Guy Sebastian: Inside the early deal that sparked the Aussie singer's legal battle with ex-manager Titus Day

Guy Sebastian personally negotiated a release from his contract to join manager Titus Day’s new company in 2009 before their relationship ultimately soured, a court has been told.

Mr Day is standing trial in the NSW District Court, accused of embezzling more than $600,000 from the Australian pop star.

It’s alleged that Mr Day failed to pay Mr Sebastian performance fees and royalties that were collected by his 6 Degrees talent agency, including $187,000 for performance fees when the Australian Idol winner supported Taylor Swift on her 2013 tour of Australia.

Mr Day has denied doing anything dishonest or fraudulent and is fighting the allegations.

He has pleaded not guilty to 34 counts of embezzlement as a clerk or servant and one count of attempting to dishonestly obtain a financial advantage by deception.

The court has been told that Mr Sebastian first became involved with Mr Day when he signed with the 22 Management company early in his career. At the time, Mr Day worked for 22 Management, which was owned by Sean Anderson.

Then, in early 2009, Mr Day told Mr Anderson that he was looking to form his own company, the court was told on Wednesday.

“He indicated to me that he was looking for something a little bit more than an employee role and whether I was open to a partnership or bringing him in as a partner in the business,” Mr Anderson told the jury on Wednesday.

“I indicated I wasn’t quite ready to do that, and so he said he was looking to start his own business. And I encouraged him to do it.”

And when Mr Day formed 6 Degrees and went out on his own, Mr Anderson said Mr Sebastian followed Mr Day because of their close relationship.

“Guy indicated he had formed a great relationship with Titus, and he wanted to follow Titus, which I expected would happen,” Mr Anderson said.

“I didn’t have anyone in the business that had the music skills that Titus had, so I then negotiated a release from my contract with Guy, and he left shortly after.”

The court was told that 22 Management had a written contract with Mr Sebastian, but Mr Anderson had since not been able to find a copy.

The court was told that Mr Sebastian’s contract with 22 Management was due to expire in April 2010; however, he negotiated a release to join Mr Day when he went out on his own to found 6 Degrees.

The jury on Wednesday heard details of a mid-2009 email exchange between Mr Anderson and Mr Sebastian as they negotiated the terms of the singer’s exit from his managerial contract.

Initially, Mr Anderson proposed that 22 Management be given a percentage of Mr Sebastian’s gross income for the next two years – 10 per cent on the first year and 5 per cent on the following year.

However, Mr Day replied, saying that 22 Management was only entitled to 20 per cent of all gross income up until April 2010 and after that a “trailing commission” on any work done that was negotiated by Mr Anderson’s business.

The court was told that “trailing commissions” were negotiated by managers to cover them for their investment in young and up-and-coming performers in the event they become successful and later leave to join new management.

It prompted Mr Anderson to propose new terms, including a 15 per cent split to 22 Management and a 5 per cent split to 6 Degrees, as well as trailing commissions.

“Titus should be doing somersaults with this outcome, if I were able to go out on my own and take the marquee client with me and earn commissions from day one, I’d be buying lottery tickets,” Mr Anderson wrote to Mr Sebastian in an email, the court was told.

Mr Anderson also asked Mr Sebastian to perform at his 40th birthday free of charge, which he agreed to do as part of their amicable split, the court was told.

The terms of Mr Sebastian’s contract with 22 Management have been a key part of the trial.

During his evidence, Mr Sebastian was grilled by Mr Day’s defence about his deal with Mr Day in the early days of his contract.

Mr Day’s barrister, Thomas Woods, suggested to Mr Sebastian that he had agreed to “look after” Mr Day down the track by compensating him for the lost commission during this early period in 2009, when he was only earning 5 per cent.

Mr Sebastian, during his evidence to the court last week, denied the assertion.

“(Mr Day) wanted more than 5 per cent for that period but couldn’t get it because of your arrangement with (22 Management) – you would look after him down the track when you were in a stronger financial position, and that was then what you did. That’s what I’m suggesting to you,” Mr Woods said.

“Firstly, that’s completely false … their agreement was a 15-5 agreement, and that was between them,” Mr Sebastian replied at the time.

“The concept that in 2014, that where I was already paying a lot of commission to Titus … that seems really ridiculous to me.”

The trial continues.