Supercars Lorinser v Benzline Auto: Failure of Basis in Exclusive Dealership Agreement

In Supercars Lorinser Pte Ltd and Supercars Singapore Pte Ltd v Benzline Auto Pte Ltd, the High Court of Singapore heard a claim by the Plaintiffs for the repayment of $300,000 paid to the Defendant, Benzline Auto Pte Ltd, ahead of entering into an exclusive dealership agreement for modified Mercedes Benz vehicles. The Plaintiffs argued that the agreement was never finalized, resulting in a failure of basis for the payment. The Defendant counterclaimed for costs related to ordered cars and lost commissions. Justice Aedit Abdullah found in favor of the Plaintiffs, ordering the repayment of the $300,000 and dismissing the Defendant's counterclaim, concluding that the payment was a pre-contractual deposit contingent on the exclusive dealership agreement, which never materialized.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiffs

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court held that a $300,000 payment was a pre-contractual deposit for an exclusive dealership agreement that failed, entitling Supercars Lorinser to repayment. Benzline Auto's counterclaim was dismissed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Benzline Auto Pte LtdDefendantCorporationCounterclaim DismissedLost
Supercars Lorinser Pte LtdPlaintiffCorporationClaim AllowedWon
Supercars Singapore Pte LtdPlaintiffCorporationClaim AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Leslie YeoSterling Law Corporation
Harry ZhengSelvam LLC
Ho May KimSelvam LLC

4. Facts

  1. The Plaintiffs paid $300,000 to the Defendant, intending it to be a pre-contractual deposit.
  2. The payment was made in anticipation of an exclusive sub-dealership agreement for Lorinser cars.
  3. The exclusive sub-dealership agreement was never finalized between the parties.
  4. The Defendant argued the $300,000 was for a separate order of 30 cars, independent of the dealership agreement.
  5. The Plaintiffs claimed the payment was conditional on the exclusive dealership being entered into.
  6. The Defendant counterclaimed for costs of cars ordered and loss of commission.
  7. The Defendant entered into an exclusive sub-dealership agreement with Regal Motors.

5. Formal Citations

  1. Supercars Lorinser Pte Ltd and another v Benzline Auto Pte Ltd, Suit No 957 of 2014, [2016] SGHC 281

6. Timeline

DateEvent
Lorinser discussed extending warranties in Singapore to Lorinser modified Mercedes Benz cars.
Payment of $300,000 made by Yu Ming Yong to the Defendant.
Draft exclusive dealership agreement sent.
Sales order for Lorinser parts made by the Plaintiffs.
Final version of draft agreement forwarded by Evan from Lorinser.
Relationship between the parties deteriorated.
Plaintiffs sought repayment of the $300,000.
Trial began.
Trial.
Trial.
Trial.
Trial.
Hearing date.
Judgment issued.

7. Legal Issues

  1. Failure of Basis
    • Outcome: The court held that there was a total failure of basis for the $300,000 payment, as the exclusive dealership agreement was never concluded.
    • Category: Substantive
    • Sub-Issues:
      • Total failure of consideration
    • Related Cases:
      • [2003] 1 SLR(R) 791
      • [1924] 1 Ch 97
  2. Contract Formation
    • Outcome: The court found that no contract was formed between the parties for the ad hoc supply of vehicles.
    • Category: Substantive
    • Related Cases:
      • [2003] 3 SLR(R) 462
      • [2008] 3 SLR(R) 1029
  3. Restitution
    • Outcome: The court held that the defense of change of position was not made out on the facts.
    • Category: Substantive
    • Sub-Issues:
      • Change of position
    • Related Cases:
      • [1991[ 2 AC 548
      • [2010] EWCA Civ 579

8. Remedies Sought

  1. Repayment of $300,000
  2. Monetary Damages
  3. Specific Performance

9. Cause of Actions

  • Failure of Basis
  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Automotive

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
United Artists Singapore Theatres Pte Ltd v Parkway Properties Pte LtdHigh CourtYes[2003] 1 SLR(R) 791SingaporeCited for the principle that a deposit may be paid before a contract is concluded and may be repayable if the basis on which it was paid fails.
Chillingworth v EscheChancery DivisionYes[1924] 1 Ch 97England and WalesCited as an example of a case where the doctrine of failure of basis applies, and payments are recoverable as reversal of unjust enrichment or restitution.
Fostif Pty Ltd v Campbells Cash and Carry Pty LtdHigh Court of AustraliaYes(2005) 218 ALR 166AustraliaCited for the principle that the determination of the basis of a transfer must be objectively ascertained.
Bakery Mart Pte Ltd (in receivership) v Sincere Watch LtdHigh CourtYes[2003] 3 SLR(R) 462SingaporeCited for the principle that intention to make an offer or to accept is determined objectively.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdHigh CourtYes[2008] 3 SLR(R) 1029SingaporeCited for the principle that intention to make an offer or to accept is determined objectively.
Lipkin Gorman (a firm) v Karpnale LtdHouse of LordsYes[1991[ 2 AC 548United KingdomCited for the principle that for change of position to be raised successfully, it must be shown that it would be inequitable for the defendant in a case to be made to give restitution nor reverse the unjust enrichment.
Haugesund Kommune and another v Depfa ACS Bank (Wikborg Rein & Co, Part 20 defendant)England and Wales Court of Appeal (Civil Division)Yes[2010] EWCA Civ 579England and WalesCited for the principle that where the basis has been found to have failed, change of position is not made out as a defendant in such a position would know that flowing from such failure, repayment would follow.
British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London LtdHouse of LordsYes[1912] AC 673United KingdomCited for the principle that any losses avoided would not have been claimable.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Exclusive Dealership Agreement
  • Pre-Contractual Deposit
  • Failure of Basis
  • Sub-Distributorship
  • Lorinser Cars
  • Planning Order
  • Change of Position
  • Ad Hoc Supply

15.2 Keywords

  • Contract
  • Restitution
  • Exclusive Dealership
  • Automotive
  • Singapore
  • Commercial Dispute

17. Areas of Law

Area NameRelevance Score
Total failure of consideration85
Contract Law80
Breach of Contract75
Formation of contract70
Restitution70
Failure of consideration70

16. Subjects

  • Contract Law
  • Restitution
  • Commercial Dispute