New South Wales Court of Appeal CITATION : SIGNATURE SECURITY v WESTERN SUBURBS DISTRICT LEAGUES [2002] NSWCA 140 FILE NUMBER(S) : CA 40483/01 HEARING DATE(S) : 1 May 2002 JUDGMENT DATE : 1 May 2002 SIGNATURE SECURITY GROUP PTY LTD PARTIES : v WESTERN SUBURBS DISTRICT LEAGUE FOOTBALL CLUB LTD JUDGMENT OF : Handley JA at 1; Sheller JA at 11; Stein JA at 12 LOWER COURT JURISDICTION : District Court LOWER COURT DC 51/00 FILE NUMBER(S) : LOWER COURT Delaney DCJ JUDICIAL OFFICER : COUNSEL : Appellant - J B Simpkins SC Respondent - S J Burchett SOLICITORS : Appellant - Price Waterhouse Coopers Respondent - Marsdens CATCHWORDS : SPONSORSHIP - CONTRACT - CONSTRUCTION - ACCRUED RIGHTS DECISION : Summons for leave to appeal dismissed with costs IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40483/01 DC 51/00 HANDLEY JA SHELLER JA STEIN JA 1 May 2002 SIGNATURE SECURITY GROUP PTY LTD v WESTERN SUBURBS DISTRICT LEAGUE FOOTBALL CLUB LTD SPONSORSHIP – CONTRACT – CONSTRUCTION – ACCRUED RIGHTS A sponsorship agreement was entered into between the plaintiff and the defendant for the 1998, 1999 and 2000 football seasons. Eleven monthly instalments were to be paid on the last day of each month with a final payment due in arrears on 31 October 1999. The instalments due on 30 September and 31 October were not paid. In December 1999, the agreement was validly terminated as a result of a merger affecting the Club. The Club sued for overdue amounts in the District Court. The trial Judge found for the Club and awarded the amount claimed plus interest. The claimant relied on cl 8.1(b) of the agreement which stated that in the event of termination the sponsor would have no obligation to make any further payments under the agreement. HELD: The release in cl 8.1(b) of the agreement only related to future payments. The general principle that agreements should be construed in a way that does not allow parties to take advantage of their own wrong supported the trial Judge's finding. There is also a presumption that the termination of a contract will not affect accrued obligations. ORDERS Summons for leave to appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40483/01 DC 51/00 HANDLEY JA SHELLER JA STEIN JA 1 May 2002 SIGNATURE SECURITY GROUP PTY LTD v WESTERN SUBURBS DISTRICT LEAGUE FOOTBALL CLUB LTD Judgment 1 HANDLEY JA: The Western Suburbs District Rugby League Football Club Ltd (the Club) entered into a sponsorship agreement with Signature Security Group Pty Ltd on 27 May 1998, under which the sponsor agreed to sponsor the Club for the 1998, 1999 and 2000 seasons. Clause 2.1(b) provided for a lump sum payment of a sponsorship fee of $275,000 for the 1999 football season. Clause 2.2(b) provided that this fee would be paid by eleven equal monthly instalments payable in arrears on the last day of each month with a final payment of $22,000 payable in arrears on 31 October 1999. 2 The instalments due on 30 September 1999 and 31 October 1999 were not paid by the sponsor on the due dates. The agreement was validly terminated on 24 December 1999 in accordance with its terms because of a merger affecting the Club and so much was common ground. 3 The Club sued for payment of the overdue amounts in the District Court but did not claim for the advance payment of $70,000 due on 30 November 1999 in respect of the sponsorship for the 2000 season. 4 Delaney DCJ found in favour of the Club and entered judgment for the amount claimed with interest. The claimant has sought leave to appeal and it relies before this Court, as it relied before the trial Judge, on cl 8.1(b) of the agreement, which provided: "In the event of termination pursuant to Clause 8.1(a) above, a pro rata adjustment shall be made to the payments made or due by the sponsor to the club pursuant to this Agreement in respect of the year of termination , save that the Naming Rights Sponsor shall not be liable to pay any part of the sponsorship moneys unpaid at the date of termination, and the club shall make a pro rata refund of any sponsorship fees paid in respect of the period between the last sponsorship fee payment by the sponsor prior to the termination date and the next date that payment of the sponsorship fee pursuant to clause 22 would have been payable but for termination. …". (emphasis added) 5 The meaning of the first part of that clause is obscure. The claimant contends that it operated to release it from the accrued obligation to make the September and October payments. The Club disputes this entitlement and the trial Judge ruled against it. 6 These payments were due in respect of the 1999 year but it seems to me that this was not the year of termination because that season had finished before the agreement was terminated and in the events that happened the year of termination was the 2000 year. Even if this is not the case, in the context provided by cls 2.1(b) and 2.4 the words "unpaid at the date of termination" are capable of being construed as referring to payments which are due but not yet payable. Clause 2.4 provided for incentive payments which, if earned, became due and payable fourteen days after the event which created the entitlement. 7 Moreover the last part of cl 8.1(b) provided: "For the avoidance of doubt, in the event that this Agreement is terminated pursuant to this Clause 8.1 the Naming Rights Sponsor shall have no obligation to make any future payments under this Agreement and the Club shall thereupon release and discharge the Naming Rights Sponsor from any obligations or liabilities whatsoever in connection with this Agreement". 8 In my judgment this part of the clause resolved any residual doubt. It was clearly the dominant provision which was intended to prevail over the earlier parts of the clause in the event of any conflict. The last part of the clause makes it clear in my judgment that the release only applies to payments due in the future and has no application to payments payable in arrears which were overdue at the date of termination. 9 This construction is confirmed by cl 8.5 and is assisted by the general principle that agreements should be construed to prevent parties taking advantage of their own wrong and the prima facie presumption that the termination of a contract does not affect accrued obligations. 10 In my judgment the summons for leave to appeal should be dismissed with costs. 11 SHELLER JA: I agree. 12 STEIN JA: I agree. 13 HANDLEY JA: Mr Burchett has applied for indemnity costs following the pronouncement of our oral orders. However neither he nor Mr Simpkins are in a position to assist the Court today because neither was aware of the cases decided in this Court dealing with the effect of an offer of compromise before trial on the order for costs which should be made on appeal. 14 The Court is aware of such cases and we will not deal with this application without proper assistance 15 Mr Burchett indicated that he would also rely on the ordinary principles governing the award of such costs. 16 Since neither counsel are in a position to argue the matter today, the Court will confirm the orders that have been orally pronounced but without prejudice to the right of the opponent, if so advised, to apply within seven days by filing and serving written submissions in support of an application for indemnity costs but that application will be at the opponent's risk as to costs. If such an application is made, the appellant is to file and serve written submissions in reply within a further 7 days. 17 They are the orders of the Court. ****** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.