Mirae Asset Daewoo awarded US$5.1m claim against ex-honestbee CEO Joel Sng

SOUTH Korean brokerage Mirae Asset Daewoo has been awarded a summary judgment for a US$5.1 million claim against former honestbee chief executive Joel Sng, according to a High Court grounds of decision released on Thursday.

Mirae Asset had sued Mr Sng last year for allegedly failing to deliver honestbee shares, after the brokerage paid US$5.1 million for some of Mr Sng's shares in the grocery delivery startup.

Mirae Asset is the trustee of an entity called DS Sng Hedge Fund, and filed the lawsuit on behalf of the fund. Mirae Asset subsequently filed a summary judgment application against Mr Sng - which involves moving to a court decision without a full trial.

The Assistant Registrar had initially dismissed the summary judgement application, but Mirae Asset appealed against this.

In a grounds of decision released on Thursday, Justice Lai Siu Chiu reversed the AR's decision and found that Mr Sng had not raised any issues that warranted a trial. In addition, Justice Lai also flagged several discrepancies in Mr Sng's defence arguments. The events leading up to the lawsuit trace back to 2018. According to an agreement in July that year, Mirae Asset - on behalf of the hedge fund - had agreed to purchase 65,117 shares in honestbee from Mr Sng for US$3.2 million. In a second agreement, dated Aug 9, 2018, the brokerage agreed to purchase 21,748 shares in honestbee from Mr Sng for US$1.9 million.

Mr Sng admitted that he received these payments, Justice Lai noted.

However, according to Mirae Asset, he failed to deliver the stock certificates by the agreed dates, and did not take all necessary action to transfer the shares it had purchased from him.

Mirae Asset wrote to Mr Sng between September and December 2018 to demand compliance, and Mr Sng did not deny his obligations in his responses, Justice Lai noted in her decision.

Subsequently, on Dec 27, 2018, Mirae Asset received a share certificate in its name dated Sept 30, 2018 and signed by Mr Sng. However, the certificate was insufficient to transfer the shares to Mirae Asset, as the brokerage was not registered as a shareholder with the Accounting and Corporate Regulatory Authority of Singapore (Acra).

Under the Companies Act, no transfer of shares in a private company can take effect until the electronic register of members is updated.

In January 2020, Mirae Asset's solicitors issued a notice to Mr Sng terminating the July and August agreements for material breaches or default of his obligations. Mr Sng's lawyers responded in a March letter claiming that he had not signed the July and August agreements.

In his defence, Mr Sng disputed the authenticity of the July and August agreements and alleged that Mirae Asset had dealt with Brian Koo - honestbee's key investor and a scion of the LG family - with regard to the share purchase agreements.

While disputing the agreements' authenticity, Mr Sng also said that he had complied with his obligations stipulated under them. Justice Lai flagged this inconsistency.

In addition, Justice Lai cast doubt on the authenticity of the share certificate. The certificate stated that Mirae Asset held over 86,000 preference shares. However, a check on Acra records in 2020 showed that honestbee had only issued over 13,000 preference shares. "I find therefore that the share certificate was in all likelihood fabricated," Justice Lai said in her grounds of decision.

Mr Sng had also alleged that Mirae Asset was seeking to improve its position in honestbee's insolvency by seeking full recovery of its investment, and that it would be unjust as he had channelled the sum into funding honestbee's operations.

However, Justice Lai found that the claim of channelling the funds towards honestbee was untrue. In one of his affidavits, Mr Sng disclosed that he had used S$3.6 million of the US$5.1 million sum in October 2018 to redeem the mortgage for his property at No 34, Jalan Jintan.

Mr Sng claimed he did the redemption in order to re-mortgage his property to ValueMax for a loan of S$4 million to advance to honestbee. No evidence was provided for this, Justice Lai noted. Mr Sng had also claimed to have lent honestbee some S$6.9 million, but one of his affidavits showed that the company had repaid him S$4 million in 2018. "He was much better off than the other and larger creditors of the company, who were unable to recover their monies in the liquidation of honestbee," Justice Lai said.

The court further noted that Mr Sng's assertion that Mirae Asset was seeking to improve its position in the insolvency may not hold.

Instead, the reverse may be true, as "the defendant's dreams of perhaps becoming a Jack Ma (of e-commerce giant Alibaba) never came to fruition", Justice Lai noted.

"Having expended the claim amount and realised his shares in honestbee are now worthless, the defendant decided to dispute liability under the share purchase agreements and conjured up unmeritorious defences to the plaintiff's claim," she added. Mr Sng has filed an appeal against Justice Lai's decision. The Business Times has reached out to the lawyers representing Mr Sng and Mirae Asset.