Lloyd's Maritime and Commercial Law Quarterly
“LACK OF CONSENT” AS AN UNJUST FACTOR
AAHG v Hong
Mohammud Jaamae Hafeez-Baig* and Jordan English†
In AAHG LLC v Hong Hin Kay Albert,1 the High Court of Singapore (Chua Lee Ming JC) broke new ground in the law of unjust enrichment. To the authors’ knowledge, it is the first judicial decision in the common law world explicitly to recognise “lack of consent” as an unjust factor.
Facts
The Defendant incorporated Universal Medicare Pte Ltd (“Universal”) in November 2000. In 2002, Universal and Medical Equipment Credit Pte Ltd (“MEC”) entered into a loan agreement (“MEC Loan Agreement”), whereby MEC loaned US$12m to Universal. Pursuant to the MEC Loan Agreement, 10,000 shares in Universal were transferred to MEC’s parent company, DVI Inc (“the DVI Shares”) and the Defendant guaranteed the payment of the loan.
In 2004, DVI obtained an order permitting it to sell the DVI Shares.2 It agreed to sell the rights to the MEC Loan Agreement to Goldman Sachs (Asia) Finance (“Goldman Sachs”) and also intended to sell the DVI Shares for US$1,000. DVI issued a Notice of Sale. The Defendant wrote to DVI objecting to the sale of the shares. He cited Art.29 of the Articles of Association of Universal, which prohibited the sale of shares in Universal to non-members where a member was willing to purchase them at fair value. The Defendant advised that he was willing to purchase the DVI Shares. The sale to Goldman Sachs did not proceed.
In 2007, International Columbia US LLC (“Columbia US”) offered to purchase all of the shares in Universal for its subsidiary, Columbia Asia Healthcare Sdn Bhd (“Columbia Asia”). Although the DVI Shares were still owned by DVI, the Defendant and the two other shareholders represented that all of the shares in Universal were owned by them. The Defendant subsequently gave notice to Universal indicating that he wished to purchase the DVI Shares, and a payment of US$1,000 was made to Universal. On the same day, the Defendant convened a board meeting of Universal and passed resolutions purporting to cancel the DVI Shares and registering the Defendant as the holder of the shares.
The Defendant and the two shareholders subsequently agreed to sell 99 per cent of the shares in Universal to Columbia Asia.3 The share certificates (including the certificate for the DVI Shares) were subsequently sent to the solicitors acting for the Defendant and Universal.
DVI’s rights with respect to the shares were assigned to the Plaintiff pursuant to a Deed of Assignment. The Plaintiff brought a claim in conversion, alleging that the Defendant
* University of Queensland.
† University of Queensland.
1. [2016] SGHC 274.
2. As part of a Chapter 11 reorganisation under the United States Bankruptcy Code.
3. In exchange, Columbia Asia was to pay an agreed settlement sum directly to Goldman Sachs, which had by that stage obtained default judgment against the Defendant and Universal for defaulting on the MEC Loan Agreement.
Case and comment
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