D'Oz International v PSB Corp: Franchise Fee Refund Dispute Over Chinese Regulations
D'Oz International Pte Ltd appealed against the dismissal of its claim for a refund of $120,000 paid to PSB Corp Pte Ltd as part of a franchise fee. PSB Corp cross-appealed the dismissal of its counterclaim for the unpaid balance of $80,000. The High Court allowed D'Oz's appeal, finding that the promulgation of a Chinese regulation constituted an event of force majeure, entitling D'Oz to a refund with interest. The court dismissed PSB's appeal.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal in District Court Appeal No 11 allowed and appeal in District Court Appeal No 12 dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
D'Oz International sought a refund of a franchise fee from PSB Corp due to Chinese regulations. The court allowed D'Oz's appeal, ordering a refund.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| D'Oz International Pte Ltd | Appellant, Plaintiff | Corporation | Appeal Allowed | Won | |
| PSB Corp Pte Ltd | Respondent, Defendant | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
4. Counsels
4. Facts
- D’Oz and PSB entered into a franchise agreement for D’Oz to operate educational training centers in China.
- D’Oz paid PSB $120,000 as part payment for the franchise fee.
- The State Council of China promulgated the “Regulation for Establishing Chinese-[F]oreign Cooperative Schools” which required both parties to be educational institutions.
- D’Oz was not an educational institution and its application for an education license was unsuccessful.
- D’Oz suspended and then ceased the franchise venture, requesting a refund of the part payment.
- PSB terminated the Franchise Agreement and claimed the balance of the franchise fee.
5. Formal Citations
- D’Oz International Pte Ltd v PSB Corp Pte Ltd, District Court Appeals Nos 11 & 12 of 2009, [2010] SGHC 88
6. Timeline
| Date | Event |
|---|---|
| PSB gave a public presentation on the System. | |
| Parties signed a term sheet and a preliminary agreement. | |
| D’Oz paid $120,000 to PSB as part payment for the Franchise Fee. | |
| Training was provided by PSB to D’Oz’s personnel in China and Singapore. | |
| Training was provided by PSB to D’Oz’s personnel in China and Singapore. | |
| The State Council of China promulgated the “Regulation for Establishing Chinese-[F]oreign Cooperative Schools”. | |
| Parties signed a franchise agreement. | |
| D’Oz submitted an application for an education licence to the Ministry of Education in Beijing, China. | |
| D’Oz learnt that its application for the Licence was unsuccessful. | |
| The “Implementation Measures of the Regulation for Establishing Chinese-[F]oreign Cooperative Schools” was amended. | |
| D’Oz informed PSB in writing that it was suspending “all developmental activities in connection to PSB franchise investment in China”. | |
| D’Oz notified PSB that it had “decided to cease the PSB franchise venture in China with immediate effect”. | |
| PSB gave notice of its immediate termination of the Franchise Agreement. | |
| Judgment reserved. |
7. Legal Issues
- Force Majeure
- Outcome: The court found that the promulgation of the 2003 Regulation constituted an event of force majeure under Chinese law.
- Category: Substantive
- Breach of Contract
- Outcome: The court did not find a breach of contract, but addressed the counterclaim as if the Franchise Agreement was valid.
- Category: Substantive
- Interpretation of Contract Clauses
- Outcome: The court interpreted clause 22 of the Franchise Agreement in light of expert evidence on Chinese law.
- Category: Substantive
8. Remedies Sought
- Refund of Payment
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Claim for Refund
10. Practice Areas
- Commercial Litigation
11. Industries
- Education
- Franchising
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| D’Oz International Pte Ltd v PSB Corporation Pte Ltd | District Court | Yes | [2009] SGDC 221 | Singapore | Cited for the District Judge's reasons for the decisions. |
| K-Rex Finance Ltd v Cheng Chih Cheng | N/A | Yes | [1992] 3 SLR(R) 296 | Singapore | Cited regarding the presumption of Singapore law being the same as foreign law. |
| Goh Chok Tong v Tang Liang Hong | N/A | Yes | [1997] 1 SLR(R) 811 | Singapore | Cited regarding the presumption of Singapore law being the same as foreign law. |
| Parno v SC Marine Pte Ltd | N/A | Yes | [1999] 3 SLR(R) 377 | Singapore | Cited regarding the presumption of Singapore law being the same as foreign law. |
| Ong Jane Rebecca v Lim Lie Hoa | High Court | Yes | [2003] SGHC 126 | Singapore | Cited regarding the presumption of Singapore law being the same as foreign law. |
| Tamil Nadu Electricity Board v ST-CMS Electric Company Private Ltd | N/A | Yes | [2008] 1 Lloyd’s Rep 93 | N/A | Cited regarding the presumption of similarity of laws. |
| Damberg v Damberg and Others | New South Wales Court of Appeal | Yes | Damberg v Damberg and Others (2001) 52 NSWLR 492 | Australia | Cited regarding when a court would not assume that the unproved provisions of foreign law are identical with those of the lex fori. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Article 94 of the Contract Law of China | China |
| Article 97 of the Contract Law of China | China |
| Article 117 of the Contract Law of China | China |
15. Key Terms and Keywords
15.1 Key Terms
- Franchise Agreement
- Franchise Fee
- Force Majeure
- 2003 Regulation
- Term Sheet
- Preliminary Agreement
- PSB Intellis
- Education Licence
15.2 Keywords
- Franchise
- China
- Force Majeure
- Refund
- Contract
- Regulation
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Franchises and Franchising | 90 |
| Contract Law | 85 |
| Force Majeure | 75 |
| Foreign Law | 50 |
| Business Law | 40 |
| Misrepresentation | 30 |
| Estoppel | 20 |
16. Subjects
- Contract Dispute
- Franchise Agreement
- International Law
- Force Majeure