Ng Swee Hua v Auston: Breach of Contract over Convertible Bonds & Share Conversion
In Ng Swee Hua v Auston International Group Ltd and Auston Institute of Management & Technology Pte Ltd, the High Court of Singapore ruled in favor of Ng Swee Hua, finding Auston International Group Ltd in breach of contract. The case concerned an investment agreement where Ng Swee Hua was to receive convertible bonds. The court held that Auston breached the agreement by failing to convene a shareholder's meeting to approve the conversion of the bonds into shares. The court ordered damages to be assessed for the loss of opportunity to convert the bonds.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Ng Swee Hua sued Auston for breach of contract regarding convertible bonds. The court found Auston liable for failing to convene a shareholder's meeting.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Ng Swee Hua | Plaintiff | Individual | Judgment on liability in favor of the plaintiff | Won | Boey Swee Siang, V Jesudevan |
| Auston International Group Ltd | Defendant | Corporation | Breach of Investment Agreement | Lost | N Sreenivasan, Valerie Ang |
| Auston Institute of Management & Technology Pte Ltd | Defendant | Corporation | No specific outcome | Neutral | N Sreenivasan, Valerie Ang |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | J | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Boey Swee Siang | Rajah & Tann |
| V Jesudevan | Rajah & Tann |
| N Sreenivasan | Straits Law Practice LLC |
| Valerie Ang | Straits Law Practice LLC |
4. Facts
- Auston was in financial difficulties and needed funding.
- Ng Swee Hua provided a loan of $200,000 to Auston.
- An Investment Agreement was signed for Ng Swee Hua to subscribe for convertible bonds.
- Ng Swee Hua was appointed Managing Director of AIMT and a director of Auston.
- Ng Swee Hua sent a Notice of Conversion to convert the bonds into shares.
- Auston failed to convene a shareholders' meeting to approve the conversion.
- Ng Swee Hua resigned from his directorships and instituted legal action.
5. Formal Citations
- Ng Swee Hua v Auston International Group Ltd, Suit 129/2007, [2008] SGHC 241
6. Timeline
| Date | Event |
|---|---|
| Auston Institute of Management & Technology Pte Ltd incorporated | |
| Investment Agreement signed | |
| First tranche of convertible bonds issued | |
| Ng Swee Hua became Managing Director of AIMT | |
| Ng Swee Hua became a director of both defendants | |
| Supplemental Investment Agreement signed | |
| Ng Swee Hua appointed President and Chief Operating Officer of Auston | |
| Ng Swee Hua resigned as Managing Director of AIMT and President and Chief Operating Officer of Auston | |
| Ng Swee Hua sent Notice of Conversion | |
| Reminder sent regarding Notice of Conversion | |
| Ng Swee Hua resigned from all directorships in the defendants | |
| Action instituted to enforce the terms of the Investment Agreement and Supplemental Investment Agreement | |
| Judgment issued |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that Auston breached the Investment Agreement by failing to call for a shareholders’ meeting to seek approval to issue the shares in Auston.
- Category: Substantive
- Sub-Issues:
- Failure to issue convertible bonds
- Failure to convene shareholders' meeting
- Failure to convert bonds into shares
- Interpretation of Contractual Terms
- Outcome: The court interpreted the Investment Agreement and Supplemental Investment Agreement to determine the obligations of the parties.
- Category: Substantive
- Sub-Issues:
- Condition precedent
- Rescission
- Typographical errors
8. Remedies Sought
- Specific Performance
- Damages
- Interest
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Education
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Aberfoyle Plantations Ltd v Cheng | N/A | Yes | [1960] 1 AC 115 | N/A | Cited for the proposition that when a conditional contract of sale fixed a date for completion, then those conditions must be fulfilled by that date, failing which there is no binding obligation on either party to complete the sale. |
| Chi Liung Holdings Sdn Bhd v Attorney General | N/A | Yes | [1994] 2 SLR 354 | Singapore | Cited for the proposition that when a conditional contract of sale fixed a date for completion, then those conditions must be fulfilled by that date, failing which there is no binding obligation on either party to complete the sale. |
| Tan Cheow Gek v Gimly Holdings Pte Ltd | N/A | Yes | [1992] 2 SLR 817 | Singapore | Cited for the proposition that when a conditional contract of sale fixed a date for completion, then those conditions must be fulfilled by that date, failing which there is no binding obligation on either party to complete the sale. |
| East v Pantiles (Plant Hire) Ltd | N/A | Yes | [1982] 2 EGLR 111 | N/A | Cited for the principle that a mistake in a written instrument could be corrected as a matter of construction if there is a clear mistake on the face of the instrument and it is clear what correction ought to be made in order to cure the mistake. |
13. Applicable Rules
| Rule Name |
|---|
| Rules 804 and 812 of the Listing Manual |
| Rule 805(2) of the Listing Manual |
| Rule 806 of the Listing Manual |
| Rule 866 of the Listing Manual |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Convertible Bonds
- Investment Agreement
- Supplemental Investment Agreement
- Notice of Conversion
- Shareholders' Approval
- Listing Manual
- General Mandate
- Completion Date
- Auston Conversion Shares
15.2 Keywords
- Convertible Bonds
- Breach of Contract
- Share Conversion
- Shareholders' Approval
- Singapore High Court
16. Subjects
- Contract Law
- Corporate Finance
- Securities Law
17. Areas of Law
- Contract Law
- Investment Law
- Corporate Law