Mobil Oil New Zealand Limited v Bagnall CA290/99 [2000] NZCA 436 (22 August 2000)

Last Updated: 21 January 2019

IN THE COURT OF APPEAL OF NEW ZEALAND CA290/99

BETWEEN MOBIL OIL NEW ZEALAND LIMITED

Appellant

AND JOHN ANDREW BAGNALL First Respondent

AND ANDREW JOHN MAHER Second Respondent

Hearing: 17 August 2000

Coram: Blanchard J McGechan J Doogue J

Appearances: J S Kos and T B Johnson for appellant

P J Dale for respondents

Judgment: 22 August 2000

_{JUDGMENTS OF THE COURT}

_Judgments

Paras No

Blanchard, Doogue JJ [1] – [43] McGechan J [44] – [52]

BLANCHARD J, DOOGUE J (DELIVERED BY BLANCHARD J)

[1] This is an appeal against the refusal of an application for summary judgment by the appellant (“Mobil”) against the respondents (“the Guarantors”). The Guarantors had guaranteed certain liabilities of Promo Marketing International Limited (“Promo”) to Mobil under a sponsorship agreement

(“the Sponsorship Agreement”). The Sponsorship Agreement provided for Mobil to pay Promo a sponsorship fee in return for certain sponsorship rights in respect of street car races at Wellington and Pukekohe (“the Races”). In

1995 Mobil and Promo entered into a second sponsorship agreement (“Super Series Agreement”). The Super Series Agreement was terminated by Mobil because of a failure by Promo to satisfy a condition of that agreement. As a result, Promo was obliged to assign to Mobil all Promo’s rights in the Races. Mobil claimed that as a further result Promo became obliged to refund a portion of sponsorship fee under the Sponsorship Agreement because Promo had lost its rights to the Races, which were not held in 1995. When Promo failed to pay the amount which Mobil said was payable, Mobil sought recovery from the Guarantors. On 12 November 1999 a Master refused Mobil’s application for summary judgment as Mobil had not persuaded him the Guarantors had no defence. He thought it was necessary that the facts be gone into at trial. Mobil appeals and says it is entitled to judgment.

Background

[2] Mobil and Promo entered into the Sponsorship Agreement on 15 January

1991 in respect of the Races for 1991 to 1995. Mobil paid Promo a sponsorship fee of $1.1 million. Mobil was in return entitled to various benefits and Promo had various obligations under the agreement. For present purposes the relevant provisions of the Sponsorship Agreement are as follows:

1.2 In the interpretation of this agreement:

...

(c) References to any party to this agreement shall include reference to its successors, assigns and administrators as the case may be;

....

7. ANNOUNCEMENTS AND PUBLIC RELATIONS

....

7.2 The Sponsor and the Promoter shall consult with each other with regard to press releases and other publications from time to time.

....

9. REFUND OF SPONSOR’S FEE

9.1 If the Pukekohe Event is not run in any year during the Term for any reason whatsoever, the Promoter shall refund to the Sponsor within seven (7) days of the date upon which it was intended to run the Pukekohe Event in that year, or where no intended date has been set, within seven (7) days of the anniversary of the previous running of the Pukekohe Event, the sum of $70,000 plus Goods and Services Tax.

9.2 If for any reason the Promoter loses the Pukekohe Rights, the Promoter shall refund to the Sponsor within seven (7) days of the loss of such rights an amount calculated in accordance with the following formula:

($70,000 x (5 - A)) + Goods and Services Tax

Where:

A = the number of occasions on which the Pukekohe Event has been run during the Term.

9.3 If the Wellington Event is not run in any year during the Term, the Promoter will refund to the Sponsor within seven (7) days of the date upon which it was intended to run the Wellington Event in that year, or where no intended date has been set, within seven (7) days of the anniversary of the previous running of the Wellington event, the sum of $150,000 plus Goods and Services Tax.

9.4 If for any reason the Promoter loses the Wellington Rights, this agreement shall automatically terminate and the Promoter shall refund to the Sponsor within seven (7) days of the loss of such rights an amount calculated in accordance with the following formula:

(($150,000 x (5 - A)) + ($70,000 x (5 - B))) + Goods and Services Tax

Where:

A = the number of occasions on which the Wellington Event has been run during the Term; and

B = the number of occasions on which Pukekohe Event has been run during the Term.

9.5 ... [Right to interest]

....

11. TERMINATION

11. In addition to any other rights and remedies at law, this agreement may be terminated at the discretion of either party by giving written notice to the other party in the following circumstances:

(a) Where the other party has committed a breach of a material obligation under this agreement and has failed to rectify that breach within fourteen (14) days of the receipt of a notice of breach by the cancelling party;

....

11.3 Should this agreement be terminated pursuant to this clause 11 the Promoter shall immediately refund to the Sponsor an amount calculated in accordance with the formula set out in clause 9.4.

[3] On 15 January 1991, Mobil also entered into deeds of indemnity and guarantee (“Deeds”) with the Guarantors. The Deeds provided that where Promo defaulted in paying any money owed to Mobil the Guarantors each agreed to pay an amount calculated in accordance with clause 6 of the Deeds. Mobil’s claim was mounted in accordance with that provision.

[4] On 13 December 1995, Mobil and Promo entered into the Super Series Agreement under which Mobil agreed to provide an additional sponsorship sum of $220,000 plus GST, subject to certain conditions. There is no suggestion by the Guarantors that this agreement affected their liability under the Deeds. The Super Series Agreement came into being because a previous joint sponsor of the Races had withdrawn in March 1995. The Races for

1995 were scheduled for December. Promo had had difficulty in finding a replacement sponsor and, as a result, Mobil had agreed to provide additional sponsorship. The terms of the Super Series Agreement gave Mobil certain additional rights over and above what was in the Sponsorship Agreement. Critical to the Super Series Agreement was an undertaking by Promo to secure, at its cost, the attendance and participation of a minimum of six 5 litre level 1 touring cars for the Races (clause 9.1).

[5] For present purposes the relevant clauses of the Super Series Agreement are as follows:

1. EXISTING AGREEMENT

1.1 This letter is to be read in conjunction with our existing Sponsorship Agreement dated 15 January 1991 (“Sponsorship Agreement”). The purpose of this letter is to clarify and supplement the rights and obligations of Mobil and Promo under the Sponsorship Agreement, pending a final agreement being entered in accordance with clause 11.3.

1.2 To the extent of any inconsistency the terms of this letter shall apply otherwise the provisions of the Sponsorship Agreement continue to apply, including but not limited to Promo’s obligations and warranties contained in clauses 4, 5, 9 and 10 of the Sponsorship Agreement.

1.3 Terms defined in the Sponsorship Agreement shall have the same meaning in this letter unless the contrary is indicated.

10. CONDITIONS PRECEDENT

10.1 This agreement is subject to and conditional upon Promo satisfying the following conditions to Mobil’s reasonable satisfaction on or before 1 October 1995.

(a) Written confirmation from Motorsport Association of New Zealand (“MANS”) and Federation Internationale de Sport L’Automobile (“FISA”) that the organisations will grant Promo a licence to conduct the Sponsored Events (subject to final track inspection).

(b) Independent written confirmation of commitment to race at least six Group 3A Touring Cars in the races as set out in clause 9.2.

(c) Execution of the further agreement referred to in clause 11.3.

10.2 In the event one or more of the conditions in 10.1(a), (b) or (c) have not been satisfied (time being of the essence), Mobil may elect to terminate this agreement without prejudice to any of its rights under this agreement, the Sponsorship Agreement or the Existing Securities.

10.3 Upon termination under 10.2, Promo shall unconditionally and immediately assign to Mobil or its nominee all rights held by

Promo to promote and conduct motor car races at Wellington or Pukekohe.

10.4 For the purposes of clause 10.3, Promo hereby appoints Mobil as its attorney to sign any documents or perform any act on behalf of Promo that may be reasonably necessary to give effect to the assignment of rights referred to in 10.3.

[6] It is common ground that Mobil extended the deadline under clause 10.1 to

11 October 1995 but that Promo still failed to satisfy the condition in clause 10.1(b). The condition in clause 10.1(c) was satisfied on 10 October

1995.

[7] On 12 October 1995, at about 5.46 p.m., Mobil sent a termination notice under clause 10.2 and a deed of assignment in respect of the Wellington race to Promo by way of facsimile. The notice of termination read:

WELLINGTON STREET RACE SPONSORSHIP AGREEMENT

1. We refer to the Street Race Promotion Agreement dated

13 September 1995 (“Agreement”). We confirm that Promo

Marketing International Limited has verbally advised Mobil that Promo is unable to fulfill the condition contained in clause 10.1(b) of the Agreement.

2. Accordingly, Mobil hereby terminates the Agreement with immediate effect pursuant to clause 10.2. This termination is without prejudice to any of Mobil’s rights under the Sponsorship Agreement dated 15 January 1991, or the securities granted pursuant to it.

3. Mobil now requires you to assign to it your rights to hold the Wellington Street Race pursuant to clause 10.3 of the Agreement. Attached is a deed of assignment assigning the Street Race Agreement between Promo Marketing International Limited, Wellington City Council & Lambton Harbour Management, dated 13 October 1994 to Mobil. Could you please sign this deed of assignment and return it to us within 24 hours.

4. Pursuant to clause 7.5 of the 15 January 1991 Agreement, Mobil requires you to immediately discontinue publicizing any material relating to the Wellington street race or Pukekohe race that refers in any way to Mobil, its products or logos, including the Mobil Super Series logo.

[8] The next day, 13 October 1995, Mobil unilaterally gave the media a press release stating in part:

The 1995 Wellington street race, known as the Mobil Super Series, looks unlikely to proceed, Mobil Managing Director Jim Law said today.

This press release was contemporaneous with an exchange of correspondence between Mobil and the Wellington City Council.

[9] On 14 October 1995, the Wellington City Council, which apparently held an overall power of veto, announced that the Wellington race would not proceed. The reason for this is not before the Court.

[10] On 19 October 1995, Mobil received from Promo a letter dated 13 October

1995, which read in part:

As of the Friday 13 October 1995 Promo Marketing Intl cease to be in charge and control of the Wellington Street Race and the second round event due to take place at Pukekohe Park Raceway.

As part of an agreement with Mobil Oil NZ Ltd Promo Marketing have assigned all rights to the event to Mobil. Mobil are yet to fully announce their intentions with regard to the race in 1995 or thereafter. This we are sure they will do in due course.

The evidence is that this was sent to all people associated with the Races. The evidence for the Guarantors is that they believed the assignment had occurred.

[11] The Races did not proceed in 1995.

[12] On 15 December 1995, Mobil made demand of Promo of the sum which it regarded as payable in accordance with clause 9 of the Sponsorship Agreement. The sum was never paid and Promo was subsequently put into liquidation.

[13] In January 1998, Mobil sought payment by the Guarantors of the sums calculated in accordance with clause 6 of the Deeds which the guarantors refused to pay.

The Case before the Master and his Findings

[14] Mobil claimed that it was entitled from Promo to the payments provided for in clause 9 of the Sponsorship Agreement. It said the Races were not run in

1995 and thus clauses 9.1 and 9.3 applied. Clause 9.4 was said to apply as it was claimed Promo lost the exclusive rights to manage, promote and administer the race at Wellington as a result of the application of clause 10.3 of the Super Series Agreement to Mobil and Promo’s consequential obligation to assign all of its rights to promote and conduct the Races. That occurred, it was said, on the giving of the termination notice by Mobil to Promo on 12 October 1995.

[15] It is not in dispute that Promo did not meet its liabilities after demand was made of it and it was wound up.

[16] As a result, Mobil claimed it was entitled to recover from the Guarantors the amounts Promo had failed to pay, subject to the maximum sum stated in the Deeds.

[17] The amended notice of opposition raised four alleged defences, which are summarised and addressed in the Master’s judgment.

First alleged defence: Mobil in breach of clause 11 of the Sponsorship Agreement

[18] The first alleged defence was that Mobil was in breach of clause 11 of the Sponsorship Agreement. It was the Guarantors’ case that Mobil was required under clause 11(a) of the Sponsorship Agreement to give 14 days’ notice of breach of a material obligation to Promo. The argument was that because no notice was given it was Mobil’s own actions which resulted in the Wellington race not being proceeded with, and therefore Mobil was not entitled to claim a refund under the Sponsorship Agreement against Promo and enforce its guarantees against the Guarantors. There was an associated argument by the Guarantors that Mobil was in breach of clause 7.2 of the Sponsorship Agreement in unilaterally issuing its media release on 13 October 1995 about

the Wellington race as there was an obligation on both sides to consult with regard to press releases.

Second alleged defence: Mobil advice that the Wellington race was unlikely to proceed was unlawful

[19] The second alleged defence was that the press release by Mobil on

13 October 1995 stating that the 1995 Wellington race looked “unlikely to proceed” was unlawful without Mobil having validly cancelled the Super Series Agreement or the Sponsorship Agreement and having taken an assignment of Promo’s rights.

Third alleged defence: Mobil took advantage of its own wrong

[20] The third alleged defence was that Mobil took advantage of its own wrong.

[21] The Guarantors argued that Mobil, in taking an assignment of the rights in respect of the Wellington race upon the termination of the Super Series Agreement, was not then entitled to cancel the Races as that would be taking advantage of its own wrong.

Fourth alleged defence: Promo’s obligation to refund a penalty

[22] This defence has not been pursued in this Court and we say no more about it.

[23] The Master held that the first three of the alleged defences could give rise to an arguable defence that should go to trial. He expressed no view on the fourth alleged defence.

[24] In respect of the first three alleged defences the Master commented in the following way:

Importantly, in my view, breach of the Super Series Agreement did not, per se, terminate the Sponsorship Agreement. Indeed, the plaintiff’s [Mobil’s] rights under the Sponsorship Agreement were specifically preserved by the Super Series Agreement, and the plaintiff in its termination notice made that clear. It is the defendant’s [the Guarantors’] position that under the Super Series Agreement the plaintiff did not have the right to cancel the race. Whether the

Wellington City Council and Lambton Harbour had the right to cancel the race under their contract with Promo is not known, because that document is not before the Court. The defendants say that Promo could have staged a successful race even in the absence of the Group

3A Touring Cars. While the plaintiff doubts that Promo could have

staged a successful race, it is not in a position to really gainsay the defendants’ contention and particularly their evidence that after public notice of cancellation of the race was given by the plaintiff and the Wellington City Council that those announcements led to the withdrawal of the racing teams that had previously confirmed they would compete, the loss of major hospitality sales, the loss of track signage sales, and irreparable damage to Promo’s credibility. [pages 11-12]

I think that the facts and circumstances of the cancellation of the Super Series Agreement and/or the Sponsorship Agreement will require to be explored in detail before the Court could be confident that the defendants [the Guarantors] are indeed liable on their guarantee of the Sponsorship Agreement. This is not a case of a guarantee of a simple loan agreement. [page 12]

The Master accepts that it may be open to the plaintiff [Mobil] to argue that the wording of clause 9 means that a refund is claimable if a race is not held in any year from whatever cause. Such an argument would have greater force in respect of the Pukekohe race because of the words included in clause 9.2, “if for any reason whatsoever”, which are omitted from clause 9.3. However, reading the Sponsorship Agreement and the Super Series Agreement together, in my view, if the plaintiff elects to act under the Super Series Agreement and take over Promo’s rights under its contracts and thereafter decides not to proceed with the result that Promo is prevented from staging the race, that the plaintiff cannot rely on its own conduct to claim a refund pursuant to clause 9 of the Sponsorship Agreement. At the very least that must be arguable: Moreton v Montrose Ltd [1986] NZCA 30; [1986] 2 NZLR 496 at

503. [pages 12-13]

[25] The Master therefore refused summary judgment.

The Argument in This Court and Discussion

[26] The case for Mobil is that the Master was wrong in considering that there were any arguable defences in respect of the first three alleged defences. In brief, Mobil submits:

[a] Promo was under an obligation to refund a proportion of the sponsorship fee on the happening of certain events under clause 9 of

the Sponsorship Agreement, in particular, clause 9.4, in that Promo lost the exclusive rights in respect of the Races.

[b] Promo lost the rights in respect of the Races because it failed to fulfil the condition in clause 10.1(b) of the Super Series Agreement and Mobil terminated that agreement. Consequently Promo was obliged to assign to Mobil its rights in respect of the Races on the written notice of termination being given to it under the Super Series Agreement: clause 10.3.

[c] Mobil’s rights arose as a simple matter of contract. Under clause 9.4 of the Sponsorship Agreement it was automatically terminated when Promo lost its rights to the Races by virtue of having to assign them to Mobil. Once that occurred there could be no breach by Mobil of the Sponsorship Agreement. Mobil was entitled to advise the public that the 1995 Wellington race looked “unlikely to proceed”.

[d] Mobil did not rely upon its own conduct or wrong to claim the refunds pursuant to clause 9 of the Sponsorship Agreement. Promo’s obligations were a result of the application of the specific contractual provisions of the agreements between itself and Mobil, arising from Promo’s failure to satisfy the condition in clause 10.1(b) of the Super Series Agreement.

[27] In this Court the case for the Guarantors has been developed in a very different way from that in the Court below. The Guarantors rely on the following arguments. First, while it is accepted that Promo did not fulfil the condition in clause 10.1(b) of the Super Series Agreement, it is now submitted that that resulted in the agreement not being formed and as a result Mobil was not entitled to terminate it pursuant to clause 10.2. As a result, it is said, there was no loss of Promo’s rights to the Wellington race in terms of clause 9.4 of the Sponsorship Agreement.

[28] The second argument for the Guarantors is that Mobil has not proven an assignment by Promo of its rights in the Races and that as a result there is no

evidence Promo had not lost its rights to the Wellington Races under clause

9.4 of the Sponsorship Agreement. It was submitted that Mobil had to prove the assignment was complete and that, despite the evidence already traversed above, it had not done this. It was indeed submitted there was material to show the assignment was not complete. We were asked to infer Wellington City Council consent was necessary and was lawfully withheld.

[29] The third argument for the Guarantors is that Mobil was in breach of the Sponsorship Agreement in making the running of the 1995 Races impossible. The evidence, it is said, supports the proposition that but for Mobil’s action Promo could have complied with that agreement.

[30] The fourth argument for the Guarantors is that it was Mobil’s decision not to run the 1995 Races prior to any assignment of Promo’s rights to Mobil. As a result, it is said, Mobil is trying to benefit from its own wrong or decision. There was no proof, it was submitted, of an effective assignment from Promo to Mobil of the rights to the Races. Hence Mobil was not entitled to cause the Races not to be run and recover money under clause 9.4 of the Sponsorship Agreement. It was part of this argument that if the Races were assigned to Mobil it was the Promoter for the purposes of that clause and under an obligation to run the Races.

[31] The final argument for the Guarantors is that the Master correctly exercised his discretion against the entry of summary judgment.

[32] It is simplest if we deal with the case in the context of the arguments for the

Guarantors.

Discussion

Guarantors’ first argument: Super Series Agreement unenforceable

[33] The Guarantors’ first argument is that clause 10 of the Super Series

Agreement was a true condition precedent: Hunt v Wilson [1978] 2 NZLR

261, 267. As a result, it is said that as there was no fulfilment of it the

contract was not formed and there is no consideration for Mobil taking and

Promo losing the rights to the Races under clause 10.3.

[34] This argument fails as it is in conflict with the express contractual terms of the Super Series Agreement. Clause 10.2 specifically provides not that the agreement is at an end on non-fulfilment of the provision of clause 10.1 but that Mobil may elect to terminate it without prejudice to its rights under it. This is consistent with the opening words of clause 10.1 which require satisfaction of the conditions “to Mobil’s reasonable satisfaction”. The conditions are for the benefit of Mobil and it was entitled to rely upon them. The contract was formed and obligations were performed under it prior to the non-fulfilment of the condition. The conditions were not conditions precedent in the Hunt v Wilson sense. It is unhelpful to attach a label to the conditions. They were consequential upon formation and part performance of the agreement. Non-compliance with clause 10.1(b) did not result in the contract not being formed but in it not being able to be completed. This argument fails.

Guarantors’ second argument: No effective assignment of rights to the Races to

Mobil

[35] In their written submissions the Guarantors accepted that Mobil could and did validly terminate the Super Series Agreement because of the non-fulfilment of the condition precedent in clause 10.1(b) of that agreement. The Guarantors also accepted that the Master correctly found Mobil had then taken an assignment of Promo’s rights to the Races. They now seek to resile from the latter acceptance.

[36] The critical issue in this case is whether Promo lost the rights to the Wellington race under clause 9.4 of the Sponsorship Agreement as a result of the Super Series Agreement being terminated by Mobil under clause 10.2 of that agreement. Before the Master the Guarantors had not raised the defence now relied upon. Their documentation acknowledged that there had been an assignment of the rights in the Races to Mobil. That was stated in Promo’s letter of 13 October 1995 to Mobil and others. It was affirmed in their

affidavit evidence. It was confirmed in their written submissions to this

Court.

[37] Such documentation was consistent with the clear wording of clause 10.3 and

10.4 of the Super Series Agreement. Under clause 10.3, upon the termination of that agreement by Mobil, Promo had “to unconditionally and immediately assign” to Mobil all its rights in the Races. Under clause 10.4, Mobil was appointed Promo’s attorney to do anything “reasonably necessary to give effect” to that assignment.

[38] Vis-à-vis Mobil, Promo could no longer claim any rights in the Races unless Mobil waived the rights to them under clause 10.2. There is no evidence Mobil did that. It is argued Mobil was equivocal but that is in reliance in particular on a letter earlier in time than the notice of termination. The evidence shows clearly that Mobil did not waive its rights under clause 10.3 nor act equivocally in respect of them.

[39] In terms of clause 9.4 of the Sponsorship Agreement, Promo had lost the rights to the Races when Mobil gave its notice under clause 10.2 of the Super Series Agreement as Promo could no longer claim any rights in respect of the Races against Mobil. As a result, under clause 9.4 of the Sponsorship Agreement that agreement automatically terminated.

[40] The argument for the Guarantors, resiling from their written concession, is that Mobil had to prove the assignment of the Races by Promo was effective before Mobil could rely upon it against them. However, the Guarantors are not entitled to take that stance now. First, the point is a new one taken in the course of argument and contrary to the evidence relied upon by the Guarantors and their written submissions. There is no evidence to support the argument. Mobil cannot be expected to meet it evidentially at this late stage. Secondly, Mobil was entitled to rely on the Super Series Agreement and its notice of termination to establish its claim that Promo no longer held any rights to the Races vis-à-vis it. If the Guarantors had intended to deny that, the obligation was on them to put evidence before the Court consistent

with such a denial, but that did not occur. Thirdly, Mobil, in terms of clause

10.4 of the Super Series Agreement, had the right as attorney to do anything necessary to complete the assignment. If there was some fundamental bar to that course, it was for the Guarantors to put it before the Court, but they have not done so.

[41] The Guarantors’ argument under this head fails. As a result, their other arguments become irrelevant because the Sponsorship Agreement, upon which the other arguments rely, was at an end under clause 9.4 of that agreement. There was never any assignment to Mobil of Promo’s rights under the Sponsorship Agreement. Mobil was never “the Promoter” for the purpose of clause 9.4 of that agreement.

[42] We therefore disagree with the decision of the Master that the Sponsorship

Agreement gave rise to arguable defences, and his decision cannot stand.

Decision

[43] The appeal is allowed. Mobil is entitled to judgment against each of the Guarantors in the sum of $127,824.00. It is entitled to its costs in the High Court in the sum of $3,000 together with reasonable disbursements to be fixed by the Registrar of that Court. It is entitled to its costs in this Court in the sum of $3,000.00 together with reasonable disbursements to be fixed by the Registrar of this Court.

MCGECHAN J

[44] I agree in outcome with the judgment of other members of the Court which I have had the advantage of reading in draft, but for somewhat different reasons.

[45] I adopt with gratitude the content of that judgment at paragraphs [1]-[34] and [41]-[43]. My approach differs in relation to “Guarantors’ second argument: No effective assignment of rights to the Races to Mobil” at paragraphs [35]- [40].

[46] The Sponsorship Agreement Clause 9.4 provides that “If for any reason the Promoter loses the Wellington Rights” the Sponsorship Agreement “shall automatically terminate” (with a formula refund then due). The Super Series Agreement Clause 10.2 provides that in event stated conditions have not been satisfied by deadline, Mobil “may elect to terminate” the Super Series Agreement (without prejudice to other rights). The Super Series Agreement Clause 10.3 then, importantly, provides that “Upon termination under 10.2, Promo shall unconditionally and immediately assign to Mobil...all rights held by Promo to promote and conduct” the Wellington Race. Super Series Agreement Clause 10.4 grants Mobil a Power of Attorney to sign documents and to act to “give effect” to the assignment.

[47] Late on 12 October 1995 Mobil terminated the Super Series Agreement under Clause 10.4 and called for an assignment of the rights to race. Mobil was entitled to do so.

[48] Did that step, ipso facto, mean Promo “loses the rights” at that point? If so, of course, then under the Sponsorship Agreement Clause 9.4 the Sponsorship Agreement automatically terminated and a refund by Promo was due at that point.

[49] The judgment of other members, paragraph [39], says it did. With respect, I regard the point as open to doubt. There is no doubt Promo was obliged to assign, subject to the implications of any necessary Wellington City Council consent, a point to which I will come. The judgment of other members, on that basis, observes “Promo could no longer claim any rights” in respect of the race “against Mobil”. I am by no means sure that is the contractual test. Clause 9.4 says “loses the Wellington Rights”. That, on one obvious meaning, means exactly what it says: loses the Wellington rights against the world. It is distinctly arguable that notwithstanding notice received and obligation to Mobil, Promo continued to hold those rights, or at least a legal interest in the rights enforceable against the rest of the world apart from Mobil, for an interim period. Mobil itself, consistently with Clause 10.4, envisaged signature of a formal Deed of Assignment. Mobil forwarded one

for execution. It is not a case where, in equity, the Court indubitably should regard as done that which it has been agreed be done. Moreover, there is evidence before the Court of a need for Wellington City Council consent to the assignment. Mobil applied in writing for that consent. It is inherently more likely Mobil was obliged than was mistaken. As the Master comments, there is a lack of evidence regarding the WCC position, but there is no evidence consent must or would have been granted. Certainly, it is less than clear that specific performance would have been available.

[50] I am not deterred by the contrasting or at best ambivalent case Appellant presented in the Court below, and in preparatory written submissions filed in this Court. Counsel for Mobil did not object to any change in position concerned, and adapted arguments without evident disadvantage. Nor am I deterred by questions of onus. Indeed, it could well be argued that Mobil as Plaintiff when it set out to prove an underlying debt, one step in which was conditional, carried the onus of pleading and proving that condition was met or otherwise became irrelevant. Whether or not that is so I would have regarded wider interests of justice, and in particular the avoidance of risk of injustice in the Summary Judgment procedure, as overcoming such points.

[51] However, there is a different and fatal difficulty for Appellants. Whatever the position may be in relation to “loss” of rights through mere obligation to assign, Promo certainly “lost” the right to at least the 1995 race when the Wellington City Council cancelled that race on 14 October. There is no evident dispute over the Council’s entitlement to do so. When one adds to the loss of that right Promo’s acquiescence in the fact of an effective assignment in Mobil’s favour evident from the Promo letter dated 13 October received by Mobil on 19 October, the realities by 19 October are clear. The rights to race clearly were lost, if only through Council’s action and Promo’s acquiescence by time of demand on 15 December 1995.

[52] For clarity, I agree that the appeal be allowed and concur as to the order for costs made.

Solicitors

Russell McVeagh, Wellington, for appellant

Grove Darlow and Partners, Auckland, for respondents