter of Singaporean law, CellOS was legally constrained in offering securities. And if CellOS were to comply with the SFA's prospectus requirement, it was confined to "making an offer of securities" to "institutional investors". Accordingly, it is submitted that Mr Huber's share sales did not, and could not have, derogated from an issue to these investors. 557 I would say at this point that I think Mr Huber's asserted difficulties are exaggerated and that CellOS could have readily relied upon these Exemptions, even without the Information Memorandum. Moreover, I do not accept that, commercially, the Information Memorandum could not have been used with it covering "affairs". There is no suggestion in the material that I have seen suggesting that the directors did not intend to be transparent with a capital raising, whether using UOB or otherwise. 558 Further, and putting Mr Huber's own evidence aside, Mr Huber relies upon the evidence of each of the CellOS board members in respect of the UOB equity raising as follows: (a) Mr Hegde's evidence was that the investors were to be "private equity funds or private equity institutions". He also gave evidence as follows: And did those key terms include that it was $5 a share?---Yes. And did those key terms include that it was a 20 million share raising?---Yes. And that would equate to $100 million raising?---That's right. And did she talk to you at all about the character, if I could put it broadly, of the entities that she and her firm would be targeting?---Yes. And how did she describe them to you?---Actually, she said they would be approaching private equity funds. But at a later date, when we had a discussion, she made it very specific that fund managers who really finance telecom-related companies. Yes?---Otherwise other private equities may not be interested in the investment. I see?---So she would prefer - it means UOB would prefer private equity funds who invest in telecom-related companies. (b) Mr Patel a director at the time of UOB's appointment, gave evidence on the target of the UOB placement as follows: And UOB are to go and to seek private equity funding. You agree with that?---That is correct. And that was a decision that the board made, obviously?---Yes. And you considered that decision at the time, obviously?---Yes. And that was a decision, was it not, to lender a private equity - pardon me. Not to lend a private equity but to issue shares to private equity?--- Well, I had a lot of discussions with UOB already. And they also have a very large personal wealth - wealth individuals as well. And I know that they would be involved as well. So it's a combination of both, I guess. Sure. But this says private equity?---Right. And that was, was it not, a decision to lend to private equity - pardon me. To issue shares to private equity or high net worth individuals over, say, mums and dads?---Yes. Correct. And you generally agree with what's in that resolution there, private equity PE mandate?---I do, yes. I agree. 559 Mr Patel later clarified what "wealthy individual" meant: What I suggest to you is that you're adding wealthy individuals to this concept because it's good for your case. What do you say to that?---Not at all. I - I had extensive discussions with UOB. And I know they have a lot of wealthy individuals. And - and that's why I refer to that as wealthy individuals as well. If people - if wealthy individuals wanted to buy this they would have been able to. Sure. And how wealthy is wealthy?---I - a billion dollars plus. I - I don't know. I mean, there are - UOB KayHian is known for wealthy individuals. 560 Mr Huber submits that Mr Patel's vague and unhelpful evidence is contradicted by documentary evidence. Mr Huber refers to and relies upon the "Further Materials from first Respondent" that he tendered during the latter phase of the trial in May this year. He submits that these documents provide clear evidence that UOB only targeted institutional investors for the placement. 561 First, in an "Action list- preparation for UOBKH investor meetings" dated 27 March 2013, Irene Chan of CellOS wrote to the senior management of CellOS (including Mr Patel) as well as Ms Mei Lan Ng (CFO), Mr Mark Rodrigues (Head of Investment), Mr Bhargab Mitra (Head of Sales), Mr Ross Carter (Head of Product Development), and stated that "UOBKH provided guidance in several areas to prepare us for the upcoming presentations to institutional investors". 562 Second, Mr Patel wrote an email dated 12 November 2013 to various property agents in the US regarding premises that CellOS wanted to lease at that time, in which he informed them that they should take note that CellOS is "(f)undraising from UOBKayHian (Singapore based Bank that is leading our fund raising activities with PE firms)". 563 Third, in an email from Mrs Peck to various persons dated 13 October 2013, she describes the investment teaser used by UOB as "for their institutional PE clients". 564 Further, in an email dated 4 January 2014 from Mrs Peck to Lai Kuen Woo, she stated that "Last year, the company sold shares at US$5 per share but the next pre-IPO price is US$25 per share and they are available to institutional buyers only". 565 Mr Huber also referred to 14 emails between officers of UOB, Mr Huber and/or Mr Patel, communicating about the introductions made by UOB to CellOS for potential investment in CellOS according to the mandate agreement. All the introductions were to institutional investors or private equity firms, mainly with an interest in the telecommunications industry fitting within the term "Strategic Partners". There was no evidence of a single introduction being made to individual persons. 566 Mr Huber also refers to an email dated 23 April 2013 from Lily Abraham, an officer of UOB, to Irene Chan and Mr Huber, in which she states, "Ok we will go ahead with the teaser and send it out to the funds" and, "Jason, attached is the list of Targeted Funds". 567 Mr Huber further refers to an email from Mrs Peck to him dated 8 October 2013, in which she states that one of the benefits was that "(t)he new buyers get a chance to buy CellOS shares. They are grateful and really happy to be able to get CellOS shares. (They can't buy from UOBKH- they are small investors and private individuals - not PE funds and institutional clients.)". 568 Further, Mr Huber refers to Mrs Peck's witness statement, where she states: In one of my early discussions with Jason Huber, he told me that UOB Kay Hian Pte Ltd (UOBKH), a stock broking firm which I knew to be a subsidiary of a reputable local bank, would be instructed to obtain up to US$100 million in equity capital from private equity firms and institutional investors for CellOS by placing 20 million new shares in CellOS at US$5.00 per share. Jason Huber told me that the UOBKH capital raising was not available to private individuals, and that large minimum purchases were required of the eligible private equity funds and institutions. Melvin Tan also told me that the UOBKH capital raising was not available to private individuals. I believed what Jason Huber and Melvin Tan told me. 569 Further, Mr Huber refers to the witness statement of Mr Tan, where he states that during one of several meetings between the senior management of UOB, including Esmond Choo (Senior Executive Director of UOB), Lily Abraham (Trading Representative of UOB), Jessie Wong (Associate Director of UOB), and the senior members of the board of CellOS (including Mr Patel), "it was discussed that the targets of the PE fundraising were to be private equity funds and financial institutions". In his evidence before me, Mr Tan confirmed that his understanding derived from Mr Huber was that the UOB fundraising was looking only to financial institutions and PE funds and that the placements they were offering were not open to private individuals. 570 Further, in relation to Mr Anthony Cooper, Mr Huber said that he was an example of how he had no discretion as to what kind of investor UOB would accept. This also shows that it was not at Mr Huber's or CellOS' discretion who UOB should or should not accept, but it was UOB who had set the restriction of what category of investor to accept. Now Mr Cooper was introduced to Mr Huber as the former Managing Partner of Price Waterhouse, and as such he could have represented a PE firm as well. Mr Huber referred Mr Cooper to UOB because he wanted them to consider whether he could qualify under the terms and conditions of UOB as a PE firm or institutional investor. Mr Huber never had a direct relationship with Mr Cooper. Mr Huber recommended to UOB to meet with Mr Cooper, but UOB was not agreeable to such a meeting. Mr Huber also says that Mrs Peck sold her own shares to Mr Cooper without the knowledge of Mr Huber. 571 Further, in relation to Mr Homer Tan, Mr Huber says that when he was under cross-examination, CellOS' counsel incorrectly insinuated that Mr Huber was attempting to divert Mr Homer Tan away from UOB in order to sell his own shares to Mr Tan for his own personal benefit at US$2 per share. But according to Mr Huber, Mr Homer Tan invested well before the UOB engagement commenced and Mr Melvin Tan introduced Mr Homer Tan. Mr Tan purchased his shares directly from Cellos at US$5 per share in 2012.

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(b) The evidence 572 Let me now deal with some of the evidence. 573 CellOS was always contemplating equity raisings as it was the only way in which CellOS could raise the funds needed to continue to operate. As CellOS points out, its funding needs can be shown by looking at the monthly cash burn rate, which is based upon oral evidence, but that oral evidence is broadly consistent with the annual losses recorded in the audited accounts. So, in 2011 CellOS' cash burn was about 500,000 to 750,000 each month, in 2012 it was around US$1 million each month, in 2013 it was about US$1 million to US$2 million each month, in 2014 it was around US$2 million each month, and in 2015 it was about US$1.5 million each month, by which time there were about 150 to 160 employees. 574 Mr Huber and CellOS' board were at all relevant times looking to raise funds through an IPO once there was a monetised product, and at all times were anticipating that this would occur in the "near future". In the interim, CellOS needed to raise funds in order to meet the cash burn and to keep trading. According to Mr Huber, CellOS had a "desperate" need for capital at all times. 575 Now Mr Huber's evidence was that he was principally responsible for fundraising for CellOS, that through the whole period 2011 to 2015 he was trying to raise funds from investors for direct investment in CellOS, that raising money between 2010 and 2015 was part of his "job", that he was constantly in the marketplace seeking to raise funds for CellOS, that he was attending investor meetings to raise capital for CellOS, and that this was "the fundraising obligation that [he] had that the board entrusted [him] to do for the company". Mr Huber said that he was constantly telling the board that he was looking to raise funds. 576 Further, Mr Huber's evidence about his selling shares to the Pecks at a discount to the market price was as follows: (a) Mrs Peck was the "main funder of the company" and whenever CellOS needed an injection of capital he asked Mrs Peck to buy shares to help him to fund the company. (b) Mr Huber said that the reason he was selling to the Pecks for US$2 when shares were selling at US$5 was "[b]ecause I needed the cash to fund the company. So if she's willing to buy at two, I will sell it to her at two". When asked why he was not trying to sell to her for a higher amount, but less than US$5, his response was "no reason". (c) When asked why, as the market price for CellOS shares rose from US$5 to US$10 to the target of US$25, he kept selling to the Pecks at US$2, Mr Huber stated "I needed the cash to pay the bills". (d) As to why Mr Huber was selling the Pecks shares at US$2 when the market price was far higher, Mr Huber said "at that price she was willing to buy. So I was afraid if I increased the price she wouldn't buy, and then I wouldn't have the money for the company". (e) He agreed that Mrs Peck was acting as an "informal underwriter" for CellOS. Mr Huber said "if I really needed the cash on that month I would sell it to her … the agreed price was $2, and she bought from me at that price". (f) Mr Huber accepted that by offering shares directly to investors, CellOS would have raised a lot more. In 2011, he says he raised US$10 million by the issue of new shares. He sold around US$37 million in shares to the Pecks. Mr Huber could identify no real change between 2011 and 2013. But CellOS says that the difference was that Mr Huber was flooding the market with his shares. (g) Mr Huber gave evidence about the process by which he sold shares to Mrs Peck as being he met her regularly, and if he needed money for the company, he would ask her if she could buy some more shares. Mr Huber's evidence that "She was always willing to buy more shares at $2" ought not surprise. 577 Mr Hegde's evidence was that Mr Huber was principally responsible for all of CellOS' fundraising, and that it was only Mr Huber who used to raise funds for the company. Mr Hegde explained that Mr Patel would, for example, go to Mr Huber and say we need money, and Mr Huber would go out and raise it. His evidence was that during the whole period from 2011, Mr Huber was doing his job of trying to raise funds for CellOS by trying to raise equity capital. Mr Hegde agreed that throughout the whole period, Mr Huber was contemplating raising funds for CellOS; and Mr Hegde was aware that CellOS had a need to raise money throughout the whole period in order to continue to trade. Mr Hegde's evidence was that CellOS' position was that, as at June 2013, it was planning to raise funds to continue operations from angel investors as well as through UOB. His evidence was that he was well aware of CellOS undertaking equity raisings from individual investors in the period July 2013 to May 2014. 578 Mr Chan's evidence was that Mr Huber was out there trying to raise funds throughout the whole period. Mr Chan accepted that between July 2013 and July 2014, the only capital raisings that were done were through Mr Huber. He accepted that CellOS was "actively trying to fund-raise for its expansion and for its normal course of business". He said that CellOS was "in a constant state of fundraising … spearheaded by the management". Mr Chan said that during the period he was a director, Mr Huber "was front and centre on fundraising", and "was actively reaching out to investors out there and making presentations to them, together with his senior management team, and presenting the business proposal and business model and prospects for CellOS". 579 Mr Patel's evidence was that Mr Huber was solely responsible for CellOS' fundraising, and that at all relevant times CellOS was entirely dependent upon Mr Huber's ability to raise equity or debt to continue its operations. The suggestion put in cross-examination that Mr Patel was involved in CellOS' fundraising (given his position and original terms of engagement) was inconsistent with Mr Huber's, and the other directors', evidence that Mr Huber was responsible and undertook fundraising for CellOS. 580 Further, Mr Huber's active equity raisings for CellOS were evidenced by the following matters as CellOS correctly submitted: (a) The statements in CellOS' audited financial accounts for the period from 1 July 2010 to 30 June 2011 (signed by Mr Huber on 5 April 2012) that CellOS was reliant on obtaining additional capital and was able to raise such funds. (b) Mr Huber's report on fundraising to the board on 3 November 2011: "The Board Noted the report of the CEO that some of the sophisticated investors based in Singapore, would be interested in subscribing to the shares in the company after the audit of financials of the company are completed". (c) Mr Huber's report to the AGM on 1 June 2012, the minutes of which record: "The chairman stated that the resources are sufficient in the short term. The company needs to continue to raise funds before IPO as the company needs to incur expenses on top management. But the board is confident that with the current management team and the product, it could raise further funds required by the company". (d) Mr Huber's report to the board on 1 June 2012, the minutes of which record: "Managing Director and CEO informed the Board that there are several proposals received from investors willing to invest in the shares of the company provided that they are allowed to make partial payment against their subscriptions and to pay the balance at a later date. The Board deliberated extensively on the issue and decided that the company may accept application for shares with partial payment as may be agreed by the Managing Director & CEO. It was decided to record the balance amount receivable as outstanding from the respective shareholders". (e) Mr Huber's report to the board on 24 August 2012 about "fund raising, cash flow and strategy": "Jason Huber reported that fund raising is slower than expected. However, he reported that the funds are enough to cover the expenses on month to month basis. He reported that keeping in view market situation, long holidays, he expected that the company would be funded by the end of first quarter of 2013". (f) Mr Huber's letter to the board dated 3 November 2012 stating that he had been focused on raising funds for CellOS and, in 2011, had been able to raise enough funds for CellOS to secure CellOS' business. (g) The going concern note in CellOS' audited financial accounts for the period from 1 July 2011 to 30 June 2012 (signed by Mr Huber on 27 March 2013) that the continuing viability of CellOS was dependent on CellOS being successful on, inter alia, it being able to secure funding through private equity investment. (h) Mr Huber's report to the board on 4 and 25 February 2013, the minutes of which record: ● "Fund raising, cash flow and strategy Jason Huber reported that KPMG has completed the preparation of Information Memorandum it is helping in current tranche of fund raising. He reported that the company has been able to obtain sufficient funds to cover the burn rate on month to month basis thanks to an arrangement of short term loans personally from him and from a company". (i) The board authorising Mr Huber to enter into, and on 19 March 2013 Mr Huber entering into, a letter of engagement with UOB, that it raise US$100 million in pre-IPO funding, for a period of six months and the extension of that agreement for six months. (j) The statement made by Mr Huber at CellOS' Annual General Meeting held on 27 June 2013 that "In order to bridge the gap in raising funds through sale of shares in the last 12 months, short term loan funds have been arranged". (k) Mr Huber's report to the board on 14 October 2013, the minutes of which recorded: "Jason Huber reported that agreement with a private investor helped the company to raised sufficient funds to meet the current requirement. There is still a balance of about UD$3 million which could be drawn upon". (l) In the period from about August 2013, Mr Huber asking for assistance from, and being assisted by Mr and Mrs Peck and Mr Tan to raise about US$10 million through share placements at US$5 per share. (m) Mr Huber's report to the board on 16 December 2013 in regard to fundraising activity being undertaken and his statements that the latest fundraising undertaken was through the issue of shares at US$5 per share and efforts were continuing to raise funds by the issue of shares. (n) Mr Huber's report to the board in April 2014, the minutes of which recorded: "CEO informed the Board that company continued to raise funds to meet expenses as the company has yet to generate revenue". (o) The report to the board on 2 September 2014, the minutes of which recorded at 3.2: "The current burn rate and cash position was advised to the board and the CEO advised that since the revenue forecasts were behind schedule, that he will need to obtain further funding from shareholders. The CEO noted that he did not foresee a problem in raising the additional funds". (p) Mr Huber's report to the board on 2 September 2014 in regard to fundraising activity being undertaken and his statements that: (v) an agreement had been entered into with Evercore Asia to assist CellOS raise funds up to and including any IPO; (vi) Evercore Asia remained committed to raising funds for CellOS; and (vii) Morgan Stanley Asia had approached CellOS and asked to be part of the capital raising to be undertaken by CellOS. (q) The introduction of Mr Huber to Temasek, Goldman Sachs, JP Morgan and Deutsche Bank regarding, inter alia, pre-IPO fundraising. 581 Now CellOS points out that in the course of the respondents' openings, there was a suggestion that Mr Huber's personal trading was not diverting any opportunity from CellOS to issue shares directly to potential investors because during the relevant period CellOS was not itself actively seeking to issue shares. The basis of this suggestion was twofold: first, CellOS was not itself considering any direct share issue during the relevant period; and second, CellOS' engagement of UOB from March 2013 to March 2014 was limited to institutional investors only, so Mr Huber selling his shares to private investors was not in competition. 582 But as to the suggestion that CellOS was not considering direct share issues during the relevant period, I agree with CellOS that the evidence is clear. CellOS was always considering the issue of shares to raise funds from willing investors. And there can be little doubt that if CellOS had had access to the Pecks, they would have purchased shares directly from CellOS. 583 Further, as to the suggestion that CellOS' engagement of UOB from March 2013 to March 2014 was limited to institutional investors only, I agree with CellOS that this is incorrect. In this regard: (a) UOB sent an email dated 13 March 2013 to Mr Huber, Mr Patel and Mr Chan stating that UOB offers "a range of services that includes broking services to both institutional and retail clients". (b) The terms of UOB's mandate entered into on 19 March 2013 was not limited to institutional investors. It uses the term "private equity investors", which includes both institutional investors and private investors. (c) Further, the board minutes of CellOS do not indicate that UOB's mandate was limited to institutional investors. Nor was there any board direction to management to limit that mandate to institutional investors. (d) Further, UOB prepared an Information Memorandum, which did not state that the offer was limited to institutional investors. (e) Further, Mr Patel's evidence was that he had a lot of discussions with UOB. They had a very large number of wealthy individuals and those persons would according to what he was told be involved in the UOB raising, such that the targets were private equity firms and wealthy individuals. (f) Further, Mr Hegde's evidence was that if UOB were able to raise money from anybody in Singapore that was eligible to receive shares in CellOS under Singaporean law, he as a board member would have gladly taken their money. 584 Now Mr Huber said that UOB were only seeking funding from essentially institutional investors or large private equity firms. But in addition to the above evidence, which indicated that the potential targets were not so limited, reference can also be made to the following matters: (a) First, Mr Huber swore an affidavit in the Singapore proceedings dated 2 February 2016, in which he stated that UOB were seeking funds "largely from sophisticated" investors. Mr Huber's only explanation for that inconsistent prior statement was that his earlier affidavit was wrong. (b) Second, in the same affidavit, Mr Huber gave evidence that UOB did allocate shares to one investor, Mr Homer Tan, worth US$250,000 at US$5 per share. Mr Huber at first accepted that UOB had made this allocation, but then said his earlier affidavit was a mistake. (c) Third, Mr Huber was shown an email dated 29 June 2013 in which he gave a direction to Mr Tan in relation to Mr Cooper, whom Mrs Peck had introduced as a potential investor seeking to invest around $1 million (presumably in US dollars), that Mr Cooper should work through UOB. Mr Huber wrote: "This is a $5 per share investment. He would have to apply and basically we will consider applications in early August, with UOB advising us on who and what to accept". Mr Huber accepted that he was dealing with sophisticated investors through the umbrella of UOB, but sought to limit the significance of Mr Cooper by saying it was only one person in a whole year. (d) Fourth, Mr Huber accepted that "[i]f [UOB] were able to introduce accredited investors, of course I would have taken it". (e) Fifth, Mr Huber accepted that he knew that the Pecks were eligible to participate under the UOB offer, and that had UOB had access to them, UOB might have been able to raise US$40 million from them. There was no prescribed issue price under the UOB mandate. Indeed, counsel for Mr Huber conceded that UOB could have allocated shares at SG$1.80, subject of course to CellOS' consent. 585 Further, even though UOB was actively seeking investors, CellOS was not refraining from issuing shares itself at the relevant time. Mr Huber said that CellOS was issuing shares to investors in 2013, and that he had told UOB that at the same time as they were being asked to raise capital, he was causing CellOS shares to be sold into the market. Mr Hegde's evidence was that CellOS' position was that, as at June 2013, CellOS was planning to raise funds to continue operations from angel investors as well as through UOB, and that shareholders were so informed at the AGM in June 2013. 586 Now from 20 September 2011 to 11 August 2015, CellOS raised funding by the placement of shares to private investors as follows: (a) For the period from 1 July 2011 to 30 June 2012, CellOS had raised AU$2,262,056 from the proceeds of share placements to private investors. (b) For the period from 1 July 2012 to 30 June 2013, CellOS had raised AU$635,088 from the proceeds of share placements to private investors. (c) For the period from 1 July 2013 to 30 June 2014, CellOS had raised AU$3,096,084 from the proceeds of share placements to private investors. (d) For the period from 1 July 2014 to 30 June 2015, CellOS had raised AU$1,381,406 from the proceeds of share placements to private investors. 587 But despite Mr Huber's mandate from CellOS' board, despite the existence of willing buyers (Mr Huber's entities sold 51,945,132 shares between 20 September 2011 and 11 August 2015, and Mr Huber personally sold 18,842,000 shares to the Pecks between 6 March 2013 and 1 July 2014), and despite there being no relevant legal impediment, all known by Mr Huber, he did not cause CellOS to raise meaningful sums through the issue of new shares to such a class of investor. 588 Instead of Mr Huber procuring potential investors to buy shares issued by CellOS, Mr Huber diverted them to buying shares from him through companies he controlled, which shares he was purchasing for that purpose in the grey market for CellOS shares at a substantial discount to the price that CellOS could have issued them for. Further, in order to fund CellOS, Mr Huber then caused companies he controlled to enter into loan agreements with CellOS, without disclosing his interest in the lending entities.

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(c) Summary: The diversion of opportunity conduct 589 In summary, the diversion of opportunity conduct was as follows. 590 First, Mr Huber knew that, in the period September 2013 to July 2014, there were willing buyers of CellOS shares at US$5 and up to US$10. In this regard, the following may be noted. On 27 November 2012, Mr Huber referred to Mr Tan meeting with "Jessie" from UOB, in relation to a proposed share placement. Mr Tan emailed Mr Huber in relation to this meeting that "in short, we should have quite a lot of potential clients who have the financial capabilities to take up the US$5 per share". On 9 January 2013, Mr Huber was telling potential investors that CellOS shares now sell at US$5 per share. In March 2013, CellOS' board approved the engagement of UOB to raise US$100 million at US$5 per share, although the issue price for shares was "subject to mutual agreement". In or about August 2013, Mr Huber asked Mrs Peck to help him to raise funds for CellOS by the issue of new shares to high net worth individuals at US$5 per share. At the start of October 2013, Mrs Peck told Mr Huber that she and Mr Tan were selling CellOS shares into the market at US$5 per share. From October 2013, CellOS through Mr Huber was offering, and issuing, new shares into the market at US$5 per share. By June 2014, Mr Huber was involved in the sale of CellOS shares held by his controlled companies at US$10 per share. 591 Second, Mr Huber knew that between September 2013 to July 2014, CellOS could issue new shares to willing investors at more than US$2 per share. Further, Mr Huber knew that from September 2013 CellOS could always have issued new shares to Mrs Peck at more than US$2 per share. When asked why he was not trying to sell to her for a higher amount, but less than US$5, his response was "no reason". 592 Third, between September 2013 and July 2014, Mr Huber procured the sale of 16,287,000 shares in CellOS to the Pecks at US$2 for the purpose of raising funds for CellOS. Mr Huber admitted that these funds were to be used for the purpose of raising funds for CellOS. Further, between 7 October 2013 and 18 July 2014, Mr Huber procured the sale of 6,741,500 shares in CellOS from companies he controlled to Mr Tan's wife. Mr Huber said that these sales were made available by Mr Narulla without his knowledge or authority. But I would, for the most part, reject this assertion. By this means, Mr Huber was soaking up the demand for CellOS shares. 593 Accordingly, Mr Huber improperly diverted third party investors from taking up shares in CellOS being offered under any actual or contemplated or possible equity raisings, to the detriment of CellOS and to the benefit of the buyers. 594 In so doing, he benefited Mrs Peck, Mr Peck and Mr Tan by procuring the sale to them of shares in CellOS for the purpose of raising funds for CellOS at US$2, in circumstances where they on-sold those shares at up to US$5 per share. 595 Further, in so doing he caused detriment to CellOS, being the difference between the amount actually raised (reflected in SG$1.80 per share under the LGA loan and option) and the amount CellOS would have raised if the shares had been issued by CellOS to investors (being up to US$5 per share).

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(a) Sequence of events - LGA loan 600 On 4 and 25 February 2013, the board of CellOS met, and the signed minutes of that meeting record as I have set out earlier: 6. Finance & Accounts • Fund raising, cash flow and strategy Jason Huber reported that KPMG has completed the preparation of Information Memorandum it is helping in current tranche of fund raising. He reported that the company has been able to obtain sufficient funds to cover the burn rate on month to month basis thanks to an arrangement of short term loans personally from him and from a company. LGA Energy Investments Ltd: • Jason submitted a draft loan agreement with the company which has agreed to provide loan to [CellOS] and its subsidiaries at their request which is repayable immediately upon large/pre-IPO fund raising by [CellOS]. The Board authorised Jason Huber to sign the Agreement on behalf of [CellOS]. 601 These minutes were approved at the following board meeting held on 11 March 2013. There were four directors present at the meeting held on 4 and 25 February 2013: Mr Huber, Mr Hegde, Mr Patel and Mr Chan. Each gave evidence, but much of the evidence about this meeting was unsatisfactory. 602 Mr Patel's evidence was that he did not recall seeing any draft loan agreement. Nor did he recall the board discussing the appropriateness of the arrangement or any alternative sources of fundraising. Further, Mr Patel did not recall Mr Huber identifying who the company lending money to CellOS was, nor making any statement to the effect that he had any relationship with or connection to it. Mr Patel did, however, know in general terms that Mr Huber was funding the company through loans. But Mr Patel was emphatic that he recalled no instance where Mr Huber had told him of a relationship he had with LGA. Further, Mr Patel made a consistent statement to this effect in his affidavit in the Singapore proceeding. 603 Mr Chan's evidence in his witness statement was that prior to the board meeting he knew that Mr Huber owned and controlled LGA, the terms of the LGA loan, including the lender's right to convert and the price for conversion, and that Mr Huber would be selling his shares in CellOS to provide cash under the loan. But Mr Chan stated that he did not recall whether any of those matters were discussed at the board meeting. 604 But in evidence before me, Mr Chan accepted that his statement was inaccurate. Mr Chan said that he had no idea when Mr Huber took control of LGA, and was not sure of the date that Mr Huber disclosed to him that Mr Huber controlled LGA. Mr Chan did not recollect any draft loan agreement being tabled at the February 2013 meeting. Mr Chan accepted that in February 2013 he did not know what the terms of the LGA loan were. Mr Chan had no independent recollection of attending a meeting in March 2013. Mr Chan said that he understood that investors were buying existing shares from Mr Huber and that the proceeds would then be re-lent to CellOS. But he did not know the details of how Mr Huber was selling his shares. Mr Chan was aware of a grey market in CellOS shares, but did not know the price. 605 In Mr Huber's witness statement and supplementary witness statement, Mr Huber said that he informed the board of his interest in the LGA loan, and that "The minutes of this meeting record that I was 'lending money to CellOS personally and through a company'". But as set out above, the minutes do not record that Mr Huber was lending money to CellOS through a company. The minutes state that Mr Huber "reported that the company has been able to obtain sufficient funds to cover the burn rate on [a] month to month basis thanks to an arrangement of short term loans personally from him and from a company". Grammatically, the reference to loans from him is separate and distinct from the reference to loans from a company. Mr Huber stated that he disclosed that the company through which loans to CellOS were being made was LGA. But during the trial and before giving evidence, Mr Huber changed his statement to say that as at 25 February 2013, the name of LGA had not been identified. 606 Mr Huber accepted that the minutes of the board meeting held on 4 and 25 February 2013 were the extent of his documented disclosure about his involvement with LGA. And Mr Huber accepted that the minutes did not disclose his involvement with LGA. 607 Further, consistent with his failure to disclose his interest, Mr Huber did not step outside during the board's discussion of the loan, and voted on it. 608 Now Mr Huber maintained that there was a draft loan agreement circulated to the board. But whatever was shown to the board was different from the final LGA loan agreement. The minutes record a loan with terms that it was repayable after a large fundraising by CellOS. But the minutes say nothing about a conversion option or any retrospective operation. Mr Huber accepted that at the time of the board meeting the intention was that the loan be repaid from the moneys raised from the next capital raising; he said that the option came in March. 609 Mr Huber accepted that his evidence in his supplementary statement that the board ratified the LGA loan agreement at the meeting on 25 February 2013 was incorrect. 610 Mr Hegde's witness statement, as filed but not adopted, stated that a draft of the loan agreement was circulated prior to the board meeting, and that at the board meeting it was said that Mr Huber was involved with LGA, Mr Huber would sell shares to third parties, CellOS would accept payment for those shares and those payments would be recorded as loans. The statement said that the loan terms were discussed, including the option to convert. 611 But Mr Hegde's witness statement, as adopted, changed one of the propositions to "Jason would provide within a couple of days the name of his company through which the loan would be extended. And the loan agreement would be signed with that company". Mr Hegde's evidence was that Mr Huber came back a few days later and said the company was to be LGA. 612 But when Mr Hegde's prior evidence sworn by affidavit in the Singapore proceeding was put to him, to the effect that it omitted the details about LGA's name not being known on 25 February and only becoming known to him a few days later, Mr Hegde justified the omissions from the Singapore affidavit on the basis that "It is not lying. I didn't know that you will be referring to my Singapore witness statement or affidavit here". 613 Mr Hegde said that he knew about Mr Huber's relationship with LGA from discussions that took place with Mr Huber in February 2013, and that Mr Huber told him that he was selling his shares for US$2, and lending the proceeds to CellOS. But Mr Hegde could offer no explanation as to why, if Mr Huber had disclosed his involvement with LGA, the minutes did not state that Mr Huber had disclosed such an interest in LGA. 614 Mr Hegde maintained that a draft agreement was circulated and that that draft agreement was the same as that he signed, including as to the option term, save that the name of LGA was omitted. 615 Let me deal with the date of execution. 616 The executed version of the LGA loan agreement was dated 1 March 2013, signed by Mr Huber, Mr Hegde and Mr Min Wee. Mr Huber's evidence was that Mr Narulla drafted the loan agreement at Mr Huber's direction. But Mr Huber accepted that his evidence in his supplementary witness statement saying that there was another board meeting on 1 March 2013 held to approve the draft loan agreement was incorrect. But he maintained that the agreement was signed on that date. He said that the name of LGA was not known on 25 February, but was known on 1 March 2013. 617 Mr Hegde maintained that Mr Huber told him prior to 1 March 2013 that LGA was the lender, and that on 1 March 2013 he signed the agreement. 618 In terms of mechanics, Mr Huber said that when the loan agreement was signed on 1 March 2013, Mr Narulla came in with the loan agreement, and that Mr Min Wee's signature was already on the signing page. 619 But I agree with CellOS that this evidence should be rejected. A better view of the evidence is that the LGA loan agreement was not signed until May 2013. 620 A series of email communications involving Mr Min Wee show that Mr Min Wee, acting as agent for Mr Huber, only took control of the shelf company LGA on 8 May 2013 at the earliest. 621 On 27 June 2013, a few hours after the AGM, Mr Narulla sent to Mr Huber an email attaching minutes of a meeting of the board of CellOS dated 1 March 2012 (the year of "2012" appeared on the document) approving LGA's and CellOS' entry into a loan agreement, a direction from Mr Narulla that both Mr Huber and Mr Patel sign both the minutes and the agreement, and a loan and option agreement between CellOS and LGA dated 1 March 2012. Mr Huber agreed that Mr Narulla had indeed sent these documents to him at this time. 622 The key differences between the loan agreement dated 1 March 2013 and the attached loan and option agreement were that it was dated 1 March 2012, and it did not have cl 4 (which operated retrospectively to pick up loans made from 1 March 2012). 623 Relevantly, the loan and option agreement dated 1 March 2012 and attached to the 27 June 2013 email had been executed by Mr Min Wee, and the signature page was the same as the signature page that was used for the version dated 1 March 2013. 624 Mr Huber's evidence about this email and its attachment was that "I didn't bother with it, because we had already signed the agreement". 625 I agree with CellOS that it is plain that Mr Narulla would not have prepared and sent these documents on 27 June 2013 if the LGA loan agreement dated 1 March 2013 had in fact been executed on that date, especially given Mr Huber's assertion that Mr Narulla was present when it was signed on 1 March 2013. 626 Further, there was another, unexplained, lending agreement between Mr Narulla and LGA dated 1 April 2012, signed by Mr Narulla and Mr Min Wee. Mr Huber could offer no explanation about these documents. 627 Further, Mr Huber could point to no other document that showed that the LGA loan agreement dated 1 March 2013 was in fact signed on 1 March 2013. And Mr Patel's evidence was that he had never seen the LGA loan dated 1 March 2013. 628 All of this indicates to me that the LGA loan agreement was not executed until, at the earliest, May 2013. Moreover, it would appear that there was some attempt to produce at one stage documents backdated to March 2012, a year earlier. 629 The circumstances under which the LGA loan agreement came to be executed and when are shadowy to say the least. 630 Let me now discuss the non-disclosure at the AGM on 27 June 2013. 631 Mr Huber also failed to disclose his interest in the LGA loan to CellOS' shareholders and it would appear misled them about it. Such conduct supports a finding that he did not disclose his interest to the board either. 632 Prior to the 2013 AGM, Mr Rodrigues circulated a draft Q&A script to all the directors for the AGM. Question 4 stated: "How was the Company being financed over the last 12 months?". The answer was: "The Company has [loan] funds from an 'Angel Investor'… a company in the Middle East". While Mr Huber denied telling Mr Rodrigues that this was the source of funding, he certainly did not correct the error. 633 When asked what he told the shareholders at the AGM, Mr Huber denied that he told them that short term funds were being provided by an angel investor from the Middle East, and said "I would have said, 'It's from my shares. I'm selling my shares to fund the company'". 634 Mr Huber was taken to an email exchange dated 9 July 2013 that he had with Sandra Dierstein, one of CellOS' brokers based in Dubai. Ms Dierstein emailed Mr Huber and referred to a call she had received from Mr Ben Kee "asking me about some Middle East investors who backed [CellOS] with a loan and I had no clue what he was taking about. He mentioned that he had a one on one with you in Melbourne and you told him that". Mr Huber responded to the email stating: "AGM went well. … After the AGM, Ben came to see me … At the AGM, I told the shareholders that I funded the company through a loan from the Middle East". Mr Huber continued to deny that he had told the investors at the AGM that he was funding CellOS through a loan from the Middle East. But when asked to explain why he therefore had lied to Ms Dierstein, he could offer no explanation. Even Mr Hegde said that shareholders were told that there was a company in the Middle East that was lending money to CellOS. Mr Huber's denial should be rejected. 635 But Mr Huber did accept that he had not told shareholders about his interest in the LGA loan. This was consistent with Mr Hegde's recollection that he did not think the shareholders were told that Mr Huber was behind LGA. That Mr Hegde knew that LGA was the company said to be in the Middle East lending money to CellOS, yet did not cause Mr Huber's interest to be disclosed to shareholders at this time, reflects poorly upon his independence from Mr Huber. 636 Further, the minutes of the 2013 AGM do not assist Mr Huber. They record the following as being said: "In order to bridge the gap in raising funds through sale of shares in the last 12 months, short term loan funds have been arranged". 637 After the AGM, a shareholder and former director who had received a copy of the minutes wrote the following to Mr Rodrigues: Thank you for sending the minutes. I note that a number of questions were asked by the shareholders, yet the minutes don't include or make mention of the answer to those questions. I'm interested to know the answer to the following questions: details of short-term loans funds. How much? Who is/are the lenders? What are the terms of the loan agreement? A copy of the loan agreement. 638 Mr Rodrigues responded by saying only that the next AGM was scheduled for 26 June 2014. 639 On 14 October 2013, the CellOS board minutes record: Jason Huber reported that agreement with a private investor helped the company. 640 But this reference to "a private investor" was likely to be Mr Huber. Mr Huber recording himself as such is inconsistent with Mr Huber having disclosed that he was that private investor. 641 Let me move to another topic. 642 Mr Huber also failed to disclose his interest in the LGA loan in CellOS' audited accounts. Such conduct further supports a finding that he did not disclose his interest to the board. 643 In relation to CellOS' financial accounts for the year ended 30 June 2013, Mr Roche and his team audited those accounts and signed off on them. Mr Roche sought from Mr Huber disclosure of all related party transactions between CellOS and its directors as was required to be disclosed in its financial statements by AASB 124. Mr Huber did not disclose the LGA loan as being a related party transaction, and furthermore, Mr Huber and Ms Mei Lan Ng provided Mr Roche with a signed letter stating that they had informed him of all related party transactions and that these had been properly disclosed by CellOS in the financial statements. Mr Huber did not make disclosure of his interest in LGA in CellOS' accounts for 30 June 2014 either. 644 Mr Huber's explanation was unsatisfactory. When asked whether he told the auditors about his interest in LGA, he first said "I did tell the auditors"; upon being pressed he said "they didn't ask". 645 When then shown the representation letter he signed to the auditors stating that all related parties transactions had been disclosed, and again asked why he did not disclose his interest in the LGA to the auditors, he said "I did disclose it. In the board minutes of February 2013". As addressed above, the minutes did not disclose any such interest. Further, if Mr Huber's non-disclosure was inadvertent, he should have brought the error to the attention of the auditors. He did not. 646 Moreover, it was not just CellOS' auditors who were unaware of Mr Huber's interest in LGA; staff in CellOS' accounts departments did not know that Mr Huber had an interest in the LGA loan. Let me elaborate at this point on evidence given by Mr Roche, Mr Reid and Ms Tapner. 647 As I have said, Mr Stephen Roche, partner of Deloitte Touche Tohmatsu (Deloitte) gave evidence. Deloitte is the auditor of CellOS. He gave evidence along the following lines. 648 There were certain accounting standards, including Australian Accounting Standards Board Standards, which had to be applied in preparing audited accounts of public companies (including public unlisted companies) in Australia. AASB 124 related to the disclosure of related party transactions to include transactions of a company involving any entity that a director or key management personnel had any control or significant influence over. CellOS' accounts had to comply with this standard. 649 With the assistance of his team, Deloitte audited the accounts and he signed the audit opinion for financial year 2013. 650 He recalled that the accounting records of CellOS showed a SG$20 million loan from LGA, described above as the LGA loan. In reviewing these accounting records, he recalled that he: (a) had sought confirmation from CellOS that approximately SG$20 million in funds had been received into the CellOS bank account; (b) was provided with a series of documents which stated that the LGA loan had been converted to shares, meaning that, for accounting purposes, the LGA loan was no longer outstanding; and (c) obtained a letter signed by Ms Mei Lan Ng and Mr Huber which, amongst other things, stated that they had informed Deloitte of all related party transactions and that they had been properly disclosed by CellOS in the financial statements. 651 I would note at this point that the LGA loan was never disclosed in the financial statements as a related party transaction. 652 In the course of auditing CellOS' accounts for year ended 30 June 2014, he became aware that CellOS had entered into a loan facility with Pized for SG$20 million. The loan was signed on 1 July 2014 (the first day of the next financial year). However, he still needed to address it as a "subsequent event" in accordance with AASB110 Events After the Reporting Period, and consider it as part of assessing the going concern assumption applied in managements preparation of the financial statements. 653 In or around October 2014, he was informed that all directors of CellOS resigned, except for Mr Huber. This delayed the finalisation of the accounts. 654 In or around early to mid-March 2015, Mr Huber contacted him with a view to getting the 30 June 2014 financial statements completed and the audit signed off. He responded that, as previously communicated to Ms Sharon Tapner, in order to conclude the audit of the 30 June 2014 financial statements, Deloitte would need an update on: (a) CellOS' cash position; (b) CellOS' cash flow forecast for the next 12 months; (c) subsequent events to be disclosed since the last audit, including supporting information; (d) copies of any new financing arrangements entered into; and (e) evidence of any drawdowns on the existing facility with Pized (i.e. bank statement). 655 On 27 March 2015, he attended a meeting with Mr Huber at the offices of CellOS in Melbourne. The meeting was also attended by two of his team members, Simon Zannis (Audit Director) and David McGuigan (Tax Director). He took handwritten notes at that meeting. Mr Zannis also prepared a typed file note of the meeting. 656 At the meeting he asked about the financial status of the company. According to Mr Roche, Mr Huber explained that he had: (a) been raising $1 million a month in equity funding (it is unclear on the evidence which form of currency Mr Roche was indicating) to keep the business going; (b) engaged Deutsche Bank to pursue a $500 million capital raising (it is unclear on the evidence which form of currency Mr Roche was indicating); (c) sacked the previous Board and the majority of the executive management team as they were not producing results; and (d) had access to further funds through the Pized loan. 657 The Pized loan was then discussed in words to the following effect: Huber: "In addition to the equity funding I have raised I have also drawn down further on the Pized Loan at rates of about $5-$10 a share." Me: "Who are the investors?" Huber: "There is an active grey market for CellOS shares that is operating and I control this market." Me: "What is the background of Pized? Are you a director?" Huber: "I am not a director." Me: "How does the arrangement with Pized work?" Huber: "An investor wants to buy shares. They pay for those shares from another investor. This money is then given to Pized who in turn loan the money to CellOS. I have about 8 brokers who help identify potential investors. Me: "Are you selling your own shares? Is this how you control the market?" Huber: "Yes. I had structured the arrangement this was to sell these shares at a discount and I don't want this to restrict my ability to extract a higher price per share from other investors. Don't write that down." 658 Mr Roche questioned Mr Huber a second time about his relationship with Pized. Mr Roche explained that Pized would be a related party under accounting standards if Mr Huber controlled or could exercise significant influence over Pized by way of ownership, directorship or other means. Mr Huber said words to the effect that I "don't need to focus on Pized". Mr Roche reiterated to Mr Huber that if, as he had explained, Pized could not loan funds to CellOS unless Mr Huber had been able to negotiate a share sale in the "grey market" in order to provide Pized with funds to loan to CellOS, this suggested to Mr Roche that Mr Huber did indeed control or have significant influence over Pized. Mr Roche put this to Mr Huber, who remained silent and did not respond. At this point in the conversation, according to Mr Roche, Mr Huber appeared stressed and was sweating. This was the first time that Deloitte became aware of some sort of relationship between Mr Huber and Pized. As the Pized loan was in similar terms to the LGA loan, this made Mr Roche think that Mr Huber may have had similar related party issues with respect to the LGA loan. 659 What is well apparent is that Mr Huber did not disclose to Deloitte that LGA and Pized were related parties to Mr Huber, and moreover that Mr Huber was evasive on such matters. Let me now turn to Mr Douglas Reid's evidence. 660 At the time of trial Mr Reid was the Company Secretary of CellOS. He was a director of CellOS from 27 January 2014 until 10 October 2014. He was initially appointed company secretary of CellOS in May 2012. He resigned from that position in December 2014 and later resumed as company secretary from December 2015. From February 2016 until August 2017 he was the Group Financial Controller of CellOS. 661 Notwithstanding that he was the company secretary, he did not process share transfer forms. 662 He gave evidence that Mr Huber at no time disclosed to him, or to the best of his knowledge to CellOS, Mr Huber's involvement with LGA or Pized. Moreover, he pointed out that Mr Huber did not declare or disclose the LGA and Pized loans as related party transactions as part of the preparation of the 2014 financial accounts. Let me now turn to Ms Sharon Tapner's evidence. 663 Ms Tapner was as at March 2017, the Group Accountant of CellOS. 664 She commenced employment with CellOS in December 2012. At this time her title was Office Manager. She reported to Mr Reid, who was the company secretary of CellOS based in Melbourne, and to Mr Ross Carter who was Head of Programs and Operations based in Singapore. Her role included accounting functions, payroll and general office management. She later became the company secretary of CellOS in December 2014 after Mr Reid resigned from that position. 665 She resigned from her employment with CellOS and as company secretary of CellOS in July 2015. In April 2016, she returned to CellOS in her current role as Group Accountant, reporting to Mr Reid, who returned to CellOS as Company Secretary in December 2015 and who was Group Financial Controller from February 2016 until August 2017. In the months prior to this, she had been assisting CellOS with bookkeeping duties. 666 During her first period of employment with CellOS from December 2012 to July 2015, the head office of CellOS was located in Singapore. Mr Huber (then Chief Executive Officer of CellOS), Ms Mei Lan Ng (then Group Financial Controller of CellOS), other finance staff and sales staff were all located in Singapore. The Melbourne office of CellOS consisted of Mr Reid, Ms Tapner, other administrative staff and technical staff who were engaged in research and development and programming duties. CellOS also had an office in India, whose staff were primarily engaged in programming duties. 667 All of CellOS's finances were controlled by CellOS's Singapore Head Office. 668 CellOS had: (a) two bank accounts with OCBC Bank in Singapore, one in Singapore Dollars and one in US Dollars; and (b) a number of Westpac bank accounts in Australia. 669 In order for any payments to be made from CellOS's bank accounts, two signatories were required. When Ms Tapner started at CellOS, the approved signatories were Mr Huber and Ms Mei Lan Ng. She and Mr Reid later became approved signatories for the Westpac bank account. 670 She recalls that on numerous occasions she was instructed by Ms Mei Lan Ng, Ms Linley Au or Ms Angela Chin to code payments made into CellOS's bank accounts as loan payments, for either the LGA, Pized or Swallow loans. 671 In respect of the following loan payments listed in schedule 4 to the 5FASOC: (a) Payments 10 to 24 and 26: she received an email from Ms Ng on 10 July 2013 with an attached spreadsheet, directing that each of the payments should be coded as a loan from LGA; (b) Payments 27 to 28: she sent an email to Ms Chin and Ms Ng on 8 August 2013 querying, amongst other things, these payments. She received a response on 12 August 2013 from Ms Chin, with an attached OCBC Bank statement of account, directing that each of these payments be coded as a loan from LGA; (c) Payments 29 to 31: she received an email from Ms Ng on 1 October 2013 with an attached spreadsheet, directing that each of the payments be coded as a loan from LGA; (d) Payment 32: she received an email from Ms Chin on 8 January 2014 with an attached spreadsheet, directing that the payment be coded as a loan from LGA; (e) Payments 33 to 35: she received an email from Ms Chin on 7 February 2014 with an attached spreadsheet and OCBC Bank statement of account, directing that each of the payments be coded as a loan from LGA; (f) Payments 36 to 37: she received an email from Ms Chin on 13 March 2014 with an attached spreadsheet and OCBC Bank statement of account, directing that each of the payments be coded as a loan from LGA; (g) Payments 38 to 40: she received an email from Ms Chin on 3 April 2014 with an attached spreadsheet and OCBC Bank statement of account, directing that each of the payments be coded as a loan from LGA; (h) Payments 41 to 51 and 53 to 56: she received an email from Ms Au on 30 March 2015 with an attached spreadsheet, directing that the each of the payments be coded as a loan from Pized; and (i) Payment 52: she received an email from Ms Au on 8 April 2015 directing that the payment be coded as loan from Pized. 672 At some stage, the timing of which she cannot specifically recall but it was likely to have been in 2013 or 2014, she queried what the "Pized" and "Swallow" loans were. She recalls that she was told that there was someone overseas who was financing the company. She does not remember who told her this. 673 She also recalls that at some stage she had a conversation with Mr Reid during which he told her that he had been told that someone from the Middle East was giving CellOS a line of credit. 674 Now, of course, this latter evidence is hearsay. But it does support the position that in terms of officers of CellOS such as Ms Tapner and Mr Reid, they appeared to be unaware of the relationship between Mr Huber and LGA/Pized. 675 Let me now return to the chronology. 676 On 21 December 2013, and without board approval, Mr Huber and Mr Patel, on behalf of CellOS, and Mr Min Wee, on behalf of LGA, extended the LGA loan from 31 December 2013 to 30 June 2014, and increased the loan amount from SG$25 million to SG$40 million. 677 On 8 April 2014, the Board of CellOS met to consider the extension of the LGA loan. As I have set out earlier, the minutes signed by the directors state the following. 7. Fund Raising CEO informed the Board that company continued to raise funds to meet the expenses as the company has yet to generate revenue. • CEO informed that the agreement with LGA Energy Investments Ltd was renewed until June 30, 2014 and requested the Board to ratify the extension of the Agreement. • The Board considered the request and noted that the company still needed to borrow funds temporarily from LGA. The Board agreed to ratify the extension of the agreement up to June 30, 2014 to enable the company to raise funds from LGA Energy Investments Ltd as short term unsecured loan. However, the Board decided that the Conversion Option granted to LGA to convert the loan into shares be terminated with effect from April 1, 2014. 678 Present at that meeting were Mr Huber, Mr Hegde, Mr Chan, Mr Patel and Mr Reid. There was no evidence from any of Mr Huber, Mr Hegde or Mr Chan that at this board meeting Mr Huber made a positive disclosure of his interest in LGA. There is evidence to the contrary. Mr Patel does not recall Mr Huber making any statement that he had any relationship with LGA. Mr Reid's evidence was that there was no discussion at this board meeting that Mr Huber was selling shares and loaning the proceeds to CellOS under the LGA loan agreement. Further, he gave evidence that he did not otherwise discuss the LGA loan with Mr Huber outside that board meeting, and that at no time did he know that LGA was owned by or a related party of Mr Huber. 679 Now there was a suggestion that because the CellOS board had terminated the option, it followed that an LGA representative must have been present in the room, which could only have been Mr Huber. But the argument is flawed. The LGA loan provided that CellOS' CEO was to request drawdowns. It follows that the board's direction was to CellOS' CEO not to make further drawdowns on terms that the loan was convertible to shares at SG$1.80 per share. 680 Mr Patel recalls that the board discussed the option conversion being terminated by reference to the fact that the option price was less than the official CellOS price. On Mr Huber's own evidence, at the point the option was terminated, CellOS was looking at the price going up to US$25 per share. 681 Mr Huber did not dispute this version of the discussion in one of his witness statements. But when asked in cross-examination, he disagreed that this was the reason. Mr Huber said he agreed to the termination because "the need had passed". But this was not responsive as CellOS points out. What was ended was not the loan, just LGA's right to convert. Further, the statement that the "need had passed" was also incorrect. In or about April to June 2014, Mr Huber told Mr Patel that when the LGA loan ended, CellOS would need a new source of funding to keep the company going. Notably, LGA made its last recorded loan to CellOS on 24 March 2014, although CellOS had the ability to borrow further from LGA (around SG$9 million) up to 30 June 2014. Mr Huber then arranged for another of his companies, Pized, to enter into a loan and option agreement with CellOS. I will return to the Pized loan later.

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(b) Other matters - LGA loan 682 Mr Huber procured payments into CellOS of SG$28,988,388 and AU$1,626,869 attributable to the LGA loan. 683 The available evidence establishes that SG$16.8 million in payments to CellOS attributable to the LGA loan derived from the sale of shares held by Basalt, which purchased its shares from early investors. Ms Hennessy identified that the source of SG$16.8 million going into the LGA loan was payments from Nesterland. She identified the source of the funds from Nesterland as being explained by the sale of 13,918,000 shares in CellOS, of which 7,037,000 were sales to the Pecks for US$2 per share. She traced 15 of the 38 deposits into Nesterland. Between August 2013 and May 2014, Nesterland received SG$37,419,059 from the sale of CellOS shares from four Huber controlled entities, Nesterland, Rex Investors, Lighthouse and Marsh Commercial. The origin of these shares was identified, including Basalt, and the end purchaser of these shares was the Pecks. I agree with CellOS that it is likely that the remainder derived from the sale of shares listed in schedule 1 to the 5FASOC. Mr Huber was not selling his personal shares held in Blue Delorite to raise funds. And by his own admission he had no other way of personally generating funds. 684 At this point let me discuss the CellOS share price during the term of the LGA loan. 685 On 27 November 2012, Mr Huber referred to Mr Tan meeting with "Jessie" from UOB, in relation to a proposed share placement. Mr Tan emailed Mr Huber in relation to this meeting that "in short, we should have quite a lot of potential clients who have the financial capabilities to take up the US$5 per share". On 9 January 2013, Mr Huber was telling potential investors that CellOS shares now sell at US$5 per share. In March 2013, CellOS' board approved the engagement of UOB to raise US$100 million at US$5 per share, although the issue price for shares was "subject to mutual agreement". Further, by July or August 2013, Mrs Peck was selling her shares at US$4 per share. And by the last quarter of 2013, CellOS was selling newly issued shares to investors at US$5 per share. Further, by April or May 2014, there was a market for shares at US$10 per share. Further, when around April 2014, CellOS staff were required to pay tax on CellOS shares paid as compensation, a group of employees approached Mr Huber saying they wanted to sell some shares to cover their tax bills due to the shares. Mr Huber said that he would help to sell enough shares for that purpose, and said that US$10 was the minimum price that should be paid for the shares. Mr Huber, through Mr Narulla, arranged the sale of these shares for US$10. 686 Yet between December 2013 and March 2014, Mr Huber caused CellOS to request, and for LGA to cause the payment of SG$13.6 million to CellOS attributable to the LGA loan. And by 27 March 2014, those funds had been converted to shares in CellOS at SG$1.80 per share, being 7,555,555 shares. 687 I agree with CellOS that it was likely to be uncommercial for Mr Huber to cause CellOS to request loans from LGA. It caused CellOS likely financial detriment, being the difference between SG$1.80 and US$5 for 7,555,555 shares. Further, when CellOS entered into the LGA loan, it obtained an option operating retrospectively (back to 1 March 2012) at SG$1.80 per share. Yet to May 2013 the market price was at least US$2 and probably US$5 per share. 688 Further, Mr Huber admitted that the funds from the Pecks' share purchases were being used for the purpose of raising funds for CellOS. Mr Huber accepted that he was converting loans to shares under the LGA loan at SG$1.80 and that he was selling shares to the Pecks at about SG$2.50. So on any view, Mr Huber was profiting SG$2.50, less 10% commission to Mr Tan, less SG$1.80 per share, being SG$0.45 per share. 689 Now there was a suggestion that the market price for CellOS shares in the financial year ended 30 June 2013 and 30 June 2014 was SG$1.80 because that was the price recorded in CellOS' audited accounts. The price of SG$1.80 per share in the accounts was reached in a dialogue with the auditors. And that figure doubtless reflects the option price at which CellOS was issuing nearly all new shares pursuant to the LGA loan and option. I agree with CellOS that this says little about the share price that was being obtained or obtainable in the market. 690 As to what happened to the LGA option shares, let me repeat in part what I have said earlier. 691 On 9 May 2014, LGA transferred 16,815,157 shares, being shares issued pursuant to the option under the LGA loan and including the abovementioned 7,555,555 shares, to seven Huber controlled companies for no consideration, as follows: (a) 2,800,000 to Birinc; (b) 2,300,000 to Sky Wealth; (c) 1,681,516 to Rex; (d) 2,350,000 to Sun Way; (e) 2,800,000 to Aura; (f) 2,583,641 to Harvest Sky; and (g) 2,300,000 to Rich Max. 692 At Mr Huber's personal direction, Rex Investors disposed of 1,681,516 shares and Harvest Sky disposed of all 2,583,641, a total of 4,265,157 shares. Mr Huber sold 2 million of these shares to the Pecks for US$2 per share, and 399,000 shares to other investors for US$10 per share. The sale price of the other 1.6 million plus shares is unknown. It would appear that the other entities still retain the shares.

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(c) Sequence of events - Pized loan 693 Let me now turn to the Pized loan, although I have already discussed some evidence concerning it. 694 In or about April to June 2014, Mr Huber told Mr Patel that when the LGA loan ended, CellOS would need a new source of funding to keep the company going. 695 On 1 July 2014, CellOS entered into the Pized loan. Mr Huber admits that he is the ultimate beneficial owner of Pized. Both Mr Narulla and Mr Min Wee stated in writing that Pized was being administered on Mr Huber's behalf. Mr Patel was asked to and did sign the Pized loan agreement, without knowing anything specifically about it. At no time did Mr Huber disclose to Mr Patel or CellOS' accounts staff any relationship between him and Pized. Mr Huber accepted that his supplementary statement was incorrect when he said that the CellOS board had requested that the Pized loan agreement be executed. 696 On 2 September 2014, the Pized loan came before the board for consideration. The unsigned minutes record the following: 2.3 Loan Agreement The Board was advised that the company had signed a loan agreement with Pized management Ltd on 1 July 2014 on the following terms: • Finance to be provided up to $20,000,000 • Interest charge is 5% simple interest per annum, calculated from the date of each draw down to the date of repayment • Term is from 1 July 2014 to 30 June 2015 • The lender has an option to convert any outstanding debt to shares based on 80% of the price per share of the last audited financial statement of the company. The Board ratified the signing of the loan agreement. 697 Mr Huber and Mr Reid were present. Mr Patel had by then resigned. The minutes also record that "the board noted that there no conflicts of interest". 698 Mr Huber did not disclose his interest in Pized to the board. Further, the loan and option were uncommercial. 699 Let me summarise the evidence of Mr Huber, Mr Chan and Mr Reid. 700 Mr Huber accepted that the board never authorised his entry into the Pized loan; rather, so it would seem, it sought to ratify it. Further, contrary to the minutes stating that there were no conflicts of interest, Mr Huber maintained that he did disclose his interest in Pized to the board. I reject Mr Huber's evidence. 701 As to the commerciality of the Pized loan, cl 21(b) provided that Pized could convert loans at 80% of the share price in the last audited accounts. Mr Huber accepted that as at the date of CellOS' ratification of the Pized loan, CellOS' audited accounts recorded the fair value of CellOS' shares at SG$1.80. This meant that the effect of the loan was that Mr Huber could get CellOS shares for about SG$1.42 per share. But Mr Huber also accepted that at this time CellOS shares were trading at US$10 and probably at US$25 per share. Clearly the option to convert was uncommercial. I would note, however, that it has never been exercised. 702 Mr Chan's evidence, as set out in his witness statement, was that prior to the meeting he knew that Mr Huber owned and controlled Pized, the terms of the Pized loan and that Mr Huber would be selling his shares in CellOS to provide cash under the loan. 703 Now Mr Chan said that at some point, whether before or at the board meeting, the source of the funds was discussed. Mr Chan's oral evidence was in effect that he thought everyone knew that Mr Huber stood behind Pized, but could recall no specific instance of that disclosure being made to the board. Mr Chan could not explain why there was no disclosure of Mr Huber's interest in Pized recorded in the board minutes. 704 Mr Chan recalled no discussion at the board meeting about the fact that the lender was going to be able to convert the loan to shares at 80% of SG$1.80. Mr Chan never asked Mr Huber what price CellOS would have been able to sell shares directly to investors for, as compared to the conversion price under the loan agreement. 705 Mr Reid did not know about the Pized loan at the time it was entered into. He became aware of the Pized loan after it was signed and before it came to the board for ratification. Before the Pized loan came before the board for ratification, Mr Reid asked Mr Huber who stood behind Pized, and Mr Huber said that Pized was a company in the Middle East and that there was a wealthy businessman in the Middle East. Mr Reid also made enquiries of Ms Mei Lan Ng, the group financial controller, as to who stood behind Pized and he was advised that it was a company in the Middle East. Mr Reid said that it was not discussed at the board meeting that Mr Huber was behind Pized. And Mr Reid was clear that at no time was he aware that Mr Huber was the beneficiary or an owner of Pized. 706 Further, as I have said, Mr Huber failed to properly disclose to CellOS' auditor that he had an interest in Pized.

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(d) Other matters - Pized loan 707 CellOS' books record total payments made to CellOS under the Pized loan of US$8.3 million and SG$2,570,707. These sums remain on CellOS' books as a liability owing to Pized. Part of the relief sought by CellOS is directed to removing that liability. I am not addressing relief at this stage of the proceedings. 708 The source of the funds paid into CellOS and attributed to the Pized loan is, from the evidence available, derived from the sale of shares in CellOS as a result of Mr Huber's scheme. 709 Ms Hennessy identified the source of the payments into CellOS attributed to the Pized loan as coming from seven sources. 710 As to the US$6.5 million attributable to Swallow, it used funds from Nesterland and from the sale of CellOS shares traceable to the LGA loan. 711 As to the US$1 million attributed to See Lop Fu James and the SG$131,000 attributable to Toh Teng Peow David, those sums were paid for the purchase of shares from Willow on 12 December 2014. These shares may be traced back to Basalt. In July/August 2013, 900,717 shares traceable to Basalt were transferred to Willow as follows: (a) Basalt transferred 2,500,717 to Prestongate Foundation in April 2013; (b) Prestongate Foundation transferred 300,717 of the 2,500,717 shares to Willow in August 2013; (c) Basalt transferred 1,500,000 shares to Rex Investors in April 2013; and (d) Rex transferred 600,000 shares to Willow in August 2013. 712 As to the SG$958,966 attributed to Sea Bass Solution, US$100,000 attributed to Lee Shih Hua, the US$100,000 attributed to Najeeb Assan, and the US$100,000 attributed to Tan Chin Hee, Stardust Financial is the source. These shares are traceable back to the funds going into the LGA loan as follows: (a) in May 2014, LGA transferred 2,583,641 shares to Harvest Sky; (b) in January 2015, Harvest Sky transferred 379,641 of the above shares to Stardust Financial; and (c) Stardust Financial's shareholding did not fall below that number of shares before 23 March 2015 (the date of the above transactions).

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(a) The scheme - its essential elements 719 As CEO of CellOS, Mr Huber was principally responsible for CellOS' fundraising. And at all relevant times, CellOS was substantially dependent upon Mr Huber's ability to raise equity or debt to continue its operations. 720 By the end of 2011, Mr Huber reported to the board of CellOS that some of the sophisticated investors based in Singapore would be interested in subscribing to the shares in the company. From at least this time, Mr Huber was causing CellOS shares to be sold through Child and Family Foundation, and part of the proceeds of these sales was going to CellOS to fund its operations. 721 In order to continue to sell shares in this manner, Mr Huber sought to purchase back shares issued to early investors in CellOS, at or about the price those investors paid for them. At CellOS' AGM on 1 June 2012, Mr Narulla, who was acting for and on behalf of Mr Huber, approached an early investor and said to him that he knew of a buyer and that he could connect him and then step out of the transaction. Mr Wolfenden acted for that early investor and other early investors with a shareholding totalling around 20 million shares, and negotiated the sale of their shares at or about cost price. Some had bought in 2005 and 2006 for around AU$0.10 per share, and others in 2008 and 2009 for around AU$0.35. The known consideration paid by Mr Huber or by Basalt for these shares was between AU$0.11 and AU$0.74 per share. 722 Basalt, one of the companies established at the direction of Mr Huber, bought these shares, and by 11 November 2012 became the holder of 23,538,717 shares (about 12% of the issued shares in CellOS). In November 2012, Mr Narulla confirmed payment had been made to the intermediary who negotiated the share purchase on behalf of Basalt in the sum of US$10,000. 723 In order to continue to purchase and then sell these shares, Mr Huber engaged Grandeza to set up a complex web of offshore companies to hide his involvement. Mr Min Wee was the sole shareholder and director of Grandeza. Mr Huber was paying Mr Min Wee directly for these services. 724 Between 2013 and 2015, there were around 47 (8 intermediary, 39 Huber controlled entities) offshore companies involved in the purchase, transfer, and sale of CellOS shares on Mr Huber's behalf. 725 As I have already said, the second to eighth and tenth to fourteenth respondents are overseas companies controlled by Mr Huber and managed by Mr Min Wee. The Ninth Respondent, Nesterland, was being administered by Mr Narulla to hold Mr Huber's shares and the proceeds from the sale of his shares. I need not repeat what I have said earlier concerning the control of Nesterland; further and in any event, Mr Narulla can be taken to have acted on Mr Huber's behalf when it came to considering Mr Huber's share dealings using Nesterland. The fifteenth respondent, Blue Delorite, had as its sole shareholder and director Mr Huber. Swallow was controlled by Mr Huber and managed by a provider of corporate services in the UAE. 726 Between 20 September 2011 and 12 August 2015, the Huber controlled entities had transferred to them at least 47,872,063 shares in CellOS from third party investors. 727 Between 20 September 2011 and 8 May 2015, the Huber controlled entities transferred at least 51,945,132 shares in CellOS into 12 offshore companies that would be used to sell the shares to private investors. That is, the same companies were not both buying and selling shares in the marketplace. Some companies were merely intermediaries. 728 Mr Huber then promoted CellOS shares to investors, ostensibly to raise capital directly for CellOS by the issue of new shares, but in fact it was to sell to such investors the same shares, which Mr Huber had purchased from early investors, at a considerable profit margin. 729 Between about February 2012 to late 2013, Mr Patel attended around 20 potential investor presentations with Mr Huber. There were about 10 to 20 potential investors at each, and they were held in CellOS' Singapore offices. 730 Between 20 September 2011 and 11 August 2015, Mr Huber procured the sale of at least 51,945,132 shares in CellOS from the Huber controlled entities to 355 third party investors. 731 Mr Huber was using various brokers to sell the offshore companies' CellOS shares in addition to Mr Tan. In March 2015, Mr Huber said that he was then using 8 brokers. These brokers included Mr Tan, Ms Sandra Dierstein at Proventus Consulting JLT in Dubai, Ms Charlene Kwok and Ms Marie Cronogue at Boswell Management Services & Consultancy. 732 It is known that Huber controlled entities purchased 19,059,834 shares (out of 47,872,063 shares transferred from private investors) for AU$4,848,094, and Huber controlled entities sold 22,832,921 shares (out of 51,945,132 transferred to private investors) for AU$50,353,076.35. The prices for the other transactions are unknown. 733 Mr Huber used part of these profits to fund CellOS through the LGA loan and the Pized loan. Mr Huber also used the profits in connection with the discharge of his bankruptcy, other personal expenses, and the purchase of properties in Melbourne and Dubai. 734 In order to provide funds to CellOS so that it could continue to operate, in or about May 2013 Mr Huber procured CellOS to enter into a loan agreement with LGA, one of his offshore companies, with the loan convertible to shares at a price below market value. 735 Mr Huber did not disclose his relationship with LGA to CellOS' board nor that the loan was being funded by profits generated from his trading in CellOS' shares. 736 CellOS in or about May 2013 entered into the LGA loan agreement (extracted earlier in my reasons), the key terms of which were that: (a) LGA granted to CellOS the right to request the drawing down of sums totalling SG$25 million; (b) if funds were advanced by third parties, CellOS accepted that those funds were to be treated as being advanced by LGA; and (c) CellOS granted LGA an option, exercisable at any time, for LGA to convert the outstanding debt into CellOS shares at SG$1.80 per fully paid ordinary share. 737 On 21 December 2013, and without board approval, Mr Huber and Mr Patel, on behalf of CellOS, and Mr Min Wee, on behalf of LGA, extended the LGA loan from 31 December 2013 to 30 June 2014, and increased the loan amount from SG$25 million to SG$40 million. 738 On 8 April 2014, the board of CellOS met, and the minutes record that the board agreed to ratify the extension of the LGA loan, but that "the Board decided that the Conversion Option granted to LGA to convert the loan into shares be terminated with effect from April 1, 2014". 739 LGA made its last recorded loan to CellOS on 24 March 2014, although CellOS had the ability to borrow further from LGA (around SG$9 million). 740 Mr Huber procured payments into CellOS of SG$28,988,388 and AU$1,626,869 attributable to the LGA loan. Significant payments to CellOS attributable to the LGA loan were derived inter-alia directly from Basalt and the shares purchased from early investors. 741 From at least 9 January 2013, Mr Huber was telling potential investors that CellOS shares were then selling at US$5 per share. In March 2013, CellOS' board approved the engagement of UOB to raise US$100 million at US$5 per share. It is known that by July or August 2013 Mrs Peck was selling her shares at US$4 per share, and by the last quarter of 2013, CellOS was selling newly issued shares to investors at US$5 per share. By April or May 2014, there was some market for shares at least at US$5 per share and possibly US$10 per share. 742 Between December 2013 and March 2014, Mr Huber caused CellOS to request, and for LGA to cause the payment of, SG$13.6 million to CellOS attributable to the LGA loan. By 27 March 2014, those funds were then converted to shares in CellOS at SG$1.80 per share, being 7,555,555 shares. 743 In my view, Mr Huber causing CellOS to request loans from LGA during this period had an uncommercial dimension to it. It likely caused CellOS damage, being the difference between SG$1.80 and US$5 for 7,555,555 shares. 744 On 9 May 2014, LGA transferred 16,815,157 shares (being shares issued pursuant to the option under the LGA loan and including the abovementioned 7,555,555 shares) to seven Huber controlled entities for no consideration. At Mr Huber's personal direction, the Huber controlled entities disposed of 4,265,157 shares. It is known that he sold 2 million of these shares to Mrs Peck and Mr Peck for US$2 per share, and 399,000 shares to other investors for US$10 per share. The Huber controlled entities continue to hold the balance of the 16,815,157 shares. 745 In or about April to June 2014, Mr Huber told Mr Patel that when the LGA loan ended, CellOS would need a new source of funding to keep the company going. 746 On 1 July 2014, CellOS entered into the Pized loan with terms that: (a) Pized granted CellOS the right to request drawdowns of sums totalling SG$20 million; (b) Pized had a discretion whether to advance any amount; (c) if funds were advanced by third parties, CellOS accepted that those funds were to be treated as being advanced by Pized; and (d) CellOS granted Pized an option, exercisable at any time, for Pized to convert the outstanding debt into shares in CellOS, calculated at a price amounting to 80% of the price per share reported in essence as the proxy for the market value in the last audited financial statement of CellOS. 747 The evidence establishes that Mr Huber did not disclose to CellOS' board or its shareholders any relationship between himself and Pized. There was no record in the minutes of CellOS' board of any such disclosure; Mr Patel's evidence was that he was never informed about any association between Mr Huber and Pized; and Mr Roche's evidence was that in early 2015 while undertaking investigations in relation to CellOS' audit, Mr Huber would not confirm to him the nature of his relationship with Pized. 748 Just on this lack of disclosure alone in relation to both the LGA loan and Pized loan, in my view Mr Huber contravened ss 195 and 208 of the Corporations Act. He did not provide the requisite disclosures or serve the necessary notices when the agreements were discussed. 749 CellOS' books record total payments made to CellOS under the Pized loan of US$8.3 million and SG$2,570,707. These sums remain on CellOS' books as a liability owing to Pized. The source of the funds paid into CellOS and attributed to the Pized loan appears to have been derived from the sale of shares in CellOS in relation to Mr Huber's scheme.

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(b) The primary claims against Mr Huber and his offshore companies 750 Let me first summarise some salient features of Mr Huber's conduct. 751 Mr Huber was a director and the CEO of CellOS with responsibility for raising funds for CellOS. At all times CellOS was in the market place trying to raise funds in order to continue operations. Mr Huber's conduct in discharging that responsibility was undertaken or required to be undertaken in his capacity as a director and the CEO of CellOS, particularly as CellOS was in the market for a share offering during the whole of the relevant period. Moreover, given Mr Huber's control and influence over CellOS' board, and as the CEO and its major shareholder, he was the person making decisions about the timings of formal share offerings. Yet on the side he was also the person running a scheme which was soaking up a class of investors who would otherwise have been likely to have been buying new shares issued by CellOS, including the Pecks. 752 In relation to the pleaded share trading conduct, instead of causing CellOS to offer and issue new shares to raise funds, Mr Huber procured, using offshore companies, the purchase of around 48 million shares from early investors at a fraction of the market price of those shares. And Mr Huber procured the sale of those shares into the market including the sale of over 18 million shares to the Pecks at US$2 per share. By reason of this conduct, Mr Huber diverted the opportunity from CellOS to issue new shares into the market by soaking up potential investors who otherwise would have created demand for CellOS issued shares. I agree with CellOS that the clearest evidence of this diversion is Mr Huber's decision to sell directly to the Pecks, rather than having CellOS issue new shares to them. Mr Huber misused his position as a director with responsibility for fund raising to procure the purchase and sale of these shares, and in doing so improperly gained profits for himself. 753 From September 2013 to July 2014, instead of issuing new CellOS shares into the market at the going price of US$5 per share (or at least more than US$2 per share) to fund CellOS, Mr Huber procured the sale of shares in CellOS to investors at US$2 to fund CellOS. In my view there was some market for CellOS shares during this period for at least US$5 per share, yet Mr Huber sold shares at US$2, including around 16 million shares to the Pecks at US$2 per share, to fund CellOS. By reason of this conduct, Mr Huber diverted potential investors from having CellOS issue new shares to them at US$5 (or at least more than US$2 per share). As I say, clear evidence of this diversion is Mr Huber's decision to sell directly to the Pecks, rather than having CellOS issue new shares to them. By reason of the foregoing, Mr Huber benefited Mrs Peck, Mr Peck and Mr Tan, by procuring the sale to them of shares in CellOS at US$2 per share, being a discount to the market of US$3 per share. Indeed, they were on-selling some of these shares at US$5 per share. Mr Huber caused detriment to CellOS by denying it the amount that CellOS would have raised by directly issuing the shares. 754 Further, I would also note at this point that in the context of considering a director's fiduciary duty, putting statutory duties to one side for the moment, there is no need to demonstrate that an opportunity taken by a director could even have been exploited by the company. Rather, the rule in relation to a corporate opportunity that a director diverts, covers opportunities which the company could be expected to have pursued if it had had the opportunity to do so. 755 Further, Mr Huber caused CellOS' entry into the LGA loan and Pized loan, the creditors of which were both related parties to Mr Huber. Mr Huber directed some of the proceeds generated from the sale of share trading conduct, which included proceeds from the sale of shares to the Pecks, to be paid into CellOS as loans under the LGA loan and the Pized loan. And Mr Huber directed LGA to exercise the option under the LGA loan and convert the loan into 17,477,204 shares at the option price of SG$1.80 per share. By reason of the foregoing, Mr Huber personally profited, being the difference between the sale price of US$2 per share Mr Huber was selling at to raise the funds for this loan arrangement, and the option price of SG$1.80. Alternatively Mr Huber caused LGA to obtain an unwarranted and unjustifiable advantage. Generally, the LGA loan was detrimental to and not in the interests of CellOS, as it included a retrospective option at below the then market price; CellOS could have issued new shares at a higher price than the option price. 756 By the above conduct, in my view Mr Huber committed breaches of his statutory and fiduciary duties to CellOS. Let me elaborate in more detail.

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Contravention of s 181 757 Section 181 of the Corporations Act provides: 181 Good faith - civil obligations Good faith - directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 758 As I said in Prestige Lifting Services Pty Ltd v Williams (2015) 333 ALR 674 at [201] and [202]: Section 181(1) of the Corporations Act (relevant to Williams only) provides that: (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. To establish a contravention of s 181(1) it is necessary to show that the director acted with a consciousness that what was being done was not in the interests of the company (Digital Cinema Network Pty Ltd v Omnilab Media Pty Ltd (No 2) [2011] FCA 509 at [158] (Digital Cinema Network) per Gordon J). The requirement to act in good faith includes that a director must: (a) exercise his powers in the interests of the company; (b) not misuse or abuse his power; (c) avoid conflict between his personal interest and those of the company; (d) not take advantage of his position to make secret profits; and (e) not appropriate the company's assets for himself. The issues of "good faith" and "proper purpose" have an objective element (Re PFS Wholesale Mortgage Corporation Pty Ltd (ACN 107 627 056); Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (ACN 106 761 826) (2006) 57 ACSR 553; [2006] VSC 192 at [377] per Hargrave J). 759 Mr Huber did not act in good faith in the best interests of CellOS and for a proper purpose, in contravention of s 181(1). Moreover, merely a subjective belief that it is in the company's interests or a belief that his purpose is proper is not sufficient to satisfy the statutory standard. There is an objective dimension to both limbs of s 181(1). Mr Huber did not act in the interests of CellOS including, essentially, its shareholders by diverting potential investors in CellOS shares from taking up newly issued shares and instead procuring them to buy shares from Huber controlled entities. He did not act in good faith. Further, his actions gave rise to a conflict between his obligations to CellOS to raise funds and his personal interests. Further, his conduct in procuring CellOS' entry into the LGA loan and the Pized loan, both of which were uncommercial given the option price and the ability of CellOS to issue new shares directly to market at a higher price, was not in the interests of the company. 760 Now the defendants submit that CellOS has not properly identified the power, the exercise of which is in question. But in one sense this lens is too narrow. Section 181(1) also refers to "discharge their duties", which in my view Mr Huber did not do "in good faith in the best interests of CellOS" and "for a proper purpose" for the reasons I have already explained. 761 Now the defendants say that the sole purpose that is alleged against Mr Huber in respect of the "diversion of opportunity conduct" is the purpose of raising funds for CellOS. But the defendants say that that is not an improper purpose where a company needs to raise funds as CellOS did. But in my view it is an improper purpose in the context where the equity raising by CellOS was purposely diverted by Mr Huber's secondary market or grey market activities. In any event, Mr Huber failed to discharge his duties in good faith in the interests of CellOS. Limbs (a) and (b) of s 181(1) are conjunctive not disjunctive. 762 Let me address the diversion case more directly, which arises in the context of both ss 181 and 182 as well as the fiduciary duty context. The defendants submit that the diversion of opportunity case fails for a number of reasons. 763 First, the defendants say that the opportunity, such as it was, stood outside the UOB capital raising, which was directed only at institutional investors and private equity firms. But I disagree with the premise. And in any event, even if it was outside the UOB process, it was still something that CellOS could have pursued or wanted to pursue. 764 Second, the defendants say that apart from UOB and the fund raising engaged in by Mrs Peck at Mr Huber's request, which did raise funds for CellOS and which did not involve any diversion from CellOS, there was no "other actual … equity raising" from which investors could be diverted. But that is to define away the problem. The Pecks and the other investors were the potential opportunity. Moreover, CellOS should have had and was more advantaged by equity funds than debt funds. 765 Third, the defendants say that CellOS' reliance on "any other … contemplated equity raisings" is a straw in the wind. They say that there was no contemplated equity raising in any real sense, and that a general desire to raise equity is not sufficient. It is said that most companies on the ASX and many that are not would be in this position, yet no one would suggest that their directors could not sell shares for that reason. But these submissions are at too high a level of abstraction to be meaningful. Clearly, CellOS was seeking to raise substantial equity and Mr Huber was tasked with that responsibility. CellOS needed this life-blood. 766 Fourth, the defendants say that CellOS' attempt to widen its case by introducing the concept of a "possible" equity raising must be rejected. Further, they say that if a possible share offering that is not even contemplated by a company has the consequence that a director who sells shares is diverting a corporate opportunity, then no director of any company could ever safely sell his shares. Again, this is an exaggeration and in any event not an accurate representation of the context that I am considering. 767 Fifth, the defendants say that under the SFA it would not have been possible for CellOS to issue shares to the Pecks or their friends and contacts without issuing a prospectus. But I have addressed this point earlier and would reject the assertion for the reasons I have given. Relevant exemptions could have been used. 768 Sixth, it is said that the opportunity asserted by CellOS was never a corporate opportunity of CellOS. They say that it was an opportunity of, and created by, Mrs Peck, to sell CellOS shares to her friends. They say it was not a maturing business opportunity, let alone one which CellOS was actively pursuing. But again this misconceives CellOS' case, particularly as CellOS should have had the opportunity of dealing with the Pecks as well as the other investors. 769 Further, they say that there is no evidence that the Pecks would ever have paid more than US$2 per share. So what? That does not deny the potential opportunity given that after-all US$2 is above SG$1.80. 770 Seventh, the defendants say that the claim depends on there having been at the relevant time a market price for CellOS shares at US$5 and later US$10. But they say that the basis for this assertion is thin. They refer to the following matters: (a) Although CellOS says that from 9 January 2013, Mr Huber was telling potential investors that CellOS shares now sell at US$5 per share, that was an assertion by Mr Huber; it is not evidence of a market or a market price. (b) Further, although CellOS says that in March 2013, CellOS' board approved the engagement of UOB to raise US$100 million at US$5 per share, they say that any fixing of that price is not evidence of a market price. Further, it is common ground that UOB did not raise any funds at that price or at any other price. And less than three weeks earlier, the board had approved the LGA loan agreement with a conversion price of SG$1.80 with what, on CellOS' case, the board must have considered an arm's-length lender. (c) Further, although CellOS says that by July or August 2013, Mrs Peck was selling her shares at US$4 per share, there was only one purchaser to whom Mrs Peck sold shares at US$4: Anthony Cooper. But these, like the Pecks' other sales of shares, were isolated transactions at prices agreed between buyer and seller at US$2 or US$5 or US$10. They are not evidence of a market. (d) Further, although CellOS says that by the last quarter of 2013, CellOS was selling newly issued shares to investors at US$5 per share, these sales appear to have been limited to a small number of buyers. This is not enough to show a market price. (e) Further, although CellOS says that by April or May 2014, there was a strong market for shares at US$10 per share, the basis for this proposition is said to be Mr Patel's witness statement. But it says only that "Huber said that USD$10 was the minimum price that should be paid for the shares, as he wanted to communicate to third parties that there was a 'strong market' for CellOS shares". But that is an assertion by Mr Huber, not evidence of a market price. 771 Now there is some force in these submissions, but in my view considering the evidence as a whole, clearly there was a market for CellOS shares at the relevant time well above SG$1.80 per share, and indeed above US$2 per share. 772 Eighth, the defendants submit that CellOS needs to prove that Mr Huber in selling his shares was doing so as a director of CellOS, not just as a shareholder who was funding the company. But this puts the case too narrowly. And certainly such an assertion does not answer the fiduciary duty question. As CEO he had a duty to promote any CellOS share issue or facilitate the raising of equity capital by CellOS. But he diverted this by his conduct. Part of his diverting conduct was to go off and create a secondary or grey market. 773 Ninth, it is said that CellOS must establish that in selling his shares to the Pecks for the purpose of funding the company, Mr Huber failed to exercise his powers and discharge his duties as a director in good faith in the best interests of the company and for a proper purpose. In those circumstances they say that it needs to show that Mr Huber acted with a consciousness that what was being done was not in CellOS' best interests. But they say that the evidence of Mr Huber is to the effect that he genuinely believed that it was in the best interests of CellOS for him to loan the net proceeds of sale to CellOS to enable it to have working capital. They say that CellOS cannot show that Mr Huber was acting with a consciousness that it was not in CellOS' best interests. I must say that this lens is too narrow and does not apply the correct legal analysis. But in any event, I do not consider that Mr Huber's state of mind was such that he genuinely considered that he was acting in CellOS' best interests to the exclusion of his own interest. 774 Tenth, it may be accepted, as the defendants assert, that the issue of shares was under the control of the board of CellOS, rather than Mr Huber personally. But that proposition does not take the matter far. His conduct caused a diversion of opportunity such that the board was not able to consider and, if thought appropriate, issue shares to the relevant investors. 775 Eleventh, it is said that CellOS has not proved that the alleged diversion of opportunity conduct caused a loss of a valuable opportunity. It is said that it must prove on the balance of probabilities that it has suffered some loss or damage, not being a loss of a commercial opportunity of a negligible value. I am not sure that such a proposition is entirely correct. In any event, the loss of the opportunity had more than negligible value.

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Breach of fiduciary duty 776 But irrespective of whether there has been a breach of s 181, in my view Mr Huber breached his fiduciary duties to CellOS: (a) to act in the best interests of CellOS; (b) not to use his position to improperly gain advantage for himself or someone other than CellOS; (c) not to obtain secret profits; (d) to account to CellOS for secret profits; and (e) not to act contrary to the interests of or to the detriment of CellOS. 777 In Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 360 ALR 1 at [67] to [70], Gageler J stated in the context of a fiduciary duty, and particularly the duty of loyalty, the following: [The] duty of loyalty is imposed in equity by means of two overlapping "proscriptive obligations". Each proscriptive obligation, or "theme", is "descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies". "The first", often referred to as the "conflict rule", "is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest." The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal. "The second", often referred to as the "profit rule", "is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary's] position for [the fiduciary's] personal advantage." The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self-interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal. Consistently with the objective of imposing each obligation, in neither case does the benefit or gain to the fiduciary need to be at the expense of the principal, though it may be. And in neither case does the fiduciary need to act dishonestly or fraudulently, or otherwise than in good faith, though again the fiduciary may do so. … (Citations omitted.) 778 Further, at [85] he said: The benefit or gain for which a fiduciary or knowing participant is liable to be ordered to account must, as a baseline requirement, have a causal connection to the fiduciary's breach of equitable obligation. The requisite causal connection was explained in Warman to exist if the benefit or gain has been obtained "by reason of" the fiduciary position, where the relevant breach is of the conflict rule, or if the benefit or gain has been obtained "by reason of" the fiduciary taking advantage of an opportunity or knowledge derived from the fiduciary position, where the relevant breach is of the profit rule. (Citations omitted.) 779 Generally, when a director of a company diverts an opportunity obtained by reason or by use of his fiduciary position, the benefits of taking that opportunity belong in equity to the company, irrespective of whether the company could have availed itself of the opportunity (Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558). 780 And as also said in Furs Ltd v Tomkies (1936) 54 CLR 583 at 592 per Rich, Dixon and Evatt JJ: It is no answer to the application of the rule that the profit is of a kind which the company could not itself have obtained, or that no loss is caused to the company by the gain of the director. It is a principle resting upon the impossibility of allowing the conflict of duty and interest which is involved in the pursuit of private advantage in the course of dealing in a fiduciary capacity with the affairs of the company. If, when it is his duty to safeguard and further the interests of the company, he uses the occasion as a means of profit to himself, he raises an opposition between the duty he has undertaken and his own self interest, beyond which it is neither wise nor practicable for the law to look for a criterion of liability. The consequences of such a conflict are not discoverable. Both justice and policy are against their investigation. 781 Now the scope of a fiduciary duty must be tailored to the nature of the relationship between the parties and the facts of the case. In terms of Mr Huber's functions and responsibilities as they concerned equity raising and the funding of CellOS, I would express his fiduciary duty relating thereto in terms used by the Full Court in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [177] that he was a person that: has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other's interest to the exclusion of his or her own or a third party's interest. 782 But I also accept that any fiduciary duty must accommodate itself to the terms of CellOS' constitution (see for example clauses 3.1, 3.2, 8.1, 8.3 and 15.2). 783 Now of course generally a director has no fiduciary duty concerning the trading of shares in a company to his own account. But that is not what I am concerned with. Mr Huber's fiduciary duty was owed by reason of his position as CEO and his responsibility for equity raising. It was breached through the scope and secrecy of the scheme he erected to create and promote a secondary or grey market in CellOS' shares, diverting to himself and to his own benefit the relevant potential investors including the Pecks. Further, the fact that he redirected funds back to CellOS as debt funds together with an uncommercial conversion option only exacerbated the breach of fiduciary duty. 784 Now company directors are frequently shareholders. And French CJ and Keane J said in Howard v Federal Commissioner of Taxation (2014) 253 CLR 83 at [34]: The decisions they take as directors may therefore affect their personal interests. They do not breach their fiduciary obligations merely because in promoting the interests of the company they are also promoting their own. On the other hand, a decision taken by directors to advantage themselves other than as members of the general body of shareholders would constitute an abuse of fiduciary powers. 785 The essence of a fiduciary relationship is that one party exercises power or discharges their duties on behalf of another and pledges himself to act in the best interests of the other. But absent a particular identified conflict arising out of his directorship, a director's fiduciary obligations do not extend to his conduct when acting qua shareholder, where no such pledge can reasonably be expected to occur. Nor is a shareholder, by reason only of his directorship, prohibited from enjoying the benefits of his shareholding. 786 But accepting all of that, in the present case Mr Huber's fiduciary duty was defined by the scope of his engagement and responsibilities as CEO principally responsible for equity raising for CellOS. He had a fiduciary duty to facilitate that objective rather than to undermine it. 787 Now Mr Huber has raised a number of arguments. 788 First, Mr Huber says that the claim concerning the share trading conduct fails because it falls outside Mr Huber's duties. But the evidence is clear that Mr Huber, as a director and the CEO with responsibility for fund raising, conducted share trading to divert the relevant opportunity otherwise available to CellOS. 789 Second, Mr Huber says that there was no diversion because there was no mature effort to obtain funding. Further, Mr Huber says that the board needed to resolve that there would be an equity raising in order that the opportunity be mature. But CellOS was always trying to raise equity. And the principle is that a corporate opportunity that a director diverts covers opportunities which the company could have been expected to pursue if it had had the opportunity to do so, having regard to its stated aspirations. That principle was engaged here by Mr Huber's conduct. 790 Third, Mr Huber's evidence was to the effect that he did not do the share trading conduct. He says that it was undertaken without his knowledge by his personal assistant Mr Narulla, and to a more limited extent by Mr Min Wee. But in my view, Mr Huber's evidence was unreliable. And for the most part Mr Huber knew and authorised what Mr Narulla and Mr Min Wee were doing on his behalf. But even if Mr Huber's evidence were to be accepted, his assertions do not constitute any defence or excuse. For the most part Mr Narulla and Mr Min Wee were acting as Mr Huber's agents in buying and selling the shares of early investors. Mr Narulla and Mr Min Wee were directing profits from the sale of those shares into the LGA loan and the Pized loan and to Mr Huber personally. Further, Mr Huber ratified those transactions by directing CellOS' registry manager and bookkeepers to record and process these transactions. I agree with CellOS that Mr Huber is responsible for the acts of his agents. 791 Let me now conclude this part of the analysis by making reference to three other authorities concerning the diversion of a business opportunity. 792 In Beam v Stewart 833 A 2d 961 (Del Ch, 2003), Chancellor Chandler dealt with a derivative action brought by a shareholder (Beam) on behalf of a company (MSO) against, inter-alia, Martha Stewart (Stewart) a director and L. John Doerr (Doerr) a former director. One of the counts in the complaint concerned the sale of Stewart's and Doerr's shares in MSO to entities designated as "ValueAct". Before the Chancellor was a summary motion to dismiss the complaint. For present purposes, I need to discuss only Count III, which alleged that Stewart and Doerr had breached their fiduciary duty of loyalty by usurping a corporate opportunity by selling large blocks of MSO shares to ValueAct. 793 Now the Chancellor referred to a four pronged test in the following terms (at [3] and [4]): The basic requirements for establishing usurpation of a corporate opportunity were articulated by the Delaware Supreme Court in Broz v. Cellular Information Systems, Inc.: [A] corporate officer or director may not take a business opportunity for his own if: (1) the corporation is financially able to exploit the opportunity; (2) the opportunity is within the corporation's line of business; (3) the corporation has an interest or expectancy in the opportunity; and (4) by taking the opportunity for his own, the corporate fiduciary will thereby be placed in a position [inimical] to his duties to the corporation. (Citation omitted.) 794 As to the first limb, he said (at [5]): Financial Ability of MSO to Exploit the Opportunity The amended complaint asserts that MSO was able to exploit this opportunity because the Company's certificate of incorporation had sufficient authorized, yet unissued, shares of Class A common stock to cover the sale to ValueAct. Defendants do not deny that the Company could have sold previously unissued shares to ValueAct. I therefore conclude that the first factor has been met. 795 Equally that may be said to be the case before me. 796 But as to the second limb, he said at [6] and [7]: Within MSO's Line of Business An opportunity is within a corporation's line of business if it is "an activity as to which [the corporation] has fundamental knowledge, practical experience and ability to pursue." Because I have already determined that MSO had sufficient authorized but unissued shares available and because no special expertise is required to issue stock, I find that the "ability to pursue" prong is met. The question then becomes whether selling its own stock is an activity as to which the Company has fundamental knowledge and practical experience. Plaintiff states that the Company's line of business is "creat[ing] 'how-to' content and domestic merchandise for home-makers and other consumers." Nevertheless, the Court recognizes that raising capital is a fundamental activity in which businesses are often engaged. MSO made its initial public offering in October 1999. Therefore, in a strictly literal sense, the Company, like any stock corporation, "has fundamental knowledge and practical experience" in the activity of selling its stock in exchange for capital contributions. This conclusion, however, does not help plaintiff in this instance. MSO is a consumer products company, not an investment company. Simply stated, selling stock is not the same line of business as selling advice to homemakers. Further, I would presume that a company's "line of business" is one that is intended to be profitable. By definition, a company's issuance of its stock does not generate income. For the foregoing reasons, I therefore conclude that the sale of stock by Stewart and Doerr was not within MSO's line of business. (Citations omitted.) 797 Now as to this second limb, under Australian law the formulation is not so narrow. Applying Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 at 143 to 148 per Lord Russell of Killowen and cases which have followed these principles ever since, I do not think that any narrow approach needs to be taken to "line of business". But in any event, CellOS was in quite a different position to MSO. If I need to so find, I would say that it was within or associated with CellOS' "line of business" to raise capital at the relevant time. 798 As to the third limb, the Chancellor said the following (at [8] and [9]): MSO's Interest or Expectancy in the Stock Sales A corporation has an interest or expectancy in an opportunity if there is "some tie between that property and the nature of the corporate business." Requiring a tie to the "nature of the corporate business" implicates many of the issues discussed above regarding MSO's line of business. The Broz Court found that the company in that case, CIS (a company in the business of providing cellular phone service to the Midwest), had no interest or expectancy in the Michigan-2 license in question because CIS was divesting its cellular license holdings and its business plan did not contemplate any new acquisitions. Here, plaintiff does not allege any facts that would imply that MSO was in need of additional capital, seeking additional capital, or even remotely interested in finding new investors. Had MSO wished to do so, it had a readily available, liquid market in which to accomplish that aim, as MSO's Class A stock is traded on the New York Stock Exchange. I fail to see any connection between the potential sale of stock to ValueAct and the nature of MSO's business. Further, issuance of new shares without a need or desire for new capital is perceived to have negative effects on preexisting shareholders, as the new capital may not be effectively used to increase earnings at the same time that the preexisting shareholders' proportionate interests in the corporation have decreased. Plaintiff presents no indication that MSO had any expectation, interest, or necessity to raise capital through new issuances of stock, nor can I reasonably infer such from the amended complaint. In the absence of specific allegations indicative of corporate interest or expectancy, I must conclude that this factor of the Broz test has not been met. (Citation omitted.) 799 Contrastingly, in the case before me CellOS had a clear interest or expectancy in the share sales. CellOS was interested in and actively pursuing steps to raise equity capital. It was clearly interested in new and additional capital. Moreover, the essence of CellOS' case is that the diversion of investors to a secondary or grey market denied CellOS a realistic opportunity to issue equity to these same investors directly. 800 As to the fourth limb, the Chancellor said (at [10] and [11]) the following: Whether the Stock Sales Placed Stewart and Doerr in a Position Inimical to Their Duties to MSO "[T]he corporate opportunity doctrine is implicated only in cases where the fiduciary's seizure of an opportunity results in a conflict between the fiduciary's duties to the corporation and the self-interest of the director as actualized by the exploitation of the opportunity." Given that I have concluded that MSO had no interest or expectancy in the issuance of new stock to ValueAct, I fail to see, based on the allegations before me, how Stewart and Doerr's sales placed them in a position inimical to their duties to the Company. Were I to decide otherwise, directors of every Delaware corporation would be faced with the ever-present specter of suit for breach of their duty of loyalty if they sold stock in the company on whose Board they sit. Additionally, Delaware courts have recognized a policy that allows officers and directors of corporations to buy and sell shares of that corporation at will so long as they act in good faith. A corporation generally "has no interest in its outstanding stock or in dealing in its shares among its stockholders." Plaintiff cites only one case purported to be to the contrary - Thorpe v. CERBCO, Inc. Thorpe involved a bidder who approached the management of Insituform East, Inc. desirous to purchase the company. In bad faith, management withheld this information from the outside directors, lied by saying that the bidder had not expressed interest in purchasing the company, threatened to block any sale of the entire company, and simply informed the board a bidder wished to buy the inside directors' controlling interest. I would attempt to compare the well-pled facts in this case to those in Thorpe, but I am unable to do so because the amended complaint fails to provide any factual detail about the circumstances surrounding the stock sales, alleging only that the transactions occurred. Delaware jurisprudence favors certainty and predictability. Directors must "make decisions based on the situation as it exists at the time a given opportunity is presented." In the absence of allegations based on well-pled facts that call into question the propriety of Stewart and Doerr's sales at the time they made them, it is impossible to infer that they acted in bad faith in selling their shares or placed themselves in a position inimical to their duties to MSO. Given the allegations before me, the fourth factor of the Broz test is not met. On balancing the four factors, I conclude that plaintiff has failed to plead facts sufficient to state a claim that Stewart and Doerr usurped a corporate opportunity for themselves in violation of their fiduciary duty of loyalty to MSO. Count III is dismissed in its entirety under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. (Citations omitted; original emphasis.) 801 Now these observations were all very well in the case before the Chancellor. But they were premised on his finding that "MSO had no interest or expectancy in the issuance of new stock to ValueAct". But I have precisely the opposite case. CellOS had every interest and expectancy in potentially issuing new shares to the investors diverted by Mr Huber's conduct, and where Mr Huber as the CEO was charged with pursuing the opportunity of raising equity capital from such a type of investor for CellOS. The narrow idea that Mr Huber was only charged with raising equity from institutions and private equity firms is a proposition I have rejected. 802 In my view, Mr Huber's conduct is generally speaking captured by Lord Russell's observations in Regal (Hastings) Ltd at 144 and 145 in the following terms: My Lords, with all respect I think there is a misapprehension here. The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon to account. 803 But it is convenient to make one other observation concerning Regal (Hastings) Ltd at this point. Lord Russell went on to conclude in the following terms: In the result, I am of opinion that the directors standing in a fiduciary relationship to Regal in regard to the exercise of their powers as directors, and having obtained these shares by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office, are accountable for the profits which they have made out of them. 804 Now Lord Russell's lens, explicable on the facts before him, was that the directors obtained the relevant shares "by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office". If Lord Russell's observation is limited only to explaining the facts before him, I have no difficulty with it. But if it is to be construed as imposing a necessary condition in all cases of such a narrow nexus, I would prefer the more flexible formulation in Howard v Federal Commissioner of Taxation at [63] and [64] where Hayne and Crennan JJ described the matter in the following terms: A director's diversion of the company's business opportunity will also commonly (perhaps inevitably) engage the director's obligation not to be in a position of conflict. But regardless of whether the obligation to avoid conflicts is engaged, a critical question presented for consideration in relation to the obligation not to obtain unauthorised benefits will be whether the director has obtained a benefit by reason or by use of the relationship between that director and the company. That question requires careful attention to how and why it is said that the director obtained a benefit by reason or by use of the relationship. And as Regal (Hastings) Ltd v Gulliver demonstrates, if the opportunity came to the director in the course or as a result of holding office as a director, it is not to the point to establish that the company could not or would not have exploited the opportunity. In Regal (Hastings), the directors of the company were held bound to account to the company for their profit despite the company's inability to raise the capital necessary to undertake the venture from which the directors made their profit. (Citations omitted; original emphasis.) 805 They then went on to say at [86] as follows: Instead, it is necessary to ask whether the identified gain or profit was obtained or received by reason or by use of the appellant's position as a director of Disctronics or by reason or by use of any opportunity or knowledge resulting from that position. (Citation omitted; original emphasis.) 806 In my view, the question is whether Mr Huber obtained or received a gain or profit by reason or by use of any opportunity or knowledge resulting from his position as CEO. I think he did. He knew CellOS needed to and wanted to raise capital. He knew from his position what the market value of the shares were. He knew what the characteristics of the share register were and the initial investors who could be soaked up cheaply. He knew that there was the potential to divert investors to the secondary market created, and that any profit made could be used to fund CellOS through debt funding through one of his associated entities. His opportunity and knowledge principally came about by reason of his position as CEO who was charged with the responsibility for raising equity funding. 807 Further and unlike Regal (Hastings) Ltd, there was a more direct conflict between interest and duty. Mr Huber's interest was to create and prosper from the implementation of this secondary and grey market in CellOS shares. But his duty was to create and nurture opportunities for direct equity capital raising by CellOS, not to divert them. There was a blatant conflict between his interest and his duty, and he acted in breach of fiduciary duty by preferring his own interest.

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Contravention of s 182 808 Section 182 of the Corporations Act provides: 182 Use of position - civil obligations Use of position - directors, other officers and employees (1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 809 Mr Huber improperly gained a personal advantage through the controlled entities, and gained an advantage for Mrs Peck, Mr Peck and Mr Tan, causing CellOS detriment, in contravention of s 182(1). As I said in Prestige Lifting Services at [205], impropriety of the person's position as a director will be found where the director breaches the standards of conduct expected of such a person in his position by a reasonable person with knowledge of his attendant duties and powers, and the authority that he can and is expected to exercise. It is an objective standard. But s 182(1) does not impose a universal standard. Impropriety needs to be assessed focusing upon the particular duties and responsibilities of the officer concerned. 810 Mr Huber misused his position as a director and CEO responsible for fund raising to interpose his companies into CellOS' fund raising process and to direct potential buyers of CellOS shares away from procuring new shares and ensuring that they purchased his shares through the Huber controlled entities. This conduct was a breach of s 182(1). It fell outside the objective standards of conduct that I have just described. 811 Now the defendants submit that it is not at all clear how it is said that Mr Huber used his position as a director of CellOS in contravention of s 182(1). The defendants submit that it is no part of the pleaded case against Mr Huber that his purpose was to benefit the Pecks and Mr Tan and to cause detriment to CellOS. They say that this is fatal to the claim under s 182(1), and that instead these matters are pleaded only as the alleged effect of his conduct. They say that the only pleaded purpose on the part of Mr Huber, "the purpose of raising funds for CellOS", was not only an entirely proper purpose, given CellOS' need for funds, but appears to have been substantially achieved. The proceeds of the share dealings, or the vast bulk of them, were lent to CellOS via the LGA loan and later converted to equity, thus taking the loan off CellOS' books. They say that this was a clear benefit for CellOS. Further, it is said that whilst the dilution of other shareholders may have disadvantaged them, it did not disadvantage CellOS itself. Further, they submit that CellOS did not suffer detriment when its shares changed hands, nor did it suffer detriment when it borrowed money or when debt was converted into equity. They say that the latter diluted other shareholders, but that was not a detriment to CellOS. Further, they say that Mr Huber was acting as a shareholder and not a director. 812 I have little difficulty in rejecting these submissions. First, they focus too narrowly on Mr Huber's purpose. And in any event his purpose was not innocent. Second, and based upon what I have previously said, Mr Huber improperly used his position to divert an equity opportunity from CellOS and caused CellOS to enter into the LGA loan and the Pized loan containing uncommercial terms, particularly concerning the conversion options. Moreover, the whole structure placed CellOS at a disadvantage in that it received debt funding rather than equity funding. This was all to the detriment of CellOS, and I might say to the advantage of Mr Huber.

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(c) The LGA and Pized loans 818 There are essentially three issues concerning the LGA and Pized loans, as I have indicated earlier. 819 First, if the diversion of the equity opportunity had not occurred, such debt funding may not have been needed, or at least needed in this form. It would have been less advantageous to CellOS to use debt funding than equity capital. Mr Huber's scheme put CellOS in that less advantageous position. 820 Second, the strike price for the conversion options under the loans was uncommercial. This entailed detriment to CellOS. It also entailed detriment to other shareholders whose interests were diluted. 821 Now Mr Huber submits that: (a) The CellOS 2013 financial report indicates SG$1.80 was the "fair value by reference to shares issued in the most recent arms length transactions to 3rd parties". CellOS' 2014 financial report indicates the same thing. (b) Mr Stephen Roche, the Deloitte partner and auditor of both sets of reports, gave no evidence calling the veracity of these matters into question. (c) Mr Patel, a director when the LGA loan was entered into, did not demur from these statements in the financial reports. Further, it is said that Mr Patel repeatedly agreed that SG$1.80 was a "fair price". Mr Patel, along with several other employees, were issued shares at SG$1.80 and paid tax on that basis. 822 As to the commerciality of these terms Mr Huber also submits the following: (a) It is telling that, at the board meeting on 2 September 2014, CellOS' board, including Mr Reid, understood and ratified the Pized loan terms. There is no evidence or suggestion that any director objected to these terms. (b) Further, no CellOS witness gave evidence that these terms were uncommercial. To the contrary, Mr Reid agreed that, at that time, the Pized loan was a perfectly fair and balanced transaction for the company to enter into. Further, Mr Patel did not consider 80% of the price to be "unfair". (c) Further, that the strike price is tethered to the audited accounts evidences the parties' genuine attempt to make the Pized loan commercial. Further, Mr Huber submits that the 20% discount was justified by CellOS' solvency risk and the loan's lack of security. 823 But in my view the strike price was uncommercial. Moreover, Mr Huber cannot seek refuge in the accounts on that aspect. The accounts figure reflected the price at which shares were issued to employees and directors (i.e. as insiders) albeit purporting to be based on "recent arms length transactions to 3rd parties"; query in fact what these were. Moreover, it is clear that the market value was well above SG$1.80 per share in any event and that this was known to Mr Huber. Further, the LGA loan had a disadvantageous retrospective operation. 824 Third, in my view there was not fully informed consent to these loans. Mr Huber put before me an elaborate written submission suggesting that there was consent. But for the reasons set out earlier and as disclosed by the relevant chronology, there was no proper or informed consent concerning his interest in LGA and Pized. 825 Mr Huber said that the central issue is whether CellOS knew and consented to: (a) the terms of those loans; and (b) the relationship between Mr Huber and LGA and Pized respectively. 826 He said that while the evidence on this issue conflicted, he submitted that the weight of the evidence supported a finding that CellOS was aware of and consented to both these things. I disagree. In my view, Mr Huber did not at the relevant time disclose his relationship with either LGA or Pized. Now Mr Huber sought to deploy many documents to show that Mr Patel or Ms Tapner knew at the relevant time. But for my part I was not convinced that they disclosed what Mr Huber asserted; see Tabs 2, 3, 4, 7, and 9 of his "Further Materials" bundle; see also the affidavit of Alexander Murphy sworn on 18 June 2018 (incorrectly dated 2016) filed by CellOS after the trial had concluded. 827 Finally, Mr Huber made submissions concerning ratification and also as to what would have happened if there had been fully informed consent. I must say I was not convinced by any of this. Moreover, some of his submissions went more to the question of remedy which I am not addressing at the moment.

[100]

(e) The second to thirteenth and fifteenth respondents were involved in Mr Huber's breaches 832 When LGA exercised the option, it transferred shares to the second to eighth respondents, each of which Mr Huber controls. Further, the ninth to thirteenth and fifteenth respondents engaged, at the direction of Mr Huber, in trading shares issued by CellOS in furtherance of the scheme. 833 I agree with CellOS that by reason of the second to fifteenth respondents' involvement in the scheme, as to which the schedules to the 5FASOC detail transfers of shares involving those entities, and Mr Huber's control of each, the second to fifteenth respondents were involved within the meaning of s 79 of the Corporations Act in Mr Huber's contraventions of ss 181(1), 182(1) and 183(1), and knowingly assisted Mr Huber's breaches of his fiduciary duties under the second limb of Barnes v Addy. Again, Mr Huber's state of mind can be attributed to these corporations. 834 In relation to the second limb of Barnes v Addy let me repeat what I said in Prestige Lifting Services at [234] to [239]: In relation to the second head of claim that invokes the second limb of Barnes, the following may be noted in terms of the relevant knowledge for knowing assistance in Williams' and Hoffman's breaches of fiduciary duty. First, as this is a serious allegation, it has to be assessed in accordance with principles of the type set out in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] ALR 334 (see s 140(2)(c) of the Evidence Act 1995 (Cth)). Second, the relevant knowledge must be established at one of the following four levels conveniently described by Peter Gibson J in Baden v Société Générale pour Favoriser le Développement du Commerce et de l'lndustrie en France SA [1993] 1 WLR 509 at 575-6; [1992] 4 All ER 161 at 234-5 being: (a) actual knowledge; (b) wilfully shutting one's eyes to the obvious; (c) wilfully or recklessly failing to make such enquiries as an honest and reasonable man would make; and (d) knowledge of circumstances that would indicate the facts to an honest man. The fifth level, namely, knowledge of circumstances that would put an honest and reasonable man on enquiry is not part of Australian law (see Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 398-9; 5 ALR 231 at 252-3 per Gibbs J and at CLR 412; ALR 264 per Stephen J). Indeed to use that fifth level would be to disregard equity's concern for the state of conscience of the defendant; see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [171]-[178] (Farah Constructions). Third, the relevant breach of fiduciary duty for the purposes of this second limb must be dishonest and fraudulent. Mere breach of fiduciary duty without dishonesty and fraud is not sufficient (see Farah Constructions at [163]). Dishonesty in this context may be established by conscious impropriety including knowingly appropriating another's property or information, whether or not the wrongdoer sees nothing wrong in his behaviour. Further, as was said in Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1995] 2 AC 378 at 389; [1995] 3 All ER 97 at 105-6 but putting to one side for present purposes the broader debate referred to in Farah Constructions at [163], in terms of explaining what dishonesty is not, it may be said that an honest person: (a) does not intentionally deceive others to their detriment; (b) does not knowingly take others' property; (c) does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of beneficiaries. Fourth, it may be queried whether it needs to be shown that the person who is alleged to have given assistance had the intention of furthering the dishonest and fraudulent breach of fiduciary duty as distinct from just having the relevant knowledge. I am inclined to the view that the preponderance of authority that binds me does not go that far. (Original emphasis.) 835 I have applied these principles. 836 Finally on this aspect, I am inclined to agree with CellOS that Mr Huber and his companies being LGA, Pized and the second to fifteenth respondents are jointly and severally liable for any profits each made through the scheme. And it is well arguable that each therefore holds on constructive trust any asset constituting the benefit in question e.g. shares purchased through the scheme or shares issued under the LGA loan. But as I say, I am not dealing with questions of relief at this stage.

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THE CLAIMS AGAINST THE PECKS AND MR TAN 843 It is said that by reason of the Pecks' and Mr Tan's involvement in, and knowledge of, parts of Mr Huber's scheme, each was relevantly involved (within the meaning of s 79) in Mr Huber's contraventions of ss 181(1), 182(1) and 183(1) of the Corporations Act. 844 I should say at this point that the Pecks and Mr Tan are now only pursued as accessories to Mr Huber's contraventions of ss 181 to 183 of the Corporations Act; there is no extant second limb Barnes v Addy claim. Accordingly, if I had only found against Mr Huber for breach of fiduciary duty rather than for the statutory contraventions, then the claims against the Pecks and Mr Tan would have failed at the threshold. Let me turn then to the accessory claims and first set the scene. 845 Mrs Peck and Mr Peck were introduced to Mr Huber by Mr Tan, and in or about March 2013 they became investors in CellOS following a presentation by Mr Huber and Mr Patel. At this presentation, Mr Huber said that the official price for CellOS shares was US$5 per share. 846 It is common ground that in or about March 2013 Mr Huber stated to Mrs Peck and Mr Peck that: (a) CellOS was seeking to raise US$100 million by way of a private share placement at US$5 per share; (b) CellOS had engaged UOB as its placement agent for the purpose of that equity raising; and (c) Mr Huber could arrange opportunities to be provided to Mrs Peck or Mr Peck to acquire shares in CellOS at a price of US$2 per share. 847 In the course of 2013, both Mrs Peck and Mr Peck variously either separately or jointly purchased 8,262,000 shares, and between February and July 2014 purchased a further 12.5 million shares, all from Huber controlled entities at US$2 per share. They knew that they were buying these shares through Mr Huber and that they were being given a special price for these shares. 848 At all times from March 2013, Mrs Peck and Mr Peck knew that the market price for CellOS shares was US$5, and that from at least August 2013 CellOS was issuing shares at US$5 to new investors. By about mid-2013, Mrs Peck and Mr Peck were helping Mr Tan to sell CellOS shares, sourced through Mr Huber and from Huber controlled entities. 849 As I have said earlier, on 21 August 2013, Mrs Peck wrote to a potential buyer, explaining the protocol for the share sales: As I mentioned, Melvin will take care of the paperwork - the forms, the registering of the shares and the handing of the monies/cheques to CellOS. Which account our monies go into will be told to us. Jason hires a man full time to take care of the registering of the shares and in approximately 2 months from the time we put our application in, we get our share certificates from Computer Share in Australia. Basically, and as you know and I discovered we do not deal with Jason Huber directly in regard to any transaction of shares. Conversely, Jason Huber does not talk directly to us about how any shares we wish to buy, at how much and when is our money available. He deals with Melvin (and Daniel) only. If Melvin is informed, and he says this is okay, we will just proceed. That is the protocol - and that became clear to me when you came on the scene in June/July. Jason NEVER EVER enquired of me about you. From Day One he handed your case to Melvin (and Daniel) and has never "interfered". Melvin told Jason that "Constance is taking care of her friends" and Jason is happy and satisfied with that. Melvin, please confirm that this is the case. (Original emphasis.) 850 Mr Tan then confirmed that this was the protocol. 851 As I have set out earlier, on 8 October 2013, Mrs Peck wrote to Mr Huber, copied to Mr Peck, in the context of her work selling shares with Mr Tan to new investors: 3 THE USD5.00 SHARE TRANSACTIONS - ARE THEY ETHICAL? These are shares that belong to investors who bought many shares in the past but expected the listing on Nasdaq to take place this year. Since it is not likely to happen in 2013, they need to offload some to realise the cash tied up for other pressing needs. They still hold many CellOS shares. They are/were willing to recover their money (at USD2.00 per share) and we are/were in a position to buy and then sell to our investors at prices ranging from USD2.00 to USD5.00 (not always USD5.00). Melvin didn't think it was right to sell shares below USD5.00 (because of UOBKH and because the shares are worth more than USD2.00 now). And you also instructed that there are no more USD2.00 shares available - though you made an exception in my case "because of Chua Hock Lin". No one knows who these sellers (vendors) are - only Melvin does and he is not at liberty to disclose who they are and we have to respect that. That is one of the conditions for him to handle the transaction. … In my case, because of this unexpected "profit", I have been able to coax Alan to buy more CellOS shares. I have never worked so hard in my life - selling USD2.00 CellOS shares to raise funds directly for CellOS and then selling USD5.00 shares to raise funds indirectly for CellOS. (Of course for me, the Pledge - and therefore raising funds for the church is a great motivation)." 852 After this time, Mrs Peck, Mr Peck and Mr Tan worked together to sell the shares of Huber controlled entities by holding presentations for potential investors, and Mrs Peck and Mr Peck began to sell large volumes of their own shares for prices including US$5 per share. 853 Between October 2013 and January 2015, Mrs Peck and Mr Peck sold 9,182,500 of their shares bought at US$2 from the Huber controlled entities, mainly to friends and members of their church, at a large profit, while at the same time buying further shares through Mr Huber from the Huber controlled entities at US$2 per share. 854 As I have set out earlier, on 16 December 2013, Mrs Peck wrote to a potential investor, copied to Mr Huber: Jason confirms that he would like to raise between USD5 million to USD10 million before the end of 2013 and hence he is offering CellOS shares at USD5.00 per share and it is really on a first-come-first served basis. … With the foregoing information, please decide what you wish to do. Jason has asked me (a CellOS investor and friend of CellOS) together with Melvin Tan (CellOS' official licensed broker) to assist you in any way we can while he is on leave should you decide to go forward with this investment opportunity before 31 December 2013. 855 On 21 June 2014, Mrs Peck wrote to Ms Teo Ly Seng: At 6.43pm - "…I know so many people who want to buy at USD5.00 - I just haven't the time to ask them. And many will buy at USD10.00. …" 856 On Mrs Peck's evidence, in mid-2014 Mr Huber told her to sell her CellOS shares at US$10 per share, while simultaneously transferring millions of shares to Mrs Peck and Mr Peck for consideration of US$2. They decided then to sell the shares for US$5 per share. 857 By late 2014, Mrs Peck and Mr Tan were telling potential buyers that the market price for CellOS shares was US$5 per share for "insiders" and US$10 per share for "outsiders". 858 At the start of 2015, there appears to have been a new arrangement involving profit sharing between Mrs Peck, Mr Peck and Mr Tan, along with others who assisted in introducing buyers of CellOS shares. But it appears by this time that Mr Huber was no longer willing to supply cheap shares. 859 On 4 January 2015, Mrs Peck messaged Ms Tay Siew Yong: "Even Jason said cannot get shares now n he does not think he himself will be selling anymore". 860 In February 2015, Mrs Peck was selling shares that she said cost US$6 at US$12, and the profit margin was split three ways, between Mr Tan, Mrs Peck, and another introducer. In some cases, Mrs Peck and Mr Tan took 10% of the sale price each. By 26 February 2015, Mrs Peck stated to a friend: "both Melvin n I think we are coming to the end of being able to get hold of vendor shares". 861 CellOS says that with Mrs Peck's and Mr Peck's assistance, Mr Huber was able to implement his scheme, and through their assistance Mrs Peck and Mr Peck were able to profit by purchasing 18,842,000 shares in CellOS at US$2 per share when the market value was US$5 per share and selling over half those shares at a considerable profit. 862 Now Mrs Peck's and Mr Peck's defence is that while they were trading in CellOS shares bought through Mr Huber at US$2 when the market price was US$5, they were unaware at the relevant time of Mr Huber's scheme, and hence were neither involved nor knowingly assisted him. 863 But CellOS says that the evidence establishes that Mrs Peck and Mr Peck had the requisite knowledge. One of the examples it gives that it says establishes such knowledge, which I have set out earlier, is a message Mrs Peck sent on 19 June 2014 to an investor: To buy n (later) sell shares or sell part of it at a higher price is NOT WRONG. When I kept buying shares from Jason at USD2.00 when Jason needed the money, he was very grateful and said to Alan n me that if we needed money b4 IPO, he will help us sell at USD25.00!! He didn't see it as wrong. Of course we never sold our shares bcos we are in this for the long haul - definitely want to wait for the IPO. We had the money n Jason had the shares. He needed the money so he sold shares at USD2.00. We had the money n the GUTS. We saw the business opportunity… 864 CellOS also says that the Pecks' explanation regarding "back filling" is also false when regard is had to the total volume of shares traded, the profits realised from the sales and the shareholder accounts from which those trades were effected; I would say now that I do not wholly reject the Pecks' explanation. 865 I will pass over the position concerning Mr Tan at this stage and address his knowledge and involvement later. 866 CellOS submits that by reason of Mrs Peck's, Mr Peck's and Mr Tan's involvement in, and knowledge of, the diversion of opportunity conduct, each was involved in Mr Huber's contraventions of ss 181(1), 182(1) and 183(1). 867 CellOS submits that there can be no real doubt about Mrs Peck's, Mr Peck's, and Mr Tan's objective involvement in the diversion of opportunity conduct. It says that Mrs Peck and Mr Peck purchased over 18 million shares at US$2 per share resulting in the funding of CellOS when there was a strong market for CellOS to issue those same shares at US$5 per share, and that Mr Tan facilitated these transactions and took commission from them. But it says that the real issue relates to knowledge. I am inclined to agree. In my view the objective conduct of the Pecks and Mr Tan facilitated Mr Huber's scheme. The real question is whether they had the relevant actual knowledge to make them accessories. 868 CellOS submits that s 79 involvement requires establishing actual knowledge of the essential matters. But it says that if circumstances are such as to indicate to an ordinary, reasonable person that the relevant facts exist, it may be open to infer actual knowledge. Moreover, it says that a combination of suspicious circumstances and the failure to make appropriate inquiry when confronted with the obvious, permits actual knowledge to be inferred of the relevant essential matters. I will discuss the relevant legal principles concerning knowledge later in my reasons. 869 CellOS submits that I should find that each of Mrs Peck and Mr Peck had knowledge of the essential elements of its claim for diversion of opportunity conduct. Further, it says that each have made admissions in relation to their knowledge about the majority of pleaded allegations. Further, it says that in relation to the other pleaded allegations, which they denied, I should be satisfied that there were suspicious circumstances and a deliberate willingness on their part to turn a blind eye to the obvious, such that I should infer the necessary knowledge. 870 Further, CellOS submits in relation to Mr Tan that I should find that he knew of each of the pleaded allegations. 871 Let me turn first to the knowledge that the Pecks had at the relevant time.

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(a) Knowledge held by the Pecks 872 CellOS' submissions regarding the actual knowledge held by each of the Pecks are structured around the individual matters pleaded in paragraph 21ML of the 5FASOC. I will take each of those matters in turn, but first I will deal with some background and general points. 873 First, the Pecks did not seek to challenge the existence of the share transactions set out in the relevant schedule to the 5FASOC or CellOS' aide memoire. In fact the Pecks added further details. But Mrs Peck sought to contextualise those transactions by reference to her lack of knowledge about them and financial matters in general. But Mrs Peck accepted, in round numbers, the scale of her purchases of shares in CellOS through Mr Huber. 874 Second, Mrs Peck is an experienced businesswoman. She set up a business providing human resources to the aviation sector, and sold that business to a Singaporean sovereign wealth fund. Mrs Peck also had commercial experience trading in commercial real estate in Singapore. She accepted that she understood the notion that a CEO and any other director owed an obligation to the relevant company to act in its best interests and not to divert opportunities available to the company to third parties. 875 Third, CellOS submits that Mrs Peck gave evidence that she: (a) could not specify whether amounts earned by her company were revenue or profit, and said "ask my husband"; (b) did not know what money went into or out of her bank account; again, she said "ask my husband"; (c) could not explain either share transfers or the payment of funds; (d) while accepting that activities between the Pecks and Mr Tan resulted in "some profit", could not say how much, and said "please ask my husband"; and (e) did not know at the time how much she and Mr Peck had spent on CellOS shares. 876 But CellOS submits that the overall impression that these answers created was inaccurate. It says that the evidence demonstrated that Mrs Peck knew the transactions she was entering into and the profits earned. It says that she identified the nature of the transactions in her WhatsApp messages on 19 June 2014: To buy n (later) sell shares or sell part of it at a higher price is NOT WRONG. When I kept buying shares from Jason at USD2.00 when Jason needed the money, he was very grateful and said to Alan n me that if we needed money b4 IPO, he will help us sell at USD25.00!! He didn't see it as wrong. Of course we never sold out shares bcos we are in this for the long haul - definitely want to wait for the IPO. We had the money n Jason had the shares. He needed the money so he sold shares at USD2.00. We had the money n the GUTS. We saw the business opportunity. (Emphasis added.) 877 Further, CellOS submits that she was also astute enough to identify the protocol designed to conceal her activities, though bold enough to describe it in writing, referring to her 21 August 2013 correspondence with Mr Cooper. 878 Further, CellOS submits that Mrs Peck's role, in light of Mr Peck's evidence and Mr Tan's evidence, was that of the driving force for the share trading in which she and Mr Peck were involved. And it says that her attempts to recast the extent of her involvement ought not to be accepted. 879 Now I am inclined to agree with CellOS' submissions on this aspect that Mrs Peck downplayed her role, but where that takes CellOS in terms of establishing the requisite knowledge of Mrs Peck and Mr Peck to make them out as accessories is another matter. 880 Fourth, CellOS submits that the facts giving rise to the claim as pleaded against Mrs Peck ought not to be controversial. CellOS submits that the evidence demonstrates that Mrs Peck had actual knowledge of each fact as alleged at paragraph 21ML of the 5FASOC. I will return to this question in a moment. 881 Fifth, Mr Peck's evidence was that he was on the periphery of the events the subject of the claim against Mrs Peck and him. But in my view the documentary record puts Mr Peck closer to the events than he would concede. He was copied in to most messages sent by Mrs Peck. He also independently assessed the business opportunity presented by Mrs Peck and decided to fund that opportunity. Further, Mr Peck's evidence was that in his conversations with his wife, CellOS would crop up regularly, and that he attended various CellOS presentations, some in his home. In my view the evidence demonstrates that Mrs Peck told Mr Peck on many occasions at some level what was happening, although Mr Peck may not have been paying much attention to all of what was said to him. But I do accept that Mr Peck did not attend CellOS presentations every week. Moreover I accept his evidence that presentations were held in his home "once, twice in three weeks maybe", but that he would only have heard parts of the presentations while "just sit[ting] around", because he "had to come home to get to [his] bedroom". 882 Now CellOS submits that given that Mr Peck was responsible for the Pecks' finances, and the fact that the Pecks invested at least half their wealth into CellOS shares, Mr Peck's evidence that although he might have been told things, he paid attention to little of it, should not be accepted. But in my view, CellOS' submissions over-state Mr Peck's knowledge. But Mr Peck's evidence in some respects has understated his knowledge. 883 Generally, CellOS submits that the evidence demonstrates that both of the Pecks had actual knowledge of each fact as alleged at paragraph 21ML of the 5FASOC. Contrastingly, the Pecks submit that they were not aware at the relevant time of any of the following essential facts: (a) the circumstances of the acquisition of CellOS shares by Mr Huber or entities he controlled; (b) Mr Huber being solely responsible for CellOS' fundraising; (c) CellOS being entirely dependent upon Mr Huber's ability to raise equity or debt to continue its operations; (d) Mr Huber's use of off-shore companies and corporate secretarial services; (e) CellOS needing capital for operational expenditure; (f) Mr Huber generating profit personally or for entities he controlled by buying and selling CellOS shares; (g) the existence of LGA or Pized or their respective loan agreements or the convertible option(s) nature of them, or Mr Huber's connection with either of them; (h) any connection between Mr Huber and the entities from whom the Pecks bought CellOS shares; (i) in the case of purchases made from or through Mr Tan or Ms Seah Chye Tin, any idea of the identity of the seller at all; (j) that Mr Huber's selling activities were in competition with the proposed UOB capital raising; and (k) that the share trading in which the Pecks engaged was benefiting entities controlled by Mr Huber and disadvantaging CellOS. 884 Further, the Pecks also submit the following: (a) First, there is no suggestion that they knew that in Mr Huber selling shares he controlled, he was acting without the informed consent of the board of CellOS. In fact they say that the apparently official nature of the CellOS presentations they attended would have put any reasonable person in their position off making any enquiry. I agree. They also say they did not know that Mr Huber was acting without the informed consent of the board of CellOS. I would say now that I agree with their submission. (b) Second, they say they did not know that CellOS was not raising any new equity by their purchases through Mr Huber. Again I am inclined to accept this. They had a very unclear view of the difference between CellOS issuing new shares and the effect of their transactions in terms of equity flow to CellOS. As they seemed to comprehend it, they thought they were assisting to raise equity for CellOS by their secondary market transactions; this was confused thinking on their part. (c) Third, they say they did not know that CellOS suffered loss or damage by their purchasing CellOS shares. Again I am inclined to accept this. 885 Let me now turn to CellOS' pleas concerning what it is said that the Pecks had knowledge of at the relevant time.

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CellOS was not generating sufficient revenue to meet its operational expenditure and was reliant upon, and sought to effect, equity raisings and loans: 21ML(a) 886 Let me begin with Mrs Peck's knowledge. 887 CellOS submits that although Mrs Peck denied that she was aware that CellOS was dependent on fundraising to continue operating, her oral evidence was clear; she knew that CellOS was not generating sufficient revenue to meet its operational expenditure and was reliant upon, and sought to effect, equity raisings and loans. 888 As to her knowledge that CellOS was not generating sufficient revenue to meet its operational expenditure, CellOS refers to the following. 889 First, CellOS submits that at the initial meeting in March 2013, Mrs Peck was told, and she understood, that CellOS had a product, but that at that time no one was paying CellOS to use it. 890 Further, it says that Mrs Peck accepted that she received relevant AGM material in or about late May 2013, and accepted that at this time she became aware that: (a) in the financial year ending 30 June 2012, CellOS had an operating loss of AU$11 million; (b) CellOS was described as a research and development company; and (c) CellOS had no revenue from ongoing contracts, and it never obtained a revenue generating contract. 891 But as to the fact that CellOS had an operating loss of AU$11 million in the 2011 to 2012 financial year, one cannot infer that Mrs Peck knew that as at May 2013 and thereafter, CellOS was generating insufficient revenue to meet its operational expenditure from this knowledge. 892 And as to the assertion that CellOS had no revenue from ongoing contracts, and that it never obtained a revenue generating contract, this cannot necessarily be inferred from the fact that CellOS had no revenue from contracts during the financial year ending June 2012. 893 Further in relation to this second point, it also does not follow that having received financial materials in May 2013 showing that CellOS did not receive revenue during the financial year ending June 2012, Mrs Peck then knew that CellOS never obtained a revenue generating contract. Moreover, the question put to Mrs Peck in cross-examination and cited in support of the proposition that "[t]he company did not enter [into] any contracts generating revenue; you're aware of that at all times?" was temporally ambiguous. 894 Second, CellOS submits that between July 2013 and July 2014, Mr Huber told Mrs Peck that a revenue stream was "imminent". But it was put to Mrs Peck that her recollection was that Mr Huber was "always saying things to the effect of, 'We're going to get a contract. We're soon going to get a contract. Soon going to get revenue. Soon we're going to get a revenue stream'", to which she answered "Yes". Leveraging this into a proposition that Mr Huber told Mrs Peck of "imminent" revenue streams in that time period is in my opinion unsustainable. It selects only one example of the types of things she agreed Mr Huber was "always saying", and seeks to elevate this to positive evidence that this was actually said in the particular time period. 895 Third, CellOS notes that on 5 May 2014, Mrs Peck wrote: "Most important thing now is the revenue - once that comes, everything will become v upbeat I m told". But this message does not go her knowledge before May 2014. Further, it does not convey that there is no revenue at all, but only that the coming of revenue is important, which might suggest that there was at that time a deficiency of revenue. 896 Let me move to another topic. As to Mrs Peck's knowledge that CellOS was reliant upon and sought to effect equity raisings and loans, CellOS refers to the following. 897 First, CellOS submits that Mrs Peck knew that CellOS was recapitalised through fundraising in 2010 and 2011. But this submission can only be intended to be read as relating to Mrs Peck's state of knowledge at a time during the relevant period of share transactions. The submission accordingly does not accurately reflect the state of the evidence, which was directed to Mrs Peck's current state of knowledge. The relevant exchange in cross-examination was as follows: So Mr Tan had told you - I think he has given evidence that he in 2011 raised about $10 million to bring - - -?---Yes. - - - the company from, let's call it, a non-operating entity?---Non-operating? A non-operating entity. So I think the evidence is that in about 2009/10, the company was no longer operating and then Mr Tan went out with the assistance of Mr Huber and raised about $10 million. You're aware of that?---Yes And you're aware that those funds were used to basically recapitalise the company at that time?--- Yes." [emphasis added] 898 Further, even if the evidence had been that Mrs Peck knew at some time during the relevant period that CellOS' business had been recapitalised in 2010 to 2011, it does not follow that this is evidence that she knew that from September 2013 to July 2014, CellOS was reliant upon and sought to effect equity raisings and loans. 899 Second, CellOS submits that Mrs Peck accepted that she received relevant AGM material in or about late May 2013 and accepted in cross-examination that at this time she became aware that: (a) in the financial year ending 2012, CellOS had an operating loss of $11 million; (b) CellOS had no revenue from ongoing contracts, and never obtained a revenue generating contract; and (c) as at the start of June 2013, in order that CellOS had continuing viability and had the ability to continue as a going concern and meet its debts and commitments as they fell due, it had to: (i) raise funds through continued private equity investment; (ii) sell new shares under the UOB offer; (iii) generate revenue from licence sales; or (iv) cut costs; and as to options (ii) and (iii), Mrs Peck was aware that neither ever occurred. 900 Now Mrs Peck's imprecise evidence in relation to the 2012 financial statements that "I received these. I must have read them" is to be considered in the context of her evidence elsewhere that she did not read financial statements, that she only "guessed" she "would have looked at" those financial statements and her agreement with the proposition that she "probably at least flicked through" those statements. In my view, CellOS is not able to elevate the relevant evidence to establish that she had a detailed knowledge of the contents of the financial statements. 901 Third, CellOS submits that as at 11 June 2013, Mrs Peck was describing herself in communications as CellOS' angel investor. But the line of cross-examination on this topic was flawed. First, the relevant email is not from Mrs Peck, but from one of her friends. She was therefore not "describing herself" as anything. Second, Mrs Peck is not described in this email as an angel investor, but is in fact being contrasted with "the many Angel Investors". I agree with the Pecks that this is the opposite of saying that she is an angel investor. The writer of the email suggests that Mr Huber should be going to angel investors, instead of coming to Mrs Peck. 902 Fourth, CellOS submits that by about June or July 2013, Mrs Peck agreed that her understanding of what was happening was that early buyers who needed to sell were selling their shares cheaply to a company, one example being Nesterland, which then parked the shares, and then Mrs Peck would purchase those shares from Nesterland and that was how the company was being funded. But the aide memoire prepared by CellOS shows that the first purchase of shares from Nesterland was on 29 August 2013. Further, CellOS has misstated Mrs Peck's evidence, which was that she thought that CellOS may have been parking its shares in entities such as Nesterland. This is apparent from the evidence given by Mrs Peck: Sorry, so you're saying that at the point in time Mr Peck wrote a cheque out to a company, you were also told of the name of the company that was transferring shares to you?---Yes. The - if you write it out to so-and-so, that company would, I suppose, transfer shares. That's how we thought their shares were parked. So you understood that the company you were writing a cheque to was also the company who was transferring shares to you?---I suppose. I wasn't involved in writing the cheques. It didn't come to you minds. That was what you thought and believed at the time?---Yes. It wasn't something you think about, because maybe that's how they park their shares. When you say that they park their shares, who is they?---The company. The company parked its shares?---CellOS. So CellOS. You thought CellOS parked shares in Nesterland?---Yes. Yes. And, then - and that's how they were being funded. So the money - you would buy shares from Nesterland and that's how the money would then get back to CellOS?---I guess." 903 Further, I asked Mrs Peck to clarify her evidence on the parking of shares, to which Mrs Peck responded: Yes. This was later. Later when I was in Mr Critchley's office and then he said you had bought from these companies. And I know I was buy - I - we had bought through Jason - people also bought through Melvin and apparently we had bought through these so-called Huber-controlled entities. And I was really confused. So - - 904 Here Mrs Peck is referring to the fact that much later, when conferring with Mr Critchley, CellOS' solicitor, and before CellOS turned around and sued her, she learned for the first time that both she and Mr Tan had been buying shares from the Huber controlled entities. CellOS' counsel in cross-examination introduced the proposition that early buyers would sell their shares to Nesterland, which then parked the shares, in an unclear line of cross-examination. But the questions asked did not take into account that Mrs Peck's answers regarding Mr Tan's share trading and the Huber controlled entities reflected her understanding after the period of share transactions: I'm so sorry. Can I just explore, then, when you say where the shares were coming from, we're talking not about - because obviously they're coming from Nesterland. You're talking about where Nesterland got the shares from. Is that what we're now talking about?---Yes. Yes. And is it these shares that Mr Tan told you were being purchased from people - - -?---Early investors. So early investors who didn't - that wanted to get out before the - - -?---They needed cash out. They needed cash. They had bought before the IPO wasn't happening in the short term?---Sure. They were the ones you thought were selling their shares cheaply to - let's pick Nesterland as the example. To Nesterland. Nesterland was then banking the shares. You were then purchasing them from Nesterland and that was how the company was being funded. That's what you basically thought was happening?---Eventually 905 That Mrs Peck became confused by this line of questioning is made clear as follows: You understood that Nesterland had - let's call it - share parked, I think it is the term, that was used. Parked shares. What - it doesn't matter what the term is - parked shares, and I think it's right that these shares were ones which had been accumulated or purchased from early investors who wanted to get out. That's correct? That's - - -?---The ones that came through Melvin. 906 When counsel clarified that he was talking about Mr Huber's shares, not Mr Tan's shares, Mrs Peck's evidence became clear again: Yes. And the money then went to, let's say, Nesterland, but the end point of that money was, in fact, CellOS - the company - you were, in fact, funding the company through those cheques?---I assumed. 907 Understood in context, Mrs Peck did not give evidence that her understanding in June or July 2013 was that early buyers who needed to sell were selling their shares cheaply to Nesterland (for example), which then parked the shares, which was how CellOS was being funded. She only understood that these early buyers were the source of the shares she bought through Mr Tan. 908 CellOS submits that in about August or September 2013, Mr Huber asked Mrs Peck to help him to raise funds from private investors for sales of US$500,000 or more at US$5 per share. It says that Mr Huber said he told Mrs Peck that CellOS had inadequate revenue in the course of this conversation. It says that Mrs Peck understood that this share issue was for the purpose of raising funds, although she couldn't recall whether it was because CellOS had inadequate revenue or not. It says that Mr Huber told Mrs Peck that he needed to raise between US$5 and US$10 million from the share issue to have enough funds for CellOS until March 2014. 909 But a relevant WhatsApp message referred to by CellOS dated 26 October 2013 stated: But Jason mentioned that he will be quite happy if we sell min USD5 million n max USD10 million at USD5.00. Goldman Sachs told him USD5.00 is too cheap. But he wants this comfort (USD5 to 10 million in the kitty) to tide him over till March 2014. Then he believes he will be able to tie up with the big corporates in the US n UOBKH n clients can miss the boat or buy at much higher price … 910 That is a little different to Mr Huber saying to Mrs Peck that he needed that amount of money to have enough funds for CellOS until March 2014. I would also note that Mrs Peck had no knowledge of how much the direct equity raising actually brought in for CellOS. 911 CellOS submits that Mr Huber's evidence was that because he and Mrs Peck had limited success in raising funds at US$5 a share, and because he needed in excess of US$1 million a month to fund the company "I went back to Mrs Peck and asked her if she could contribute more and help me to fund the company". It says that when asked about the circumstances in which Mr Huber came to her offering more shares on or before 15 January 2014, Mrs Peck gave the following evidence: And at this time he is offering you shares at US$2 to fund the company, and you understand that's to fund the company?---He was. He was. And at any one time it would be if I wanted to buy or if he wanted to sell, then we can talk. There was no, "I will definitely sell you at $2," yes. … The $2 shares you were purchasing from Mr Huber were being used to fund CellOS, to fund the company?---I thought, yes. … Well, you understood that when he came to you for, to buy shares, it was to raise money for the company?---Sure. 912 CellOS submits that Mr Huber then went back to Mrs Peck to ask for more money in April 2014. Moreover, Mrs Peck had a copy of the audited financial accounts at least by July 2014, but it was sent to shareholders for the 2014 AGM with a covering letter dated 15 May 2014, and it included a like going concern note to the 30 June 2012 accounts. 913 CellOS submits that on 19 June 2014, Mrs Peck stated that she had been getting US$2 shares when "Jason needed the money" - though Mrs Peck also described this as a two way street where she would approach Mr Huber because she wanted to buy. 914 CellOS submits that Mr Huber also went back to Mrs Peck to ask for more money in July 2014. 915 Now I accept CellOS' submissions on this aspect. 916 Let me deal with Mr Peck's knowledge. CellOS submits that although Mr Peck denied that he was aware that CellOS was dependent on fundraising to continue operating, his oral evidence establishes his knowledge. 917 As to knowledge that CellOS was not generating sufficient revenue to meet its operational expenditure, CellOS refers to the following. 918 CellOS submits that at the initial meeting in March 2013, Mr Peck said he looked at CellOS' profit and loss statement, but only cursorily, but accepted that he noticed that CellOS had losses and it was probably likely he understood that it had no revenue. 919 CellOS submits that Mr Peck accepted that at about the time the Pecks received relevant AGM material in or about late May 2013, he was aware of the following: (a) CellOS was then losing money, was not profitable, and was not making money; (b) it could have had a large cash outflow of many millions; and (c) its principal activity was research and development in the software industry. 920 But as to the assertion that Mr Peck was aware that CellOS was losing money, that submission relates to Mr Peck's understanding as to CellOS' revenue position in May 2013 based on the accounts for the year ending June 2012. 921 CellOS submits that Mr Peck later corrected his evidence in his witness statement about the sufficiency of CellOS' revenue, to "I thought that there would be some revenue to meet the expenses in part". But CellOS submits that in May 2014, Mrs Peck wrote, copied to Mr Peck: "Most important thing now is the revenue - once that comes, everything will become v upbeat I m told." 922 But Mr Peck's receipt of that message, even if he read it, is not evidence going to his knowledge before May 2014. And the message is not inconsistent with Mr Peck's evidence that he thought "that there would be some revenue to meet the expenses in part". It does not convey that there is no revenue at all, but only that the coming of revenue is important, which might suggest that there was at that time a deficiency of revenue. Further, Mr Peck did not give evidence that he read this message, and indeed his evidence was that he was copied in by Mrs Peck as a standing arrangement so that he could take care of matters if something happened to her, and that he was very busy and may have missed out on many of her emails and similarly her messages. Finally, although Mr Peck had access to financial accounts in May 2013 that, if read closely, would have revealed that no revenue had been generated by CellOS' business in respect of the 2012 financial year, such a state of affairs did not mean that at all times thereafter he could not have believed that CellOS would receive or had received some revenue. 923 Further, as to Mr Peck's knowledge that CellOS was reliant upon and sought to effect equity raisings and loans, CellOS refers to the following. 924 CellOS submits that Mr Peck was asked whether he understood that the funds from the shares the Pecks were buying in CellOS were being used to fund the company. It says that Mr Peck answered positively, and CellOS relies upon that admission. But in my view Mr Peck's evidence was equivocal. 925 In my view, actual knowledge that CellOS was reliant upon and sought to effect equity raisings and loans cannot be inferred just from Mr Peck's evidence that he could not discount that the Pecks' share purchases were being used to fund CellOS. 926 CellOS submits that Mr Peck was later asked, "do you recall whether [Mrs Peck] had said to you words to the effect of, 'Mr Huber has called me and he says the company needs more money?'" and Mr Peck responded "I do remember that, but more the converse, that she - she was trying to purchase X number of shares and would need Y dollars. That part would interest me". 927 CellOS submits that Mr Peck's evidence later moved to "I wouldn't discount that", in relation to the Pecks' share purchases funding CellOS, but he "suspected" that that was the case. 928 CellOS submits that when pressed further, Mr Peck was quite clear that he just wanted the cheap shares to keep coming, and cared for little else. 929 Further, CellOS submits that Mr Peck's denial that he looked at the relevant financial accounts, including the going concern note, should not be accepted as being contrary to a contemporaneous record, and Mr Peck should be found to have held such knowledge. CellOS also says that Mr Peck saw the UOB mandate letter. 930 Generally, CellOS submits that Mr Peck's evidence that he did not actually know CellOS was reliant upon equity raisings and loans, in circumstances where he understood CellOS was not generating sufficient revenue to meets its expenses, and the CEO was constantly approaching his wife and him offering shares at a US$3 discount to market, is contrary to basic common sense. It says that it is clear that Mr Peck did not lack common sense. 931 Now CellOS relies on the shareholder pack delivered in late May 2013, and that this contained the financial statements as at 30 June 2012. But they were not definitive as to the company's financial position in 2013 when the Pecks bought shares. Further, Mr Peck was aware that CellOS was a start-up and he was therefore not concerned about the revenue. But he thought it was receiving some revenue and did not know whether it was generating sufficient to meet its operational requirements. 932 Further, the only equity raisings or loans of which the Pecks were aware were: (a) the UOB raising; (b) the efforts of Mrs Peck herself and her friends at Mr Huber's request during October to December 2013 to pull in large investors prepared to invest US$500,000 in order to raise US$10 million for CellOS; (c) in the case of Mrs Peck, various meetings or introductions that Mr Huber had with large investment banks; and (d) their own purchases of CellOS shares through Mr Huber, as to which they appear to have understood that the money they paid would go to CellOS in some unknown way. 933 But in my view it cannot be concluded from this knowledge that the Pecks knew that CellOS had any other actual or contemplated equity raisings. 934 Further, there is no evidence that they knew that CellOS was seeking to effect any equity raising other than as I have described. Further, there is no evidence that the Pecks knew that CellOS was seeking to effect any loans.

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Between 1 September 2013 to 22 January 2015, all shares CellOS issued to third party investors (exclusive of shares issued to employees and conversions pursuant to the LGA loan), were issued at $5 per share: accordingly, shares in CellOS could be placed in the market at US$5: 21ML(d) 939 In relation to Mrs Peck's knowledge, she admitted that in that period she was aware that all shares CellOS issued to third party investors were issued at US$5 per share, noting her knowledge about the issue of such shares was in October to December 2013, as well as the issue to Mr Lau in March 2014. Mrs Peck also admitted that shares could be placed or sold at US$5 per share from September 2013 until mid-2014. 940 As to Mr Peck's knowledge, CellOS submits that Mr Peck denied that in that period he was aware that all shares CellOS issued to third party investors were issued at US$5 per share. But in my view the correct characterisation of his evidence was that he was explaining that he was not aware. 941 CellOS submits that Mr Peck knew that from about mid-2013 shares in CellOS could be placed in the market at US$5 per share. He gave the following evidence: You understood, at this time, that the price that Mr Huber was offering shares at - this is about mid 2013 - to others was US$5 per share?---There was mention of the $5, so indeed, I thought we were getting a discount, yes. A good deal. So you understood from about mid 2013 that Mr Huber was continuing to offer you shares at US$2 - - -?---Yes. - - - at a time when he was otherwise offering shares at US$5 to other people?---There was mention of the $5, but, yes, I thought - I thought - I did think - think that it was a privilege, yes. 942 But Mr Peck's evidence was that he knew that Mr Huber's market price for shares was US$5, but he did not know if Mr Huber had succeeded in placing shares at that price. 943 CellOS also referred to the following parts of Mr Peck's cross-examination to support his knowledge that from about mid-2013 shares in CellOS could be placed in the market at US$5 per share: Just to be clear, you understood from mid 2013 that Mr Huber was offering shares to people for sale at US$5 per share? --- As I mentioned, that number, $5 was mentioned, but whether he succeeded, I wasn't sure, yes. … Well, you're aware, certainly, in about June 2013, that Mr Huber said he would stop offering other people shares at US$2, only at US$5, and that he would continue to offer shares at US $2 to you and Mrs Peck? --- I - I was conscious that there was a jump in the value or the price, but whether it's June or later, I'm not sure either. I cannot recollect. Putting to one side whether it was specifically June, in about middish 2013, you were aware that Mr Huber increased the price of shares of CellOS to others but not yourself? --- Yes, yes. But June or not, yes, I don't know. If you pinpoint me to June, then I would say, "don't know". … Let's go back. At the point in time there was a step change. You were aware that Mr Huber's step change was to offer shares at US $5?---Yes. I can't remember when. And you were aware from that time on, whenever that step change occurred, that there was, in effect, a market price that CellOS shares could be sold into the market at US$5?---Yes, yes. And they could be sold by you or Mr Huber into the market at US$5? ---Definitely. Yes. It's true, yes. 944 But again, CellOS exaggerates the effect of this evidence. But it may be accepted that Mr Peck knew at the relevant time that Mr Huber's market price was US$5 per share. Moreover, he was aware of the potentiality for shares to be sold at US$5 per share.

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Mr Huber was the chief executive officer and a director of CellOS: 21ML(f) 946 Mr and Mrs Peck both admit that they knew that Mr Huber was CEO and a director of CellOS. 947 In relation to Mrs Peck, CellOS says further that she met him in that capacity, and that she understood her share purchases from him related to his position. 948 But importantly, they did not know Mr Huber was acting without the informed consent of the CellOS board in his dealings with them. 949 There is no suggestion that the Pecks knew that in selling shares he controlled, Mr Huber was acting without the informed consent of the board of CellOS. The early presentations the Pecks attended were given by Mr Huber, Mr Patel and Mr Tan and at the first presentation CellOS' chief technical officer, Madhu Pandya, was also present. The second presentation was held at the offices of CellOS' solicitors and was attended by other senior CellOS officers Irene Chan (Vice President Corporate Strategy) and Ms Mei Lan Ng (Group Financial Controller). 950 Further, CellOS has not pleaded that the Pecks knew that Mr Huber lacked the informed consent of the board. For accessorial liability, actual knowledge of each essential fact of the contravention is required. In my view the absence of informed consent of the board is an essential fact. Further, if Mr Huber had the informed consent of the board to sell his shares to the Pecks, there could be no contravention of ss 181 to 183. Further, the official nature of the CellOS presentations would, to any reasonable person in the Pecks' position, have obviated any need to make enquiries of the board as to whether Mr Huber was acting with their sanction. 951 I also agree with the Pecks that CellOS' allegations of wilful blindness fail not only on the actual extent of the Pecks' ignorance of the true position, but also on the fact that wilful blindness cannot be inferred when the circumstances are such as to reassure the Pecks and put them off any enquiry that someone in their position might think to make. In my view, if the Pecks had turned their minds to the question, they would have concluded that Mr Huber had the informed consent of the board of CellOS for what he was doing. 952 Further, this position is supported by what Mrs Peck actually said and did at the time. In her 8 October 2013 email, she explained to Mr Huber how the share transactions worked, as she understood it. Mrs Peck's 8 October 2013 email is inconsistent with the suggestion that she knew the essential facts of any contravention by Mr Huber. Indeed, at the end of the 8 October 2013 email, Mrs Peck said "I would like to request that the above information be passed to Kamlesh and Jonathan Chan to set the record straight". But this displays an assumption that the board was aware of the transactions in which she and Mr Huber had been engaging. In my view Mrs Peck had an honest and reasonable belief in circumstances that if true would render Mr Huber's action and her's innocent.

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CellOS shares that Mr Huber was making available were not new shares issued by CellOS but were shares being sold by the Huber controlled entities, for the purpose of raising funds for CellOS: 21ML(g) 953 As to Mrs Peck's knowledge, the following may be noted. 954 CellOS accepts that Mrs Peck said that she was initially unaware of the difference between new shares and old shares, but it is said that her understanding evolved over time. It says that in particular she recalled seeing a form for new subscriptions for shares in CellOS, while helping Mr Huber sell new shares, at a meeting at CellOS' office. Let me elaborate. 955 First, CellOS submits that it is apparent that Mrs Peck well knew that the shares she was buying from Mr Huber were existing shares, in circumstances where she: (a) asked, at an early stage, why "people" were selling at US$2 per share; (b) by May 2013, thought CellOS had "parked" shares purchased from early investors in Nesterland; (c) followed instructions from Mr Huber to "make cheques out to A, B or C"; and (d) suspected and directly asked Mr Huber about the source of the US$2 shares. 956 CellOS says that Mrs Peck plainly had actual knowledge that the shares she was purchasing from Mr Huber were existing shares. 957 But in my view Mrs Peck's previous explanation that she thought CellOS could have "parked" its shares in other companies and her enquiry as to why "people" were selling shares are not inconsistent with the fact that, at an early stage, she failed to comprehend the difference between existing and new CellOS shares. It was only when Mrs Peck successfully introduced new investors to CellOS that the difference between vendor shares and newly issued shares began to dawn on her. Mrs Peck's naiveté about such matters was plausible. She had never significantly invested in or traded shares before. A WhatsApp message shows that as late as 29 September 2014 she believed that UOB had been engaged to market an existing parcel of 20 million shares which, when UOB failed to sell them, nevertheless had a continuing existence and could be sold to others. 958 I have already addressed the claims around Mrs Peck being aware of shares being "parked" in Nesterland. Further, if Mrs Peck believed that the shares she was purchasing were parked shares belonging to CellOS, then there could be no practical difference between buying an existing share and subscribing for a new one. 959 Further, as to the instructions from Mr Huber to make out cheques, given Mrs Peck's explanation that she thought CellOS could have "parked" its shares in other companies, the fact that she was instructed to make out cheques to various companies is not inconsistent with her lack of understanding (prior to late 2013) of the difference between existing and new CellOS shares. 960 Further, as to Mrs Peck's suspicions about the source of the US$2 shares such that she once asked Mr Huber "who's behind these shares?", to which Mr Huber replied "don't ask" and then when pressed said "an Australian gentleman", the cross-examination relied upon by CellOS was temporally undefined and her answers were equivocal. I cannot be confident that she knew she was buying from Mr Huber. Let me set out that cross-examination: And that was - you suspected then that they were Mr Huber's shares?---Jason Huber arranged for them. Yes, and you suspected that they were Mr Huber's shares?---They could be, could not be. I did ask. Well, that's because you asked, because you suspected?---I never - I was never told conclusively. No, but you asked, because you suspected. Is that right?---I suppose I would have. And you asked Mr Huber, specifically, "Are they your shares"?---Yes. And what did he say?---"Don't ask." And you accepted that?---Yes. What can I do? You're a sophisticated businessperson and you accepted that as an answer?---So? But they were bona fide shares. 961 Second, CellOS submits that even if it is accepted that Mrs Peck's understanding evolved, that evolution had occurred by about August 2013. It says that by 17 July 2014, Mrs Peck's own documents reflect that she understood the distinction between "direct" and "indirect" investments; at that time she wrote to Mr Huber and said: In a few weeks time, I hope to bring some individuals for you who will be able to invest USD100 million (USD25.00) - direct with CellOS. 962 But this message is at the end of the relevant period and does not shed any real light on Mrs Peck's knowledge before that time. This message is consistent with Mrs Peck's evidence that "It was an evolution of understanding" and that previously she "probably parroted but wasn't completely clear" about the difference between new shares and transferred shares. 963 Third, CellOS submits that Mrs Peck denied knowledge that the shares Mr Huber was making available were shares being sold by the Huber controlled entities, although her oral evidence was much more equivocal. Now I repeat what I have said above regarding Mrs Peck's knowledge of shares being "parked" in Nesterland. CellOS submits that her denial should be rejected, referring to its previous submissions regarding Mrs Peck's enquiries as to the source of the shares. It says that Mrs Peck accepted that she was "very" suspicious that the shares were Mr Huber's shares, so much so that she made enquiries with Mr Daniel Tan and Mr Huber directly. It says that she did not consider the answers given to be satisfactory. Further, CellOS says that only Mr Huber, who owned a significant proportion of the company, could have supplied over 18 million shares to the Pecks at below market price, and that only he had an interest in supplying them at below value because he needed those funds to fund CellOS. It says that when, on 15 January 2014, Mr Huber sold the Pecks 1 million shares, and Mrs Peck said she would imagine that Mr Huber was coming to her to raise money because he needed money, any conclusion other than that Mr Huber controlled the selling entities was almost inescapable. Now CellOS notes that Mrs Peck's evidence was that she did not draw that conclusion because she was not interested in anything except getting more shares, and that as she said, "I was in my own little world". Now her evidence was that she was not interested in what Mr Huber was doing, but was focusing on accumulating shares. But in those circumstances, CellOS says that where Mrs Peck was presented with the facts but at the very least was wilfully blind to them, I should infer her actual knowledge. I disagree. I do not think the necessary wilful blindness was made out. Mrs Peck was focused on getting shares and her own commercial interests. She wanted shares at US$2 per share. The ultimate source was not that material to her. 964 CellOS submits that as to whether the purpose of the share sales was to raise funds for CellOS, Mrs Peck said "What he did with [the funds], I don't know". But it says that this denial cannot stand in the face of the evidence that to her knowledge Mr Huber was using the money to fund CellOS. But even if that be so, that does not establish actual knowledge supporting accessorial liability in terms of Mr Huber's scheme. 965 As to Mr Peck's knowledge, the following may be noted. 966 As to whether Mr Peck knew that CellOS shares that Mr Huber was making available to the Pecks and others were not new shares issued by CellOS, CellOS submits that Mr Peck said that he was only aware that they were shares provided through Mr Huber. But it says that given that Mr Peck was signing cheques to companies other than CellOS, it follows that he knew and understood that the shares were not new shares issued by CellOS. It says that Mr Peck accepted that he knew the transfers were coming from companies such as Nesterland. It says that further, Mr Peck recalled Mrs Peck asking Mr Huber about the source of the shares they were buying, and her telling him that Mr Huber told her "don't ask". 967 But Mr Peck's evidence on this issue, when read in full, is that he did not know whether he was buying "new old or medium old" shares when he purchased shares from Nesterland (for example), because it could have been a subsidiary of CellOS. 968 Further, as to whether Mr Peck recalled Mrs Peck asking Mr Huber about the source of the shares, Mr Peck's evidence was that Mrs Peck did not say to him that she asked Mr Huber "Are the shares yours?". This was after repeated denials of any recollection of similar statements suggested by CellOS' counsel. The questions that then followed, "Did she tell you that Mr Huber had said to her, 'Don't ask' or 'Don't ask too many questions' or 'Don't ask so many questions'?" and "So Mrs Peck conveyed to you that she made some enquiries, and Mr Huber had said to her - - -?- - -", were vague and general and accordingly elicited vague and general answers, namely that Mrs Peck mentioned to him that "sometimes" Mr Huber would say "don't ask" when Mrs Peck asked Mr Huber questions about "this and that" but Mr Peck "wasn't bothered to know" the details. 969 As to whether the shares Mr Huber was making available were shares being sold by the Huber controlled entities, CellOS submits that Mr Peck denied such knowledge. CellOS submits that that denial should be rejected. The relevant evidence from Mr Peck's cross-examination is set out as follows: Mr Peck, during the period you bought about 18 million shares from Mr Huber, did you not wonder where he was getting the shares from?---It didn't - it didn't - it didn't bother me to pry as to where, no. It didn't occur to me to pry. When you say it didn't occur to you to pry, did you make any inquiries at all - - -?---Not at all. … So Mrs Peck conveyed to you that she was made some inquiries, and Mr Huber had said to her - - -?---Yes, "I asked him this and that and he said 'Don't ask'." Yes, that's right. So that's it. I didn't want to crowd my mind. I had already enough on my plate, yes. 970 But it is to be noted that the following evidence was also given: Do you recall whether your wife ever told you about any conversations she had with Mr Huber in about mid 2013 where she asked him about where the shares he was selling were coming from?---I don't recall that, no. Do you recall her ever talking about such a conversation?---No. Do you recall her ever saying to you that she had asked Mr Huber who was behind the shares?---No. Do you recall her ever saying or telling that you she had asked Mr Huber, "Are they Singaporean sellers or an Australian gentleman"?---No. 971 CellOS also refers to the following excerpts of evidence in relation to its submission that Mr Peck's denial ought be rejected: The share supply to you, and you accepted that you understood that Mr Huber could turn off the tap?---Yes. And I want to suggest to you that you understood that those shares were, in fact, Mr Huber's personal shares?---No. I didn't attribute them precisely to Mr Huber. It just didn't matter, as long as we could get the shares facilitated through Mr Huber. How did you think it was that Mr Huber was able to procure for you many, many, many millions of shares at a price so far below market price?---There was - there was a social element in it. We felt that he also liked us, because he - he liked our brother-in-law, who was a pastor. … Mr Peck, I want to suggest to you that that's not right. I want to suggest to you that you did not think that Mr Huber was selling you millions and millions of shares at about $3 below market price because he liked you?---No, of course not the full amount, but he did have some comfort in selling us shares - not the whole lot maybe. Well, why do you think he then sold you the other bit? You say, one, he partly liked you, but why else?---For the rest? Yes?---I didn't bother to pry or to get into why, yes. 972 But Mr Peck went on to explain why he "didn't bother to pry or get into why": … When I buy shares from a broker, I don't go into all the philosophy of how he got the shares and all that nowadays, so that is ingrained in my brain, you know, when I do that. So it's just one of - and besides, I don't have 100 per cent of the time to dwell on this. I have got my other businesses to focus on. So as long as someone offers me shares, my broker says "Singapore Airlines shares are $10, I can get $8 from it." "Get them. You deliver the scrip, I will give you the cheque." That's it. So I don't drill right down to all this who and what, you know. DR PARKINSON: Were you not curious?---Not at all. I'm quite used to this kind of posture, yes. 973 CellOS also refers to the following excerpts of evidence in relation to its submission that Mr Peck's denial ought be rejected: But you said that your understanding was that he could have turned off the tap?---Yes. So to your mind, at that time, how could he have done that?---Okay. A negative signal to whoever was providing the shares could have influenced the flow. … You were aware, weren't you, that Mr Huber owned approximately 40 per cent or thereabouts of the shares in the company? He - he did own a large chunk, but I mean, whether these were his or in that bundle, I'm not sure - that were sold to us, yes. … And you're aware that CellOS - the CellOS shares that Mr Huber was making available for US$2 to you and other people, they were not new shares issued by CellOS; you were aware of that?---I was only aware that there were shares provided through Mr Jason Huber. Yes. But - - - The distinction I'm seeking to draw is between new shares and a transfer of existing shares?--- I didn't drill - never - I didn't drill into whether new, old, or semi-new, old, no, I didn't. … And I wish to put to you that you knew that the shares that Mr Huber was making available to you at US$2 were for the purpose of raising funds for CellOS?---I wouldn't dismiss that, yes. I'm sorry, I didn't - - -?---I wouldn't dismiss that fact, yes. 974 CellOS submits that like Mrs Peck, Mr Peck's explanation for his denial of knowledge was that he had closed his mind to further enquiry because he just wanted to keep getting hold of the US$2 shares. In these circumstances, and where Mr Peck was presented with the facts but was wilfully blind to them, it is said that I should infer his actual knowledge. I disagree with CellOS' submissions that Mr Peck was wilfully blind. 975 Let me make some more general points. The contention that the Pecks were aware that the shares they bought through Mr Huber were through entities controlled by him is also in some respects inconsistent with some of the contemporaneous documentary record. 976 On 18 June 2013, Mrs Peck sent a message to Mr Huber which said in part, "For one, I couldn't understand why the USD2.00 share continued to be so freely available as Dan kept telling me they were. That was one thing that did not make sense to me". 977 On 8 October 2013, Mrs Peck sent a long email to Mr Huber describing in detail the trading that had gone on, and specifically requesting at the end that the email be forwarded to Mr Patel and Mr Chan. 978 On 11 July 2014, Mr Peck exchanged emails with Mr Huber over payment for 2 million shares from Harvest Sky. In the emails Mr Huber repeatedly referred to "the vendor" or "the principal of Harvest Sky" in order to give the impression that it was an independent third party with whom Mr Huber was in communication. Mr Peck's replies show that he accepted that the vendor was a separate party independent of Mr Huber. 979 I agree with the Pecks that these messages are inconsistent with either Mrs Peck or Mr Peck knowing that Mr Huber was the owner of the shares that they were purchasing through him. 980 Further, it would seem that the Pecks did not know that shares they bought from Mr Tan were sourced from Mr Huber. Mrs Peck's evidence was that the first time she was aware of this fact was when she was told it in conference by CellOS' solicitor Mr Critchley. She immediately rang Mr Tan to ask him where he had got his shares from. She was shocked when he told her that his source was Mr Narulla, and not the early purchasers she had been led to believe. I accept her evidence on this aspect.

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General 986 Let me draw together some general themes before dealing with Mr Tan. 987 First, the Pecks did not know that Mr Huber lacked the informed consent of the board. Moreover, it has not been pleaded that the Pecks knew that Mr Huber lacked the informed consent of the board. Now CellOS said that knowledge of the absence of informed consent need not be pleaded or established. But in my view it was required to be established. Under s 79 of the Corporations Act, actual knowledge of each essential fact of the contravention is required. The absence of informed consent of the board is an essential fact. If Mr Huber had the informed consent of the board to sell his shares to the Pecks, there could be no contravention of ss 181 to 183. Further, the official nature of the CellOS' presentations would, to any reasonable person in the Pecks' position, have obviated any need for them to make enquiries of the board as to whether Mr Huber was acting with their sanction. 988 Indeed CellOS' allegations of wilful blindness fail not only on the actual extent of the Pecks' ignorance of the true position, but also because I cannot infer wilful blindness when the circumstances were such as to reassure the Pecks and put them off any enquiry that someone in their position might think to make. On the contrary, I infer that had the Pecks turned their minds to the question, the Pecks would have concluded that Mr Huber had the informed consent of the board of CellOS for what he was doing. 989 Moreover, as I have indicated, this approach is supported by what Mrs Peck actually said and did at the time. In her 8 October 2013 email, she explained to Mr Huber how the share transactions worked, as she understood it. Her 8 October 2013 email is inconsistent with the allegation that she knew the essential facts of any contravention by Mr Huber. Further, at the end of the 8 October 2013 email, Mrs Peck said "I would like to request that the above information be passed to Kamlesh and Jonathan Chan to set the record straight". This displays an understanding or assumption that the board was aware of the transactions in which she and Mr Huber had been engaging. As I have said, Mrs Peck had an honest and reasonable belief in circumstances that, if true, would render Mr Huber's action, and her's, innocent. 990 Second, the Pecks did not know that CellOS was not raising new equity by their purchases. They seem to have understood that their purchases were helping CellOS in some way, but they appear never to have turned their minds to precisely how. As I have already said, in the case of Mrs Peck a dawning realisation from late 2013 onwards as to the difference between vendor shares and newly issued shares might have alerted her to the possibility that the money the Pecks were paying for shares sourced through Mr Huber was not going as new equity to CellOS. But she appears to have thought that the shares she was purchasing were shares that CellOS had "parked" with the entities to which she and Mr Peck were asked to make out their cheques. 991 Third, there does not seem to be any evidence that the Pecks knew that CellOS suffered loss or damage by their purchasing CellOS shares. 992 Finally and for completeness, I should say that I have carefully considered material relating to Mrs Peck in particular including her WhatsApp messages in evidence, her email to Mr Huber of 8 October 2013 and her emails to Mr Justin Lau of 10 and 19 December 2013. I have also considered her emails of 21 August 2013 concerning Mr Cooper. Clearly from time to time she made some misrepresentations. Clearly from time to time she kept things from Mr Huber; and at times some of her dealings with Mr Tan were not fully transparent to Mr Huber. But at the end of the day, none of this establishes the requisite actual knowledge required for accessorial liability. Moreover, from her perspective she appeared to assume that CellOS was aware of and condoned the secondary or grey market.

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(b) Knowledge held by Mr Tan 993 CellOS submits that Mr Tan's position is different from the Pecks, in that he was formally engaged by CellOS as its broker for the relevant period. It says that his conduct should therefore be assessed through that prism. CellOS submits that the evidence demonstrates that Mr Tan had actual knowledge of each fact as alleged in paragraph 21ML of the 5FASOC. 994 Contrastingly, Mr Tan submits generally that while he may have assisted in the sales of shares by Mr Huber to the Pecks, he did not have knowledge of any matters which would take those sales beyond being apparently innocent acts. 995 Before getting into the detail, let me say something on the factual background. 996 On 4 January 2011, Mr Huber wrote to Mr Tan appointing him as an advisor and broker to CellOS. The terms of that appointment were governed by Mr Tan's engagement letter dated 4 January 2011. Mr Tan gave evidence that his role was to seek out and refer investors who might be interested in investing in CellOS to Mr Huber for the purpose of investing in CellOS. The scope of the engagement included both the issue of new shares and the sale of existing shares, and Mr Tan understood that to be so. 997 Mr Tan's evidence was that he raised US$10 million in 2011 in new issue shares. At this time, and later into 2013, Mr Tan was selling shares held by Child and Family Foundation. Mr Tan assumed that Child and Family Foundation was a Huber controlled entity. He understood that the proceeds from the sale of these shares was to be used to fund CellOS. 998 Initially, Mr Tan received 10% commission on share sales. It later changed to 6%, when Mr Tan brokered the sale of some CellOS shares at US$5 instead of US$2, and his commission was thereafter reduced. 999 As early as December 2012, Mr Tan told Mr Huber about potential clients who had the financial capacity to take up shares at US$5 per share. And Mr Tan said that he believed buyers of CellOS shares could be found at US$5 per share throughout 2013. 1000 In March 2013, Daniel Tan, Mr Tan's brother, arranged for CellOS' management to present to the Pecks about investing in CellOS shares. 1001 At this meeting, Daniel Tan introduced Mr Tan to the Pecks as CellOS' "official broker". Mrs Peck's evidence was that she understood Mr Tan to be CellOS' official broker, and she thereafter introduced him to people as such, although there was a later falling out between Mr Huber and Mr Tan. 1002 Now Mr Tan says that he was not CellOS' "official broker" during the relevant period. He was an advisor to CellOS on a non-exclusive basis pursuant to a mandate and advisory agreement dated 4 January 2011, by which he assisted CellOS in specific fundraising exercises when called upon to do so. In about June 2013 Mr Huber told Mr Tan he was not needed for further fundraising work and, during the period September 2013 to July 2014, the only occasions on which he was asked to assist CellOS were in respect of sales of shares made by Mr Huber to the Pecks for the purpose of funding CellOS and on a discrete fundraising in November and December 2013. 1003 Mr Tan denied the allegation that Mr Huber "procured the sale" to Mr Tan of shares during the relevant period. The evidence is that during this period Mr Tan bought shares from Mr Narulla as part of share trading he conducted with the Pecks separately from Mr Huber, who denied having anything to do with it, did not approve of it taking place and tried to stop it. Mr Huber said he did not sell shares to Mr Tan and that the payments made by Mr Tan to Mr Narulla for such shares were not received by Mr Huber, nor was Mr Narulla receiving them on his behalf. 1004 Let me now deal with the matters that CellOS says Mr Tan had knowledge of.

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CellOS was not generating sufficient revenue to meet its operational expenditure and was reliant upon, and sought to effect, equity raisings and loans: 21ML(a) 1005 I note that Mr Tan has admitted that he knew that between 2011 and 2014 CellOS was engaged in fund-raising. Now as to CellOS' proposition that Mr Tan knew that CellOS was not generating sufficient revenue to meet its operational expenditure, CellOS refers to the following. 1006 CellOS submits that Mr Tan assisted Mr Huber to raise funds in 2011 to recapitalise CellOS. I accept this. Mr Tan's evidence was: Jason told me that the funds had gone towards supporting the company's operating expenses and that he was now able bring in a management team to get the business going and work towards listing the company on Nasdaq, which was always his aim. 1007 CellOS submits that Mr Tan was one of CellOS' brokers, and held shares in CellOS. He had access to company reports as broker and obtained information as a shareholder including AGM information. I am also prepared to accept this. 1008 I also accept that in May 2014, Mrs Peck wrote, copied to Mr Tan: "Most important thing now is the revenue - once that comes, everything will become v upbeat I m told". 1009 Now as to CellOS' proposition that Mr Tan knew that CellOS was reliant upon and sought to effect equity raisings and loans, CellOS refers to the following. 1010 CellOS submits that Mr Tan assisted Mr Huber to raise funds in 2011 to recapitalise CellOS. So much is true. 1011 CellOS submits that Mr Tan admitted that during the relevant period he was acting as a broker for CellOS and that he understood that CellOS was in the market seeking to raise funds if it could. I think this all has to be read with the chronology I have just indicated. 1012 Further, CellOS submits that Mr Huber, too, was clear that Mr Tan knew that Mr Huber was selling shares to raise money to fund CellOS. Further, CellOS submits that Mr Tan knew that Mr Huber was selling shares from his associated companies to the Pecks at US$2 per share to raise funds for CellOS, when the market price of shares was higher than US$2. These are more problematic submissions. 1013 Now Mr Tan said that he did not know: (a) first, that CellOS was not generating sufficient revenue to meet expenses and was reliant upon equity raisings and loans; and (b) second, that the sale of shares to Mr Huber by the Pecks did not involve any new shares being issued by the company. 1014 But as to the first matter, I am prepared to find that Mr Tan knew this. 1015 But as to the second matter, in my view there is no evidence that Mr Tan knew or could be expected to know what had taken place within CellOS with respect to shares being sold by Mr Huber to the Pecks. It was possible that new shares were or had been issued to the seller for the purpose, or in anticipation, of such transactions.

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CellOS shares that Mr Huber was making available were not new shares issued by CellOS but were shares being sold by the Huber controlled entities, for the purpose of raising funds for CellOS: 21ML(g) 1022 As to whether Mr Tan knew that the CellOS shares that Mr Huber was making available to the Pecks and others were not new shares issued by CellOS, CellOS says that Mr Tan knew the sellers were companies associated with Mr Huber. It is said that Mr Tan said he would assume that Child and Family Foundation was a Huber controlled entity. It is said that as to Maitreya Mandala, Money Max, Rex Investors and Nesterland, Mr Tan knew that these were companies associated with Mr Huber and that Mr Huber was using them to sell shares. 1023 Now Mr Tan's evidence in some respects was equivocal. For example, occasionally he filled in transfer forms with a blank seller. But the general effect was that he accepted that he knew that the vendor companies were in some way associated with Mr Huber or had some arrangement with him. 1024 As to whether the shares Mr Huber was making available were shares being sold by the Huber controlled entities, CellOS says that Mr Tan accepted that he knew the sellers were companies associated with Mr Huber. 1025 When Mr Tan was pressed about what he understood when he said Mr Huber was using these companies, the following exchange occurred. HIS HONOUR: That's why I asked you the question earlier about "using". What was your understanding about how - - -?---Yes, your Honour. - - - Jason Huber was able to use these companies?---This company - it's just when we bring our clients to see Jason and, if our clients are interested, Jason will give us a form to put down which are the company. So during that time, whatever company he gives, we will just ask my client to issues cheques to that particular company, and I just submit my invoice. MR CRUTCHFIELD: So is it fair, Mr Tan, as far as you were concerned, you didn't inquire into who was - - -?---I did not inquire. - - - the ultimate owner of any of these companies. That's right?---Yes, sir. Okay. But you did understand that in some way or another they were associated with Mr Huber, and Mr Huber was able to facilitate those companies selling shares?---I think my understanding would be whoever - whichever company that has been - we are told to issue the cheques to, there were - I believe that this certain arrangement that Jason would somehow pass the money to CellOS for it - for them to run the company. 1026 As to whether the purpose of the share sales was to raise funds for CellOS, CellOS says that Mr Tan's evidence was clear that he knew this to be so. Evidence was given as follows: HIS HONOUR: So the question, Mr Tan, was if you're dealing with the sale of shares, how does that raise equity for the company or how does money flow into CellOS, I think is the question of Mr Crutchfield?---Yes, your Honour. Jason told me that actually, for me, your Honour, my duty is to bring customers to - shareholders, potential shareholders, to the company. I - I will not question Jason Huber as to which arrangement. It could be his subsidiary, it could be his company, but, ultimately, the arrangement for Jason is that somehow the money raised would still be given to the company. I did not know about the … arrangement. I did not ask. That's right, your Honours. 1027 Mr Tan also gave the following evidence in relation to the Huber controlled entities selling shares at US$2 per share: Okay. But you did understand that in some way or another they were associated with Mr Huber, and Mr Huber was able to facilitate those companies selling shares?---I think my understanding would be whoever - whichever company that has been - we are told to issue the cheques to, there were - I believe that this certain arrangement that Jason would somehow pass the money to CellOS for it - for them to run the company. 1028 Mr Tan admits that he was aware that the sales of shares by Mr Huber to the Pecks at US$2 per share were for the purpose of raising funds for CellOS. Further, he knew of the details of these transactions, including the amounts paid by the Pecks. 1029 But nevertheless, there is no evidence that Mr Tan knew, or could be expected to know, what had taken place within CellOS with respect to the shares being sold by Mr Huber to the Pecks. It was possible that new shares were, or had been, issued to the seller for the purpose, or in anticipation, of such transactions. In any case, Mr Tan knew little about the real source of the shares or the funding arrangements.

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Mr Tan knew that by Mr Huber making available and selling to the Pecks and Mr Tan CellOS shares held by the Huber controlled entities at US$2, them on-selling those shares at between US$5 and US$10, and them promoting the sale of CellOS shares from the Huber controlled entities to third parties at and for more than US$5 per share, they benefited and that CellOS suffered loss and damage: 21ML(j) 1031 CellOS submits that it is axiomatic that Mr Tan benefited and CellOS suffered loss and damage. 1032 Now Mr Tan admits that he obtained some profits from the sale of some of the US$2 shares and that he and the Pecks split those profits. 1033 CellOS submits that Mr Tan accepted that at the same time as he was acting as CellOS' broker or adviser and raising money for CellOS by way of CellOS issuing its shares at US$5, he was also arranging for the US$2 shares to be sold into the market. But Mr Tan did not agree that he knew his conduct caused CellOS to be disadvantaged because investors were buying the US$2 shares from the Pecks and him rather than subscribing for new shares in CellOS. His reason for that disagreement was as follows: No, I - I think if the market is upbeat and there are people who are prepared to pay $10, $25 - I do not know who sold at $25, but if there is a market for that kind of price every shareholder would be very, very happy, and it's also very good for the company because we are all very hopeful that the company would go IPO, even above US$25. 1034 But CellOS says that this should not be accepted. I disagree. 1035 Now Mr Tan submits that by paragraph 21ML(j), CellOS goes beyond the elements of the pleaded "diversion of opportunity conduct" claim, alleging the Pecks and Mr Tan knew that: the effect of Huber making available and selling to them CellOS shares held by the Huber controlled entities at US$2, them on-selling those shares at between US$5 and US$10, and them promoting the sale of CellOS shares from the Huber controlled entities to third parties at or for more than US$5 per share, was that: (i) CellOS was suffering loss and damage and being disadvantaged; and (ii) Constance Peck, Alan Peck and Melvin Tan benefited. 1036 But I disagree. 1037 Generally, I am not prepared to find that Mr Tan knew that what he was doing was causing CellOS loss and damage.

[124]

(c) General 1038 For CellOS to succeed on the accessorial claims, it is necessary to prove that the Pecks and Mr Tan had actual knowledge of the essential facts constituting the contravention (Yorke v Lucas (1985) 158 CLR 661 at 670 per Mason ACJ, Wilson, Deane and Dawson JJ); but it is not necessary to show that they knew that the relevant conduct contravened the statute. Now strictly CellOS must show more than that the Pecks and Mr Tan, if it be the case, wilfully and recklessly failed to make such inquiries as an honest and reasonable man would make or had knowledge of circumstances which would indicate the facts to an honest and reasonable man. Concepts of constructive knowledge in the context of a claim under the second limb of Barnes v Addy have no direct relevance in the present context. CellOS has not pursued such a claim against the Pecks or Mr Tan. However, such concepts may be relevant to the question of inference. 1039 The Pecks submit that if the diversion of business opportunity as pleaded did amount to a contravention of the Corporations Act, the Pecks were not involved in the contravention. They say that CellOS has failed to prove that they possessed actual knowledge of the essential facts of any contravention as pleaded within the meaning of Yorke v Lucas. The Pecks submit that the essential facts that the Pecks did not know entail that CellOS cannot sheet home to them accessorial liability for any breach by Mr Huber. I agree. 1040 Now CellOS seemed to suggest at one stage that Mrs Peck could be said to have knowledge applying what was said by Leeming JA in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at [140]: Let it be assumed that a third party knows of the essential facts which, absent fully informed consent, amount to a breach of fiduciary duty which is a dishonest and fraudulent design. If that third party continues to participate in what prima facie amounts to a dishonest and fraudulent breach of fiduciary duty without inquiring whether there is fully informed consent, then the third party is liable. It is not necessary for the plaintiff to take the further step of proving knowledge of the absence of fully informed consent. Once in possession of knowledge of what would otherwise amount to a dishonest breach of duty, an honest and reasonable person in the position of the third party would make inquiries. If there is no other evidence as to the third party's state of mind, the third party will have the requisite knowledge to be rendered liable to account as a constructive trustee. 1041 But these propositions have little direct bearing on the present context concerning the claims against the Pecks and Mr Tan. I am dealing with accessorial liability where actual knowledge or as good as actual knowledge must be demonstrated. I am not dealing with constructive knowledge in the context of the second limb of Barnes v Addy or what Leeming JA described as requisite knowledge. 1042 But I accept of course that awareness of suspicious circumstances and the failure to make inquiry may sustain an inference of actual knowledge (Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 220). So too, wilful blindness may sustain such an inference. But I do not consider that in the present case from what was known by the Pecks and Mr Tan that such an inference should be drawn. The inference that CellOS seeks me to draw is not the only rational inference. Further, if the facts known to the alleged accessory demonstrate an apparently innocent act or, at least, as equally demonstrate that as not, then no finding of actual knowledge or an inference drawn as to actual knowledge can be made. 1043 Let me also say something further concerning ignorance by setting out the classic statement of Lord Sumner tendering the advice of the Privy Council in The Zamora (No 2) [1921] 1 AC 801 at 812 in the following terms: It may be that in his anxiety not to state more than he found against Mr Banck, the learned President appeared to state something less, but there are two senses in which a man is said not to know something because he does not want to know it. A thing may be troublesome to learn, and the knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a man is said not to know because he does not want to know, where the substance of the thing is borne in upon his mind with a conviction that full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that where ignorance is safe, 'tis folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise. 1044 Let me also refer to Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [15] where Moore J said (Mansfield J agreeing): I should add that, in my opinion, liability as an accessory (in circumstances where the contravening conduct of the principal was making false or misleading representations) does not depend on an affirmative answer to the question whether the alleged accessory knew the representations were false or misleading. All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. In a comparatively simple situation, such as the situation considered in Yorke v Lucas, where particular representations were being made to individuals or groups of individuals, knowledge of those matters would almost inevitably result in the alleged accessory also knowing the representations were false or misleading. Had Lucas known of the real turnover figures, then it is difficult to imagine that he would not have appreciated, additionally, that what he was saying about the business was false and misleading. 1045 This observation was made in the context of Moore J's observations at [12] where he said: The majority [in Yorke v Lucas] used two expressions in these passages. One is "essential matters" making up the offence and the other is "essential elements" of the contravention. It is relatively clear from the example used in the first passage, that the expression "essential matters" comprehends matters of fact which must be known to the alleged accessory before liability arises. The example given (from the facts in Giorgianni v R (1985) 156 CLR 473) was knowledge of the condition of the brakes. On any view of what was held by the High Court, accessorial liability only arises in the present matter if it is at least demonstrated that the alleged accessory knew of the facts which constituted the conduct of MBF which contravened the ASIC Act. 1046 In summary and based on the factual analysis set out above, CellOS has not made out its case against the Pecks and Mr Tan concerning the requisite knowledge necessary to establishing accessorial liability. 1047 In my view, the Pecks and Mr Tan lacked actual knowledge of or relevant to the following matters. Moreover, I am not prepared to infer actual knowledge of such matters from a lesser constructive knowledge foundation or reckless indifference. 1048 First, they had no appreciation or awareness that their relevant conduct or Mr Huber's activities was causing or would be likely to cause loss to CellOS. 1049 Second, they had no appreciation or awareness that Mr Huber's activities were done without the knowledge or consent of CellOS and its board. 1050 Third, they had no appreciation or awareness that their relevant conduct or Mr Huber's activities were diverting from CellOS a valuable business opportunity. 1051 Fourth, the fact that the Pecks and Mr Tan from time to time acted against Mr Huber's intentions is a point against finding accessorial liability. 1052 Fifth, they had no appreciation or awareness of the use by Mr Huber of LGA and Pized and the use of and the vice in the LGA loan and the Pized loan. 1053 Sixth, the Pecks had less than a sophisticated appreciation of the difference between CellOS issuing new shares and trading by Mr Huber and others in existing shares in terms of providing equity funding to CellOS. 1054 Seventh, the Pecks at least had little awareness of who was behind the Huber controlled entities in terms of the sellers of shares to them, although their suspicions were raised at one stage. They were aware at one stage that they were being kept in the dark. 1055 Eighth, it would also seem that the Pecks and Mr Tan thought that the making available of shares by or through Mr Huber to them, if they perceived that to be the case, raised no issue in their minds that this was not in the interests of CellOS. 1056 Generally, CellOS' case rose no higher than establishing that at times suspicions were raised as to who was doing what to whom and why. But that is not sufficient to show the requisite actual knowledge or to justify drawing an inference thereof sufficient to establish accessorial liability.

CellOS Software Ltd v Huber

At a glance

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Judgment (126 paragraphs)

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Legislation Cited (3)

Cases Cited (17)

Cited By (8)