Suntoso Jacob

- vs -

Kong

Judgment

KC Lai J

1. In this action, the plaintiff, an Indonesian national, is seeking a declaration that the first defendant is holding 92,000 shares (the said shares) of $1 nominal value each in the second defendant Company (the company) upon trust for him and for an order that these shares be re-transferred to him. The company has a paid-up capital of 200,000 shares. If the plaintiff succeeds he will altogether own 190,000 shares in the company and will obviously be its controller. It was asserted in the statement of claim that in early 1980 the said shares were transferred by the plaintiff to the first defendant as his nominee, the first defendant having paid nothing for them and having executed a blank transfer form.

2. The gist of the defence was that the first defendant had bought the said shares from the plaintiff, having paid for them in cash, by three instalments which he handed over to the plaintiff.

3. Although the matter was not pleaded, at the resumed hearing of the case, the first defendant through his counsel began to cross-examine the plaintiff on the basis that the whole transaction involving the transfer of the said shares to the first defendant was a deception practised by the plaintiff on the public administration of Singapore. Accordingly, the first defendant urged this court not to lend its aid to the plaintiff and to allow the said shares to remain in his ownership.

4. To begin with, I should at once say that I reject the first defendant’s evidence that there was a sale of the said shares to him. The alleged payments of the consideration by instalments in cash were an untruth from first to last. The company was then owning some office units and shares in quoted companies in Singapore. The alleged sale price bore no relationship to the net value of the said shares at all. The first defendant, who had all along assisted the plaintiff in the affairs of the company in Singapore, was a sort of personal assistant to the plaintiff attending to all his needs in Singapore. I find that he simply could not afford to pay for the said shares.

5. I turn now to the circumstances surrounding the transfer of the said shares to the first defendant. The plaintiff had excellent business relationship with Pertamina, the Indonesian State corporation. Pertamina wanted to charter a tug from his company in Indonesia on terms which were very attractive. The plaintiff went to Tokyo, Japan and on 15 February 1980 he bought a twin-screw tug boat of 3,000 BHP known as ‘Hansan Maru’ for 60 million Japanese yen. On the following day, he telephoned the first defendant and told him of the purchase and asked him to put in process the registration of the tug under the Singapore flag in the name of the company. The idea was for the company to charter the tug to the plaintiff’s Indonesian company. When the plaintiff visited Singapore in early February 1980 on his way back to Jakarta, he discussed the registration of the tug with the first defendant.

6. When the plaintiff was in Jakarta, he received a telex from the first defendant to the effect that registration of the tug under the Singapore flag was possible only if the company was owned in the majority by Singapore citizens. At that time, the first defendant owned only 10,000 shares in the company. So, the plaintiff phoned the first defendant. After some discussion, he instructed the first defendant to transfer the said shares to himself to hold them upon trust for the plaintiff. The plaintiff said that he wanted to borrow on the tug after registration. After repayment of the loan, it was his intention to have the said shares re-transferred to himself. He told the first defendant to prepare all the necessary papers which were later signed. The tug was registered under the Singapore flag on the basis that the first defendant, a Singapore citizen, owned at least more than half of the shares in the company. The loan was raised on a mortgage of the tug. It was chartered to an Indonesian company known as PT Aspa Shipping which in turn chartered it to Pertamina. The loan was repaid. But the first defendant eventually refused to retransfer the said Shares.

7. Now, at the material time, the Registrar of Singapore Ships had issued an administrative guideline (see AB57–58) in which it was clearly announced that as an administrative policy, vessels such as the tug boat, would not be accepted for registration under the Merchant Shipping Act (Cap 172) unless the corporate owner is itself owned as to at least one-half of its equity by Singapore citizens. The plaintiff was well aware of this requirement. Alan Wee Boon Heng, the Assistant Registrar of Singapore Ships, confirmed in evidence that if he had known that the first defendant had held the said shares upon trust for a foreign national, he would not have registered the tug as a Singapore vessel. The plaintiff himself admitted that the true ownership of the said shares had to be kept away from the Registrar of Singapore Ships in order to obtain registration. I am satisfied on the evidence that the plaintiff had transferred the said shares to the first defendant in order that the Registrar of Singapore Ships would get a false picture. Although the first defendant had alone signed the registration papers containing the false representation, it was all done with the knowledge and consent of the plaintiff.

8. The plaintiff is therefore confronted with the principle stated a long time ago by Lord Mansfield: ‘No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.’: see Holman v Johnson (1775), 1 Cowp 341; 98 All ER Rep 1120. A similar situation had arisen in Palaniappa Chettiar v Arunasalam Chettiar [1962] MLJ 143. I have no doubt that the plaintiff had practised a deception on the Registrar of Singapore Ships. To the plaintiff, I have to say: ‘Let the said shares lie where they fall’.

9. It was submitted on behalf of the plaintiff that the administrative guidelines of the Registrar of Singapore Ships were directly in conflict with the provisions of s 369 of the Merchant Shipping Act (Cap 172), in their unamended form in February 1980. I do not need to comment on the validity or otherwise of the guidelines. Assuming that they were invalid, their invalidity was no justification for the plaintiff to practise a deception on the public administration of Singapore. He ought to have pursued his remedies in a lawful manner.

10. Accordingly, I dismiss the plaintiff’s claims against both the defendants with costs.[a]

Cases

Holman v Johnson [1775] 1 Cowp 341; 98 All ER Rep 1120; Palaniappa Chettiar v Arunasalam Chettiar [1962] MLJ 143

Representation

KS Chung and Mirza Namazie (Mallal & Namazie) for the plaintiff.

Lim Chor Pee (Chor Pee & Co) for the defendants.

Notes:-

[a] The plaintiff appealed against this decision. The Court of Appeal (CJ Wee CJ, TS Sinnathuray J & LP Thean J) on 24 January 1986 dismissed the appeal. See Suntoso Jacob v Kong @www.ipsofactoJ.com/index.htm [1986] Part 5 Case 6 [CA,S'pore].