A Mercedes-Benz parts dealer will no longer have to refund a car retailer $300,000 after the Court of Appeal found that the money was paid as a deposit for vehicles to be produced - and not as part of a business deal.
Supercars Lorinser claimed it paid the sum to Benzline Auto in January 2014 on the condition that the two companies would set up an exclusive pact to sell modified cars.
In December 2016, Supercars and a related company successfully sued Benzline for the money to be returned after claiming that no contract had been entered into by the two parties.
Benzline countered that the payment was actually for an order of 30 cars, made separately from the distributorship agreement. No agreement was reached and five months later, the relationship derailed when Supercars noted that Benzline had looked to name another firm as the exclusive sub-dealer.
Supercars was incorporated in Singapore with a view to sub-distributing Mercedes-Benz vehicles modified by Lorinser, a top German-based car-tuning company.
Benzline Auto held the master dealer rights in Singapore for cars modified by Lorinser.
A key issue discussed in the original hearing was whether the sum was placed as part of a contract or was a "pre-contractual deposit".
Benzline, through lawyer Leslie Yeo, appealed, while Supercars - defended by Ms Ho May Kim and Mr Harry Zheng - resisted at a hearing before the apex court last August.
In reserved judgment grounds issued earlier this month, the apex court found the money was meant as a deposit for cars to be produced and "conditioned on Supercars being offered the choice to enter into the exclusive sub-dealership agreement".
Writing on the court's behalf, Judge of Appeal Judith Prakash said: "Supercars chose to reject the offer. Consequently, it is not entitled to restitution of the payment."
The court, which also included Chief Justice Sundaresh Menon and Judge of Appeal Andrew Phang, also found "the weight of the evidence" did not support the understanding that Supercars paid the money because it would be securing the sub-dealership agreement.
"It was inherently unlikely that Benzline would be willing to place in Supercars' hands the ability to claw back the payment simply by refusing to sign the exclusive sub-dealership agreement later," wrote Judge Prakash.
The court added that Supercars did not pay " blindly" as it had seen the first draft agreement, which showed the terms were largely acceptable to Supercars.
Benzline managing director Kevin Ng told The Straits Times yesterday: "I am grateful this case has come to a closure for us and as a goodwill gesture, we will be making a donation of $50,000 to Singapore Thong Chai Medical Institution."
