A coconut drink company has won its legal battle against Manly-Warringah NRL club over a demand for a AU$302,500 sponsorship payment.

In the NSW Supreme Court on Wednesday, Acting Justice Reginald Barrett set aside the statutory demand served on FAL Healthy Beverages, which owns coconut water brand CoCo Joy.The debt was said to have arisen from a AU$3 million major partnership agreement, dated October 7, 2015, and signed for FAL by Tim Xenos.

But FAL argued he had no authority to do so, as when he signed the preliminary agreement he was an undischarged bankrupt and therefore automatically disqualified from managing corporations.

The judge found that as at July 28, 2015, senior officers of Manly had information that an investigation by the corporate watchdog ASIC concerning Xenos and the possibility of his contravening corporate law was "ongoing".


"There is nothing to suggest that, a little over two months later, as at 7 October 2015, Manly had learned anything more on the subject," the judge said.

Thus it could be argued that Manly could have had a "slight opinion" that Mr Xenos was a person disqualified from managing corporations who accordingly could not act so as to bind FAL, the judge said.

The $302,500 debt was said to have become due and payable on February 20, 2016, pursuant to the agreement."

Reduced to its essentials, the agreement provides for Manly to provide advertising benefits to FAL in connection with the staging of football matches, including by placement of FAL's logo on players' jerseys, and for FAL to make payments to Manly," the judge said.

He ordered Manly to pay FAL's legal costs.FAL's win could prove a significant blow for the club, in a season already marked by match-fixing allegations and injuries to key players.

The company has publicly stated it has no deal with Manly, and that as early as May its lawyers wrote to the club demanding it remove CoCo Joy branding from jerseys.