Auston v Ng Swee Hua: Convertible Bonds, Share Allotment, and SGX-ST Listing Manual Compliance
The Court of Appeal of Singapore heard an appeal by Auston International Group Ltd and Auston Institute of Management & Technology Pte Ltd against Ng Swee Hua regarding a breach of contract under an investment agreement. The primary legal issues concerned the issuance of convertible bonds, the allotment of shares, and compliance with the SGX-ST Listing Manual. The Court of Appeal dismissed the appeal, finding Auston in breach of contract and directing that damages be assessed before the Registrar.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal regarding breach of contract for failure to issue convertible bonds and conversion shares. Court of Appeal held Auston in breach, damages assessed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Auston International Group Ltd | Appellant | Corporation | Appeal Dismissed | Lost | N Sreenivasan, Valerie Ang |
| Auston Institute of Management & Technology Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost | N Sreenivasan, Valerie Ang |
| Ng Swee Hua | Respondent | Individual | Judgment for Respondent | Won | Boey Swee Siang, V Jesudevan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| N Sreenivasan | Straits Law Practice LLC |
| Valerie Ang | Straits Law Practice LLC |
| Boey Swee Siang | Rajah & Tann LLP |
| V Jesudevan | Rajah & Tann LLP |
4. Facts
- Auston needed funding and Ricky Ang sought a loan from Ng Swee Hua.
- Ng Swee Hua provided a $200,000 loan to Auston.
- An Investment Agreement was signed for Ng Swee Hua to subscribe for convertible bonds.
- The loan was to be used as consideration for the convertible bonds.
- Ng Swee Hua was to have the option to subscribe for an additional $400,000 worth of bonds.
- Ng Swee Hua sent a conversion notice to the appellants.
- Auston did not act on the Conversion Notice.
5. Formal Citations
- Auston International Group Ltd and Another v Ng Swee Hua, CA 207/2008, [2009] SGCA 36
- Ng Swee Hua v Auston International Group Ltd, Suit No 129 of 2007, [2008] SGHC 241
6. Timeline
| Date | Event |
|---|---|
| Auston sought a loan of $200,000 from the respondent. | |
| Shareholders' resolution passed authorizing directors to issue shares. | |
| AIMT passed an ordinary resolution empowering the directors of AIMT to issue shares. | |
| Investment Agreement entered into between the respondent, Auston and AIMT. | |
| First tranche of convertible bonds issued to the respondent. | |
| Respondent became managing director of AIMT. | |
| Respondent became a director of both appellants. | |
| Parties amended the Investment Agreement by a supplementary investment agreement. | |
| Annual General Meeting held. | |
| Respondent sent a conversion notice to the appellants. | |
| Respondent resigned from his directorships in the appellants. | |
| Respondent commenced action claiming specific performance or damages. | |
| Ng Swee Hua v Auston International Group Ltd [2008] SGHC 241 issued. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Contract
- Outcome: The court held that the appellants were in breach of the Investment Agreement.
- Category: Substantive
- Sub-Issues:
- Failure to issue convertible bonds
- Failure to allot conversion shares
- Shareholder Approval Requirements
- Outcome: The court held that shareholder approval was not required for the conversion of the convertible bonds.
- Category: Procedural
- Damages Assessment
- Outcome: The court directed that damages be assessed based on the market price of the shares at the time of breach, not on the basis of loss of chance.
- Category: Substantive
- Related Cases:
- [2007] 4 SLR 460
- [1995] 1 WLR 1602
8. Remedies Sought
- Specific Performance
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Failure to deliver shares
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ng Swee Hua v Auston International Group Ltd | High Court | Yes | [2008] SGHC 241 | Singapore | The current appeal is from the decision in this case, which held the appellants in breach of contract. |
| Ong Seow Pheng v Lotus Development Corp | N/A | Yes | [1997] 3 SLR 137 | Singapore | Cited for principles regarding going beyond issues pleaded by the parties. |
| The Ohm Mariana | N/A | Yes | [1993] 2 SLR 698 | Singapore | Cited for principles regarding going beyond issues pleaded by the parties. |
| PT Tenar Indoam Oil Services v Third Wave Group Ltd | High Court | Yes | [2008] SGHC 18 | Singapore | Cited in support of the contention that there is no absolute rule prohibiting a court from making findings of fact outside of the pleadings. |
| JSI Shipping (S) Pte Ltd v Teofoongwonglcloong (a firm) | Court of Appeal | Yes | [2007] 4 SLR 460 | Singapore | Revisited the doctrine of loss of chance and endorsed the principles laid down in Allied Maples. |
| Allied Maples Group Ltd v Simmons & Simmons | N/A | Yes | [1995] 1 WLR 1602 | N/A | Principles laid down in this case were re-endorsed in JSI Shipping regarding loss of chance. |
| Wilson v London and Globe Finance Corp | N/A | Yes | (1897) 14 TLR 15 | N/A | Cited regarding the postponement of the date of breach for damages assessment. |
13. Applicable Rules
| Rule Name |
|---|
| Rules 804 and 812 SGX-ST Listing Manual |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 161(4) Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Convertible Bonds
- Conversion Shares
- Investment Agreement
- Supplementary Investment Agreement
- Conversion Notice
- Shareholders' Approval
- General Mandate
- SGX-ST Listing Manual
- Bond Certificates
- Conditions Precedent
15.2 Keywords
- Convertible Bonds
- Share Allotment
- SGX-ST Listing Manual
- Breach of Contract
- Singapore Law
16. Subjects
- Companies
- Bonds
- Shares
- Damages
17. Areas of Law
- Companies Law
- Contract Law
- Securities Law