Friis v Casetech: Breach of Contract & Account of Profits Dispute
In Friis and Another v Casetech Trading Pte Ltd and Others, the Singapore Court of Appeal addressed a claim by Povl Friis and Combined Overseas Transport Sdn Bhd against Casetech Trading Pte Ltd, Stephen Wiffen, Stevany Wiffen, and Lars Arne Kent Linden for breach of contract and breach of trust related to the misuse of overdraft facilities. The court allowed the appeal in part, setting aside the order for a general taking of accounts and instead ordering an account of profits limited to back-to-back transactions occurring after 7 July 1992. The court dismissed the breach of trust claim and related claims against Mrs. Wiffen.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal allowed in part.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal examined a breach of contract claim regarding overdraft facilities and the right to an account of profits.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Friis | Appellant, Respondent | Individual | Appeal dismissed in part | Partial | Harish Kumar, Joanna Tan |
| Combined Overseas Transport Sdn Bhd | Appellant, Respondent | Corporation | Appeal dismissed in part | Partial | Harish Kumar, Joanna Tan |
| Casetech Trading Pte Ltd | Appellant, Respondent | Corporation | Appeal allowed in part | Partial | Philip Lam |
| Stephen Wiffen | Appellant, Respondent | Individual | Appeal allowed in part | Partial | Philip Lam |
| Stevany Wiffen | Appellant | Individual | Appeal allowed | Won | Philip Lam |
| Lars Arne Kent Linden | Defendant | Individual | Judgment in default entered against him | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of Appeal | Yes |
| L P Thean | Justice of Appeal | No |
| Yong Pung How | Chief Justice | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Harish Kumar | Engelin Teh & Partners |
| Joanna Tan | Engelin Teh & Partners |
| Philip Lam | Foo, Liew & Philip Lam |
4. Facts
- Friis agreed to provide financial assistance to Casetech by arranging letters of credit and providing security for a bank overdraft.
- The parties entered into a 1990 oral agreement where Friis would help finance Casetech's trade in return for one-third of the profits.
- The financing arrangement was varied in 1991 and 1992, with Friis providing a bank guarantee to secure overdraft facilities for Casetech.
- Casetech used the overdraft facilities for purposes other than the agreed back-to-back trades.
- HSBC called on the DDB's guarantee, resulting in a deduction of $1 million from Friis' account.
- Wiffen and Linden agreed that Casetech would sell equipment to repay Friis, but only a small portion was repaid.
- Friis brought an action against Casetech, Wiffen, Mrs. Wiffen, and Linden for breach of contract and breach of trust.
5. Formal Citations
- Friis and Another v Casetech Trading Pte Ltd and Others, CA 203/1999, 204/1999, [2000] SGCA 35
6. Timeline
| Date | Event |
|---|---|
| Friis met Linden at the Danish club in Kuala Lumpur. | |
| Linden wrote to Friis outlining a proposal for Friis to take up a 33% share in Casetech. | |
| Friis met Linden and Wiffen at the Lake Club in Kuala Lumpur. | |
| Parties undertook a series of transactions financed by Friis. | |
| Variation made to the financing arrangement; Friis obtained a bank guarantee from DDB for $950,000 to secure facilities granted to Casetech by DB. | |
| Casetech obtained similar facilities from HSBC, secured by a DDB's guarantee for $1m procured by Friis. | |
| Linden informed Friis that something was amiss in Casetech's accounts. | |
| DDB informed Friis that HSBC had called on the guarantee. | |
| Wiffen and Linden arranged a meeting with Friis in Kuala Lumpur to discuss repayment. | |
| Deadline for the sale of equipment under the December 1992 agreement. | |
| A total sum of $97,390.30 was paid into the new account in March and April 1993. | |
| Linden came forward with information that the DDB's guarantee was called on as a result of a misuse of the overdraft facilities. | |
| Friis brought the present action. | |
| Civil Appeal 203/99 was filed by the plaintiffs, and CA 204/99 was filed by Casetech, Wiffen and Mrs Wiffen. | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that Casetech and Wiffen breached the 1990 oral agreement by using the overdraft facilities for purposes other than back-to-back trades.
- Category: Substantive
- Sub-Issues:
- Failure to adhere to terms of oral agreement
- Misuse of overdraft facilities
- Constructive Trust
- Outcome: The court held that no constructive trust existed over the funds from the overdraft facilities, as the arrangement was a purely commercial financing arrangement.
- Category: Substantive
- Sub-Issues:
- Existence of fiduciary duty
- Commercial financing arrangement
- Limitation of Actions
- Outcome: The court held that the claim for damages was not time-barred, as the cause of action arose when the DDB's guarantee was called on by HSBC.
- Category: Procedural
- Sub-Issues:
- When time begins to run
- Breach of contract
- Account of Profits
- Outcome: The court ordered an account of profits to be taken of the profits made from the use of funds from the overdraft facilities for the back-to-back trades or transactions which the parties had agreed, but such taking of account be limited to the back-to-back transactions occurring after the 7 July 1992.
- Category: Remedial
- Sub-Issues:
- Entitlement to account
- Contractual right
- Interest on Judgment Debt
- Outcome: The court upheld the trial judge's decision to award interest from the date of the writ, citing the plaintiffs' unwarranted delay in bringing the action.
- Category: Remedial
- Sub-Issues:
- Date of accrual of loss
- Unwarranted delay
8. Remedies Sought
- Damages for breach of contract
- Account of profits
9. Cause of Actions
- Breach of Contract
- Breach of Trust
10. Practice Areas
- Commercial Litigation
- Breach of Contract
- Banking and Finance
11. Industries
- Construction
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Coulthard v Disco Mix Club Ltd & Ors | Court of Appeal | Yes | [1999] 2 All ER 457 | England and Wales | The court found this case to be not relevant to the question of whether Wiffen and Linden owed the plaintiffs a fiduciary duty. |
| Tito & Ors v Waddell & Ors (No 2) | Chancery Division | Yes | [1977] 1 Ch 107 | England and Wales | Cited for the principle that damages are to compensate the plaintiff for loss or injury, not to make the defendant disgorge savings from the wrong. |
| The Siboen; Occidental Worldwide Investment Corp v Skibs A/S Avanti & Ors | Not Available | Yes | [1976] 1 Lloyd`s Rep 293 | England and Wales | Cited to show that charterers were entitled to damages, not an account of profits, when the shipowner wrongfully withdrew vessels in breach of charterparties. |
| Surrey County Council & Anor v Bredero Homes Ltd | Court of Appeal | Yes | [1993] 3 All ER 705 | England and Wales | Cited for the principle that damages are intended to compensate the victim for loss, not to transfer the benefit gained by the wrongdoer if the victim suffered no loss. |
| A-G v Blake (Jonathan Cape Ltd, third party) | Court of Appeal | Yes | [1998] Ch 439 | England and Wales | Cited for the consideration of restitutionary damages as a proper remedy for breach of contract. |
| Hospital Products Ltd v United States Surgical Corp | High Court of Australia | Yes | [1984] 156 CLR 41 | Australia | Cited to show that a commercial arrangement does not automatically give rise to a fiduciary relationship. |
| Mahtani & Ors v Kiaw Aik Kang Land Pte | Not Available | Yes | [1995] 1 SLR 168 | Singapore | Distinguished because in that case, the defendants had the use of the money which was the subject of claim, whereas here, the judgement sum represented compensation for loss suffered which was never represented by any sum held by the defendants. |
| Metal Box v Currys | Not Available | Yes | [1988] 1 All ER 341 | England and Wales | Cited as an example of an award of interest covering the period from date of writ to date of judgment. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| s 6(1) Limitation Act | Singapore |
| s 6(2) of the Limitation Act (Cap 163) | Singapore |
| s 29(1) of the Limitation Act | Singapore |
| s 12 of the Civil Law Act (Cap 43, 1999 Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Overdraft facilities
- Bank guarantee
- Back-to-back trades
- 1990 oral agreement
- Constructive trust
- Account of profits
- Limitation Act
- Commercial financing arrangement
15.2 Keywords
- Breach of contract
- Constructive trust
- Account of profits
- Limitation
- Overdraft
- Guarantee
- Singapore
- Commercial
- Financing
16. Subjects
- Contract Law
- Trust Law
- Limitation of Actions
- Banking Law
- Finance Law
17. Areas of Law
- Contract Law
- Trusts
- Limitation of Actions
- Commercial Law
- Financing Law