Link: Case Summary Document
Citation: [2012] VSCA 308 (Victorian Court of Appeal, Redlich, Osborne JJA, Cavanough AJA)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Summary:
This case about the affairs of the Sephardi Association of Victoria (SAV), was an appeal from Horesh v Sephardi Association of Victoria [2011] VSC 26 (see casenote). In 1990, Albert Yehuda (AY) had financed the establishment of a synagogue in St Kilda, Melbourne. The synagogue was named in honour of AY’s father, Sassoon Yehuda. The naming followed a dispute between the parties which was resolved by a Settlement Agreement in which the name of the synagogue was to be the ‘Sassoon Yehuda Synagogue’ in perpetuity. However, when the synagogue was opened in 1994 it was named the Sassoon Yehuda Sephardi Centre (the Centre).
From 1 July 1993, AY’s affairs were administered by State Trustees Ltd (State Trustees) under the provisions of the Guardianship and Administration Act 1986 (Vic). In 2002, the SAV began a fundraising appeal to extend the Centre by building a large hall with various attached facilities. The appeal was known as the Sassoon Yehuda Synagogue Extension Appeal, and a brochure was produced which included, inter alia, naming rights for the ‘entire extension of the Synagogue’ for a donation of $450,000. Also offered were naming rights for the hall lighting for a donation of $125,000.
The SAV wrote to the State Trustees in November 2006, in its capacity as administrator of AY’s estate, advising of the hall plan, and offering AY ‘first option naming rights for the new annex’ and ‘the naming rights for the new hall’. The brochure was enclosed. In January 2007, State Trustees declined the offer. AY died on 4 July 2007, and Horesh (H), a solicitor and AY’s nephew, was appointed executor of his estate.
During 2008, H, on behalf of the estate, agreed to forgive the remaining 1990 loan, and provide further loans for the SAV extension plan. The amount to be forgiven was $100,000, and the certificate of title was to be returned to the estate. Two documents were created, a Memorandum of Understanding (MOU) which provided that ‘the estate wishes to protect and preserve Albert Yehuda’s legacy by obtaining naming rights to the proposed extension…’. The MOU also provided that a Naming Rights Agreement would be ‘crafted and signed by both parties after return of the title to SAV’.
The second document in issue was a Loan Agreement dated 17 August 2008. This provided for an interest free loan of $100,000 to SAV for a period of 10 years. This document stated that ‘the lender in its capacity as the executor of the estate of Albert Yehuda wants the ground floor hall to be named ‘Albert Sassoon Yehuda Hall’…’. The terms and conditions of the loan were stated to be ‘in consideration for the name to the hall’.
Following this, the estate forgave the $100,000 loan from 1990 and provided a new amount of $100,000 to the SAV. The hall was completed and was named the ‘Albert Sassoon Yehuda Hall’.
In 2009, a dispute arose when H became aware that the words ‘Lyndi and Rodney Adler Sephardi Centre’ were inscribed over the front entrance to the entire extended premises.
H alleged that the SAV were thereby in breach of the Settlement Agreement, the MOU and the Loan Agreement. H also alleged wilful misrepresentations during negotiations with the SAV as to the naming of the synagogue, and unconscionable conduct on the part of the SAV.
At trial, His Honour dealt with each document in turn. In relation to the 1990 Settlement Agreement, the naming issue turned on the true meaning of the word ‘synagogue’. ‘Synagogue’ was not defined in the Settlement Agreement. The SAV contended that it only referred to the inner prayer chamber of the building, and not the whole complex. The original synagogue consisted of a prayer hall with a women’s section at the back, toilet facilities, a very small kitchen, a library and a study room. It was used solely for religious purposes. His Honour, in construing the document as a reasonable person would, found that the word ‘synagogue’ referred to the whole original building and not just some inner chamber within it. Since the name ‘Sassoon Yehuda Synagogue’ is now displayed prominently inside the original building over the entrance to the prayer chamber, His Honour concluded that the signing rights referred to in the Settlement Agreement had been complied with.
Should this name have been applied to the extended premises as a whole? The wording of the MOU certainly pointed to the fact that naming rights to the hall extension were expected, and a draft ‘New Hall Naming Agreement’ sent by the SAV to H also made this clear by providing that the hall would be known as the ‘Albert Sassoon Yehuda Hall’. However, that Agreement was not agreed to by H, who wanted a simpler loan and naming agreement drawn up. Subsequently, the Loan Agreement was completed.
The Loan Agreement certainly referred explicitly to the ground floor hall of the new extension as an area to be named the ‘Albert Sassoon Yehuda Hall’. No other areas were referred to, although it is made clear that there was to be a new frontage. His Honour concluded that a reasonable person would not find that the rights to the new frontage were included in this reference. The hall had been named after AY. The new frontage could bear another name. Therefore, there was no breach of any agreement as to naming rights.
Had there been misrepresentation and unconscionable conduct? His Honour concluded that these allegations could not be made out. There was no fraud, and the estate had received precisely what it had bargained for, which was the naming rights to the new hall. Therefore, the plaintiff’s claim was dismissed in total at first instance.
On appeal, the Court held that 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 did not extinguish the appellant’s rights in this regard. The appellant was entitled to have the extended building named after his grandfather, and that precluded the Association from putting up any inconsistent inscription or from otherwise behaving inconsistently with the appellant’s entitlement. The appellant was entitled to require the removal of the ‘Adler’ inscription from its current position on the front of the building.
In terms of the various documents in play, the Appeal Court held that the Settlement Agreement was such that there had been inconsistent naming of the extended building by naming it after the Adlers, but that there could be dual naming. The Court said (at [35]–[37]):
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… 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.
As to the other documents, the Court said that in relation to the MOU and the loan agreement (at [42]–[43]):
… 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.
The Court concluded (at [73]):
…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.
Damages were not sought by the appellant. Therefore, the appeal was allowed in part, with the Court ordering (at [75]):
· a declaration that the inscribing and maintaining by the Sephardi Association of Victoria Inc of the name ‘Lyndi and Rodney Adler Sephardi Centre’ over the front entrance to the building at 79 Hotham Street, East Kilda amounted to a breach by the Association of the deed of agreement dated 9 November 1990 between the Association and Albert Sassoon Yehuda;
· 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.
The case may be viewed at: http://www.austlii.edu.au/au/cases/vic/VSCA/2012/308.html
Implications of this case
This was a complex case about very little, in which substantial costs could have been avoided by the association, employing an easy compromise solution (dual naming or some variation of dual naming), as was suggested by the Appeal Court. Negotiation of such an outcome before the matter came to court would have avoided considerable legal expense.