Horesh v Sephardi Association of Victoria
[2012] VSCA 308
•13 December 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2011 0023
| DAN HORESH (in his capacity as Executor of the Estate of the late ALBERT SASSOON YEHUDA) | Appellant |
| v | |
| THE SEPHARDI ASSOCIATION OF VICTORIA AND OTHERS | Respondents |
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| JUDGES | REDLICH, OSBORN JJA and CAVANOUGH AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 22 May 2012 |
| DATE OF JUDGMENT | 13 December 2012 |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 308 |
| JUDGMENT APPEALED FROM | [2011] VSC 26 (Almond J) |
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CONTRACT – Interpretation of terms – Deed of agreement between religious and cultural association and financial contributor – Deed conferring naming rights to proposed new synagogue building in perpetuity – Building constructed and named after contributor – Contributor later making additional contributions towards extension of building on agreed terms – Meaning of terms – Extent of additional naming rights conferred – Building extended – Whether inscription referring to third party donors a breach of the original deed or of agreed terms of later contributions – Inscription a breach of original deed only – Appeal allowed in part – Order made for alteration of inscription.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D B Sharp | Dan Horesh |
| For the First Respondent | Mr H A Aizen and Mr D V Aghion | Brygel Lawyers |
THE COURT:
Introduction
Sassoon Yehuda was for many years a prominent member of the Sephardi Jewish community of Victoria. So was his son, Albert Sassoon Yehuda. In about 1977, Albert contributed financially to a project by the respondent, the Sephardi Association of Victoria Inc (‘the Association’), to convert a building at 73 Darling Road, East Malvern into a synagogue for the Sephardi community. The converted building was named in honour of Sassoon Yehuda. It was called ‘The Sassoon Yehuda Synagogue’. This name was inscribed above the main entrance to the building.
In 1988, a dispute broke out between Albert Sassoon Yehuda and the Association arising from a proposal to relocate the Association’s synagogue away from the East Malvern site. At about this time, the Association acquired a block of land in Hotham Street, East St Kilda. The Association was considering a move either to that location or to some other location, on either a temporary or permanent basis. Albert apparently became concerned that recognition of the Yehuda family’s legacy might suffer in the event of a relocation from the East Malvern site. He lodged a caveat against the title of the East Malvern site. The Association and Albert then commenced proceedings against each other in this Court. In 1990, both proceedings were settled. They were settled on the terms contained in a deed of agreement (‘settlement deed’) dated 9 November 1990. By the deed Albert agreed to remove the caveat and the Association agreed, in essence, that the new synagogue would be named in perpetuity ‘The Sassoon Yehuda Synagogue’.
Some three years passed. Then, during 1994, with further financial help from Albert, the Association set about building a new synagogue on the East St Kilda land. Albert laid the foundation stone in March 1994. The synagogue was completed and formally opened in November 1994. Inscribed on the front, above the entrance, were the words ‘Sassoon Yehuda Sephardi Centre’. Albert had assented to this variation of name. The Association’s letterhead was modified to include, among other things, a picture of the Hotham Street synagogue as constructed, above the words ‘The Sassoon Yehuda Sephardi Synagogue’. Again, Albert had assented to this variation.
About eight years later, in or around 2002, the Association began to propose the construction of an extension at the front of the Hotham Street synagogue. It obtained various building permits and prepared necessary plans. In about 2005, the Association established, for the purpose of funding the construction of the proposed extension, ‘The Sassoon Yehuda Sephardi Synagogue Extension Appeal’.
Albert Sassoon Yehuda died in 2007. The appellant, Mr Dan Horesh, being a nephew of Albert Sassoon Yehuda and a grandson of Sassoon Yehuda, is the executor of Albert’s estate. (He sued below, and he brings this appeal, in that capacity). In 2007 to 2008, on behalf of the estate, Mr Horesh entered into negotiations with the Association relating to funding for the extension and relating to naming rights. Two documents that emerged from those negotiations have assumed particular prominence in this appeal. The first, created in May 2008, has been referred to as the memorandum of understanding. The second, created in August 2008, has been called the loan agreement.
The extension was completed in about mid-2009. At that time, the Association caused the name ‘Lyndi and Rodney Adler Sephardi Centre’ to be inscribed on the new front of the building. This was done without the knowledge of, or reference to, Mr Horesh or any other representative of the estate of Albert Yehuda. It transpired that the Adlers had donated a sum of $150,000 towards the extension. The former name, ‘The Sassoon Yehuda Sephardi Centre’ no longer appeared externally on any part of the extended building and it still does not. The name ‘Sassoon Yehuda Synagogue’ is now inscribed internally over the entrance to the prayer chamber, but this, too, was done without the knowledge of, or reference to, Mr Horesh or any other representative of the estate of Albert Yehuda. It does not satisfy Mr Horesh.
After seeing the new inscriptions, Mr Horesh brought a proceeding in the Trial Division on behalf of the estate against the Association, two individual officers of the Association (Mr Lelah and Mr Jaffe) and Lyndi and Rodney Adler. The Adlers were joined as necessary parties but no relief was sought against them and they signified that they would merely abide the result of the case. Primarily, Mr Horesh claimed that the estate was entitled to have the inscription ‘Lyndi and Rodney Adler Sephardi Centre’ removed from the front of the extended building and to have it replaced by an inscription ‘The Sassoon Yehuda Sephardi Synagogue’ or ‘The Sassoon Yehuda Sephardi Centre’. He based these claims, and ancillary or alternative claims for damages, primarily on certain alleged agreements, including the agreement recorded in the 1990 settlement deed and an agreement or agreements said to have been made in 2008. In the alternative, Mr Horesh sought the same kinds of relief on the basis of alleged deceit and alleged estoppels. The relevant defendants resisted Mr Horesh’s claims. They denied that the rights claimed by the appellant were conferred by the agreements relied upon. They denied the allegations of deceit and the estoppel claims. They contended that, in any event, the loan agreement of 2008 extinguished any relevant rights of the estate or at least reduced them to such an extent that none of the claims was maintainable.
The hearing occupied some ten days. The trial judge rejected all of Mr Horesh’s claims.[1]
[1]See Dan Horesh (in his capacity as Executor of the Estate of the late Albert Sassoon Yehuda) v The Sephardi Association of Victoria & Ors [2011] VSC 26 (‘trial judgment’).
Mr Horesh now appeals to this Court. He has named only the Association and the Adlers as respondents. The Adlers were notified of the appeal but have chosen to take no part in it. Mr Lelah and Mr Jaffe are no longer pursued individually. Hence, the substantive issues which remain are issues between Mr Horesh and the Association only. Further, Mr Horesh has now limited himself to claims in contract only.
In our view, the inscribing and maintaining of the name ‘Lyndi and Rodney Adler Sephardi Centre’ over the front entrance to the extended building was a breach of the 1990 settlement agreement, though not of any other agreement. The terms of the loan agreement do not extinguish the appellant’s rights in this regard. The appellant is entitled to require the removal of the present inscription. However, for reasons we will explain, we do not accept that the appellant is entitled to have the Yehuda name inscribed on any external part of the extended building. He is, however, entitled to have the extended building named after his grandfather, and that would preclude the Association from putting up any inconsistent inscription or from otherwise behaving inconsistently with the appellant’s entitlement. We will allow the appeal to that extent and will make orders accordingly. Our more detailed reasons follow.
The trial judge’s critical finding
For present purposes, the critical finding of the trial judge was that the estate’s naming rights under the 1990 settlement deed were restricted to the St Kilda building as originally constructed in 1994 and could not apply to the building as a whole as extended in 2009.
The appellant challenges that finding. The Association has hardly addressed the appellant’s challenge, save that it simply adopts the trial judge’s analysis of the 1990 settlement deed as set out at paragraphs [46]-[58] of the trial judgment. We are unable to uphold the finding.
As the appellant points out, at trial the Association’s contention was that, under the 1990 settlement deed, Albert Yehuda’s naming rights were confined to that part of the then proposed new building which comprised a ‘synagogue’ in the narrow sense of a Jewish prayer chamber or prayer hall. However, as the evidence before his Honour indicated, and as his Honour recognised, the word ‘synagogue’ can also be used in a broader sense, to signify a building which contains, among other things, a Jewish prayer chamber or prayer hall.
In the deed itself, the relevant naming rights were granted in respect of ‘the new Synagogue’. The meaning of that expression was elucidated by its context and in particular by recitals A and B of the deed, which read:
A.The Association owns the property situated at 73 Darling Road, East Malvern in the said State (hereinafter called “the Malvern Property”) upon which is situated the present Synagogue of the Association which bears the name “The Sassoon Yehuda Synagogue”.
B.The Association desires to relocate its Synagogue to a location deemed to be appropriate for the needs of its members (hereinafter called “the new Synagogue”).
In the end, the trial judge rejected the Association’s contention that the expression ‘the new Synagogue’ in the deed was confined to the prayer chamber or prayer hall itself. His Honour held, rightly in our view, that the expression ‘means the building, and is not confined to the prayer hall’.[2] The Association has not challenged that holding before us.
[2]Trial judgment [51].
In his notice of appeal and written outline of submissions, the appellant asserted repeatedly that at the trial the Association had not argued in the alternative that the expression ‘the new Synagogue’ in the settlement deed was inapplicable to the extended building, as distinct from the original building, at Hotham Street. Nor, according to the appellant, was any such proposition raised by the trial judge during the hearing. The Association did not, in its written outline of submissions, contradict the appellant in either of these respects. On the hearing of the appeal, however, counsel for the Association asserted that the point had in fact been raised at trial, but counsel were unable to refer us to any part of the transcript, or to anything else, which established this with any degree of clarity.[3]
[3]The respondent’s counsel were given leave to put in after the hearing copies of trial transcript pages which, they said, would bear out this assertion. Pages were later supplied on that basis. However those pages do not bear out the assertion. Notably, they had not been included in the appeal book, except for one page which had been included for a different purpose.
It is unnecessary for us to determine whether or to what extent the point was alive at trial. In the end, the question is one of construction of the 1990 deed of settlement. Principally, at least, that is a question of law, not fact.[4] It is true that, if there be ambiguity in the deed, facts might be relevant to establish surrounding circumstances known to the parties.[5] However, only the appellant complains about an alleged lack of warning about the point and an alleged lack of opportunity to lead evidence on the matter at the trial. The Association could hardly do so and it does not. Counsel for the appellant theorised that he might have been able to call evidence of other situations in which extended synagogues had kept their original names. We think it highly dubious that any such evidence would have been relevant and admissible. However, this matters not. In our view, on the material now before the Court, the settlement deed should be construed in favour of the appellant in any event.
[4]FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, 351 (per Brooking J, with whom Nathan and Eames JJ agreed in substance); O’Neill v Vero Insurance Ltd [2008] VSC 364 (Beach J), [10]; Prowse v Johnston [2012] VSC 4 (Cavanough J), [53] and cases there cited.
[5]Bytan Pty Ltd v BB Australia Ltd [2012] VSCA 233, [11] and cases there cited.
The terms of the settlement deed
In the settlement deed, Albert Yehuda was called ‘Yehuda’. We have already set out recitals A and B. The presently relevant operative provisions of the deed were as follows:
1.The parties hereto hereby agree and acknowledge that in this agreement the expression “the Association” shall mean and include the Association’s successors in title and the expression “Yehuda” shall mean and include Yehuda’s legal personal representative.
2.(a) The Association hereby agrees and covenants with Yehuda that it will cause the new Synagogue if established on a temporary basis, to be named “The Sassoon Yehuda Synagogue” for such period of time as the Association may utilise the new Synagogue for its purposes.
(b) The Association hereby agrees and convenants with Yehuda that it will cause the new Synagogue when established on a permanent basis to be named in perpetuity “The Sassoon Yehuda Synagogue”.
…
8.The Association hereby agrees and covenants with Yehuda that it shall cause the name “The Sassoon Yehuda Synagogue” to appear on all letterhead of the Association.
…
11.(a) The Association hereby agrees and convenants with Yehuda that … it will not sell the Malvern Property unless one of the following events first occurs:-
(i)it obtains a Town Planning Permit to construct a Synagogue upon its property situated at 79 Hotham Street, East St Kilda in the said State; or
(ii)it purchases a property with the intention of constructing upon such property, a Synagogue; or
(iii)it obtains Yehuda’s written consent to such sale.
The deed falls to be interpreted as the parties would reasonably have understood it at the date of its execution, namely 9 November 1990. The deed indicates that the situation at that time was fluid, and also that the parties were entering into a permanent arrangement. The Association’s synagogue was already known as ‘The Sassoon Yehuda Synagogue’: recital A. The Association ‘desire[d]’ to relocate ‘its Synagogue’ to a place ‘deemed to be appropriate’ for ‘the needs of its members’: recital B. The deed was expressed to bind not only the direct parties but also the Association’s successors in title and Albert Yehuda’s legal personal representative: clause 1. A possibility contemplated was that ‘the new Synagogue’ might first be established on a temporary basis, and in that event it would be named ‘The Sassoon Yehuda Synagogue’ for such period of time as the Association ‘may utilise the new Synagogue for its purposes’: clause 2(a). When established on a permanent basis, the new Synagogue was to be named in perpetuity ‘The Sassoon Yehuda Synagogue’: clause 2(b). The Association further covenanted to cause the name ‘The Sassoon Yehuda Synagogue’ to appear on all letterhead of the Association: clause 8. There was no evidence, nor did his Honour hold, that the Association was purely a religious association or that the ‘needs of its members’ were purely religious or that the ‘purposes’ of the Association were purely religious.
It was apparently by no means certain in November 1990 that the new Synagogue would be established at the Hotham Street site. Clause 11 indicates that no town planning permit (much less any building permit) had been obtained for a synagogue at that site. Moreover, clause 11 expressly contemplates that the Association might purchase a different property with the intention of constructing a synagogue on it. Further, by the same clause the Association covenanted not to sell the East Malvern property (on which was then located ‘The Sassoon Yehuda Synagogue’) unless one or other of the events therein listed happened.
It was common ground at trial, and his Honour duly found, that the East Malvern building included not only a prayer chamber with a women’s section at the back but also ancillary spaces comprising ‘toilet facilities, a kitchen, library and study room’.[6] As his Honour said, this was a surrounding circumstance known to the parties which could therefore legitimately be taken into account in the interpretation of the deed to the extent of any relevant ambiguity. The same also applied (as his Honour recognised) to the fact that the name ‘The Sassoon Yehuda Synagogue’ was then inscribed on the front of the East Malvern building.
[6]Trial judgment, [49].
From the matters to which we have so far referred it would seem to follow, subject to anything else contained in the deed or otherwise able to be considered in the interpretation of the deed, that in 1990 the parties, acting reasonably, would have understood the deed to mean that for so long as the Association existed it was to have a synagogue and that whatever building comprised that synagogue was to be named ‘The Sassoon Yehuda Synagogue’.
On the other hand, the trial judge said:
52However, in my opinion the real question in dispute, namely whether the Estate has a right in perpetuity to have the name “Sassoon Yehuda Synagogue” displayed at the front of the extension to the building does not turn on a determination of the meaning of the word “synagogue” as it is used in the Settlement Agreement.
53The Settlement Agreement provides that the SAV[7] would “cause the new Synagogue, when established ... to be named in perpetuity ‘the Sassoon Yehuda Synagogue’”. The scope of the covenanted obligation is circumscribed. It applies only to the building then in contemplation. In my opinion it is to that building that the naming obligation attaches.
54Further, the Settlement Agreement did not purport to cater for the circumstance which eventuated. It was not envisaged in the Settlement Agreement that the “new synagogue” would in the future be substantially extended and that the extension to the building would be used for non-religious purposes. Mr Lelah gave evidence to the effect that there is a clear demarcation between religious activities which can take place in the synagogue as a place of worship and the other activities which can take place in the extended part of the premises, which now includes the hall. The other activities include educational lectures, talks, cooking classes and demonstrations, fundraising activities including film, comedy and trivia evenings and backgammon tournaments. Mr Lelah gave evidence that according to the “orthodox legal way” it is not permissible to conduct such activities inside the synagogue. Mr Jaffe gave evidence to like effect as did Rabbi Heilbrunn. The evidence was not disputed by the plaintiff who accepted that he was not qualified to give such evidence.
55In my view, a reasonable person would conclude in the circumstances that the naming obligation in the Settlement Agreement attaches only to the building characterised as the “new synagogue” in Recital B. This is the original building which was constructed at the Hotham Street location in about 1994.
[7]This expression meant the Association.
Dealing first with paragraph 52 of the trial judgment, we would observe that, although at trial Mr Horesh claimed a right to have the name ‘Sassoon Yehuda Synagogue’ displayed at the front of the extended building, he did not claim that this right arose from the settlement deed alone. In his pleadings, he had asserted that the inscribing of the Yehuda name above the entrance to the Hotham Street Synagogue was ‘[c]onsistent with’ the terms of the settlement deed. However, he acknowledged (as he continues to acknowledge) that the settlement deed itself did not refer expressly to signage or to the inscribing of the Yehuda name on the external part of any building, and that the deed did not contain any express or implied term requiring that the Yehuda name be displayed externally. Mr Horesh’s argument in this respect was and is that, under the settlement deed, the relevant building was required to be ‘named’ after Sassoon Yehuda and that this precluded the use of any inconsistent external signage. His claim to have the Yehuda name inscribed on the front of the extended building at Hotham Street was originally based on a wide range of matters, but it was never based on the settlement deed alone. At least by the time of the appeal, it was principally based on the memorandum of understanding. We will return to that matter in due course.
Turning to paragraphs [53]-[55] of the trial judgment, we respectfully find ourselves unable to agree that the obligation under the settlement deed to cause the new Synagogue to be named in perpetuity ‘the Sassoon Yehuda Synagogue’ applied only to the building which was in fact built in 1994. We think that, for reasons we shall explain and subject to any provisions to the contrary in later agreements, it was applicable to the building in its present extended form.
As far as we can tell, there was no evidence at trial that, as at November 1990, the Association had any clear or definite plans, much less any disclosed or approved plans, in relation to the size, shape or design of the proposed new synagogue. Even the location was not fixed. There was no sufficient basis for finding that the 1994 building was ‘the building then [in 1990] in contemplation’.
In the absence of a basis for such a finding, it is not appropriate to interpret the settlement deed by reference to the subsequent conduct of the parties.[8]
[8]FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343; Ryan v Textile Clothing and Footwear Union of Australia [1996] 2 VR 235; cf Seddon and Ellinghaus, Cheshire & Fifoot’s Law of Contract, 9th Australian edition, 2008 [10.16].
Even if it were appropriate to do so, it would be necessary to take into account that the 1994 building was quite elaborate and contained a variety of ancillary spaces. In a document published by the Association itself in 2000 the building (referred to as ‘the Synagogue’) was described as follows:
The Synagogue, built on two levels incorporating an elevated ladies’ gallery. It has a board room, Library, Rabbi’s office, a kitchen, a multi-purpose area for Kiddushim, an upstairs study area, and an area for a large Succah at the rear. The building has a nice setback position from the road and has palm trees at its doorstep.
As extended in 2009, the synagogue remains a single building. It is true that it contains a new hall, new classrooms and a commercial scale kitchen; that the hall is specifically designed for social activities rather than strictly religious activities; and that the new facilities are additional to the facilities which were previously available in either location. But social activities had nevertheless taken place to a significant extent both in the East Malvern synagogue and in the St Kilda synagogue as originally constructed, albeit contrary to the ‘orthodox legal way’ mentioned in paragraph [54] of the trial judgment.
Although, in an earlier part of his judgment,[9] the trial judge had said that he inferred from Recital B of the settlement deed that it was probably intended that the new synagogue would have comparable facilities to the synagogue in East Malvern, his Honour did not hold, nor did the Association submit before us, that the meaning of the expression ‘the new Synagogue’ in the settlement deed was to be determined by reference to the size, shape or design of the East Malvern synagogue. The critical distinction in his Honour’s view was between the ancillary nature of the spaces provided in addition to the prayer chamber both at the East Malvern synagogue and the new Synagogue on the one hand, and the social purpose of the facilities provided in the new extension.
[9]Trial judgment, [49]. See also at [44].
Nevertheless, whilst we accept that the distinction drawn by his Honour is a legitimate one, once it is accepted that, under the settlement deed, Albert Yehuda had a right to have the Yehuda name applied to the building which was to house the Association’s prayer chamber – not merely to the prayer chamber itself – it would be a surprising result if it were open to the Association to derogate from (and even extinguish) that right unilaterally, simply by extending the building in the way that has been done.
Even in its current, extended form, the building in Hotham Street, St Kilda is the one and only building of the Association which contains a prayer chamber. Thus it is the Association’s one and only synagogue. Moreover, in our view, it is plain that the primary purpose of the use of the extended building remains that of a synagogue, even if it is accepted that the spaces now provided go beyond those which might be regarded as essentially ancillary to the prayer chamber. From the Association’s point of view, it is now ‘its Synagogue’ within the meaning of recital B of the settlement deed and it remains ‘the new Synagogue’ within the meaning of the settlement deed as a whole.
Hence, subject to any later agreement extinguishing or varying the rights of the estate under the settlement deed, the estate is entitled to require that the building be named after Sassoon Yehuda and not after anyone else. In our view, the present inscription on the front of the extended building is inconsistent with the settlement deed. To display the inscription ‘Lyndi and Rodney Adler Sephardi Centre’ at the front is to indicate that the entire building (not merely the extension) is named after the Adlers. To do so is to deny that the building is named after Sassoon Yehuda. The fact that the name ‘Sassoon Yehuda Synagogue’ now appears internally over the entrance to the prayer chamber does not remove this inconsistency. It indicates, wrongly, that the prayer chamber (alone) is named after Sassoon Yehuda. That is not what the settlement deed required. On the other hand, as already mentioned, the appellant acknowledges that the estate’s rights under the settlement deed alone do not include a positive right to have external signage bearing the Yehuda name erected.
As we have noted, the words ‘Sassoon Yehuda Sephardi Centre’ were inscribed above the front entrance of the new Synagogue when it was first constructed and the name ‘Lyndi and Rodney Adler Sephardi Centre’ now appears on the front external wall of the extended building. Both names are expressed in like terms. Nevertheless, the appellant’s right is to maintain the name ‘the Sassoon Yehuda Synagogue’ (or some agreed variation thereof).
It follows that just as a hospital, school or other institution may name a substantial new extension to an existing building as an ‘Extension’ or ‘Wing’ with a specific name, so might the extension in the current case be named the ‘Lyndi and Rodney Adler Extension’ or some other name which was consistent with the primacy of the name of the Synagogue.
The vice in the current situation is that because the name ‘the Sassoon Yehuda Synagogue’ is not inscribed on the front of the building, the reference to the ‘the Lyndi and Rodney Adler Sephardi Centre’ conveys a primary name to the Synagogue building and complex as a whole which is inconsistent with the settlement deed.
The fact that the East Malvern Synagogue was inscribed with the name ‘the Sassoon Yehuda Synagogue’ on the front of the building strongly supports the conclusion that the relevant right to name the new Synagogue was intended to encompass such name as the synagogue building presented to the public. Nevertheless, for the reasons we have explained, it was not intended that substantial extensions to the Synagogue building could not have a new subsidiary name, so long as any name on the front of the building did not derogate from the rights conferred by the settlement deed.
Indeed, if the front external wall were inscribed both ‘the Sassoon Yehuda Synagogue’ and ‘the Lyndi and Rodney Adler Extension’ this would not breach the agreement, because the extension so named would be identified as distinct from the Synagogue.
We turn now to the later alleged agreements.
The memorandum of understanding and the loan agreement
At the hearing before this Court, the appellant argued that, by itself, the memorandum of understanding of May 2008 (‘MOU’) gave the estate naming rights over the extension as a whole, including a right to have the Yehuda name placed on the front façade of the building. These rights, he said, were offered and accepted as protection for, and enhancement of, his existing naming rights under the settlement deed. Separately and in addition, he argued, the estate acquired naming rights to the internal hall on the ground floor of the extension pursuant to the loan agreement of August 2008 (‘loan agreement’).
The Association argued in response that the MOU merely foreshadowed, but did not confer, naming rights.[10] According to the Association, the only naming rights ultimately obtained by the estate in 2008 were the rights granted under the loan agreement. It was common ground that those were rights in respect of the internal hall, not the extension as a whole. Further and in any event, argued the Association, by the loan agreement the estate ‘agreed to give away’ any and all naming rights in respect of the front facade of the extended building.
[10]A submission by the Association to this effect was accepted by the trial judge: trial judgment, [82].
The appellant argued by way of reply that, insofar as the loan agreement was in conflict with the MOU, it should be read down in favour of the MOU.
In short, we do not accept that by the MOU or otherwise the estate gained the right to have the Yehuda name displayed on the front façade of the extended building or on any other external part of the building. There was no relevant conflict between the MOU and the loan agreement. On the other hand, the appellant did not, by the loan agreement or otherwise, relinquish the right of the estate under the settlement deed to prevent the Association from erecting or maintaining on the front façade or elsewhere any sign inconsistent with the extended building being named after Sassoon Yehuda.
We agree with the Association that the MOU merely foreshadowed, but did not confer, naming rights. This was also the conclusion of the trial judge.[11]
[11]Trial judgment, [82].
The MOU did not purport to be a complete or comprehensive repository of an agreement between the parties. Indeed, the very title ‘memorandum of understanding’ tells against any such characterisation. It is a brief document. As counsel for the appellant conceded at the hearing of the appeal, the wording is both ‘very strange’ and ‘contrived’. On its face, it purports to have been entered into ‘as of’ 29 June 2007 (ie just before the end of the 2006-2007 tax year) but it is common ground that it was not prepared until May 2008 and that it was signed on 5 May 2008. The MOU recites at the beginning that it is made between the Association (referred to therein as ‘SAV’) and Mr Horesh. It then recites that Mr Horesh ‘will in due course be acting as the Executor of the “Estate of Albert Yehuda” (“The Estate”)’. At the foot of the MOU there is a statement that ‘the undersigned’ have caused the document to be duly executed ‘as of the date first above written’, ie 29 June 2007. The MOU is then signed by the President of the Association on its behalf and by Mr Horesh as ‘Executor Albert Yehuda Estate’ on behalf of ‘The Estate of Albert Yehuda’. In fact, Albert Yehuda was still alive on 29 June 2007. He died five days later. On the other hand, by 5 May 2008, Mr Horesh, a solicitor, had for some time been acting as the executor of Albert Yehuda’s estate.
The remaining parts of the MOU read as follows:
The Estate wishes to protect and preserve Albert Yehuda’s legacy to SAV by obtaining Naming Rights to the proposed extension, in return for the protection;
• The Estate will discharge the outstanding debt of $100,000 of SAV, for which it holds the mortgage to the property at 79 Hotham St., East St Kilda.
•The discharge will be provided to SAV together with the certificate of title(s).
• As the Estate is complex and will take time to finalise its affairs, the expectation is April 2008 the discharge will take place.
• The memorandum also recognises the Protection is part of an overall “Naming Rights Agreement” that will be crafted and signed by both parties after return of the title to SAV.
• In the event of the extension not proceeding after the title has been returned to SAV, SAV will repay the $100,000 to the Estate.
In paragraph [82] of his judgment, the trial judge observes that two things are evident from this document – first, that the estate expresses a wish to obtain naming rights to the proposed extension without specifying what those rights may be; and, second, that the parties contemplate that a ‘Naming Rights Agreement’ will be crafted and signed by both parties after return of the title to the Association. His Honour then goes on to express his agreement with the Association’s submission that the MOU foreshadows but does not confer naming rights.
The appellant takes issue with his Honour’s reasoning in this regard. He says that the courts will hold parties to their bargains notwithstanding that they have expressed an intention to enter into a more formal agreement.[12]
[12]Citing Masters v Cameron (1954) 91 CLR 353.
It is true that the courts will find a contract where, on an objective assessment of the language used by the parties, it can be seen that the parties intended to be bound immediately rather than to postpone contractual relations.[13] However it is not necessary to determine whether the present case does or does not fall into that category. Even if the MOU did impose immediately binding contractual obligations of some kind on the parties, we agree with his Honour that it did not, of itself, actually confer naming rights.
[13]Seddon & Ellinghaus, above n 8, [5.24] and cases there cited.
The appellant’s attempt to rely upon the MOU as a separate and complete source of naming rights represents a major departure from the way in which his case was put below. Mr Horesh went to trial on a second further amended statement of claim dated 20 May 2010. The first mention of the MOU comes in paragraph 15 of the pleading, under the heading ‘Extension Agreement’. Paragraph 15 of the pleading reads:
15 Further or in the alternative, in or about mid-2008 the Plaintiff, as Executor, of the one part, and the First Defendant, of the other part, concluded an Agreement for the Plaintiff, as Executor, to provide $200,000 towards the cost of the proposed extension, in particular by forgiving an outstanding loan from the Estate to the First Defendant of $100,000, and a further contribution of $100,000 by way of a ten year interest free loan (the ‘Extension Agreement’).
Particulars
(a) The Extension Agreement, the negotiations for which took place over several years, is partly written, partly oral and partly to be implied.
(b) Insofar as the Extension Agreement is in writing, it is contained in a proposed Draft Agreement dated 10 June 2008, which document incorporates by reference the contents of the Plaintiff’s letter to the First Defendant dated 26 May 2008 and also by a Memorandum of Understanding dated 5 May 2008 and a Deed of Loan dated 17 August 2008.
(c) Insofar as the Extension Agreement is oral, it was contained in the contents of numerous conversations with took place with respect thereto, between the Plaintiff, on the one part, and various representatives of the First Defendant, of the other part, within the period 2004 to 2008, more precise particulars of which are contained in Schedule A hereto.
(d) Insofar as the Extension Agreement is to be implied, such implication arises from the circumstances and in order to give business efficacy thereto.
More precise particulars are contained in Schedule B hereto.
The only other references to the MOU in the pleading are in Schedule A. That Schedule is described as setting out particulars of the oral component of the alleged ‘Extension Agreement’. Consistently with that description, the two references to the MOU in Schedule A are but passing references providing context for the alleged conversations.[14]
[14]Particulars of the respective terms omitted.
By paragraph 16 of the second further amended statement of claim, Mr Horesh pleaded that the Extension Agreement included the following terms:[15]
[15]See items (xiii) and (xv) of Schedule A (AB, A 41).
(a)The existing Synagogue’s name would be retained for and attached to the extended Synagogue.
(b)The plaintiff as executor would donate $100,000 towards the cost of the Extension by forgiving the outstanding loan of the First Defendant to the Estate for such amount and by providing a Discharge of its Mortgage over the Synagogue securing it for such amount.
(c)The plaintiff, as executor, would contribute a further $100,000 towards the cost of the Extension by way of a ten-year interest-free loan to the First Defendant for such amount.
(d)The First Defendant would name the communal hall, the main part of the Extension, “the Albert Sassoon Yehuda Hall”, would display therein a picture of [Albert Sassoon Yehuda], and would place such name on the front thereof.
(e)The First Defendant would honour and effect the wish of [Albert Sassoon Yehuda] that only the Yehuda name would appear on the front of the extended building.
Separate particulars are given for each term but for the most part the particulars are similar to those given under clause 15.
Despite these pleadings and particulars, the appellant now staunchly maintains that the MOU is to be interpreted and applied as a separate and complete source of naming rights to the whole of the extension. Further, despite paragraph (b) of the particulars subjoined to clause 15, the appellant now says that neither the draft agreement dated 10 June 2008 nor the letter of 26 May 2008 nor the loan agreement of August 2008 is relevant to the ascertainment of the extent of the estate’s naming rights in relation to the external parts of the synagogue.
We disagree. Though the MOU was signed by the parties, it was not a final document. It was neither complete nor comprehensive in itself. It was merely part of the picture. When the entire picture is considered, one sees quite clearly that what the estate purchased in 2008 was no more than the naming rights to the internal hall.
The learned trial judge dealt with these issues, as they had been presented to him, principally in paragraphs [78]-[98] of his judgment. We have already covered the subject matter of paragraphs [78]-[82]. His Honour proceeded:
83Following execution of the MOU on 5 May 2008, the SAV provided a receipt (backdated to 20 June 2007) acknowledging a donation of $100,000 from Mr Yehuda. Mr Jaffe gave evidence that at about this time Mr Horesh requested that the SAV minute the fact that the extension was going ahead and that the hall be named the Albert Yehuda Memorial Hall. In Mr Horesh’s account of this conversation, Mr Horesh said “I think I asked him for the extension to be named after Albert Sassoon Yehuda and I never mentioned the word “memorial”.
84On 20 May 2008 the SAV passed a motion in the following terms:
That the Sephardi Association goes ahead with the building of the extension and that the Hall be named the ALBERT YEHUDA MEMORIAL HALL.
85A copy of the minutes incorporating the wording of the motion was subsequently delivered to Mr Horesh.
Mr Horesh’s letter dated 26 May 2008
86By letter dated 26 May 2008, Mr Horesh wrote to Mr Lelah of the SAV purporting to clarify the basis on which agreement had been reached with the Estate to provide funds to assist in the construction of the hall. In this letter Mr Horesh states:
The hall is to be named after Albert with his photo and video of his life to be displayed at a prominent location at the Hall.
87There is no reference in this letter to the Estate having agreed to naming rights to the frontage of the extended building. Furthermore, Mr Jaffe gave evidence to the effect that Mr Horesh said he wanted the name “Albert Sassoon Yehuda Hall” placed above the main entrance to the hall and that the name is currently in that position. Mr Horesh agreed that the name was currently above the doorway to the hall but denied having been involved in the decision to put it there. I do not accept Mr Horesh’s evidence on this issue. In my view, Mr Jaffe’s evidence was much clearer and is more reliable on this point. Mr Horesh took a close interest in the construction works. He acknowledged direct involvement in choosing the placement of the photographs of Mr Yehuda inside the hall and in my view it is probable that he also had direct involvement in choosing the location of the signage.
88On 10 June 2008, a draft “New Hall Naming Agreement” was provided by the SAV to Mr Horesh for his consideration. It provides for naming rights to the hall on the ground floor of the new building in exchange for discharge of the debt of $100,000 and an interest-free loan of $100,000 for ten years. The draft agreement refers to the request of the Estate that the hall be known as the “Albert Sassoon Yehuda Hall” and that all signage expenses be borne by the SAV. There is no reference in this draft to signage on the frontage of the extended building.
89A signed copy of the draft “New Hall Naming Agreement” was provided to Mr Horesh under cover of a letter dated 10 June 2008. Mr Lelah gave evidence that Mr Horesh telephoned him one night and said in effect that it was too complex, that he wanted a simple two page agreement to cover the loan and naming rights. Mr Horesh denied this. He said he never made any comments on the draft agreements except to say he was not happy with them with no specific suggestion to change anything. It follows there was no complaint that the draft refers to the hall and not to the extension.
90Mr Lelah gave evidence that following this discussion and with the help of the SAV’s honorary solicitor Mr Szmerling, a simple loan agreement was prepared.
91On or about 16 July 2008, it was delivered by Mr Jaffe to Mr Horesh for his consideration.
92Mr Horesh requested an amendment to the execution clause seeking the addition of the words “signed, sealed and delivered” so that the document could be executed as a deed. The terms of the draft loan agreement were also discussed at a meeting at the synagogue on 17 August 2008 attended by Mr Lelah, Mr Jaffe and Mr Horesh among others and during which Mr Horesh agreed to sign the draft Loan Agreement subject to minor amendments.
93The revised version of the Loan Agreement, incorporating the amendments specified by Mr Horesh, was sent to Mr Horesh after the meeting later on 17 August 2008. On 21 August 2008, Mr Jaffe attended Mr Horesh’s office to collect the Loan Agreement. Mr Horesh signed the document in Mr Jaffe’s presence and it was subsequently signed by Mr Lelah and Mr Jaffe on behalf of the SAV. A copy of the signed Loan Agreement was sent to Mr Horesh by letter dated 24 August 2008.
The Loan Agreement
94The Loan Agreement provides for a $100,000 interest-free loan to the SAV. It also provides for naming rights, relevantly as follows:
The Borrower has represented to the Lender in its capacity as Executor to The Estate of Albert Yehuda that the purpose of the loan is for a new 2 story (sic) Building proposed for the present site which will have a new frontage, and contain a HALL on the ground floor, kitchen, classrooms, etc.
The Borrower acknowledges that the Lender in its capacity as Executor to The Estate of Albert Yehuda wants the ground floor HALL to be named “Albert Sassoon Yehuda Hall” subject to the Loan terms and conditions set forth herein.
NOW, THEREFORE, in consideration for the name to the hall, mutual promises, duties and obligations acknowledged and agreed to by both parties are set forth herein as follows:
5. Entire agreement
This Agreement constitutes the entire agreement between the parties and shall become a binding and enforceable Agreement among the parties hereto and their respective successors upon the signed date of this Loan Agreement below. No prior verbal or written agreement shall survive the execution of this Agreement.
...
7. Exclusions
The Lender in its capacity as Executor to The Estate of Albert Yehuda acknowledges and agrees that except for the ground floor hall, it has no rights whatsoever over the other areas of the building and frontages and or its naming rights nor signage in these areas.
95It is evident from the above paragraphs that the parties provide in explicit terms for naming rights only to the hall on the ground floor of the proposed new building.
96There is express reference to the fact that the building will have a new frontage. In clause 7, Mr Horesh “acknowledges and agrees” on behalf of the Estate that, except for the ground floor hall, it has no rights over “other areas of the building and frontages and/or its naming rights nor signage in these areas”. I accept the submissions made on behalf of the plaintiff to the effect that this acknowledgement and agreement in so far as it refers to other areas of the building, frontages, naming and signage rights in the context, is confined to the area of the extension.[16]
97In clause 5, the parties have provided that the Loan Agreement constitutes the entire agreement between the parties. There is no reason to ignore or read down this clause which has effect to exclude matters extraneous to the written agreement.[17]
98In my view, a reasonable person would conclude that the terms of the Loan Agreement are clear and unambiguous and directly contradict Mr Horesh’s claim that the Estate has naming rights to the frontage of the extension to the Hotham Street building.
[16]In final submissions, counsel for the plaintiff submitted that the acknowledgement and agreement of Mr Horesh in his capacity as executor of the Estate in clause 7 of the Loan Agreement that the estate “has no rights whatsoever over the other areas of the building and frontages ...” could not affect Mr Yehuda’s rights under the Settlement Agreement because the parties to the Loan Agreement (the SAV and Mr Horesh as executor of the Estate of Mr Yehuda) were different to the parties to the Settlement Agreement (the SAV and Mr Yehuda). In my view, this argument has no merit. In any event in the Loan Agreement, the Estate unequivocally renounced naming rights over the extension and the frontage to the extension, except for the ground floor hall, and is precluded by its own conduct from now claiming it has such rights.
[17]Hart v MacDonald(1910) 10 CLR 417, 430 (Isaacs J).
The appellant does not challenge any of the findings of primary fact set out in paragraphs [78]-[98] of the judgment. However he now invites us to ignore those findings, notwithstanding that they were made in response to the case he pleaded and ran below. Instead, he invites us to confine our attention to the terms of the settlement agreement, the MOU and the loan agreement, with particular emphasis on the MOU. Such a departure from the case advanced at trial should not be permitted.
In any event, even on the approach now advocated by the appellant, our conclusions would be the same.
We have already referred to the two evident features of the MOU which led the trial judge to conclude (as we ourselves would also conclude) that the MOU foreshadowed but did not confer naming rights. Two additional features of the MOU should now be noticed. The MOU related to Albert Yehuda, not Sassoon Yehuda; and it related to the extension only, not the synagogue as a whole.
There was no reference in the MOU to Sassoon Yehuda or to his legacy or to the 1990 settlement. Rather, there was a reference to protecting and preserving the legacy of Albert Yehuda.
Neither was there any reference in the MOU to the synagogue as a whole. Rather, there was a reference to the proposed extension.
On the appellant’s own case, the matter of the required name of the extended synagogue as a whole was already covered by the 1990 settlement deed.
It follows that, at best for the appellant, the understanding recorded by the MOU was an understanding that, in return for the discharge of the $100,000 mortgage debt, Albert Yehuda’s name would be applied, in some way yet to be agreed, to or in relation to the extension. Hence, on no view could the MOU have given the estate the right to have the name of Sassoon Yehuda, as distinct from Albert Yehuda, inscribed on the frontage, or on any other particular part, of the extended building. Further, any obligation on the Association that was envisaged by the MOU would not exceed an obligation to name the extension, as distinct from the synagogue as a whole, after Albert Yehuda. And the question whether it was to be the whole extension or some particular part or feature of the extension that was to be the subject of the contemplated naming rights was a matter for future negotiation and agreement between the parties, subject perhaps to a requirement of reasonableness.
It follows, also, that there is no conflict between the MOU and the loan agreement. The loan agreement makes provision for a particular part of the extension, namely the large internal hall, to be named after Albert Yehuda. That provision is well within the contemplation of the MOU.
It does not matter that the agreement of August 2008 is entitled ‘Loan Agreement’ rather than, say, ‘Naming Rights Agreement’. The document deals with naming rights. Indeed, it confers naming rights. They are naming rights of a kind plainly envisaged by the MOU.
It is true that, on the view we take, the estate made two separate contributions (the discharge of the $100,000 mortgage loan and the $100,000 ten year interest free loan) and received in return only a single tangible benefit, being the right to name the internal hall after Albert Yehuda. The appellant describes this as an uncommercial interpretation of the relevant documents. We disagree.
When asked what the estate got for the forgiving of the $100,000 mortgage debt, counsel for the Association answered that the estate got ‘the satisfaction of helping a congregation and the naming rights of the hall’. That was a useful reminder that the setting in which the MOU was signed was not purely commercial. Rather, the MOU recorded the making of a charitable donation of $100,000, albeit that the MOU was crafted to assist the estate to claim a tax deduction for that sum in respect of the previous tax year. It is true that the estate made a further contribution by way of the $100,000 interest free loan, but that too was a charitable donation to an ethnic and religious association with which Mr Horesh and the estate had close connections.
Counsel for the appellant himself submitted to us that the MOU and the loan agreement were in fact ‘part of the one transaction’.
Contrary to the appellant’s submissions, the mere total quantum of the contributions does not show that the interpretation we favour is uncommercial. We note that the appellant submits that the interest free loan should be valued at $100,000 and contends that this much was common ground at the trial. Counsel for the Association did not refer to this point in his submissions before this Court, but we have great difficulty in seeing how a mere loan of $100,000, albeit interest free for a period of ten years, can be equated to an outright gift of $100,000 as of the date of the loan, unless one posits that prevailing interest rates for the ten year period were very high. In any event, no assessment of the commerciality of the arrangement could be made without trespassing beyond the terms of the settlement deed, the MOU and the loan agreement, whereas the appellant now urges us to confine ourselves entirely to those documents. Moreover, if we do look to the other evidence in the case, we see that the Association had been advertising the naming rights to the extension for the price of $450,000, whilst still reserving the right to sell off, in addition, numerous individual parts of the extension for substantial extra consideration. The appellant submits that the advertised prices were much higher than the Association was expecting or able to obtain in fact, but there are no findings about such matters in the judgment. We are not persuaded that the interpretation we favour is uncommercial.
On a related point, it might perhaps be suggested that clause 5 of the loan agreement – the ‘entire agreement’ clause – indicates that the only contribution that was made by the estate towards the obtaining of the naming rights to the hall was the interest–free loan; and that therefore the discharge of the $100,000 mortgage debt must have represented a contribution towards the obtaining of other naming rights – more particularly, naming rights to the whole extension. We would not accept such a suggestion. Clause 5 is in a standard form. Unlike the rest of the loan agreement, it is not tailored to the specifics of the arrangements between the parties. Standard form clauses of this kind are sometimes included in written agreements thoughtlessly. Even though a court may nevertheless have to give full force and effect to such a clause in the construction of a legal instrument of which it forms a part,[18] there is no necessity to accord such a clause any significance in the construction of another document, much less a document created at an earlier time. Hence we do not think that clause 5 of the loan agreement requires the MOU to be read in any particular way.
[18]See Seddon and Ellinghaus, above n 8, [10.7].
The appellant submits that the MOU was drafted by or on behalf of the Association and that it should be read contra proferentem. It is not necessary for us to decide whether the MOU is a document of a kind in relation to which a contra proferentem interpretation may be appropriate.[19] In our view, although the MOU certainly presents difficulties of interpretation, it is not open to the interpretation now urged by the appellant.
[19]Ibid [10.33] and [10.74].
This leaves only the question whether, as the Association argues, clauses 5 and 7 of the loan agreement preclude the appellant obtaining any of the relief he seeks in this appeal.
The Association has no need to rely on clauses 5 and 7 in order to defeat the claims made by the appellant in reliance on the MOU, because those claims must fail in any event for the reasons we have stated.
However, in our view, clauses 5 and 7 of the loan agreement do not extinguish, defeat or even modify the estate’s rights under the settlement deed as articulated above. The loan agreement makes no mention of the 1990 settlement or of the settlement deed. As indicated above, in our view the settlement deed applies to the whole of the extended building. So far as naming rights are concerned, the subject matter of the loan agreement is confined to the extension and the hall. It does not include the extended synagogue as a whole. Hence clause 5 does not assist the Association for present purposes.
It is true that clause 7 of the loan agreement refers to ‘the building’. However, it is clear from the context of that expression in clause 7 and especially from the recital on the first page of the loan agreement (which refers to ‘a new 2 story building … which will have a new frontage, and contain a HALL on the ground floor, kitchen, classrooms etc’), that the reference to ‘the building’ in clause 7 is intended to be a reference to the extension only. This was the conclusion of the trial judge, too.[20] His Honour did say in a footnote to that conclusion that the estate had by clause 7 ‘unequivocally renounced naming rights over the extension and the frontage to the extension, except for the ground floor hall, and is precluded by its own conduct from now claiming it has such right’. However, we do not understand his Honour to have been of the view that anything in clause 7 of the loan agreement cut back the rights of the estate under the settlement deed. The only difference between his Honour and ourselves is that we have adopted a wider view of the rights of the estate under the settlement deed, as indicated above.
[20]Trial judgment, [96].
Conclusion and orders
For these reasons, the appeal will be allowed to the extent indicated in paragraph 10 of this judgment. Nevertheless, we reiterate that nothing in this judgment would preclude the Association from entering into or giving effect to an agreement with the Adlers or any other third party for the grant of naming rights in respect of some particular part of the building or for the erection of a corresponding external sign, provided that neither the agreement nor the sign was inconsistent with the rights of the appellant. Thus, for example, if the Association were to agree to name the extension after the Adlers, the Association would be free to erect a sign such as ‘Adler extension’ on some appropriate external part of the building. On the other hand, such a sign should not be so designed or so placed as to be inconsistent with the naming of the building as it presently stands after Sassoon Yehuda.
At the hearing of the appeal, the appellant’s counsel said nothing about damages. We apprehend that the appellant no longer pursues damages.
Accordingly, subject to any submission to the contrary as to form, we are minded to give effect to our conclusions by making orders in the following form:
(1)The appeal be allowed in part.
(2)Paragraph 1 of the order made by the Honourable Justice Almond on 15 February 2011 (being the order dismissing the proceeding) be set aside.
(3)In lieu of paragraph 1 of the order made on 15 February 2011, there be:
(a)a declaration that the inscribing and maintaining by the Sephardi Association of Victoria Inc (‘the Association’) of the name ‘Lyndi and Rodney Adler Sephardi Centre’ over the front entrance to the building at 79 Hotham Street, East Kilda amounts to a breach by the Association of the deed of agreement dated 9 November 1990 between the Association and Albert Sassoon Yehuda;
(b)an order that as soon as practicable the Association remove the name ‘Lyndi and Rodney Adler Sephardi Centre’ presently appearing over the front entrance to the building at 79 Hotham Street, East St Kilda;
(c)an order that there be liberty to apply within three months to a judge of the Trial Division for any further orders necessary or desirable for the working out of the judgment of this Court.
We will hear the parties on the questions of the costs of the trial and the costs of the appeal. We note that the trial judge ordered a mediation as to costs and later (on 31 March 2011) made comprehensive orders as to costs, including orders as to the costs of Mr Lelah and Mr Jaffe who are no longer pursued by the appellant. We note also that the points on which the appellant has now succeeded were thickly obscured, especially at trial, by his pleadings and by the multitude of mostly unsuccessful points raised by him, and that parts of his evidence were simply not accepted at trial.
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