A South Korean brokerage has won a US$5.1 million (S$6.9 million) summary judgement against former honestbee chief Joel Sng, according to a High Court grounds of decision released on Thursday.
This was over shares in the grocery delivery start-up that the brokerage said were paid but never received. Joel is appealing against the ruling.
Joel had defended and said he did not sign the purchase agreements for those shares, and that it was his honestbee successor Brian Koo – honestbee’s key investor and a scion of the LG family – who failed to transfer the shares. He said that it was Brian who told him to ignore the emails from the hedge fund.
Joel also claimed that because the shares of the insolvent firm are now worthless, the hedge fund is taking legal action against him in order to improve its position in honestbee’s insolvency by seeking full recovery of its investment.
According to Joel – who was honestbee’s chief executive from 2014 to 2019 – the claim amount to be recovered would be “inequitable and unjust” as he had put the sum into funding the operations of honestbee.
Shareholder stake of US$5.1 million
The brokerage Mirae Asset Daewoo is the trustee of an entity called DS Sng Hedge Fund that wanted to be an honestbee shareholder. Mirae Asset had sued Joel last year for failing to deliver the honestbee shares, after the brokerage paid US$5.1 million for some of his shares in the grocery delivery startup.
A summary judgement application was filed against Joel – which involves moving to a court decision without a full trial. The Assistant Registrar had initially dismissed the summary judgement application, but the brokerage appealed against that.
In the grounds of decision documents released, Justice Lai Siu Chiu reversed the decision and found that Joel had not raised any issues that warranted a trial. Justice Lai also flagged several discrepancies in Joel’s defence arguments.
According to an agreement in July 2018, Mirae Asset – on behalf of the hedge fund – had agreed to purchase 65,117 shares in honestbee from Joel for US$3.2 million. In another agreement dated August 2018, another 21,748 shares was agreed to be purchased for US$1.9 million.
Justice Lai noted that Joel had admitted to receiving the payments.
However, Mirae Asset said Joel 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.
The brokerage received a share certificate subsequently in December 2018, but 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).
Ex-honestbee chief appeals against the ruling
Joel disclosed in one of his affidavits 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 34, Jalan Jintan.
Joel 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 also cast doubts over 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.
Joel 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.
Justice Lai said: “In the euphoria created by honestbee’s rapid and successful expansion in its early days, (Joel) and perhaps Mr Koo (Brian) as well held an overly optimistic and, dare I say, unrealistic view of the company’s prospects and its valuation.”
Justice Lai added that it might be the reverse situation on Joel’s claim that Mirae Asset was merely trying to improve its position in the insolvency proceedings.
“Because honestbee (before its liquidation) was not or never worth US$330 million or anywhere near that valuation, (Joel’s) dreams of perhaps becoming a Jack Ma (of e-commerce giant Alibaba) never came to fruition,” she wrote.
“Having expended the claim amount and realised his shares in honestbee are now worthless, (Joel) decided to dispute liability under the share purchase agreements and conjured up unmeritorious defences to the plaintiff’s claim.”
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