Benzline Auto v Supercars: Restitution for Failure of Consideration in Car Sub-Dealership Dispute

In a Singapore Court of Appeal case, Benzline Auto Pte Ltd appealed against the decision in favor of Supercars Lorinser Pte Ltd and Supercars Singapore Pte Ltd regarding a $300,000 payment made during failed sub-dealership negotiations. Supercars sought restitution for total failure of consideration. The court allowed the appeal in part, dismissing Supercars' claim and affirming the dismissal of Benzline's counterclaim for breach of contract.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part; Supercars' claim dismissed, Benzline's counterclaim affirmed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a $300,000 payment during sub-dealership negotiations. The court examines restitution for failure of consideration after negotiations failed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Benzline Auto Pte LtdAppellantCorporationAppeal allowed in partPartial
Supercars Lorinser Pte LtdRespondentCorporationClaim DismissedLost
Supercars Singapore Pte LtdRespondentCorporationClaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Andrew Phang Boon LeongJudge of AppealNo
Judith PrakashJudge of AppealYes

4. Counsels

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

4. Facts

  1. Supercars paid Benzline $300,000 as a deposit for new Mercedes cars.
  2. The payment was made during negotiations for an exclusive sub-dealership agreement between Supercars and Benzline.
  3. The negotiations for the Exclusive Sub-Dealership Agreement eventually failed.
  4. Supercars sought restitution of the $300,000 payment from Benzline.
  5. Benzline claimed the payment was a deposit on a standalone purchase of cars.
  6. The payment was used by Benzline to pay a deposit to Lorinser, which then paid the deposit to Daimler.
  7. Supercars rejected the offer to enter into the Exclusive Sub-Dealership Agreement on terms materially similar to the First Draft Agreement.

5. Formal Citations

  1. Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd and another, , [2018] SGCA 02
  2. , 103 of 2016, Civil Appeal No 103 of 2016

6. Timeline

DateEvent
Benzline appointed master dealer of Lorinser car parts in Singapore.
Benzline and Lorinser concluded an agreement for Lorinser cars.
Benzline abandoned the experiment of importing and selling Lorinser cars.
EH informed Mr. Ng and Mr. Chong that Lorinser had concluded an agreement with Daimler to extend the Daimler Warranty to Lorinser cars.
EH sent an e-mail to Mr. Chua requesting an amended Planning Order for 2014 and Purchase Orders for the first order for May production.
EH sent an e-mail to Mr. Ng containing the first draft of the Benzline–Lorinser Agreement.
Supercars gave Benzline a cheque for $300,000 as a 30% deposit for New Mercedes.
Mr. Chong sent an e-mail to EH to place an order for nine cars.
EH sent an e-mail to Mr. Ng regarding some problems with the First Purchase Order.
Mr. Chong sent an e-mail to EH stating the desired substitute models.
First Purchase Order was finalized.
EH sent Mr. Ng a copy of the second and final draft of the Benzline–Lorinser Agreement.
Mr. Chua e-mailed Marcus Lorinser directly to propose a new arrangement.
Supercars commenced proceedings against Benzline.
Judgment reserved.
Judgment delivered.

7. Legal Issues

  1. Failure of Consideration
    • Outcome: The court held that there was no total failure of consideration because the payment was made to enable Lorinser to pay Daimler the deposit and thereby to avoid future delay, and not to show good faith and seriousness.
    • Category: Substantive
    • Sub-Issues:
      • Total failure of consideration
      • Pre-contractual deposit

8. Remedies Sought

  1. Return of payment of $300,000
  2. Compensation for lost sales
  3. Damages for storage and other costs

9. Cause of Actions

  • Restitution for total failure of consideration
  • Breach of contract
  • Unjust enrichment

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Automotive

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Alwie Handoyo v Tjong Very Sumito and another and another appealHigh CourtYes[2013] 4 SLR 308SingaporeCited to explain that 'money had and received' is not a cause of action, but a form of action subsumed within unjust enrichment.
Supercars Lorinser Pte Ltd and another v Benzline Auto Pte LtdHigh CourtYes[2016] SGHC 281SingaporeThe High Court decision that was appealed in the current judgment.
United Artists Singapore Theatres Pte Ltd and another v Parkway Properties Pte Ltd and anotherHigh CourtYes[2003] 1 SLR(R) 791SingaporeCited for the principle that a pre-contractual deposit is refundable when the agreement fails to materialize.
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour LtdHouse of LordsYes[1943] AC 32EnglandCited to explain the concept of consideration in the law of unjust enrichment.
Gribbon v LuttonCourt of AppealYes[2002] 2 WLR 842EnglandCited as an example of restitution being ordered for failure of a non-promissory contingent condition.
Roxborough v Rothmans of Pall Mall Australia LtdHigh Court of AustraliaYes[2001] HCA 68AustraliaCited as an example of restitution being ordered for failure of a non-promissory contingent condition.
Rowland v DivallCourt of AppealYes[1923] KB 500EnglandCited to explain that the basis for a transfer must be objectively determined based on what is communicated between the parties.
Max Media FZ LLC v Nimbus Media Pte LtdHigh CourtYes[2010] 2 SLR 677SingaporeCited for the prevailing position that the failure of consideration must be total, not partial.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealHigh CourtYes[2007] 3 SLR(R) 537SingaporeCited to explain that ordering restitution would allow the payor to profit from his own breach.
Mok Kwong Yue v Ding Leng KongHigh CourtYes[2012] 1 SLR 737SingaporeCited for the applicable principles as to costs in a situation where both a claim and the counterclaim failed and were dismissed with costs.

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

  • Failure of consideration
  • Restitution
  • Sub-dealership agreement
  • Planning order
  • Purchase order
  • Daimler Warranty
  • Standby letter of credit
  • Exclusive sub-dealership agreement
  • Lorinser cars
  • Pre-contractual deposit

15.2 Keywords

  • restitution
  • failure of consideration
  • sub-dealership
  • contract
  • automotive
  • Benzline
  • Supercars
  • Singapore
  • commercial dispute

17. Areas of Law

Area NameRelevance Score
Restitution95
Failure of consideration90
Unjust Enrichment85
Contract Law80
Breach of Contract70
Commercial Disputes60
Estoppel30

16. Subjects

  • Contract Law
  • Restitution
  • Commercial Dispute