Case Details
- Title: SAIS Limited & Anor v Michael Jon Hardman & Anor
- Citation: [2022] SGHCA 32
- Court: Appellate Division of the High Court (Singapore)
- Date: 20 September 2022
- Judges: Woo Bih Li JAD, Quentin Loh JAD and Kannan Ramesh J
- Appellants/Plaintiffs below: SAIS Limited (A1) and Kaddra Pte Ltd (A2)
- Respondents/Defendants below: Michael Jon Hardman and Nicolas Jack Leon Finck
- Procedural history: Appeal against the decision of the Judge of the General Division of the High Court in Hardman, Michael Jon and another v SAIS Ltd and another [2022] SGHC 38
- Suit below: Suit No 651 of 2020
- Appeal: Civil Appeal No 27 of 2022
- Legal areas: Contract law; contractual interpretation of express terms; breach; contractual remedies (damages)
- Statutes referenced: Not specified in the provided extract
- Cases cited: [2022] SGHC 38
- Judgment length: 46 pages, 14,486 words
Summary
This appeal concerned employees’ contractual claims for damages arising from the non-delivery of shares under an employee restricted share unit (“RSU”) scheme. The RSU Plan was introduced by SAIS Limited (formerly Sarment Holdings Ltd) shortly before its listing on the Toronto Stock Exchange Venture Exchange (“TSX-V”). Two employees, Michael Jon Hardman and Nicolas Jack Leon Finck, were participants in the RSU Plan and received grant documentation that incorporated the RSU Plan’s general terms. When the company later failed to deliver shares corresponding to their RSU entitlements, the employees sued for damages.
The Appellate Division of the High Court (Woo Bih Li JAD, Quentin Loh JAD and Kannan Ramesh J) upheld the core contractual analysis of the Judge below. The court focused on the express contractual mechanics of the RSU Plan and the grant letters, including what was required for delivery and vesting, and how events such as termination of employment and corporate transactions affected the employees’ rights. The decision is significant for employers and employees alike because it treats RSU arrangements as enforceable contracts whose terms—particularly around vesting, delivery, and the consequences of termination—will be applied strictly according to their wording.
What Were the Facts of This Case?
The respondents commenced employment with Sarment Pte Ltd (“SPL”) in August 2017. Although SPL was not a party to the proceedings, it was a subsidiary within the group. The respondents’ roles were within the group’s business operations: Mr Hardman was Chief Marketing Officer, and Mr Finck was Head of Partnership. In December 2017, Kaddra Pte Ltd (“A2”) was incorporated as the group’s arm for e-commerce applications. Later, in July 2019, both respondents’ employment contracts with SPL were terminated and they entered into new employment contracts with A2 to perform different roles. This corporate restructuring matters because the RSU Plan was administered by SAIS Limited (A1), while employment relationships were with group entities.
Before the respondents joined the group, they were told by the group’s Chief Executive Officer that A1 planned to be listed and that employees might be granted shares in the then-listed A1. That plan materialised on 21 August 2018 when A1 was listed on the TSX-V. Shortly before listing, A1 introduced the “Sarment Holding Limited Restricted Share Unit Plan” (the “RSU Plan”). The RSU Plan was an employee share incentive scheme. There was no dispute that the respondents were placed on the scheme.
On 21 September 2018, Mr Finck received a letter stating that he would be granted 38,260 restricted share units (“units”) under the RSU Plan. The letter annexed an agreement form incorporating the RSU Plan’s general terms, and Mr Finck signed the form on 28 February 2019. On 29 March 2019, Mr Hardman signed a similar form for 199,619 units (the “29 March 2019 Grant”). These grant letters were central to the contractual dispute because they set out the employees’ entitlements and the scheme’s mechanics.
In 2019, the group’s business deteriorated. The Keyyes project failed and the group lost distribution contracts. On 29 May 2019, senior management announced consideration of selling the group’s wine and spirits distribution business housed in Sarment Wines & Spirits Holding Pte Ltd (“Sarment Wines”). On 29 July 2019, A1 announced a sale and purchase agreement for Sarment Wines to three shareholders, with consideration of US$20.5 million. The transaction required general meeting approval, and a meeting was held on 30 August 2019. At that meeting, shareholders also approved a change of A1’s name from “Sarment Holdings Ltd” to “SAIS Limited”. The TSX-V approval for the sale was obtained on 13 September 2019, and the sale closed on that date. However, the change in majority shareholding took longer to complete, with Mr Irwin obtaining the relevant shares only on 15 October 2019.
Against this backdrop, Mr Finck was made redundant. On 5 September 2019, he was informed that his employment contract with A2 would be terminated with immediate effect. He was told he would receive prorated salary for September 2019, pay in lieu of notice, and his outstanding bonus for 2018 over four months. Importantly, Mr Finck was dissatisfied because his first tranche of the 21 September 2018 grant—one-third, being 12,753 units—was due to be delivered around that time. He asked for his outstanding salary and bonus to be paid at once and for him to retain the benefit of the 12,753 units, effectively receiving 12,753 shares in A1 pursuant to his grant. Senior management acceded to this request in a letter dated 6 September 2019 issued on A2’s letterhead (Mr Finck’s Termination Letter). The appellants did not dispute that Mr Finck never received the shares relating to the 12,753 units promised in that letter.
Mr Hardman’s situation was different but similarly affected by termination and corporate events. Before his redundancy, three important events occurred. First, the sale of Sarment Wines and the acquisition of majority shareholding were completed in September and October 2019. Second, on 4 October 2019, pursuant to the 29 March 2019 Grant, Mr Hardman received 66,540 shares in A1, representing one-third of his total allocation. Third, in October 2019, Mr Chiarugi asked Mr Hardman whether he would accept his 2018 bonus in the form of bonus units rather than cash because A2 was short on cash. Mr Hardman agreed. On 9 December 2019, he executed the Bonus Units Agreement granting him 72,590 units in lieu of the 2018 cash bonus (described as 72,950 bonus units in the narrative, with the operative grant being 72,590 units).
In January 2020, Mr Hardman was informed he would be made redundant. He requested to resign instead to avoid prejudice to future job opportunities, and A2 agreed. On 15 January 2020, he tendered his resignation. On 29 January 2020, A2 issued a letter titled “Terms & Conditions of your resignation dated 15 January 2020”, stating that the 72,590 bonus units would be “issued and vesting [sic] at end February 2020”. Mr Hardman countersigned the letter. However, nothing was done by the end of February 2020. On 19 February 2020, A1 announced it had filed an application to delist from the TSX-V, and approval was granted on 5 March 2020, with the last trading day being 16 March 2020.
By June 2020, Mr Hardman still had not received the shares representing the 72,590 bonus units. On 17 June 2020, his solicitors wrote to A2 asserting that the delay was a repudiatory breach and that he elected to treat the agreement as discharged, demanding payment of his 2018 bonus in cash. There was no response. On 21 September 2020, without prompting, A1 unilaterally issued 205,669 shares in Mr Hardman’s name, comprising 133,079 shares outstanding under the 29 March 2019 Grant and 72,590 shares under the Bonus Units Agreement. The issuance occurred after A1 was delisted and after the suit below was commenced.
What Were the Key Legal Issues?
The appeal raised contractual questions about the enforceability and interpretation of the RSU Plan and the specific grant documentation. In particular, the court had to determine whether the appellants’ obligations to deliver shares were triggered and enforceable according to the express terms of the RSU Plan and the grant letters, and whether the company’s failure to deliver by the relevant dates constituted a breach giving rise to damages.
A second issue concerned the effect of termination of employment and related corporate events on the employees’ entitlements. The RSU Plan included mechanics for “change of control” events and for the effect of terminating a participant’s employment. The court had to analyse how those provisions operated in the context of the group’s sale of Sarment Wines, the change in majority shareholding, and the respondents’ redundancies and resignations.
Finally, the court had to address remedies—specifically, how damages should be assessed for non-delivery of shares under a contractual share incentive scheme. This required the court to consider what loss the employees suffered as a result of the breach, and whether subsequent issuance of shares (after suit commenced) affected liability or the measure of damages.
How Did the Court Analyse the Issues?
The Appellate Division approached the dispute as a matter of contract interpretation and contractual remedies. The court treated the RSU Plan and the grant letters as the primary sources of rights and obligations. The key analytical starting point was that the employees’ entitlements were not merely discretionary benefits; they were contractual promises, with express terms governing vesting, delivery, and the consequences of particular events. Where the documentation clearly specified what was to be delivered and when, the court was prepared to enforce those terms rather than allow the employer to rely on general corporate explanations.
On Mr Finck’s claim, the court’s analysis turned on the Termination Letter dated 6 September 2019. That letter was issued on A2’s letterhead and reflected an agreement that Mr Finck would be allowed to retain the benefit of the first tranche of units—12,753 units—by receiving shares in A1. The court noted that the appellants did not dispute that Mr Finck never received those shares. The legal consequence was that the company’s failure to deliver the promised shares constituted breach of contract. The court then considered how the RSU Plan’s general mechanics interacted with the specific termination arrangement, and whether any contractual provision could excuse non-delivery. The court’s reasoning indicated that the specific promise in the Termination Letter had to be given effect according to its terms.
On Mr Hardman’s claims, the court analysed two distinct sets of entitlements. First, it considered the 29 March 2019 Grant and the portion that had already been delivered (66,540 shares representing one-third). The dispute concerned the remaining shares that were not delivered within the contractual timeline. Second, it considered the Bonus Units Agreement and the resignation letter terms that stated the bonus units would be “issued and vesting” at end February 2020. The court treated the “end February 2020” issuance/vesting statement as a contractual timing commitment. The failure to deliver by that time was therefore a breach, notwithstanding that A1 later issued shares in September 2020.
The court also addressed the appellants’ reliance on corporate events, including the sale of Sarment Wines and the change in majority shareholding, as well as A1’s delisting from the TSX-V. While such events were relevant background, the court’s reasoning emphasised that contractual obligations cannot be displaced by later corporate developments unless the RSU Plan expressly provides for such displacement. In other words, the court did not treat corporate restructuring or delisting as an automatic excuse for non-performance. Instead, it examined whether the RSU Plan’s “change of control” provisions or other scheme mechanics were engaged and, if so, what they required the company to do.
Finally, the court’s approach to damages reflected the contractual nature of the RSU scheme. Where shares were promised and not delivered, the employees’ loss could be framed as the value of the shares they were entitled to receive at the relevant time, subject to the contractual and factual context. The court also considered the effect of A1’s unilateral issuance of shares after suit commenced. Although the later issuance partially addressed the non-delivery, it did not negate the breach that had already occurred. The court’s reasoning therefore supported the view that damages were still recoverable for the period and circumstances of non-performance, and that subsequent performance did not automatically extinguish liability.
What Was the Outcome?
The Appellate Division dismissed the appeal and affirmed the Judge’s decision in substance. The court upheld the contractual analysis that the appellants were in breach of their obligations to deliver shares corresponding to the respondents’ RSU entitlements and related agreements. The practical effect was that the employees’ claims for damages for non-delivery were maintained.
In addition, the court dealt with costs in accordance with the outcome of the appeal. For practitioners, the decision confirms that RSU arrangements will be enforced as contracts with enforceable timing and delivery obligations, and that later issuance of shares—particularly after litigation has commenced—will not necessarily eliminate damages exposure.
Why Does This Case Matter?
This case is important because it provides a clear Singapore appellate-level illustration of how courts treat employee share incentive schemes as contractual instruments. Employers often assume that RSU plans are flexible or subject to administrative discretion, but this decision underscores that where express terms specify vesting and issuance/delivery, the company must comply. The court’s reasoning demonstrates that contractual promises in RSU documentation—especially those reflected in termination letters or specific grant agreements—will be enforced.
For employees and their advisers, the decision supports the proposition that termination-related communications can create binding obligations beyond the general RSU Plan. In particular, the Termination Letter’s promise to allow retention of a tranche of units was treated as enforceable. This is a useful precedent for arguing that bespoke termination arrangements should be construed according to their wording and not reduced to mere “settlement discussions” without legal effect.
For employers and in-house counsel, the case highlights litigation risk in the administration of RSU plans during corporate transactions and restructuring. Even where delisting or major shareholding changes occur, the court will look to the scheme’s express mechanics and the specific contractual commitments made to employees. Practically, companies should ensure that RSU plan administration is aligned with contractual timelines, and that any contemplated changes to delivery obligations are properly documented and communicated in a legally effective manner.
Legislation Referenced
- Not specified in the provided extract.
Cases Cited
- [2022] SGHC 38 (Hardman, Michael Jon and another v SAIS Ltd and another) — decision appealed from.
Source Documents
This article analyses [2022] SGHCA 32 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.