Background: Muddy Waters Capital LLC and MW Domino Management LLC sought to replace the majority of Mayfair Gold Corp.'s board of directors. The dispute involved employment agreements with change-of-control provisions, allowing employees to terminate their agreements and receive 24 months' salary. In February 2024, Mayfair's management expressed concerns about a potential change of control, leading to amendments in these agreements. Muddy Waters initiated a proxy contest, and some employees terminated their agreements, citing a change of control.

Legal Arguments/Issues: Mayfair Gold Corp. argued that Muddy Waters Capital LLC failed to make full and frank disclosure during the ex parte application for an injunction, particularly regarding the test for an injunction and potential defenses. The court examined whether the ex parte order should be set aside for non-disclosure and if a new injunction should be granted, requiring a strong prima facie case. Muddy Waters Capital LLC alleged oppressive actions by Mayfair, including settlement agreements and amended change-of-control provisions, potentially to thwart the proxy contest.

Held: The court found material non-disclosure by Muddy Waters Capital LLC and set aside the ex parte injunction. A new injunction was not granted as the petitioners did not establish a strong prima facie case of oppression.

Costs/Damages Awarded: The court ordered Muddy Waters Capital LLC to pay Mayfair Gold Corp.'s costs of the application at Scale B, but no special costs were awarded. The total amount of costs awarded was not specified.