Court of Appeal for Ontario

CITATION: Canadian Soccer Association v. Hyundai Auto Canada Corp., 2011 ONCA 704

DATE: 2011-11-14

DOCKET: C53447

BEFORE: Blair, LaForme J.J.A. and Benotto J. (ad hoc)

BETWEEN

Canadian Soccer Association

Respondent

and

Hyundai Auto Canada Corp.

Appellant

COUNSEL:

Lawrence Theall and Andrea Gorys, for the appellant

Pasquale Santini, for the respondent

HEARD: October 12, 2011

On appeal from the judgment of Justice Robert J. Smith of the Superior Court of Justice, dated February 15, 2011.

ENDORSEMENT

[1] Hyundai Auto Canada (“Hyundai”) appeals the summary judgment requiring it to pay $175,000 plus interest and costs to the Canadian Soccer Association (CSA).

[2] CSA is a non-profit organization that promotes and develops soccer at all levels across the country. Hyundai is the wholesale distributor of Hyundai cars. In early 2007, Hyundai and CSA signed a two year sponsorship agreement. CSA made two presentations to Hyundai in 2006. The presentations highlighted the opportunity for Hyundai to co-brand with CSA’s other sponsors. The most important other sponsor was Tide.

[3] The agreement gave Hyundai the right to sponsor CSA festivals and to use the name of the festivals in its promotional material. In return, Hyundai would pay CSA $125,000 for 2007 and $175,000 for 2008. The agreement specifically referred to Tide as a title sponsor and obligated CSA to obtain the rights for Hyundai to use Tide’s trademarks and the name “Tide Mini-Soccer” in its promotions. The agreement included a clause allowing either party the right to terminate the agreement for default of the other provided that the party not in default give 90 days’ notice to the other so that the default might be cured.

[4] Before the second year payment was due, problems arose in the management of CSA and this resulted in negative publicity. Tide withdrew as a title sponsor. Hyundai terminated the agreement and did not give CSA the required 90 days notice provided for in the agreement in order to remedy the alleged breach.

[5] CSA commenced an action against Hyundai for breach of the sponsorship agreement and sought $175,000 representing the 2008 payment.

[6] The parties agreed that there were no material facts in dispute requiring a trial and proceeded to a summary judgement motion.

[7] The motions judge read the agreement in the context of the underlying presentations and found that Hyundai had breached the sponsorship agreement when it terminated the contract. He concluded that Tide’s continued involvement was not a material term of the contract. He found that Tide could be replaced by another sponsor. He also found that Hyundai should have given 90 days’ notice of termination.

[8] Hyundai alleges that the ongoing involvement of Tide was a material term of the contract, the breach of which could not be cured, thus the notice period was irrelevant. Hyundai argues that the motions judge “misapprehended the factual matrix” of the sponsorship agreement and misinterpreted its terms. In particular, Hyundai argues that paragraph 2(c)(iv) of the agreement was misinterpreted.

[9] Paragraph 2(c)(iv) provides that Hyundai shall have:

The right to use and display the words “Canadian Soccer Association,” and “Tide Mini Soccer” with presenting partner where applicable and the initials “CSA” …

[10] The appellant argues that the only way to give this clause meaning is by interpreting it to mean that Tide will remain the sponsor. “Tide” is the official name of the Festival. The motions judge found that the addition of the words “with presenting partner where applicable” indicates that sponsors could change. Hyundai argues that this misapprehends the distinction between title sponsor (which meant Tide) and presenting partner (which meant other sponsors such as Telus and Adidas). These terms are not defined in the agreement, but are set out in the presentation material.

[11] Whether or not the motions judge confused the terms title sponsor and presenting sponsor is irrelevant. The agreement, read as a whole discloses an intention that the title sponsor, namely Tide, could be changed.

[12] Paragraph 2(c)(i) of the agreement provides that:

In connection with the Festivals, the CSA grants or agrees to provide to [Hyundai]

(i) Associate sponsorship rights of the Festivals and category exclusivity in the automotive manufacturer category. [Hyundai] agrees to use the official name of the Festivals as designated by CSA. (emphasis added)

[13] The name that CSA designated was “Tide Mini-Soccer”. It is implicit in paragraph 2(c)(i) that CSA had the right to designate another title sponsor. There was no warranty clause which guaranteed that Tide would remain a sponsor.

[14] We agree with the motions judge that the continued involvement of Tide was not a material term of the contract. Notice of termination should have been given in accordance with the clear words of the contract.

[15] The appeal is dismissed. The parties agreed upon the quantum of costs which are fixed in the amount of $10,000 and payable to CSA plus disbursements.

“R.A. Blair J.A.”

“H.S. LaForme J.A.”

“M.L. Benotto J. (ad hoc)”