Irawan Darsono v Ong Soon Kiat: Enforceability of Illegal Share Purchase Agreement under Securities Industry Act

In Irawan Darsono and Another v Ong Soon Kiat, the High Court of Singapore dismissed the plaintiffs' action against the defendant, Ong Soon Kiat, concerning a dispute over Goldtron shares. The plaintiffs, Irawan Darsono and Arhawishanto International Holdings Pte Ltd, claimed reimbursement and damages related to share transactions. The court, presided over by Justice Kan Ting Chiu, held that the agreements were illegal and unenforceable under the Securities Industry Act. The plaintiffs' claims for reimbursement, loss from the sale of shares, wasted expenses, and loss of investment opportunity were all dismissed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiffs' action dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Irawan Darsono sues Ong Soon Kiat for breach of contract related to Goldtron shares. The court found the agreement illegal and unenforceable under the Securities Industry Act.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Irawan DarsonoPlaintiffIndividualClaim DismissedLost
Arhawishanto International Holdings Pte LtdPlaintiffCorporationClaim DismissedLost
Ong Soon KiatDefendantIndividualJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Kan Ting ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Samuel ChackoColin Ng & Partners
John ThomasColin Ng & Partners
Adeline TohColin Ng & Partners
Mark TanRajah & Tann
Francis XavierRajah & Tann

4. Facts

  1. Darsono and Ong Soon Kiat met in July 1995, where Ong Soon Kiat was the executive chairman and a substantial shareholder of Goldtron Ltd.
  2. Darsono and Ong Soon Kiat agreed that Darsono would purchase 35m Goldtron shares at $1.10 a share.
  3. Darsono was to be appointed managing director of Goldtron upon the purchase of the 15m shares.
  4. Darsono agreed to buy 15m Goldtron shares at $1.23 per share on Ong Soon Kiat’s assurance that he would reimburse him the additional share price and brokerage expenses.
  5. Darsono transferred 10m of his Goldtron shares to the second plaintiff at $1.65 after Ong Soon Kiat promised to reimburse him the additional brokerage charges involved.
  6. The transactions came under investigation by the Commercial Affairs Division (CAD).
  7. Ong Soon Kiat was charged with five charges for offences under the Securities Industry Act and pleaded guilty to all charges.

5. Formal Citations

  1. Irawan Darsono and Another v Ong Soon Kiat, Suit 464/2001, [2002] SGHC 133

6. Timeline

DateEvent
Darsono and Ong Soon Kiat met.
July agreement was struck between Darsono and Ong Soon Kiat.
First transaction: Darsono bought 15m Goldtron shares at $1.23 per share.
August agreement was made to vary the July agreement.
Second transaction: Darsono transferred 10m Goldtron shares to the second plaintiff at $1.65.
Third transaction: Darsono transferred his remaining 4.5m Goldtron shares to the second plaintiff at $1.56 per share.
Fourth transaction: The second plaintiff purchased 10m Goldtron shares at $1.55.
Darsono learnt that the defendant may have acted illegally in the four transactions.
Shares were disposed of over a period of 15 months between 11 March 1996 and 26 May 1997.
Shares were disposed of over a period of 15 months between 11 March 1996 and 26 May 1997.
Defendant pleaded guilty to all the charges on 5 March 1999.
Plaintiffs filed proceedings against the defendant.
Defendant deposed supplemental affidavit of evidence-in-chief.
Judgment was made on 26 June 2002.

7. Legal Issues

  1. Enforceability of Illegal Contract
    • Outcome: The court held that the agreements relating to the four transactions were illegal contracts and therefore unenforceable.
    • Category: Substantive
  2. Breach of Contract
    • Outcome: The court found that the plaintiffs had not established that the shares were sold because the defendant’s illegal activities rendered the further performance of the agreements impossible or impracticable.
    • Category: Substantive
  3. Measure of Damages
    • Outcome: The court found that the claim for loss of opportunity for investment was misconceived and failed.
    • Category: Substantive

8. Remedies Sought

  1. Reimbursement of additional brokerage charges
  2. Damages for loss incurred in the sale of Goldtron shares
  3. Damages for wasted expense
  4. Damages for loss of opportunity to use the money spent on the Goldtron shares for other investment

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Finance
  • Telecommunications

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Chitty on ContractsN/AYesChitty on Contracts (28th Edn) para 17-007England and WalesCited for the principle that courts will not enforce illegal contracts or provide remedies arising out of them.
Halsbury’s Laws of EnglandN/AYesHalsbury’s Laws of England (4th Edn Reissue) Vol 12(1) at para 962England and WalesCited for the principle that damages may be awarded for the loss of a chance to receive a particular benefit or avoid a particular risk due to breach of contract.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Securities Industry Act (Cap 289)Singapore
s 97(1) Securities Industry Act (Cap 289)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Goldtron
  • Securities Industry Act
  • Share Purchase Agreement
  • Reimbursement
  • Illegal Contract
  • Stock Exchange
  • CAD Investigations

15.2 Keywords

  • Contract
  • Shares
  • Securities
  • Illegal
  • Singapore
  • Goldtron
  • Breach of Contract

17. Areas of Law

Area NameRelevance Score
Contract Law75
Breach of Contract70
Illegality and public policy65
Securities Fraud60
Damages Assessment55
Company Law50
Loss of opportunity45
Frustration40

16. Subjects

  • Contract Law
  • Securities Law
  • Commercial Law