Hardman v SAIS Ltd: Employee Share Incentive Scheme Dispute After Corporate Restructuring
Michael Jon Hardman and Nicolas Jack Leon Finck sued SAIS Limited and Kaddra Pte Ltd in the General Division of the High Court of Singapore, claiming entitlement to shares under an employee share incentive scheme following a corporate restructuring of SAIS. Ang Cheng Hock J ruled in favor of the plaintiffs, finding that SAIS breached the Restricted Share Unit Plan by failing to provide shares upon a Change of Control event. The court awarded damages to Hardman and Finck for the unissued shares, and dismissed the defendants' counterclaim against Hardman.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Judgment for Plaintiffs
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Plaintiffs Hardman and Finck sue SAIS Ltd over denied share grants after a corporate restructuring. The court addresses breach of contract and RSU plan interpretation.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| SAIS Limited | Defendant | Corporation | Judgment against Defendant | Lost | |
| Kaddra Pte Ltd | Defendant | Corporation | Judgment against Defendant | Lost | |
| Michael Jon Hardman | Plaintiff | Individual | Judgment for Plaintiff | Won | |
| Nicolas Jack Leon Finck | Plaintiff | Individual | Judgment for Plaintiff | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Ang Cheng Hock | Judge | Yes |
4. Counsels
4. Facts
- Hardman and Finck were employed by Sarment Group and granted RSUs under an employee share incentive scheme.
- Sarment Holdings Ltd, the holding company, was listed on the TSX-V.
- The RSU Plan allowed employees to receive shares in the listed company upon vesting of RSUs.
- Sarment Group underwent a corporate restructuring, including the sale of its wine business.
- Irwin acquired a controlling stake in SAIS.
- Finck's employment was terminated.
- Hardman resigned from his position.
5. Formal Citations
- Hardman, Michael Jon and another v SAIS Ltd and another, Suit No 651 of 2020, [2022] SGHC 38
6. Timeline
| Date | Event |
|---|---|
| Finck started work with the Sarment Group | |
| Hardman started work in the Sarment Group | |
| Sarment Holding Limited Restricted Share Unit Plan came into operation | |
| First defendant listed on the TSX-V | |
| Finck was granted an award of 38,260 RSUs | |
| First defendant awarded Hardman 199,619 RSUs | |
| Finck became General Manager for Keyyes | |
| First defendant announced evaluating options for sale of its traditional luxury distribution business | |
| Hardman signed a new employment contract with Kaddra | |
| First defendant entered into a sale and purchase agreement to sell Sarment Wines to El Greco International Investments SRI, the Claude Dauphin Estate, and Mr Mark Joseph Irwin | |
| Shareholders voted to approve the Wine Business Sale and Mr Irwin becoming a control person of the first defendant | |
| Finck was informed that his employment with Kaddra would be terminated with immediate effect | |
| Termination of Finck’s employment was finalised | |
| SAIS obtained TSX-V’s approval for the Wine Business Sale and made a press announcement about the closing of the Wine Business Sale | |
| Hardman was provided with 66,540 shares in SAIS | |
| Mr Irwin acquired the additional shares in SAIS from El Greco and CDE | |
| Hardman executed another RSU Agreement Form for an award of 72,590 RSUs | |
| Hardman was informed that he would be made redundant | |
| Hardman executed a letter issued by Kaddra titled “Terms & Conditions of your resignation dated 15 January 2020” | |
| SAIS’s delisting application was approved | |
| SAIS’s last day of trading on the TSX-V | |
| Hardman’s solicitors sent a letter to Kaddra to complain that Kaddra failed to issue the RSUs representing the 2018 Bonus and ensure their vesting at the end of February 2020 | |
| Both the plaintiffs commenced this suit | |
| Shares were issued to Hardman | |
| Hearing took place | |
| Hearing took place | |
| Judgment reserved |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the defendants breached their contractual obligations by failing to issue shares and pay the bonus as agreed.
- Category: Substantive
- Sub-Issues:
- Failure to issue shares
- Failure to pay bonus
- Interpretation of Restricted Share Unit Plan
- Outcome: The court interpreted the RSU Plan to mean that a Change of Control event triggered immediate vesting and payment of RSUs.
- Category: Substantive
- Sub-Issues:
- Change of Control
- Vesting of RSUs
- Settlement of RSUs
- Breach of Fiduciary Duty
- Outcome: The court dismissed the defendants' counterclaim that Hardman breached his fiduciary duties.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Specific Performance (Shares)
9. Cause of Actions
- Breach of Contract
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Corporate Restructuring
- Breach of Contract
11. Industries
- Wine and Spirits
- Technology
- E-commerce
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Yap Son On v Ding Pei Zhen | High Court | Yes | [2017] 1 SLR 219 | Singapore | Cited for the principle of contractual interpretation to give effect to the objectively ascertained expressed intentions of the contracting parties. |
| Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) | High Court | Yes | [2015] 5 SLR 1187 | Singapore | Cited for the principle that the text of the contract is the first port of call for the court in contractual interpretation. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | High Court | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the principle that the court must consider the relevant context and circumstances in which the contract was made. |
| Raineri v Miles | House of Lords | Yes | [1981] AC 1050 | United Kingdom | Cited for the principle that it is generally immaterial why a defendant has failed to fulfil his contractual obligations in a claim for breach of contract. |
| Out of the Box Pte Ltd v Wanin Industries Pte Ltd | High Court | Yes | [2013] 2 SLR 363 | Singapore | Cited for the principle that every breach of contract gives rise to a secondary obligation on the part of the contract breaker to pay monetary compensation. |
| Photo Production Ltd v Securicor Transport Ltd | House of Lords | Yes | [1980] AC 827 | United Kingdom | Cited for the principle that the general aim of damages for breach of contract is to compensate the innocent party. |
| Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal | Court of Appeal | Yes | [2018] 2 SLR 655 | Singapore | Cited for the principle that damages are to be assessed by reference to what a plaintiff would have obtained had the contract been performed. |
| Orix Capital Ltd v Personal Representative(s) of the Estate of Lim Chor Pee (deceased) and others | High Court | Yes | [2009] 4 SLR(R) 1062 | Singapore | Cited for the principle that termination only discharges the parties from all their outstanding obligations under the contract. |
| The “Asia Star” | High Court | Yes | [2010] 2 SLR 1154 | Singapore | Cited for the principle that an aggrieved party is under a “duty” to take all reasonable steps to mitigate his loss. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Restricted Share Units
- RSU Plan
- Change of Control
- Vesting Date
- Wine Business Sale
- Redundancy Agreement
- Bonus Agreement
- Outstanding RSUs
15.2 Keywords
- employee share incentive scheme
- restricted share units
- corporate restructuring
- breach of contract
- change of control
- vesting
- damages
- redundancy
- bonus
17. Areas of Law
16. Subjects
- Contract Law
- Corporate Law
- Employment Law
- Share Incentive Schemes