Anglican Development Fund Diocese of Bathurst in its own capacity and in its capacity as trustee of the Anglican Development Fund Diocese of Bathurst (receivers and managers appointed) –v– The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst; Commonwealth Bank of Australia –v– The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst [2015] NSWSC 1856 - NSWSC 2015 case summary

Supreme Court of NSW|2015-04-30|Before: Hammerschlag J

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Norman; in the matter of Forest Enterprises Limited v FEA Plantation Limited [2011] FCAFC 99 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Banque Brussels Lambert SA v Australia National Industries Ltd (1989) 21 NSWLR 502 Giliberto v Kenny (1983) 48 ALR 620 Prenn v Simmonds [1971] 1 WLR 1381 Tomko v Palasty [2007] NSWCA 258 Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640 Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 Meehan v Jones (1982) 149 CLR 571 Carlton Cricket & Football Social Club v Joseph [1970] VR 487 Ex parte Goddard; Re Falvey (1946) 46 SR (NSW) 289 Peckham v Moore [1975] 1 NSWLR 353 Scandrett v Dowling (1992) 27 NSWLR 483 Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565 Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 Affleck v Newcastle Mind & Others [1999] ICR 852 Harrington v Coote (2013) 119 SASR 152 Ward v Eltherington [1982] Qd R 561 Cameron v Hogan (1934) 51 CLR 358 Fielding v Houison (1908) 7 CLR 393 Watkinson v Hollington [1944] 1 KB 16 City of Vancouver v BCP Telephone Co [1951] SCR 3 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Crabtree-Vickers v Australian Direct Mail Advertising & Addressing Co (1975) 133 CLR 72 Placer Development Limited v The Commonwealth of Australia (1969) 121 CLR 353 Bailes v Modern Amusements Pty Ltd [1964] VR 436 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 Allcars Pty Ltd v Tweedle [1937] VLR 35 Thorby v Goldberg (1964) 112 CLR 597 Yaroomba Beach Development Co Pty Ltd v Coeur De Lion Investments Pty Ltd (1989) 18 NSWLR 398 at 404 Head v Kelk (1963) 63 SR (NSW) 340 Egel v Drogemuller [1936] SASR 407 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Hospital Products Limited v United States Surgical Corporation and Others (1984) 156 CLR 41 Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640 Sheffield District Railway v Great Central Railway Co (1911) 27 TLR 451 Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135 Pips (Leisure Productions) Ltd v Walton (1980) 43 P & CR 415 Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163 MacarthurCook Fund Management Ltd v Zhaofeng Funds Ltd [2012] NSWSC 911 Hickman v Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881 Residues Treatment & Trading Co Ltd v Southern Resources Ltd (No 2) (1988) 51 SASR 177 Eley v Positive Government Security Life Assurance Co Ltd (1875) 1 Ex D 20 The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc (1994) 181 CLR 404 Hampton Court Ltd v Crooks (1957) 97 CLR 367 Attorney-General v Gould (1860) 28 Beav 485 Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 Attorney-General and Others v Church of England Property Trust Diocese of Sydney (1933) 34 SR (NSW) 36 The Attorney-General for New South Wales v The Perpetual Trustee Company (Limited) and Others (1940) 63 CLR 209 Alghussein Establishment v Eton College [1991] 1 All ER 267 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Re King; Jackson v Attorney General [1917] 2 Ch 420 Metropolitan Petar & Ors v Mitreski & Ors [2001] NSWSC 976 Maks v Maks (1986) 6 NSWLR 34 Mack v Lenton (1993) 32 NSWLR 259 Chapman v Luminis Pty Ltd (No 2) [2000] FCA 1010 Minassian v Minassian [2010] NSWSC 708 United Australia Limited v Barclays Bank Limited [1941] AC 1 Texts Cited: K.L. Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand, (1st ed 1986, The Law Book Company Limited) Stewart, Campbell, Baughen, The Law of Unincorporated Associations, (1st ed 2011, Oxford University Press) Macquarie Concise Dictionary (4th ed 2006, Macquarie Dictionary Publishers Pty Ltd) Oxford English Dictionary (2nd ed 1989, Oxford University Press) M. Furmston and G.J. Tolhurst, Contract Formation: Law and Practice, (1st ed 2010, Oxford University Press) LexisNexis Butterworths, Ritchie's Uniform Civil Procedure NSW, vol 2 (at Service 98) J.D. Heydon and M.J. Leeming, Jacobs' Law of Trusts in Australia (7th ed 2006, LexisNexis Butterworths) New South Wales, Parliamentary Debates, Legislative Assembly, 30 November 1916, 3139 (Attorney-General, D.R. Hall) Category: Principal judgment Parties: Proceedings 2014/75940 Anglican Development Fund Diocese of Bathurst in its own capacity and in its capacity as trustee of the Anglican Development Fund Diocese of Bathurst (receivers and managers appointed) - Plaintiff The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst - First Defendant Ellen Sharp - Second Defendant The Venerable Francis Hetherington - Third Defendant The Very Reverend Anne Wentzel - Fourth Defendant Robert Woods - Fifth Defendant The Reverend Canon Craig Moody - Sixth Defendant The Reverend Canon Margaret Finlay - Seventh Defendant The Reverend Canon Grahame Yager - Eighth Defendant The Reverend Brett Watterson - Ninth Defendant The Reverend James Hodson - Tenth Defendant The Reverend Gary Neville - Eleventh Defendant The Reverend Dr Max Wood - Twelfth Defendant The Reverend Leigh Gardiner - Thirteenth Defendant Marilyn Baker - Fourteenth Defendant Graham Leatherland - Fifteenth Defendant Coral McFarland - Sixteenth Defendant Ray Norman - Seventeenth Defendant Janet Price - Eighteenth Defendant Sue West - Nineteenth Defendant Leigh Edwards - Twentieth Defendant Anglican Property Trust Diocese of Bathurst (ABN 15 968 693 964) - Twenty-first Defendant All Saints' College Bathurst Council (ABN 43 418 897 717) - Twenty-second Defendant Bathurst Endowment of the See Board (ABN 89 509 521 070) - Twenty-third Defendant

Proceedings 2014/75947 Commonwealth Bank of Australia (ABN 48 123 123 124) - Plaintiff The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst - First Defendant Ellen Sharp - Second Defendant The Venerable Francis Hetherington - Third Defendant The Very Reverend Anne Wentzel - Fourth Defendant Robert Woods - Fifth Defendant The Reverend Canon Craig Moody - Sixth Defendant The Reverend Canon Margaret Finlay - Seventh Defendant The Reverend Canon Grahame Yager - Eighth Defendant The Reverend Brett Watterson - Ninth Defendant The Reverend James Hodson - Tenth Defendant The Reverend Gary Neville - Eleventh Defendant The Reverend Dr Max Wood - Twelfth Defendant The Reverend Leigh Gardiner - Thirteenth Defendant Marilyn Baker - Fourteenth Defendant Graham Leatherland - Fifteenth Defendant Coral McFarland - Sixteenth Defendant Ray Norman - Seventeenth Defendant Janet Price - Eighteenth Defendant Sue West - Nineteenth Defendant Leigh Edwards - Twentieth Defendant Anglican Property Trust Diocese of Bathurst (ABN 15 968 693 964) - Twenty-first Defendant All Saints' College Bathurst Council (ABN 43 418 897 717) - Twenty-second Defendant Bathurst Endowment of the See Board (ABN 89 509 521 070) - Twenty-third Defendant Representation: Counsel: Proceedings 2014/75940 A.G.Bell SC with P. Dowdy, B. Koch and E.L. Beechey - Plaintiff G.O. Blake SC with W.A.D. Edwards - First to Twenty-Third Defendants Proceedings 2014/75947 A. McGrath SC with S. Aspinall and J.D. Williams - Plaintiff G.O. Blake SC with W.A.D. Edwards - First to Twenty-Third Defendants

Solicitors: Proceedings 2014/75940 Henry Davis York - Plaintiff Bridges Lawyers - First to Twenty-Third Defendants Proceedings 2014/75947 Henry Davis York - Plaintiff Bridges Lawyers - First to Twenty-Third Defendants File Number(s): 2014/75940; 2014/75947 Publication restriction: Unrestricted

Judgment What this case is about Relevant legislation and ordinances Constitutional and administrative Church property Finance Some other Diocesan organisations and enterprises The Bank Facility The Collapse The Proceedings The hearing The Bank's Claims ADF's Claims BIC's responses The Bank Case Legally binding relations Authority Continuity Certainty Banking Code of Conduct, Contracts Review Act and Unconscionable Conduct Section 65 of the Supreme Court Act Church trust property The ADF Case Effect of Ordinances and Certificates Certificates for OAGS loans 5043, 5044, 5049 and MAGS loan 5042 What the 17 December 2009 Certificate for OAGS loan 5033 covers Reissue or replacement of Certificates Conclusivity Conclusions and Relief

What this case is about

HIS HONOUR: The Anglican Church in Australia (the Church) was originally known as the United Church of England and Ireland. In 1902 its name was changed to the Church of England in Australia, and in 1976 it became the Anglican Church of Australia.
The Church has a highly formalised governance structure. It is organised into geographical areas, each called (in one of its meanings) a diocese. Each diocese is the see of a bishop. There are 23 dioceses in Australia, one of which is the Diocese of Bathurst (the Diocese). The Diocese was formed in 1870 by the transfer of territory from the dioceses of Sydney and Newcastle. There have been some territorial adjustments since. Dioceses are organised on a provincial basis. Apart from Tasmania (which for historical reasons is treated separately), each Australian State corresponds to a Church province. Each diocese comprises smaller geographical areas called (in one of its meanings) parishes, within which there must be at least one licensed or consecrated church. The Diocese comprehends 34 parishes, three of which are in Bathurst, two are in Orange, and one is in Dubbo. In one of its meanings parish connotes merely a geographical area.
Nationally, governance of the Church resides in a committee known as General Synod, presided over by a bishop designated the Primate.
The Diocese is governed by its own Synod, which has a term of three years and meets at least annually. Unless otherwise stated, references to Synod are references to the Synod of the Diocese.
The activities of the Diocese are many and varied. They include commercial and other enterprises conducted through numerous corporate entities.
At no level does the Church itself, as an institution, have corporate existence. It is a series of unincorporated voluntary associations at different levels: national, provincial, diocesan and perhaps even parish.
Synod makes ordinances for the order and good government of the Church in the Diocese. Ordinances are, in effect, part of the rules of the voluntary association or consensual compact. However, as will appear below, their bindingness is affected by statute. Ordinances are amended from time to time. The most current version is designated by the year in which it was originally passed and the year in which it was last amended. The Diocese has a constitution. Under it, ordinances are binding upon the bishop and the bishop's successors and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holders of any office in the Church within the Diocese. When Synod is in recess, its powers are delegated to a committee known as Bishop-in-Council (BIC).
BIC was originally established by an Ordinance cited as the Bishop-in-Council Ordinance 1912, as a council which, '[i]n matters pertaining to the temporal affairs of the Church', would assist the Bishop, and with whose consent he would act in all such matters. That Ordinance was repealed by the Bishop-in-Council Ordinance 1990, the repeal not to extend to affect anything validly done pursuant to the repealed Ordinance. The current Ordinance regulating BIC is the Anglican Diocese of Bathurst Administration Ordinance 2003 - 2011 (the Administration Ordinance).
The Anglican Church of Australia (Bodies Corporate) Act 1938 (NSW) (the Bodies Corporate Act), which was assented to on 26 October 1938, is an Act to make provision for and with respect to the constitution of bodies corporate for the purposes of managing, governing and controlling institutions and organisations of the Church.
Sections 4, 6 and 9 of the Bodies Corporate Act provide: 4 Power to constitute further bodies corporate (1) In this section the expression unincorporated body means the board, committee, council or other body constituted (either before or after the commencement of this Act) by or under the authority of an ordinance of the Synod of a diocese for the purpose of managing, governing or controlling any institution or organisation of the Church of England, or of holding, managing and dealing with any church trust property. (2) The Synod of a diocese may, by ordinance, declare that it is expedient for the purpose of managing, governing or controlling any institution or organisation of the Church of England or of holding, managing or dealing with any church trust property subject to the control of that Synod, that the persons who for the time being are the members of the unincorporated body named in the ordinance should be constituted a body corporate under the name set out in the ordinance. (3) Where any such ordinance is passed the Governor may, by order published in the Gazette, declare that the persons who for the time being are the members of the unincorporated body shall be a body corporate, and, as from the date of such publication or from such later date as may be specified in the order, such persons shall become and be a body corporate under the name set out in the ordinance. (4) Any such body corporate shall for the purposes of this Act be deemed to have been constituted at the instance of the Synod of the diocese which passed the ordinance declaring the expediency of constituting the body corporate. … 6 Powers and functions of bodies corporate (1) Each body corporate constituted by or under this Act shall have perpetual succession and a common seal, may enter into contracts in its corporate name, may sue and be sued, and may take and hold any real or personal property. (2) Each body corporate constituted by or under this Act shall have and may exercise and perform the powers, authorities, duties and functions conferred or imposed by any ordinance of the Synod of the diocese at whose instance the body corporate was constituted: (a) upon the unincorporated body, the members of which are incorporated by or under this Act, or (b) upon the body corporate. … 9 Vesting of property … (4) Where the members of an unincorporated body are constituted a body corporate by or under this Act, the body corporate shall have and be subject to all the rights, powers, remedies, liabilities and obligations and may exercise and discharge all or any of the rights, powers and remedies which the members of the unincorporated body would have had and been subject to and might have exercised and discharged if the body corporate had not been so constituted. …
In 1990, Synod delegated the power under s 4(2) to BIC.
In 1998, by an Ordinance then known as the Anglican Diocese of Bathurst Stewardship for Ministry Fund Ordinance 1998, Synod ordained to establish a fund to be administered by a separate and independent body, to be known as the Anglican Diocese of Bathurst Stewardship for Ministry Fund, to receive deposits from persons or organisations (not being diocesan organisations, corporations or parishes) and to invest such monies for the purposes of returning a surplus to be used to provide financial support for ministry objectives for the Diocese. On 24 February 1999, the Governor declared the fund to be a body corporate in accordance with s 4(3) of the Bodies Corporate Act. By the Anglican Diocese of Bathurst Stewardship for Ministry Fund Amendment Ordinance 2004, its name was changed to the Anglican Development Fund Diocese of Bathurst. I will refer to it as ADF or the Fund. The name of the principal ordinance which established ADF was changed at the same time to the Anglican Development Fund Diocese of Bathurst Ordinance 1998 - 2008. The current version is 1998 - 2010 (the ADF Ordinance).
In 2007, it was decided that the Diocese would go, after a fashion, into the business of banking. ADF was chosen to be the Diocesan 'banker'. The idea was that instead of parishes and other Diocesan bodies individually borrowing money from commercial banks in dribs and drabs, as to that time had been the case, Church borrowing and lending would be centralised. All necessary funds would be borrowed by ADF from a bank and ADF would on-lend it to Diocesan organisations. It was intended that ADF would profit by lending at interest rates higher than the ones at which it borrowed. The ADF Ordinance was amended to give its Board the power to lend and advance money or give credit to any parish, school or any organisation subject to the control of Synod, whether on security or not, and to take security (if any) for money lent or advanced or credit given by it. The ADF Ordinance included a provision requiring its Board to adopt a Prudential Code of Practice.
A number of banks were approached. The Commonwealth Bank of Australia (the Bank) was finally selected as the institution from which ADF would borrow. The Bank's Relationship Manager, Mr Graeme Grundy, wrote that the Bank was 'honoured' to be selected as the preferred provider of financial services.
At the time, the Bank had (and perhaps still has) a specific lending policy styled Credit Counter-party Standards (or CCS), which applied to extending credit facilities to religious organisations. The Bank classified (and perhaps still does) religious organisations into two groups, A and B. Group A religious institutions were described as entities where special arrangements had been agreed to which dispensed with the need to lodge normal securities. These were listed as the Anglican Church, the Baptist Church, the Roman Catholic Church, the Church of Christ, the Presbyterian Church and the Uniting Church of Australia. From these institutions, the Bank would (and perhaps still will) accept as sole security for borrowings a letter of acknowledgment on the letterhead of the religious organisation executed by its authorised representatives. Group B religious organisations were all other religious organisations where no special security arrangements had been agreed to. In their case, a first ranking mortgage over the religious organisation's freehold land and improvements (i.e. the church and other specialised structures) was to be obtained.
By Letter of Offer dated 22 November 2007, the Bank offered ADF a facility of $50.1 million. This was accepted by ADF on 11 December 2007. The facility limit was reduced to $40 million pursuant to a request by ADF made on 7 April 2008.
The only 'security' required and taken by the Bank for repayment of the loan was a letter dated 24 April 2008, under the hand and seal of the Right Reverend Richard Hurford (who held office as Bishop of the Diocese from 10 February 2001 until his retirement on 6 November 2012), in the following form: text version of letter (645 KB, pdf) This type of instrument is variously described as a Bishop's Letter, Bishop's Guarantee, Bishop's Certificate, Episcopal Certificate, Letter of Comfort and Letter of Acknowledgement. I shall refer to the 24 April 2008 letter as the Letter of Comfort.
The Anglican Property Trust Diocese of Bathurst (APT or the Trust) is a Diocesan corporate entity. APT's original name was the Church of England Property Trust Diocese of Bathurst. It was constituted as a body politic and corporate under the provisions of the Church of England Trust Property Incorporation Act 1881 (44 Victoria) (NSW). As trustee, it owns a significant amount of property, real and personal, within the Diocese.
The ADF Board comprises the Bishop of the Diocese, the Bishop's Registrar, members of APT and members appointed by APT.
Clause 32 of the ADF Ordinance provides: 32 Guarantee The Fund shall be guaranteed by the Anglican Diocese of Bathurst to the extent that should there by [sic] any deficiency in funds, Bishop-in-Council shall promote an ordinance to levy the necessary funds from the parishes.
By the Bathurst Anglican Church Finance Ordinance 1959 - 2010 (the Finance Ordinance), APT has the power and duty to investigate all applications for guarantee by the Diocese to any bank or other lending body or persons for loans for parochial or other purposes which may be referred to it by Diocesan organisations, and to report to the Bishop any loan proposed to be made, together with its recommendation in respect thereof.
Clause 2 of the Finance Ordinance (hence the reference in the Letter of Comfort) provides: In any case in which the Trust has recommended approval of an advance as aforesaid the Bishop may and he is hereby authorised and empowered to certify to the Bank or other lending body or persons (including parishioners) willing to make the advance to such parish, parochial district, provisional district or other organisation or corporation that the Diocese of Bathurst accepts responsibility therefore, provided however that where the advance to be made exceeds the prescribed sum the Bishop is neither authorised nor empowered to certify as aforesaid unless and until Synod or Bishop-in-Council has by resolution approved such advance.
Clauses 3, 4 and 5 of the Finance Ordinance provide: 3 The Certificate of the Bishop given under the last preceding clause hereof shall in favour of the bank or lending body or persons (including parishioners) be conclusive evidence that the provisions of this Ordinance have been duly complied with. 4 In the event of the Trust reporting to the Synod or Bishop-in-Council any case of default in pursuance of Clause 1(c) hereof the Synod or Bishop-in-Council shall take such action by ordinance or otherwise to cause the same to be rectified as it may think fit. 5 That in the event that the Diocese shall, by reason of default of a parish parochial district, provisional district, or other organisation or corporation in respect of which such approval is given, pay or be called upon to pay any principal interest or other moneys to a bank or other lending body or persons (including parishioners) the same shall be paid out of the "Diocese of Bathurst Synod Management Fund" and thereupon such payments may be refunded and recouped to the Diocese by levies on all of the parishes of the Diocese in such proportions and at such times and in such manner as the Synod or the Bishop-in-Council thereof may determine.
To put it mildly, the Diocesan banking enterprise did not fare well.
ADF proceeded to borrow some $40 million from the Bank, which it on-lent to various Diocesan bodies and enterprises. A significant part of the money was lent to two start-up schools (each operated by a Diocesan body corporate) known respectively as Macquarie Anglican Grammar School (or MAGS) and Orange Anglican Grammar School (or OAGS). From 9 May 2008 to 16 December 2011, in some 19 transactions, ADF advanced $28,095,529.00 to OAGS and MAGS.
In most but not all instances where ADF lent to the schools, the Bishop provided a letter either in the following form, or in a form which includes contents materially indistinguishable from it: The [Macquarie Anglican Grammar School in the Diocese or Orange Anglican Grammar School Council in the Diocese - as the case may be] requires a loan facility totalling $[Amount] to be guaranteed by the Diocese of Bathurst. Pursuant to clause 2 of the Bathurst Anglican Finance Ordinance, I now certify that the Diocese of Bathurst accepts responsibility for an advance by your fund by way of a loan. It is understood that such advance or so much thereof as shall for the time being remain owing and interest thereon at the usual rate charged by your fund and any account fees shall be payable to your fund in accordance with the terms of the loan. I shall refer to this form of instrument as a Certificate.
Over the period during which ADF lent money to the schools, each of the following persons were at some time a member of the ADF Board: Bishop Hurford (who was also President of APT and of both schools), Mr Bruce Henderson (who was also a member of BIC, a member of APT and chairman of MAGS council), Mrs Marilyn Robey, Mr Adrian Scarra (who was Diocesan treasurer, a member of BIC, a member of APT and a member of the council of both schools), Mr Maxwell Ingersole (who was also a member of BIC and APT), the Reverend Canon Carla Archer (who was also a member of BIC and APT), Mr Graham Leatherland (who was also a member of BIC and APT), the Venerable Robert Howell (who was a member of BIC and APT - he passed away on 13 August 2012), the Right Reverend Peter Danaher (who was also a member of APT and of the council of both schools), Mrs Mary Wainwright - nee Cleasby (who was also a member of APT), Bishop John Stead (who was also a member of BIC and APT), and Mr Tony Card (who was also a member of APT).
Operating costs and deficits incurred by the schools were funded with borrowings. Enrolments did not meet expectations. There were staffing problems. The schools were overladen with debt, could not sustain themselves, and were incapable of repaying the borrowed monies. ADF had internal lending guidelines which were not heeded by its Board. Such was the parlous position of the schools that some of the loans were described as emergency loans. On various occasions, Board members were placed in a position of having to approve loans at short notice without appropriate documentation. It is fair to say that the majority of the Board members simply did not have the capability to discharge the task with which they were burdened. Independent reports obtained by the Board made it clear that without a significant injection of equity and a reduction in the loan burden, the schools could not survive. Even though there was no injection of equity, the Board ploughed ahead in lending moneys to the schools, motivated by their belief in the overarching mission of the Church in general and the Diocese in particular to spread Christianity in the Anglican tradition. With one or two exceptions, the mind of the Board was unanimous.
Inevitably, ADF defaulted in its obligations to the Bank. On 30 September 2013, it notified the Bank that the commercial bills which matured that day should not be rolled-over.
On 1 October 2013, the Court appointed Barry Fredric Kogan and Joseph David Hayes to be receivers to ADF (the Receivers) on an interim basis. At the same time, the Court entered judgment against ADF in favour of the Bank for $36,063,742.57 (plus costs). The Receivers' appointment was made final on 15 October 2013.
On 23 October 2013, the Court appointed receivers to MAGS and OAGS. The schools' assets, consisting of real estate and businesses, were sold to the Sydney Anglican Schools Corporation. In the case of MAGS, $7.1 million was paid for its land and $160,000.00 for its business. In the case of OAGS, $3.59 million was paid for its land and $150,000.00 for its business component. After adjustments for long service leave and the like, both MAGS and OAGS were left owing money back to the buyer.
As at 19 February 2014, the following persons were members of BIC, and, unless otherwise stated, still hold office: ● The Right Reverend Ian Stanley Palmer, who succeeded Bishop Hurford as Bishop of the Diocese on 30 November 2012; ● Mrs Ellen Sharp - resigned 29 August 2014; ● The Venerable Francis (Frank) Hetherington; ● The Very Reverend Anne Wentzel; ● Sir Robert Woods; ● The Reverend Canon Craig Moody - resigned 7 September 2014; ● The Reverend Canon Patricia Margaret Finlay; ● The Reverend Canon Grahame Yager; ● The Reverend Brett Watterson; ● The Reverend James Hodson - there is a question as to whether Reverend Hodson vacated office in July 2013 or in February 2014; ● The Reverend Gary Neville; ● The Reverend Dr Maxwell Wood - resigned 25 May 2014; ● The Reverend Leigh Gardiner - resigned 15 January 2015; ● Mrs Marilyn Baker - resigned 23 February 2015; ● Mr Graham Leatherland; ● Mrs Coral McFarland - resigned 26 February 2015; ● Mr Raymond (Ray) Norman; ● Mrs Janet Price; ● Mrs Suzanne (Sue) West; and ● Mrs Leigh Haywood (Edwards).
Unless the context otherwise indicates, references below to old BIC may be taken to mean BIC as it was constituted on 24 April 2008, and references to BIC or new BIC may be taken to mean BIC as it was constituted on 19 February 2014.
On 19 February 2014, the Receivers, on behalf of ADF, called on APT to undertake the duties imposed by the Finance Ordinance and report the defaults of MAGS and OAGS to BIC. On the same day, the Receivers wrote to BIC recording that MAGS and OAGS had defaulted, and demanding that BIC take all necessary steps in accordance with its obligations under the Certificates and cl 32 of the ADF Ordinance to rectify the defaults and make up ADF's deficiency in funds. The Receivers demanded that BIC issue ordinances for the sale of Diocesan assets, the proceeds of such sales to be paid to ADF in reduction of the amount owing to it by the schools.
On 24 February 2014, the Bank wrote to each member of BIC recording that ADF had defaulted and that the Bank had obtained judgment against ADF, and asserting that the facilities provided to ADF were secured by the Letter of Comfort. The Bank demanded that BIC take all necessary steps in accordance with its obligations under the Letter of Comfort and cl 32 of the ADF Ordinance to make good the shortfall suffered by the Bank in respect to the amounts advanced under the facilities. The Bank demanded that BIC issue ordinances for the sale of Diocesan assets.
ADF's principal creditors are the Bank and APT. ADF recovered some monies lent to other Diocesan enterprises, including a fund known as the Synod Management Fund. As a consequence of the sale of the schools, ADF recovered some of the money it lent to MAGS and OAGS. It made distributions to the Bank and to APT. As at 14 April 2015, ADF had a deficiency on creditors' claims of $25,363,074.92.
The collapse of ADF prompted the commencement of three actions in this Court. They were heard together.
In the first action (the Board Case), ADF (controlled by the Receivers) sued the individual members of its Board for compensation, alleging that in committing ADF to the loans to the schools, they had acted in contravention of statutory duties under ss 180(1) and 181(1) of the Corporations Act 2001 (Cth) (the Corporations Act) to exercise their powers and discharge their duties with the requisite degree of care and diligence in good faith in the best interests of ADF and for proper purposes. Each Board member sought orders pursuant to s 1317S of the Corporations Act, relieving him or her from liability. As well, they cross-claimed against the Bank alleging that it would be unconscionable conduct on its part to participate in or receive a distribution through ADF via recovery by ADF from the Board when, they say, the Bank was a knowing and full participant in the decisions by the Board to advance money to the schools.
After 34 days of hearing, the Board Case was settled with a verdict in favour of ADF for $11.3 million, and the dismissal of all cross-claims. The result is that the total ADF deficiency has been reduced to $14,063,074.92. Some of the settlement amount will no doubt find its way to the Bank and APT.
In the second action (the Bank Case), the Bank sues BIC as, in effect, the 'management committee' of the Diocese, seeking, amongst others, a declaration that BIC has a binding legal obligation to ensure that the sum of $14,063,074.92 is paid to ADF from real and personal property comprising church trust property held on behalf of the Diocese to enable ADF to meet its financial commitments to the Bank. It relies on the Letter of Comfort as a binding contract in its own right and on the certification in it under cl 2 of the Finance Ordinance as imposing on BIC such an obligation in its favour. It seeks ancillary orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod to pay the said sum. The Bank also seeks a declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency in funds owing by ADF to the Bank from real and personal property comprising parochial (or parish) church trust property held on behalf of the Diocese, together with ancillary orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod to pay the said sum. The Bank's Summons also contains prayers for damages and further or other relief.
In the third action (the ADF Case), ADF sues BIC as, in effect, the 'management committee' of the Diocese, seeking a declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency of funds in ADF of $14,063,074.92. It also seeks a declaration that cl 2 of the Finance Ordinance together with the Certificates issued under it creates a binding legal obligation on BIC to repay $11,050,762, being the total amount of the loans to the schools outstanding and allegedly covered by those Certificates, from real and personal property comprising church trust property held on behalf of the Diocese. It seeks orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod, to discharge the asserted obligations. It seeks orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod and which hold parochial property, to pay the said sum. Its Summons includes prayers for damages and further or other relief. Plainly, it cannot obtain, and does not seek, double recovery.

Relevant legislation and ordinances

Various statutory enactments and ordinances are pertinent to the issues in this case. For ease of reference, I have attempted to divide them respectively (recognising both that the categories are not clearly defined and also that there is overlap) into those which concern the constitutional operation and administration of the Church in general, those which concern church trust property, those which concern finance, and those which relate to relevant Diocesan enterprises or corporations.
I will use the term 'Church rules' as a general description for legislation, provisions of Constitutions and ordinances which apply to the Diocese.

Constitutional and administrative

In April 1866, at a General Conference in Sydney of Bishops and Clerical and Lay representatives of the Church in New South Wales, certain articles and provisions were agreed to and accepted as Constitutions for the management and good governance of the Church in this State. It was recognised that such agreement could not, as regards the management of the property of the Church, be carried into effect without the aid of legislation. This was achieved by the Church of England Property Management Act 1866 (Act 30 Victoria) (NSW), assented to on 4 October 1866, ss 1 and 2 of which provided: 1. The several articles and provisions contained in the said Constitutions and any rules and ordinances to be made under or by virtue or in pursuance thereof are and shall for all purposes relating to the property of the said United Church of England and Ireland within the Colony of New South Wales be binding upon the members of the said Church. And all persons now or at any time hereafter holding any real or personal estate in trust for or in any way on behalf or for the use of the said Church except in so far as such real or personal estate may be the subject of any express trust and then so far as such express trust shall not extend shall hold the said real and personal estate subject to the said rules and shall be bound thereby as fully in all respects as if the said rules were contained in a deed of conveyance and trust of the said real and personal estate. 2. Provided always that no rule or ordinance to be made under or by virtue or in pursuance of the said Constitutions shall be in contravention of any law or statute in force for the time being in this Colony.
The 1866 Act was repealed by the (now named) Anglican Church of Australia Constitutions Act 1902 (NSW) (the 1902 Act), ss 4, 5, 6 and 7 of which provide as follows: 4 Constitutions to be binding The several articles and provisions of the constitutions contained in the Schedule to this Act, and any ordinances and rules to be made under or by virtue or in pursuance thereof, are and shall be for all purposes connected with or in any way relating to the property of the Church of England within the State of New South Wales binding upon the members of the said Church. 5 Church property to be held subject to constitutions All persons now or at any time afterwards holding any real or personal estate in trust for or in any way on behalf or for the use of the Anglican Church of England, except in so far as the real or personal estate may be the subject of any express trust, and then so far as such express trust shall not extend, and except lands, the management of which may be already specially provided for by ordinance of Synod or by Act of Parliament, shall hold the said real and personal estate subject to the provisions of the constitutions and of any ordinances or rules made thereunder, and shall be bound by them as fully in all respects as if the constitutions, ordinances, and rules were contained in a deed of conveyance and trust of the real and personal estate. 6 No ordinance or rule to be in contravention of law No ordinance or rule to be made under or by virtue or in pursuance of the said constitutions shall be in contravention of any law or statute in force for the time being in this State. 7 Not to affect other Church Acts This Act shall not repeal or in any way cut down or abridge the provisions of the Church of England Trust Property Incorporation Act 1881, the Sydney Bishopric and Church Property Act 1887, the Church of England Property Act of 1889 or the Church Acts Repealing Act of 1897.
The then Constitutions for the management and good governance of the Church within New South Wales were contained in the Schedule to the 1902 Act. Articles 3, 6 and 29 of those Constitutions were in the following terms: 3 Power of Synod generally The Synod of each Diocese may make ordinances upon and in respect of all matters and things concerning the order and good government of the Church of England and the regulation of its affairs within the Diocese, including the management and disposal of all Church property, moneys, and revenues (not diverting any specifically appropriated, or the subject of any specific trust, nor interfering with any vested rights), except in accordance with the provisions of any Act of Parliament, and for the election or appointment of churchwardens and trustees of churches, burial grounds, church lands, and parsonages. And all ordinances of the Synod shall be binding upon the Bishop and his successors, and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holding any office in the said Church within the Diocese. … 6 Mode of voting and quorum At the first meeting of a Synod in any Diocese the presence of not less than one-fourth of the members of each order shall be necessary to constitute a quorum. And every rule or ordinance of a Synod shall be made by a majority of the clergy and representative members present and voting collectively: Provided that in any Synod if any eight members of one order shall so desire the votes shall be taken by orders and, if a vote be taken by orders, a majority of members of each order present and voting shall be required: Provided that no such rule or ordinance shall take effect or have any validity unless within one month after the passing of the same the Bishop shall signify his assent thereto in writing: Provided also that any such rule or ordinance to which the Bishop shall not assent may be the subject of reference to and determination by any Provincial Synod composed of the representatives of the Diocesan Synods of the State of New South Wales. … 29 Amendments These articles and provisions may be amended by an ordinance passed by the Provincial Synod of the Church in the Province of New South Wales and adopted by the Synod of each Diocese in that Province if the amendment is ratified by, or made in accordance with, a canon of the General Synod of the Church.
In 1955, steps were taken by General Synod, with the cooperation of dioceses in New South Wales and other States, to have a National Constitution. In New South Wales, this was implemented by way of the Anglican Church of Australia Constitution Act 1961 (NSW) (the 1961 Act), ss 2, 3, 4 and 5, of which provide as follows: 2 Constitution, canons and rules to be binding for Church property purposes The several articles and provisions of the Constitution contained in the Schedule to this Act (hereinafter called the Constitution) and any canons and rules to be made under or by virtue or in pursuance thereof are and as provided in the Constitution shall be for all purposes connected with or in any way relating to the property of the Church of England in Australia binding on the Bishops, clergy and laity being members of the Church of England in Australia in the several Dioceses of the Church of England within the State of New South Wales. 3 Effect of canons and rules Any canon or rule made under or by virtue or in pursuance of the said Constitution which contravenes any law or statute in force for the time being in the said State shall to the extent of such contravention be incapable of having any force or effect. 4 Church of England Constitutions Act Amendment Act 1902 - operation restricted Any provision of the Church of England Constitutions Act Amendment Act of 1902 which is inconsistent with the provisions of this Act and the Constitution shall to the extent of such inconsistency be inoperative in the several Dioceses of the Church of England within the said State: Provided that this section shall not prejudice or affect the previous operation of the said Act, or any proceeding matter or thing lawfully done or suffered under the said Act before this Act comes into operation. 5 Church Trust Property The Church of England Trust Property Act 1917, as amended, shall continue to apply to Church Trust Property within the meaning of the Act, and in the said Act all references to the Church of England shall include the Church of England in Australia.
The effect of the 1961 Act was not to repeal the 1902 Act, but to render inoperative any provision of the earlier Act which was inconsistent with the later one. Article 47 of the National Constitution provided, relevantly, that the constitution of each diocese would, subject to the National Constitution, continue until altered in accordance therewith. Article 51 of the National Constitution provides that diocesan synods can continue to make ordinances for the order and good government of the Church within the diocese 'in accordance with the powers in that behalf conferred upon it by the constitution of such diocese'. Article 71(1) provides that every consensual compact and every enactment in force in the dioceses, insofar as they are not inconsistent with the Constitution, continue in force in the diocese until altered under the Constitution or under the constitution of a diocese.
In 1998, the Diocese, acting pursuant to Art 29 of the National Constitution, by way of an ordinance described as the General Synod Canons Adoption Ordinance 1998, adopted a new Constitution for New South Wales. The presently relevant articles of the New South Wales Constitution are: Power of Synod Generally 2. (1) The Synod of each Diocese may make ordinances upon and in respect of all matters and things concerning the order and good government of the Anglican Church of Australia and the regulation of its affairs within the Diocese, subject only to the Anglican Church of Australia Constitution Act 1961 and any other Act in force in this State. (2) All ordinances of the Synod shall be binding upon the Bishop and the Bishop's successors and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holders of any office in the Church within the Diocese. Specific Powers 3. … (2) The Synod of each Diocese may call upon any person holding property belonging to or held in trust for the Church in the Diocese or any part thereof, or in which the Church or any part thereof is in any manner interested, to render a full account of all such property, and of the manner in which the same and every part thereof is applied and disposed of. ... Rules for conduct of business 4. (1) The Synod of each Diocese may make rules for - (a) the conduct of all business coming before it; (b) trying the validity of the election of any representative; (c) supplying any vacancy in the Synod which may be occasioned by death, resignation or any other cause; and (d) determining for what reason any representative shall be disqualified from sitting and voting in the synod. (2) The Synod of each Diocese may make rules for - (a) subject to clause 1(2), altering the periods within which and the manner in which subsequent Synods shall be convened; (b) the mode of electing representative members; (c) regulating the number of the clergy and representative members to be respectively summoned to any future Synod; and (d) as to the manner in which such regulation shall be effected, and as to the number necessary to constitute a quorum. (3) The rules in force when this clause takes effect shall continue to apply until varied pursuant to this clause. 5. Notwithstanding anything in clause 4 or any rule made thereunder - (a) every ordinance, rule or resolution of a Synod shall be made by a majority of the clergy and other members present and voting collectively, provided that a synod may determine that a special majority be required for any particular matter or class of matter before it; (b) if any eight members of one order shall so desire, votes on any ordinance, rule or resolution shall be taken by orders and on such vote a majority of members of each order present and voting shall be required; (c) no ordinance shall take effect or have any validity unless within one month after the passing of the same the Bishop shall signify assent thereto in writing provided that any ordinance to which the Bishop shall not assent may be referred by resolution of the Synod, to the Provincial Synod and if the Provincial Synod shall assent to the ordinance, the ordinance shall take effect on the Provincial Synod giving its assent; (d) the Bishop of the Diocese, or in the absence of the bishop a commissary appointed by such Bishop in writing or, in the absence of the Bishop and of such commissary, a person selected by the Synod shall be present of the Synod, and may adjourn, prorogue, and dissolve the same with the concurrence of the Synod; and (e) it shall not be lawful for the president to vote on any question or matter arising in the Synod.
The primary ordinance regulating the administration of the Diocese is the Administration Ordinance. It is a comprehensive instrument providing, amongst others, for the appointment and removal of various Diocesan officials and officers (including a Registrar of the Diocese), representation at Synod, and the formation and authority of BIC.
The introductory section of the Administration Ordinance is headed 'Fundamental Declarations and Ruling Principles' and provides as follows: FUNDAMENTAL DECLARATIONS AND RULING PRINCIPLES 1 This Diocese holds and approves the Fundamental Declarations and the Ruling Principles contained in the Constitution of the Anglican Church of Australia and reprinted in Schedule A of this Ordinance to be the basis upon which the church in this Diocese is built and maintained. 2 The purpose and ministry of the Anglican Church in this Diocese is, by the grace of God, to proclaim the Gospel of Christ and administer His sacraments to His Church and by our lives witness to the love of God for all people. The Church in this Diocese exists to encourage and equip its members in these tasks in the communities in which they live and work. 3 By baptism each member of the Church is called to ministry according to his or her gifts. Within our Anglican tradition we recognise that some are called to the threefold order of Ordained Ministry as Bishop, Priest or Deacon. All Christian people lay and ordained are called and equipped by God for the building up of the body of Christ. 4 Good order in Church administration is part of the ministry of this Diocese. In the administration of its affairs the people of the Diocese express their thanks to God for his gifts both spiritual and temporal, model themselves as a community upon the life and teaching of Christ and exercise the fruits and gifts of the Holy Spirit with faith and generosity. 5 The rules ordering the administration of the Church in this Diocese having become unwieldy, in some cases outdated and in others unworkable, this Diocese has resolved at this time to consider afresh all matters relating to the administration of the Diocese.
Clause 103, entitled 'Definitions', contains, amongst others, the following definitions: Bishop: The Bishop of Bathurst or in the event of the Bishop of Bathurst being absent from the State of New South Wales or of a vacancy in that office the person next entitled to administer the Diocese of Bathurst during the absence or vacancy in accordance with this Ordinance. Bishop in Council: The Council constituted by section 400 of this Ordinance. Corporate Trustees OR The Anglican Property Trust: The Anglican Property Trust Diocese of Bathurst Communicant Member of the Anglican Church of Australia OR Communicant Member: A person who has (i) been baptised; and (ii) been confirmed or received into the Church according to the rites and ceremonies of the Anglican Church of Australia; and (iii) is over the age of 18 years; and (iv) has made at least three communions in an Anglican Church during the previous twelve calendar months Diocese: Diocese of Bathurst Parish: A geographical area the boundaries of which are determined and registered by Bishop-in-Council and which contains at least one licensed or consecrated church.
Clause 200 of the Administrative Ordinance provides that the Bishop of Bathurst is the chief pastor of the Diocese.
Chapter 4 of the Administrative Ordinance, which includes cll 400 - 423, concerns BIC.
Clause 400 provides that: There shall be a Council formed in accordance with this Ordinance to be the advisors to the Bishop. This Council together with the Bishop is hereafter referred to as "Bishop-in-Council".
Clause 401 provides that BIC shall consist of: (a) The Bishop, (b) Any Assistant Bishop, (c) The Diocesan Archdeacon, (d) The Dean, (e) The Regional Ministry Co-ordinators, (f) The Chancellor, (g) The Registrar, (h) The Diocesan Treasurer and (i) 12 other members of whom 4 shall be clergy and 8 lay persons.
Clause 410 provides that the primary duty of BIC is to provide advice to the Bishop in the exercise of his responsibilities in the administration of the Diocese and to act as the Standing Committee of Synod.
Clauses 411(a) and (h) provide: 411 Bishop-in-Council has the following specific duties; (a) To administer such funds as may from time to time be placed under its control by Ordinances of the Synod or otherwise and to submit to Synod a report upon such financial matters together with the report of the auditors. … (h) To discharge all duties specifically assigned to it from time to time by the Synod of the Diocese under Ordinances or resolutions and generally during the recess of Synod to guide and control the temporal affairs of the Diocese consistently with the constitutions of the Anglican Church of Australia and the Ordinances of Synod. …
Clause 412 provides that BIC may, during the recess of Synod, exercise in the place of Synod all or any of the powers and functions, and do and make all or any of the things referred to in various sections 11, 12, 13, 14, 15, 16, 19, 23, 25, 26, 26A, 27, 27A, 32, 32A, 32B or 37 of the Anglican Church Trust Property Act 1917 (NSW) (the Trust Property Act) as amended, sections 3, 5, 6, 7, 10 and 11 of the Anglican Church (Bodies Corporate) Act 1938 and subject to Art 7(2) of the 1902 Constitutions, Arts 2(1) and 3(2).
Clause 419 provides that the Registrar is responsible for, and shall have in his or her custody, all deeds, oaths and declarations and other official documents relating to church trust property, licensed clergy and other Diocesan officers, and generally all other matters committed to the management of BIC.
Clause 420 provides that the Bishop shall chair each meeting of BIC provided that the Bishop, whether present or absent from the meeting, may request a member of BIC to chair the meeting for the whole or part of its course.
The Administration Ordinance contains provisions which reflect the nature and functions of Parishes, including that the Parishioners have the right to participate in the choice of person who is to be the Parish Priest, that in each Parish there must be an Annual Parish Meeting at which only persons who are communicant members of the Anglican Church of Australia are permitted to participate, and which must receive a financial report and an audited statement of accounts and consider general business.
The Administration Ordinance contains provisions dealing with Church buildings and grounds. Clause 600 provides: (1) All grounds and buildings of the Diocese of Bathurst or of a Parish or organisation of the Diocese are generally owned at law by the Anglican Church Property Trust Diocese of Bathurst on trust for the purposes of the Anglican Church of Australia in this Diocese (2) Such trust may be for Diocesan, Parish or other use as recited in the relevant declaration of trust.
Clause 597(1) provides that funds of a Parish shall be held on trust for the purposes of the Anglican Church of Australia in that Parish and for such other Diocesan and missionary purposes as may be specified by Ordinance.
The Accounts and Reporting (Organisations and Corporations) Ordinance 2004 lays down accounting and reporting requirements for organisations and corporations and for any parish which BIC directs shall comply with the Ordinance. It applies to diocesan organisations and funds and corporations constituted under the Bodies Corporate Act, and requires the members of each organisation and corporation to lay before each ordinary session of Synod audited financial statements in accordance with Australian accounting standards. The members of each organisation and corporation are required to send to BIC a copy of such documents at least four months before the end of the financial year. Clause 8 empowers BIC to call upon any organisation or corporation to furnish additional information on its assets, liabilities, income and expenditure, as BIC may require.

Church property

The Church of England Trust Property Incorporation Act 1881 (44 Victoria) (NSW) provided for the vesting of property of the Church in corporate trustees, of which APT is one.
There appears to have been some doubt as to the efficacy of the creation of APT. By s 5 of the Trust Property Act, the 1881 Act was repealed.
The Trust Property Act declares that APT, along with a number of other bodies, had been duly constituted under the 1881 Act and provides that, notwithstanding the repeal of the 1881 Act, APT remains so constituted. It provides that a Bishop of a diocese shall ex officio be a member of the corporate body so constituted.
The preamble to the Trust Property Act includes the following: WHEREAS the Acts relating to property held upon any trust for or for the use, benefit, or purposes of the Church of England in dioceses within New South Wales, and the Acts conferring powers upon the synods of the dioceses with reference to the said property are numerous, ambiguous, and discursive, and it is therefore expedient to consolidate and amend the same
Section 4 of the Trust Property Act defines: Church trust property to include all or any part of any real and personal property which may for the time being be subject to any trust whether by dedication, consecration, trust instrument, or otherwise, for or for the use, benefit, or purposes of the Church of England in any diocese, and each such diocese is referred to as the diocese for which the church trust property in question is held. Corporate trustees and Corporate body of trustees respectively include corporate bodies of trustees now or hereafter to be constituted for any diocese under the provisions of the Church of England Trust Property Incorporation Act 1881 hereby repealed or of this Act. Diocese to include any diocese now or hereafter to be formed and situated within New South Wales, or partly within and partly outside New South Wales and the identity of a diocese shall be deemed not to be affected by the formation wholly or partly thereout of a new diocese nor by any other alternation of boundaries or area nor by any change of name. Parish includes any parish or ecclesiastical district now or hereafter to be formed and situated within New South Wales. … Purposes includes religious, educational, cemetery, and all other purposes of the Church of England, whether such purposes are within or beyond the diocese or the State. … Trust instrument includes ordinances of synod and Acts of Parliament, though not expressly mentioned herein.
The following further sections of the Trust Property Act are pertinent: 3 Amendment (1) Sections 5 and 7 of the Anglican Church of Australia Constitutions Act 1902 and clauses 3 and 6 of the Schedule to the said Act and all Acts and parts of Acts relating to church trust property shall, so far as may be necessary for the purposes of this Act, be read as amended and supplemented by this Act. … 18 Bishops Every person for the time being acting and recognised as being the bishop of a diocese … shall in the construction of all Statutes, Acts, grants, deeds, and other instruments be deemed to be and shall be the successor of the bishop of such diocese… and shall in all respects within such diocese have and enjoy all and singular the same rights, powers, and privileges, whether created by Statute, Act, grant, deed, or other instrument whatsoever as were enjoyed or possessed therein by the bishops his predecessors… … 24 Management It shall be lawful for the synod of a diocese for which any church trust property is for the time being held, from time to time by ordinance, to provide and to vary any provision now or hereafter to be made for governing and controlling the management and user of such property for the purposes for which the same is for the time being held in trust, and for all things incidental to such government and control, including constitutions of councils, committees, and other bodies, whether incorporated or not, and such property shall be held, managed, and used under and in accordance with such ordinance accordingly, the provisions of the trust instrument or instruments (if any) to the contrary notwithstanding. 25 Investment It shall be lawful for the synod of a diocese for which any church trust property is for the time being held, from time to time by ordinance, to provide and to vary any provision now or hereafter to be made for the investment of such property, and for the pooling of separate church trust properties for the purpose of investment, and for averaging gains, losses, and interests, and for all other matters and things incidental to such investment and pooling. … 26 Synod may direct sales or other dealings (1) It shall be lawful for the synod of the diocese for which any church trust property is for the time being held if it shall appear to such synod expedient by reason of circumstances subsequent to the creation of the trusts of such property by ordinance to direct that such property be sold, exchanged, mortgaged, or let on mining, building, occupation, or other leases, or otherwise dealt with in manner provided by such ordinance, and to provide for accepting the surrender of any lease thereof and for laying out and dedicating parts thereof for any purpose or purposes, and to provide for the application of the real and personal property arising from any such sale, exchange, mortgage, letting, or other dealing as aforesaid: Provided that in the cases of the Diocese of Canberra and Goulburn no such ordinance in respect of property held for the sole benefit of some particular parish shall be assented to under the Anglican Church of Australia Constitutions Act 1902, or any Act amending or taking the place of the same, without the consent in writing of a majority of the members of the parish council (if any) for the time being of the parish, and in the case of property gratuitously granted or assured within twenty years preceding the time being by any private donor without the like consent of such donor if living. (2) Despite subsection (1), an ordinance in relation to property held for the sole benefit of some particular parish in the Diocese of Sydney may only be assented to under the Anglican Church of Australia Constitutions Act 1902: (a) either: (i) with the written consent of a majority of the members of the parish council (if any) for the time being of the parish, or (ii) if the ordinance was passed by at least two-thirds of the members of the synod of the Diocese of Sydney present and voting, and (b) with the written consent of any living private donor who gratuitously granted or assured the property to the parish within the period of 20 years before the date of assent to the ordinance. … 29 Protection of purchasers etc No purchaser, mortgagee, lessee, or other person, or the Registrar-General, upon any sale, exchange, mortgage, lease, or other dealing purporting to be made under the powers granted by or under this Act, shall be concerned to see or inquire into the necessity or propriety thereof, or the mode of exercising the same nor be affected by notice that the exercise of the power is unauthorised, irregular, or improper, nor be concerned to see to the application or disposition of any purchase, mortgage, or other money or rent paid by him. 30 Discharge for purchase moneys etc The moneys (if any) arising from any sale, exchange, mortgage, lease, or other dealing purporting to be made under the powers granted by or under this Act shall be paid to the trustee or trustees in whom the property, the subject matter of such sale, exchange, mortgage, lease, or other dealing immediately theretofore vested, or to such other person or persons as the ordinance (if any) directing such sale, exchange, mortgage, lease, or other dealing may provide. And the receipt of the said trustee or trustees, or other person or persons, as the case may be, shall be an effectual discharge therefor. … 32 Power of synod to vary trusts etc In each case where by reason of circumstances subsequent to the creation of the trusts, including trusts declared under this section, to which any church trust property is for the time being subject, it has in the opinion of the synod of the diocese for which such property is held become impossible or inexpedient to carry out or observe such trusts, it shall be lawful for the synod of such diocese by ordinance to declare such their opinion, and by the same or any subsequent ordinance to declare other trusts for or for the use, benefit, or purposes of the Church of England within the said diocese instead of such first-mentioned trusts, and such first-mentioned trusts shall thereupon by force of the said ordinance cease and determine, and such property shall thereupon be held upon such other trusts accordingly: Provided that such property shall be dealt with and applied for the benefit of the Church of England in the parish or parishes (if any) for the benefit of which such property was immediately before such ordinance held in trust, and for the same purposes as nearly as may be as the purposes for which such property was immediately before such ordinance held unless the synod of such diocese shall by ordinance declare that by reason of circumstances, subsequent to the creation of the first-mentioned trusts, it is, in the opinion of the synod, impossible or inexpedient to deal with or apply such property or some part thereof for the use or benefit of such parish or parishes or for the same or the like purposes, in which case such property or such part thereof may be dealt with and applied for the use and benefit of the Church of England for such other purposes and in such other parish or parishes in the said diocese or otherwise as shall be declared by ordinance of the synod of the said diocese. … 40 Delegation of powers etc of synod During the recess of the synod of a diocese such committee, council, or other body of persons (if any) as shall from time to time be constituted or appointed for the purpose by or under ordinance of the synod of such diocese may, in place of the synod of such diocese, exercise such of the powers and functions, and do and make such of the things referred to in this Act as shall from time to time be determined by ordinance of the synod of such diocese, and the synod of such diocese may, for the purpose aforesaid, from time to time by ordinance regulate the procedure of such committee, council, or other body of persons: Provided that no ordinance passed by any such committee, council, or other body of persons as aforesaid shall take effect or have any validity unless within one month after the passing thereof the same shall be assented to under the Anglican Church of Australia Constitutions Act 1902 or some Act amending or taking the place of the same.
The Bodies Corporate Act has been referred to earlier. It warrants mention that s 1(2) of that Act provides '[t]his Act shall be read and construed with the Church of England Trust Property Act 1917, as amended by subsequent Acts'.
Control and management of church trust property vested in APT is regulated principally by the Church Trust Property Ordinance 1990 - 2005 (the Trust Property Ordinance).
The Trust Property Ordinance describes itself as an Ordinance to provide for the control, management and investment of Anglican Church Trust Property within the Diocese. Clause 1 declares that APT continues to exist and its constitution, control and procedures shall be in accordance with this Ordinance. The following clauses of the Trust Property Ordinance are pertinent: 2 The members of the Anglican Property Trust Diocese of Bathurst shall be the Bishop, a person appointed by the Bishop being an Assistant Bishop or Diocesan Archdeacon and six other members. At least two members shall be in Holy Orders and at least three shall be lay persons. 3 The members of the Anglican Property Trust, Diocese of Bathurst at the date when this ordinance comes into operation are hereby continued in office until the conclusion of the First Session of Synod for the year 1991. … 5 The Bishop shall be President of the Property Trust. … RELATIONSHIP TO BISHOP-IN-COUNCIL 12 It is hereby declared that except in so far as the trusts upon which it holds property otherwise provide, the Corporate Trustees shall follow the directions and advice of Bishop-in-Council, and shall, whenever practicable, consult with and obtain directions and advice from Bishop-in-Council as to their administration and functions. … TRUSTS FOR PARISHES OR INSTITUTIONS 16 (1) Whenever any Church Trust Property is vested in the Corporate Trustees on behalf of any parish organisation or institution, the purpose of the trust and the terms and conditions upon which the property is held shall be ascertained and duly recorded and the relevant deeds, the record of the trust and all ancillary documents shall be filed in the Diocesan Registry in such a way as to be readily identifiable as appertaining to the parish organisation or institution concerned. (2) Whenever any Church Trust Property is vested in the Corporate Trustees otherwise than for the purpose of a parish organisation or institution, the purpose of the trust and the terms and conditions upon which the property is held shall be ascertained and duly recorded and the relevant deeds, the record of the trust and ancillary documents shall be held in the Diocesan Registry. (3) Whenever it seems to the Corporate Trustees proper so to do, they may give advice and directions as to how any money or other property held on behalf of the Diocese or any Parish Church organisation or institution thereof should be dealt with and, if it appears to the Corporate Trustees that such advice or direction is not being followed that fact may be reported by the Corporate Trustees to Bishopin-Council which shall in tum report the same to the Synod. … DELEGATION OF POWERS IN CERTAIN CASES 26 (a) The Bishop-in-Council of the Diocese as constituted by the Bishop-in-Council Ordinance 1912-1980 is hereby appointed a Committee or Council under Section 40 of the Anglican Trust Property Act 1917-1982 and may during the recess of the Synod exercise in place of the Synod of the Diocese such of the powers and functions and do and make such of the things referred to in such act as may be done by the Synod of the Diocese under the provisions of the Anglican Trust Property Act 1917-1982 and shall report to the Synod at the next Session all actions taken under this section.
The Charitable Trusts Act 1993 (NSW) (the Charitable Trusts Act) states that it is an Act to make further provision for the protection of charitable trusts; to authorise the Attorney General to establish schemes for the administration of charitable trusts; and for other purposes.
The following sections are said by BIC to be pertinent: 3 Definitions In this Act: charitable trust means any trust established for charitable purposes and subject to the control of the Court in the exercise of the Court's general jurisdiction with respect to charitable trusts. Court means the Supreme Court of New South Wales. trust property means any property subject to the charitable trust concerned. … 5 Definition of "charitable trust proceedings" (1) In this Part, charitable trust proceedings means proceedings in the Court brought, whether by any trustee of a charitable trust or by any other person, under the Court's statutory or general jurisdiction with respect to any breach or supposed breach of a charitable trust, or with respect to the administration of a charitable trust. (2) However, in this Part charitable trust proceedings does not include: (a) proceedings for the bringing of any appeal, or (b) proceedings relating merely to the construction of a trust instrument. 6 Bringing of certain charitable trust proceedings to be authorised by Attorney General or by leave (1) Charitable trust proceedings are not to be commenced in the Court unless: (a) the Attorney General has authorised the bringing of the proceedings, or (b) leave to bring the proceedings is obtained from the Court. (2) The Court is not to give such leave unless satisfied that the Attorney General has been given an opportunity to consider whether to authorise the proceedings or that the referral of the matter to the Attorney General is not appropriate because of the urgency of the matter or other good cause. (2A) Any such authority or leave may also be given after charitable trust proceedings have been brought so as to enable the continuation of those proceedings. (3) A person who does not otherwise have standing may bring charitable trust proceedings if authorised by the Attorney General to bring those proceedings. (4) Nothing in this section applies to the bringing by the Attorney General, with or without a relator, of charitable trust proceedings or any other proceedings relating to a charitable trust.

Finance

The Finance Ordinance (which was ordained by BIC in the name and place of Synod) states that it is 'An Ordinance to make provision for finance for parochial and other purposes in connection with the Anglican Church in the Diocese of Bathurst to empower the Anglican Property Trust Diocese of Bathurst to administer such Ordinance and for purposes incidental thereto'.
The Preamble includes the following statement: WHEREAS it is expedient to provide a method of financing the activities of the Anglican Church within the Diocese of Bathurst without the necessity of executing formal securities AND WHEREAS it is desirable to confer upon the Anglican Property Trust Diocese of Bathurst (hereinafter called "the Trust") authority for the purpose of investigating certain application for loans of making recommendation thereon and of administering the provisions of this Ordinance.
It is appropriate to set out the entirety of the operative part of the Finance Ordinance. It is as follows: 1 The Trust shall have the following duties and powers; (a) To investigate all applications for guarantee by the Diocese to any bank or other lending body or persons (including parishioners) for loans for parochial or other purposes which may be referred to it by a parish, parochial district, provisional district or organisation or corporation as aforesaid and to report to the Bishop any loan proposed to be made by such bank or other lending body or persons (including parishioners) together with its recommendation in respect thereof and there shall be a condition of approval for any such advance that the parish, parochial district, provisional district, or other organisation or corporation in respect of which such approval is given shall be liable to the bank or other lending body or persons (including parishioners) for the payment of the principal money and interest at the times and in the manner agreed. (b) To report to each regular meeting of the Bishop-in-Council upon all applications made to it and the purposes for which the loans were sought and the recommendations made in respect thereof. (c) To investigate any case where default shall be made by any such parish, parochial district, provisional district, or other organisation or corporation in meeting its obligations in respect of any advance made to it under the provisions of this Ordinance or in respect of any advances made prior thereto and to report to Synod or the Bishop-in-Council thereof and recommend what action should be taken. (d) To make such rules and regulations as Bishop-in-Council may from time to time by resolution approve for the purpose of administering this Ordinance and for providing for the expenses of and incidental to such applications. 1A Where any debt for church purposes was incurred on or after the 23rd day of July 1954 and guaranteed by one or more persons and where in the opinion of the Bishop such debt has been reduced at a reasonable rate it shall be provided that the provisions of this Ordinance shall apply mutatis mutandis to any such acceptance of responsibility. 2 In any case in which the Trust has recommended approval of an advance as aforesaid the Bishop may and he is hereby authorised and empowered to certify to the Bank or other lending body or persons (including parishioners) willing to make the advance to such parish, parochial district, provisional district or other organisation or corporation that the Diocese of Bathurst accepts responsibility therefore, provided however that where the advance to be made exceeds the prescribed sum the Bishop is neither authorised nor empowered to certify as aforesaid unless and until Synod or Bishop-in-Council has by resolution approved such advance. 2A The prescribed sum for the purpose of Clause 2 shall be the sum of $20,000 or such larger sum as Bishop-in-Council may from time to time resolve to be the prescribed sum. 3 The Certificate of the Bishop given under the last preceding clause hereof shall in favour of the bank or lending body or persons (including parishioners) be conclusive evidence that the provisions of this Ordinance have been duly complied with. 4 In the event of the Trust reporting to the Synod or Bishop-in-Council any case of default in pursuance of Clause 1(c) hereof the Synod or Bishop-in-Council shall take such action by ordinance or otherwise to cause the same to be rectified as it may think fit. 5 That in the event that the Diocese shall, by reason of default of a parish parochial district, provisional district, or other organisation or corporation in respect of which such approval is given, pay or be called upon to pay any principal interest or other moneys to a bank or other lending body or persons (including parishioners) the same shall be paid out of the "Diocese of Bathurst Synod Management Fund" and thereupon such payments may be refunded and recouped to the Diocese by levies on all of the parishes of the Diocese in such proportions and at such times and in such manner as the Synod or the Bishop-in-Council thereof may determine. 6 (a) A notice shall be posted and continuously for a period including two consecutive Sundays remain posted at the main entrance of the Principal Church of each parish intending to apply for the guarantee of an advance pursuant to the provisions of this Ordinance and of each other Church therein which may be specially affected thereby, or in the case of a provisional district or parochial district in all the Churches thereof and the attention of the congregation shall be specially drawn to such Notice at the Morning and/or Evening Services held in Churches on such Sundays. (b) Every such Notice shall state the intention of the Churchwardens and Church Committee or Parish Council to apply for such loan and the general purposes thereof and shall also contain a notification that any objections thereto must be lodged with the Trust within the time stated therein. Such time shall be not less than seven days after the date of the second Sunday on which such Notice is posted as aforesaid. 7 The provisions of this Ordinance shall not apply to any advance which is to be secured by any legal or equitable mortgage over any real or personal property. 8 The Trust at least once in each year shall report its proceedings to the Synod and shall present a statement of receipts and payments and a balance sheet duly audited and shall present such other accounts as may be required from time to time by resolution of Synod.
The ADF Ordinance has been referred to earlier. There are some further provisions of it which warrant specific reference. It describes itself as: An Ordinance to make provisions for the management and control of deposits received and monies borrowed from persons or organisations to provide financial support for the ministry objectives of the Diocese of Bathurst including borrowing and raising funds from external sources; to invest moneys so raised; and to lend moneys to parochial units and other organisations controlled by the Synod of the Anglican Church of Australia in the Diocese of Bathurst.
The preamble states: PREAMBLE A It has become expedient to establish an Anglican Development Fund to receive deposits from persons or organisations (not being Diocesan organisations, corporations or parishes) and to invest those monies (including investment in projects supporting ministry objectives within the Diocese) for the purpose of returning a surplus for the financial support of ministry objectives of the Diocese of Bathurst. B It is expedient to provide for the Anglican Church of Australia in the Diocese of Bathurst ("the Diocese") to borrow and raise such moneys as it thinks appropriate to support the programmes and activities of parochial units and other organisations controlled by the Synod of the Diocese. C It is expedient that the Fund be administered by a separate body corporate to ensure that any borrowings and moneys raised are managed and serviced and to investigate applications for loans and to generally administer the provisions of this Ordinance. D Bishop-in-Council has been empowered pursuant to S40 and other provisions of the Anglican Church Trust Property Act, 1917, to act for the Synod during the recess of the Synod, to manage the property of the Diocese and to vary inexpedient trusts and, in the name of the Synod to enact appropriate Ordinances.
Clauses 1 and 2 provide that there shall be a Fund which shall be administered by the Board. The following clauses of the ADF Ordinance are also pertinent: 4 The Board shall be the Trustee of and shall administer the Fund and shall provide distributions of net income of the fund to the Synod Management Fund Diocese of Bathurst (less any amount determined in each year by the Board and confirmed by Bishop-in-Council which shall be set aside to necessary reserves) … POWERS AND AUTHORITIES 14. The Board has power: (a) to borrow and raise moneys to finance the programmes and activities of the Diocese including those of parishes, schools and organisations which are subject to the control of Synod; … 15 Without limiting the generality of clause 14, the Board has the power to: (a) borrow or raise money and secure the repayment thereof and interest in such manner as the Board may think fit, to secure the same or the repayment or performance of any debt, contract, guarantee or other liability incurred or entered into by the Board or by an organisation of the Diocese which is subject to the control of Synod, to guarantee the obligations of an organisation of the Diocese which is subject to the control of the Synod and in relation to the foregoing to do so by mortgaging or charging all or any property, present and future of the Board or of an organisation which is subject to the control of Synod; … INVESTMENT POLICY 18 The Board shall comply with the following investment policy. (a) The Fund may be invested in projects supporting ministry objectives of the Diocese of Bathurst or its parishes, schools or other organisations and no more than such sum as is determined by resolution from time to time by Bishop-in Council may be invested in any one Parish or organisation of the Diocese. (b) Such internal loans if made shall be on a commercial basis, and repayment in full of capital and interest shall be made over a period not to exceed 40 years unless Bishop-in-Council otherwise determines. … INDEMNIFICATION 19 Every person who is or has been at any time a member of the Board is entitled to be indemnified out of the assets for the time being under the control of the Board against all loss or liability which that person may incur by reason of such office. …

All Saints' College

All Saints' College Bathurst (All Saints) is a co-educational school located in Bathurst. It was established in 1875. The Ordinance presently pertinent to All Saints is the All Saints' College Bathurst Ordinance 1982 - 2014. The School Council, which is incorporated under the Bodies Corporate Act, is responsible for its governance. The Bishop is the President of the School Council. The Ordinance provides that all moneys and property received or derived in connection with the School shall be applied solely towards the promotion of the objects of the School, and no part of them shall be paid or transferred directly or indirectly by any means whatsoever as profit to members of the School Council.
Clause 8.2 provides that with the approval of BIC, the Council may open and operate bank accounts, borrow funds and give security to support term borrowings. Clause 34.1 provides that BIC may of its own motion or at the request of the Council promote an Ordinance to the Synod for repeal of this Ordinance and the dissolution of the Council and the vesting of its property in such person or body upon such trusts as to BIC then seems appropriate.
The School Council is the 22nd Defendant in both the Bank case and the ADF case.

Bathurst Endowment of the See Board

The Bathurst Endowment of the See Fund provides housing for the Bishop, stipend for the Bishop, and salary and other emoluments for the Bishop's executive assistant. It is operated by the Bathurst Endowment of the See Board (BEOS) which, by Ordinance and by act of the Governor pursuant to the Bodies Corporate Act, was incorporated on 13 July 1999.
It is regulated by the Endowment of the See Ordinance 1997 - 2006. Only a person who is a member of BIC is eligible for election to the Board. The Board is required annually to furnish to BIC a report on the performance of the Fund and the investment policy to be followed, and is required to take account of any advice that BIC shall give. It is required to report to BIC if it considers there is a likelihood that the real value of the Fund will not be maintained in the current or next financial year.
The Bathurst Endowment of the See Board is the 23rd Defendant in both the ADF proceedings and the Bank proceedings.

The Diocese of Bathurst Synod Management Fund

By an Ordinance known as the Diocesan Funds Ordinance 1980 - 1997, two funds were established, one described as the Reserve Fund, the capital and income of which may be used amongst others 'to liquidate any liability of the Diocese', and the other described as the Synod Management Fund, from which the costs of the management of the Diocese are to be provided.

The Anglican Schools and University Colleges Commission

The Anglican Schools and University Colleges Commission (ASUCC) is an organisation responsible for the exercise, on behalf of BIC, of the supervision of Diocesan schools and university colleges. It is established and regulated by the Bathurst Diocesan Schools and University Colleges Ordinance 2006 - 2008. It comprises the Bishop, Assistant Bishop, Registrar, Chief Executive Officer of the Commission, and not less than three nor more than six members to be appointed by the Bishop for a period of not more than two years.

The Bank Facility

In about August 2006, by chance Mr Grundy met ADF's Fund Manager, Mr Kevin Shackleton, in the street in Bathurst. Mr Shackleton raised the question of whether the Bank would be interested in discussing Diocesan banking arrangements.
Mr Shackleton provided to Mr Grundy a document entitled 'Anglican Church of Australia Diocese of Bathurst, Profile of the Diocese, August 2006' (the Profile). The Profile included a structure diagram showing the Bishop at the head and the position of various officials, organisations and enterprises conducted under the aegis of the Diocese. The Profile identified the principal 'Diocesan organisations and corporations'. It stated that 'Property including real estate, investments and other funds of the Diocese and its organisations and parishes is held in trust for their respective purposes' by APT. As to ADF, it said: 'deposits are accepted from "external parties", typically the Anglican faithful, who are often prepared to accept a lower rate of interest in the expectation of the income differential which the Fund is able to generate from its investments will assist Diocesan ministry objectives.'
Mr Grundy attended a meeting at the Diocesan office in Bathurst on about 14 September 2006, and attended more meetings there in October and November. At some time during this period, the Bank was provided with financial statements for the Diocese, including an aggregated financial report for the year ending 31 December 2006. The notes to those financial statements record that the aggregated financial statements exclude all parish assets and liabilities and the financial results of their activities, and that whilst they show the financial position of the Diocese for identified entities (including ADF and APT), not all funds are available for general use of the Diocese. The notes state that the use of amounts held under trust included in the financial report are restricted to the terms of each particular declaration of trust, and that funds held by certain entities can only be utilised for specific purposes.
Mr Grundy prepared a 'Banking Proposal for "Banking Solutions"' which identified a selection of services that the Bank felt could benefit the Diocese. The proposal provided that security must be to the Bank's satisfaction and would include a 'Letter of acknowledgment from [the] Anglican Diocese of Bathurst (see example below)'. The example contains much of what subsequently appeared in the Letter of Comfort.
Mr Grundy also prepared a proposal letter dated 12 November 2006 for the provision of 'Banking Services' for the Diocese, which included a $40 million multi-option facility and stated that 'this limit is to be secured by a Letter of Acknowledgement by the Church'.
On 16 November 2006, Mr Grundy attended a presentation at the Diocesan offices. He had apparently provided the original banking proposal to Mr Scarra beforehand, under cover of a letter of the same date. Subsequently, there were a number of meetings between the Bank and officials of the Diocese.
In its Letter of Offer dated 22 November 2007, the Bank recorded that it had approved facilities of $50.1 million, and that approval was subject to the conditions outlined in the Letter of Offer and the attached Terms and Conditions for Commercial Lending Facilities. It described the term of the facility as 'Annual Review - Individual drawings up to a maximum of 20 years will be considered'. The Letter of Offer, under the heading General Facility Information and the sub-heading Security, identified as the security for all facilities 'A Letter of Acknowledgement by the Bishop of Bathurst, Anglican Church of Australia Diocese of Bathurst located at 3 Church St Bathurst NSW 2795'. Under the heading Acceptance of Offer, it stated 'By accepting this Letter of Offer I/We acknowledge that any Security listed in this Letter extends to cover my/our obligations under the Contract.'
The Letter of Offer was sent by the Bank to Bishop Hurford and Mr Scarra under cover of a letter of the same date. Under the heading Letter of Acknowledgement, the covering letter states: Please also find enclosed a speciment [sic] Letter of Acknowledgement. As detailed in the Letter of Offer, the Bank will be relying upon the Acknowledgement by the Bishop on behalf of the Diocese as its sole security. To this end, and assuming all is satisfactory, this document needs to be appropriately executed (on Diocese letterhead) and, together with a signed copy of the enclosed Letter of Offer, returned to the Bank to enable the above facilities to be established as soon as possible.
The specimen Letter of Acknowledgement does not include a Certificate pursuant to cl 2 of the Finance Ordinance, as does the Letter of Comfort. Apart from this, and the amount of the multi-option facility which was later reduced, the specimen is in the same terms as the Letter of Comfort.
At this time, there was a sub-committee of BIC called the Finance division (it was later dissolved). At a meeting on 29 November 2007, it resolved to recommend to APT that, in principle and subject to further clarification on arrangement for borrowings, the offer of the Bank to provide total banking services to the Diocese be accepted.
APT met on 2 November 2007 and 30 November 2007. At the 2 November 2007 meeting, the correspondence with the Bank was noted. APT resolved in principle, and subject to further clarification on arrangement for borrowings, that the offer of the Bank to provide total banking services to the Diocese be accepted.
On 30 November 2007, APT passed the following resolutions: It was RESOLVED that the Letter of Offer from the Commonwealth Bank of Australia be acknowledged in the affirmative under the seal of the Anglican Development Fund Diocese of Bathurst. It was RESOLVED that the Anglican Property Trust authorises the Bishop to issue a Letter of Guarantee for the Commonwealth Bank for $50,100,000 to secure a multi-option facility of $50,000,000 and a corporate card facility of $100,000 for the Anglican Development Fund on the understanding that (1) the initial draw-down will only be equivalent to the amounts of existing borrowings supported by the guarantee, (2) that further borrowings from the facility be approved in the normal manner by authority of Bishop-in-Council and (3) that all existing Letters of Guarantee issued to banks be withdrawn.
ADF's acceptance of the Bank's Letter of Offer dated 22 November 2007 was approved at a meeting of its members on 30 November 2007. They resolved to accept it under common seal. Bishop Hurford signed the acceptance portion of the Letter and the common seal of ADF was affixed on 11 December 2007. ADF reported this approval to BIC.
Both the passing of APT's resolutions and ADF's approval of the facility were reported to BIC in writing. Both reports were available at the meeting on 12 December 2007, referred to below.
There was a meeting of old BIC on 12 December 2007.
Those present included Bishop Hurford, Bishop Danaher, the Venerable Robert Howell, Sir Robert Woods (Chancellor), Mr Scarra, Reverend Canon Carla Archer, Reverend Canon Anne Wentzel, Reverend Canon Frank Hetherington, Reverend Gary Neville, Mr Ray Norman, Mrs Janet Price and Ms Sue West.
Mr Grundy and Mr Peter Collie (the Bank's Area Manager for the Central West) attended. It is appropriate to set out the relevant parts of the minutes: 15. ANGLICAN PROPERTY TRUST Report The report from the Anglican Property Trust was received and noted. (copy attached) Mr Adrian Scarra spoke about the negotiations with the Commonwealth Bank and the effects on the Diocese of the "ballooning" which is now called "International Financial Obligation Expansion Programme (IFOEP) noting that a lot of things will flow from the arrangement with the Commonwealth Bank. The Diocese will have maximum regulation but not by volunteers. Bishop-in-Council must assume a long term association with the Commonwealth Bank 16. BANKING ARRANGEMENTS Consolidation of Diocesan Banking The Diocesan Business Manager, Chief Financial Officer and the Funds Manager have reviewed Diocesan banking arrangements and the Finance Division and the Anglican Property Trust have approved the appointment of the Commonwealth Bank of Australia to provide complete banking services to the Diocese including a consolidation of borrowings via the Anglican Development Fund and the provision of banking for all Parishes and Diocesan Organisations. Sheets 8086 - 8102 Correspondence to and from the Commonwealth Bank was received and noted. (copy attached) Mr Graeme Grundy, Relationship Executive, Commonwealth Bank Central and Western NSW and Mr Peter Collie, Area Manager of the Central West were welcomed together with Mrs Jo Chirgwin, CFO and Mr Kevin Shackleton, Manager ADF. Mr Grundy stated that the Commonwealth Bank is most enthusiastic about its involvement in the endeavours of the Diocese. Senior Management will become involved with all decisions made and they are fully supportive and are willing to work with the Diocese. A benefit of using the Commonwealth Bank is that it is the largest financial institution in Australia with resources and products. An aim of the proposal has been to offer the parishes and entities a better detail and it is anticipated that all parishes and entities will move to the Commonwealth Bank. … The Bank has undertaken to do a review in six months time. There are a lot of entities operating within the group but the Bank will consider all Diocesan entities as a single pool of money for the purposes of calculating interest. It was noted that the interest rate will become competitive and significantly better and that access to electronic banking will ease some of the administration issues. Monthly debits from parish accounts will not attract any charge and credit cards will attract an annual fee, other than that there is no other charges. It was noted that pursuant to section 589 of the Anglican Diocese of Bathurst Administration Ordinance, Parishes must invest their funds in AMIF accounts. It was noted that the arrangements with the Commonwealth Bank will not fail if all the Parishes do not transfer their accounts to the Commonwealth. However the benefits will be such that parishes should see that a change to the Commonwealth Bank will result in a good response. The Bishop would be surprised if there will be many objections. There will be Bank staff in each branch who will be available to assist Parishes with the change over. Mr Grundy indicated that there is a bank branch or agency in each Parish and he gave a verbal guarantee that the retail side will be communicating directly with their branch people to let them know what has to happen for Parishes. Ongoing relationship with the Commonwealth Bank will require a regular encounter between the Bank and the Diocese. The Diocese will ensure quality of accountability and Bishop-in-Council will have at least six months dialogues with the Bank on key commitments and outcomes. The major thing is the Bank would continue to support the Diocese in difficult times. The Bishop thanked Mr Grundy and Mr Collie for attending. Mrs Jo Chirgwin reported that 0.05% will be paid on any undrawn amount and that the Bank will review each month the undrawn amount we need. It was agreed that information on some of the issues of the change should be advised to parishes and the benefits for making the change included other aspects should be confidential until the Parish Officers' Conference in February 2008. RMC's to make sure that everyone attends the Parish Officers' Conference. Bishop Peter Danaher is keen to promote the Parish Officers' Conference to Treasurers and Church wardens and other Parish Council members. It was agreed that a document be prepared showing the advantages to the Diocese with a press release with further details. 17. FINANCE DIVISION Report The report from the Finance Division was received and noted. (copy attached).
Messrs Grundy and Collie apparently left after the Bank presentation.
The minutes record that reports from the Finance division, APT and ADF were received and noted.
As will have been observed, the minutes of the meeting do not in terms record a formal resolution to approve the Letter of Offer or authorise the Bishop to provide a Certificate. Ms Marilyn Robey, Diocesan Deputy Registrar, was minutes secretary. She gave affidavit evidence of her belief that the selection of the Bank as the provider of banking services to the Diocese occurred at a BIC meeting in November 2007, but could not recall any discussion in relation to the selection process. She gave oral evidence of having observed every member of BIC approve the entry into the facility and of the issuing of a Certificate to secure it, and that the minutes are probably incorrect in failing to record that fact.
On 9 January 2008, Bishop Hurford executed the Letter of Comfort. It was entered in a Diocesan register called 'Acts of the Bishop', maintained at the Diocesan offices in Bathurst and available for inspection.
On 13 February 2008, BIC met and resolved to amend the ADF Ordinance to facilitate ADF becoming the Diocesan banker.
In early April 2008, Mr Shackleton spoke to Mr Grundy and asked whether, given that ADF was not going to use or need the whole of the facility limit for some time, the Bank could waive the fee or reduce the limit. Mr Grundy responded that it was unlikely that the fee would be waived. Mr Shackleton agreed to let him know if ADF would like the limit reduced.
On 7 April 2008, ADF wrote to the Bank confirming that it wished to reduce the facility from $50 million to $40 million. Mr Shackleton wrote: Arrangements will be made for a fresh Bishop's Letter of Guarantee to be issued for the reduced amount subject to the existing Guarantee being returned to this office.
On 30 June 2008, a bill for $15 million was drawn by ADF and discounted by the Bank, pursuant to the facility. The proceeds were used principally to refinance existing borrowings.
Between 9 May 2008 and 16 December 2011, ADF made loans totalling over $28 million to MAGS and OAGS. Each loan was assigned a number. The following is a schedule of the loans which remain unpaid, showing, in each case, the amount outstanding as at 24 June 2015, whether or not there is in evidence a Certificate alleged to cover it, and whether or not there is a resolution by Synod or BIC approving the advance. Date Loan Original Amount Certificate/BIC Resolution Amount Outstanding 31 October 2008 OAGS 5022 (Tranche 1) $500,000 Originally covered by Certificate dated 11 December 2008, replaced by Certificate 17 December 2009; BIC resolution 16 December 2009 (Combined with Tranche 2 below) 3 February 2009 OAGS 5017 $2,800,000 Originally covered by Certificates dated 19 March 2008 and 2 September 2009, both replaced by Certificate dated 17 December 2009 $485,162.71 20 May 2009 MAGS 5023 $1,400,000 Certificate dated 26 May 2009; BIC resolution 20 May 2009 - passed by majority because the Reverend Canon Carla Archer voted no $1,557,256.27 28 August 2009 OAGS 5022 (Tranche 2) $800,000 Certificate dated 17 December 2009; BIC resolution 16 December 2009 $1,446,010.32 28 August 2009 OAGS 5029 $1,400,000 Certificate dated 17 December 2009; BIC resolution 19 August 2009 and 16 December 2009 $1,557,241.91 27 November 2009 OAGS 5033 $2,200,000 Certificate dated 17 December 2009; BIC resolution 19 August 2009 and 16 December 2009 $1,181,458.67 1 October 2010 MAGS 5036 $1,665,000 Certificate dated 20 October 2010; BIC resolution 20 October 2010 $1,203,139.50 $556,162.95 26 November 2010 OAGS 5044 $500,000 No Certificate; BIC resolution 15 December 2010 $556,157.81 28 November 2010 OAGS 5043 $1,710,000 No Certificate; BIC resolution 15 December 2010 $1,870,607.25 29 April 2011 MAGS 5042 $200,000 No Certificate; No BIC resolution $222,460.65 26 August 2011 OAGS 5049 $670,000 No Certificate; BIC resolution 19 October 2011 $415,104.86 $11,050,762.90

No Certificates with respect to MAGS loan 5042 and OAGS loans 5043, 5044 and 5049 can be found. However, there is secondary evidence of their existence.

The Collapse

Laden as they were with ever increasing debt, the schools could not survive. In June 2008, Mr Shackleton proposed an independent review of the schools by Resolve Consulting (Resolve). Resolve reported in September 2008, noting that the schools faced extremely challenging financial situations and that the auditors had expressed serious concerns as to whether they could be classified as going concerns.
MAGS was already in an extremely serious financial position. Projections showed a peak debt of $39 million in 2023. The School lacked detailed accurate financial forecasting to determine its short and long term financial needs, and the financial modelling that had been done was unreliable and appeared to have significant flaws in the assumptions upon which it was built. MAGS had borrowings well in excess of benchmarks for a low fee school. It had a recent history of failing to pay PAYG tax and superannuation liabilities, and failing to pay its creditors on time.
Projections showed that OAGS would have a peak debt of $25 million in 2025. Its overall debt position was unsustainable and continued to deteriorate. The financial modelling that had been done was unreliable and appeared to have significant flaws in the assumptions on which it was built.
The ADF Board members did not heed Resolve's warnings and continued to participate in making further loans to the schools. For example, on 20 May 2009 ADF resolved to approve a loan of $1.4 million to MAGS without supporting information. The sole voice against the resolution was Reverend Canon Carla Archer.
At a meeting of old BIC on 16 December 2009, it was proposed that the 2010 budgets of the schools be independently reviewed by Pathways International Consulting (Pathways). Pathways provided its review in March 2010. It described the current financial situation of MAGS as dire. Enrolments were declining. There were signals of significant financial distress. OAGS appeared to be trading soundly but its lack of capital was seen by Pathways as alarming. They considered that there would inevitably be financial distress if debt could not be significantly reduced to appropriate levels in the short term.
ADF did not heed the Pathways review either. Mr Scarra, in particular, expressed the view that the Pathways report contained assumptions and conclusions which were inappropriate. ADF continued to lend money to MAGS and OAGS without financial information that demonstrated any capacity on the part of MAGS or OAGS to repay.
In April 2011, Somerset Education was engaged to conduct yet another independent review of the budgets and financial projections of MAGS and OAGS. Once again, the unsustainable debt level of the schools was referred to. Notwithstanding this, further loans were made both to MAGS and OAGS.
The Tri-diocesan Commission was a group set up by the dioceses of the Riverina, Canberra-Goulburn and Bathurst to discuss matters in common and work collaboratively in certain areas. Bishop John Stead, who became the Assistant Bishop of the Diocese, was on the Commission. In early 2010, Bishop Stead became chairman of the Anglican Schools Commission and was a member of ADF from the time he was appointed Assistant Bishop. In about April 2011, Bishop Stead attended a Tri-diocesan meeting after which he spoke to Bishop Hurford and Bishop Stuart Robinson of the Canberra-Goulburn diocese about the diocese of Canberra-Goulburn working with the Diocese to create a cash injection to solve the financial problems of the Diocese. A committee was formed.
The Canberra-Goulburn diocese proposed buying properties of the Diocese and leasing them back, which would create a necessary capital injection to reduce the debt burden of the Diocese, with the idea that the Diocese might buy the properties back after about 10 years, failing which Canberra-Goulburn would have to sell them on the open market. This became known as the Canberra-Goulburn Proposal. Bishop Hurford was in favour of the Proposal. Bishop Stead and others worked on drafting the necessary ordinances to give effect to the Canberra-Goulburn Proposal. Old BIC resolved to put it to Synod. At a meeting of ADF or APT in July or August 2011, Mr Scarra raised a doubt whether trusts under which the Diocese's property was held could be varied. Mr Scarra was an opponent of the Proposal. The Canberra-Goulburn Proposal was put to a general meeting of Synod on 12 November 2011 which voted it down. Instead, the Synod resolved to proceed with what became known as the 10 Point Plan.
The 10 Point Plan entailed: establishing a Diocesan income account (what Bishop Stead described as a 'pool of cash') from sale of assets and use of trust and other funds provided by Diocesan entities to generate income to be applied to the management of Diocesan debt; the diversion of annual income streams from ADF, Bathurst Goldfields (a conference facility), and commercial properties owned by parishes to the servicing of Diocesan debt; encouraging parishes to deposit Diocesan funds to the Diocesan income account; the transfer of a minimum of $8 million of loans from the balance sheet of MAGS and OAGS to the Diocese and the direct sale of redundant assets; a marketing initiative for the schools; the sale of available property at OAGS; opening negotiations with the Bank to explore ways in which the Diocese could serve Diocesan debt; and establishing an Independent Oversight Committee to oversee the development and implementation of the plan.
After the 10 Point Plan had been approved, the late Robert Howell went about identifying properties which could be sold. Bishop Hurford and Bishop Stead travelled to each parish in the Diocese to present the 10 Point Plan and convince the parishes to co-operate and identify properties for sale.
Some steps were taken to implement the 10 Point Plan. Six properties were identified for sale, including a property known as Bluestone Hall at Anson Street, Orange. The Independent Oversight Committee was appointed on 2 April 2012. On 9 May 2012, old BIC agreed to an ordinance for the sale of the six properties identified. On 29 June 2012, a parishioner lodged a caveat on Bluestone Hall, claiming an equitable interest on the footing that the land was held on trust for the parishioners, or that they had possessory title. Legal advice was obtained in relation to the caveat and the ordinance under which the identified properties would be sold.
On 15 August 2012, in the light of legal advice received, old BIC rescinded the resolutions containing the 10 Point Plan.
At a meeting of old BIC on 7 September 2012, it was noted that Bishop Hurford would be writing to a number of identified dioceses in the next couple of days to ask for assistance.
On 10 September 2012, Bishop Hurford wrote to the Most Reverend Phillip Aspinall (the Anglican Primate of Australia), the Most Reverend Dr Peter Jensen (Bishop of Sydney), the Right Reverend Dr Brian Farran (Bishop of Newcastle), the Right Reverend Stuart Robinson (Bishop of Canberra and Goulburn), the Right Reverend Roger Herft (Bishop of Perth), and the Right Reverend Jeffery Driver (Bishop of Adelaide) requesting help in the areas of working capital and longer term debt support. Bishop Hurford drew attention to the possibility of substantial loss for the Bank and significant pastoral and reputational consequences for the Church if the Diocese was unable to provide assurance that the schools would have funds. By all accounts, no assistance was forthcoming.
On 5 October 2012, Bishop Hurford addressed a pastoral letter to all Synod members, parish councils and school councils providing an update on the position. It included information that there was legal advice that forced sales of assets was not possible, and that each parish would be asked to consider a voluntary contribution to cash needs and debt reduction.
Bishop Hurford vacated office on 6 November 2012. The legal advice coupled with the retirement of Bishop Hurford marked the beginning of a seismic shift in the position of the Diocese with respect to its position as regards the Bank.
Bishop Palmer was consecrated in office on 9 February 2013. On about 26 February 2013, Bishop Palmer and others met with representatives of the Bank. He says that an exchange to the following effect took place: Bank Officer: Would you be prepared to sign a letter of guarantee like the one signed by your predecessor in 2008? Bishop Palmer: No I have inherited hundreds of documents signed by my predecessor in his capacity as the Bishop of Bathurst and I do not have to reissue these documents or letters. Please also note that I do not consider that the document to which you refer is a letter of guarantee.
On 20 March 2013, BIC resolved that a letter be written to the Bank seeking an extension of time until after the sale of the schools to enable the Diocese to use its best endeavours to respond to the outstanding debt owed to the Bank.
On 27 September 2013, the Bank wrote to ADF and the Independent Oversight Committee expressing its preparedness to permit a rollover of bills that were due on 30 September 2013 on certain conditions, which included receipt within 14 days of a revised draft debt repayment plan.
On 30 September 2013, the Bank wrote to ADF and the Independent Oversight Committee recording that it had been informed that it was ADF's intention to apply to Court for the appointment of an external administrator, and expressing the Bank's concern.
The settlement of the sale of MAGS and OAGS occurred on 30 September 2013, and on that day ADF resolved not to rollover commercial bills with the Bank.
On 1 October 2013, the Receivers were appointed to ADF and the Court entered judgment for the Bank against ADF. As at 12 April 2015, the amount owing to the Bank, excluding enforcement expenses, was $37,771,238.35.
On 24 October 2013, Mr Ian Copp, General Manager Group Credit Structuring, wrote to Bishop Palmer as follows: Dear Bishop Palmer Facilities from Commonwealth Bank of Australia (Bank) to the Anglican Development Fund Diocese of Bathurst Board (Receivers and Managers Appointed) (ADF) as trustee for the Anglican Development Fund Diocese of Bathurst (Facilities) Letter of Guarantee dated 24 April 2008 from the Bishop of the Anglican Diocese of Bathurst to the Bank (Letter of Guarantee) You will recall that we met with you and with representatives of the ADF on 26 February 2013 to discuss repayment of the Facilities. At that meeting, you confirmed your commitment to honour your obligations as Bishop of Bathurst arising out of the letter of Guarantee. Following that meeting and up to the end of September 2013, the Bank sought, in good faith, to negotiate a "Debt Repayment Plan" satisfactory to both it and the ADF in respect of the Facilities. These negotiations took place against the backdrop of the proposed sales of All Saints College, Macquarie Anglican Grammar School and Orange Anglican Grammar School. As you are aware, those discussions took place in the context of more than 15 months of negotiations between the Bank and the ADF in relation to the ADF's financial Issues. Despite the Bank on a number of occasions expressing its preparedness to restructure the Facilities, the ADF was unwilling to agree a Debt Repayment Plan acceptable to the Bank. The unresolved issues between the Bank and the ADF crystallised at the end of September when the following matters of great concern to the Bank occurred: (a) On 26 September 2013, the ADF, by its advisor Bruce Auty, notified the Bank that it would not be meeting its payment obligations to the Bank under the Facilities due on 30 September 2013. (b) The Bank wrote to the ADF on 27 September 2013 noting its extreme disappointment and concern that the Bank's requirements as set out in the Bank's letter to the ADF on 1 August 2013, including [in] relation to the provision of a "Revised Debt Repayment Plan" had not been addressed by the ADF. (c) On the morning of 30 September 2013, the ADF, again by its advisor Mr Auty, notified the Bank that the ADF was to make application to the court for an appointment of an administrator. (d) Later on 30 September 2013, the ADF's solicitors, Prolegis Lawyers, notified the Bank that the ADF had resolved to cease trading immediately and that an application would be made to the court for the appointment of a liquidator. In those circumstances, the Bank applied to the Supreme Court of New South Wales for appointment of receivers to the ADF and on 1 October 2013, the Supreme Court appointed receivers to the ADF ("the Receivers") on an Interim basis. On 15 October 2013, the ADF consented to final orders continuing the appointment of the Receivers, together with judgment in favour of the Bank in the amount of $36,083,742.57. We understand that this is a time of great concern to the Diocese of Bathurst and the parishioners and that they look to you, their Bishop, for guidance and reassurance. We understand that you have made a number of public statements to the effect that, in essence, All Saints College Bathurst and individual parishes win not be affected by the ADF's current circumstances. While we understand that you wish to provide your parishioners with as much comfort as possible in relation to the current circumstances, we remind you of your obligations to the Bank under the letter of Guarantee which have been enlivened by reason of the above matters. In the above circumstances and where the ADF is, by its own admission, insolvent and unable to repay its indebtedness to the Bank, we would be grateful if you could please send to us by no later than 7 November 2013, your written proposal as to how you intend to honour your obligations under the Letter of Guarantee. The Bank expects that such proposal will detail the steps you intend to take to cause the Bank to be paid the amount owing to it by the ADF. The Bank continues to reserve all of its rights in relation to the Facilities and the Letter of Guarantee. Further, given the serious concerns held by the Bank in relation to the issues expressed in this letter, a copy of this letter has been provided to the Most Reverend Doctor Phillip Aspinall, Archbishop of Brisbane and Primate of the Anglican Church of Australia. Yours sincerely Ian Copp
On 8 November 2013, Bishop Palmer replied: Dear Mr Copp Thank you for your letter of the 24th October 2013. I do recall meeting with you on 26th February 2013 and I recall the conversation concerning the "Letter of Acknowledgment" of 24th April 2008 signed by the then Bishop of Bathurst and my stated commitment to honour my obligations as Bishop of Bathurst under the Letter of Acknowledgment. The obligations of the Bishop of Bathurst as set out in that letter are that the Diocese of Bathurst "undertakes to use its best endeavours and powers conferred by legislative or other means to resolve issues that may arise within the loan facilities" and to "take control of the Debtors affairs, to facilitate clearance of loan amount(s) outstanding". The Facility Agreement dated 22nd November 2007 did not refer to or require a Guarantee from the Diocese of Bathurst. The wording of the Letter of Acknowledgment was provided by the Commonwealth Bank and referred to in the above-mentioned Facility Agreement as a "Letter of Acknowledgement". Further, the Facility Agreement was accompanied by a covering letter from Mr Graeme Grundy dated 22nd November, 2007 confirming that the CBA would be relying on the Letter of Acknowledgment "as its sole security". During 2012 the CBA requested that the Diocese provide a Guarantee however as you are aware this request was declined. The CBA's sole security remains as it has always been a Letter of Acknowledgment which is restricted to the obligations outlined therein. The CBA has at all times been an unsecured creditor of the ADF, a completely unrelated party to the two Diocesan Schools. The Diocese has fulfilled its obligations under the Letter of Acknowledgement. The Diocese took control of the affairs of the debtor by the appointment of the IOC in April 2012, which process has been lengthy, time consuming, extremely difficult, and costly. At all times the IOC held frank and open discussion with the CBA. During my short time as Bishop I have continued to honour the undertakings of the letter. On Saturday 9th February 2013, the very day of my consecration and installation as the Bishop of Bathurst, I chaired a meeting of the Bishop in Council (BIC), at which we agreed to the sale of the Orange Anglican Grammar School and the Macquarie Anglican Grammar School, Dubbo. As you are aware, the IOC had prepared and presented to CBA options for addressing the debt owed by MAGS and OAGS to the ADF, with a focus on maximising the return to the ADF. The preferred option (because it would return most to CBA) was to continue to trade the schools. CBA refused to support this option and without that support the sale of the schools was essential. In April 2013, the IOC presented to the CBA both in a meeting and in writing a "Debt Repayment Plan". In a letter dated 26th April 2013 the CBA indicated it would be able to respond "by the middle of May". However, the ADF Board did not receive a written reply until 1 August 2013. Therefore, I reject the comment that "the ADF was unwilling to agree a Debt Repayment Plan acceptable to the Bank". On the contrary, during the time the IOC and ADF waited for a response, a comprehensive sale process for the schools was planned and executed. When a reply was finally received from CBA in August 2013, it sought certain assurances from the Diocese. The ADF considered these issues, but the IOC had not been in a position to respond to the CBA prior to the end of September. Unfortunately, in the meantime, the ADF formed the view that without resolving the wider debt problem it would be trading insolvently from 30 September 2013. On 26 September the ADF sought assurances from the CBA (in terms which were contemplated within the context of the proposed Debt Repayment Plan and settlement), which would have allowed the ADF to trade beyond 30 September and provided time for the IOC to have continued discussions with the CBA, but CBA declined to provide them. The ADF thus determined to cease trading. This was not the ADF nor the IOC's preferred outcome, but the ADF was not in a position to trade unlawfully. In your letter of 24th October you express concern as to the 'guidance and reassurance' given by me as the Bishop in my public statements. In a Pastoral Letter to the Parishes early in October I wrote, "… my goal is to constantly encourage the worship, mission and ministry of the Diocese and its parishes." There has been nothing in my public statements, correspondence or reassurances to Parishes that is contrary to the position of the Diocese vis a vis the bank. Finally, I approach the matter of the steps that I "intend to take to cause the Bank to be paid the amount owing to it by the ADF." My answer is straightforward. I have done what is required and lawful: the two schools have been sold, the remaining loans in default to the ADF called in. As you are aware, the ADF is now in the hands of receivers appointed by the Court on the application of the Commonwealth Bank, which effectively puts an end to the ability of the Diocese to 'take control of the debtor's affairs to facilitate clearance of loan amount(s) outstanding'. It would now be inappropriate for the Diocese to take further steps to control the ADF to secure payment to the CBA as an unsecured creditor in preference to the ADF's other unsecured creditors. Accordingly, I can advise that the Anglican Diocese of Bathurst has acted as required under the Letter of Acknowledgment, and has already taken such steps as it is able within legislative and other means to discharge Its undertakings. Yours sincerely, The Right Reverend Ian Palmer
On 19 February 2014, the solicitors for the Receivers of ADF wrote to Bishop Palmer and all other members of BIC in the following terms: We act for Joseph David Hayes and Barry Frederic Kogan who were appointed on 1 October 2013 by order of the Supreme Court of NSW as receivers and managers of ADF. Between 22 April 2008 and 22 June 2011 ADF provided loans to Orange Anglican Grammar School Council (OAGS) and Macquarie Anglican Grammar School Council (MAGS) (together, School Loans). OAGS is presently indebted to ADF in the amount of $13,383,739 and MAGS is indebted to ADF in the amount of $11,169,672. A schedule of OAGS and MAGS indebtedness is attached showing particulars of the School Loans and amounts owing under them. On 30 September 2013, each of OAGS and MAGS sold all of their assets and undertakings. The sale price of each of the sales was insufficient for MAGS and OAGS to repay their indebtedness to ADF. ADF has received a small portion of the proceeds of sale (refer to the schedule). Following the sales, OAGS and MAGS ceased trading and on 23 October 2013 by their own application to the Supreme Court of NSW, each of OAGS and MAGS had appointed to them receivers and managers (School Receivers). As at the date of the appointment of the School Receivers, the amount of $14,757,158 and $13,338,370 was outstanding from OAGS and MAGS respectively. After taking into account dividends paid by the School Receives to date, the amount of $13,383,739 and $11,169,671 (excluding interest owing from 23 October 2013) remains due and payable from OAGS and MAGS respectively. In the above circumstances, OAGS and MAGS are in default of the loans. To the extent that you have not already done so, we are instructed to request that you undertake the duties imposed by clause 1(c) of the Bathurst Anglican Diocese Finance Ordinance 1959-2010 and report OAGS' and MAGS' defaults under the School Loans to Bishop-in-Council.
On 24 February 2014, the same solicitors acting for the Bank wrote to Bishop Palmer and all other members of BIC in the following terms: We act for the Bank which, as you are aware, provided the Facilities to the ADF on or about 11 December 2007. The Facilities were secured by a Letter of Guarantee dated 24 April 2008, provided to the Bank by the Bishop of Bathurst, on behalf of the Anglican Church Diocese of Bathurst (Letter of Guarantee). The ADF defaulted on the Facilities on 30 September 2013 (Default), which was followed by the appointment by the Supreme Court of New South Wales of Joseph David Hayes and Barry Frederic Kogan as receivers and managers of the ADF on 1 October 2013 (Receivers). On 15 October 2013, the Bank obtained judgment against the ADF for the sum of $36,063,742.57. The Bishop of Bathurst, on behalf of the Diocese, has declined to honour the obligations set out in the Letter of Guarantee, asserting that the Diocese fulfilled its obligations by appointing the Independent Oversight Committee in April 2012. In addition to the obligations of the Diocese under the Letter of Guarantee, clause 32 of the Anglican Development Fund Diocese of Bathurst Ordinance 1998-2010 (ADF Ordinance) provides that ADF shall be guaranteed by the Anglican Diocese of Bathurst to the extent that there should be any deficiency in funds, and that in the event of such a deficiency, Bishop in Council (BIC) shall promote an ordinance to levy the necessary funds from the parishes. The ADF is in Default and judgment has been awarded in favour of the Bank. The Bank demands that the BIC take all necessary steps in accordance with its obligations under the Letter of Guarantee and clause 32 of the ADF Ordinance to make good the shortfall suffered by the Bank in respect to the amounts advanced under the Facilities. In particular, we are instructed to demand that the BIC issue ordinances for the sale of Diocesan assets. If the Bank does not have the BIC's confirmation within 14 days of the date of this letter that it will take all such steps, we are instructed to commence proceedings seeking orders compelling the BIC to do so. We await your response.

The hearing

Mr A.S. McGrath SC together with Mr S.W. Aspinall and Ms J.D. Williams of counsel appeared for the Bank.
Mr A.G. Bell SC together with Mr B. Koch, Ms E.L. Beechey, and occasionally Mr P. Dowdy, of counsel appeared for ADF.
Mr G.O. Blake SC together with Mr W.A.D. Edwards of counsel appeared for BIC, APT, All Saints and BEOS.
Mr C.R.C Newlinds SC together with messrs J. Emmett and A. Macauley of Counsel appeared for the ADF Board.
The hearing commenced on Tuesday 14 April 2015 and proceeded (with some brief interruptions caused by the unavailability of witnesses and the like) on all issues until the settlement of the Board Case, and thereafter on the remaining issues, for over some 36 hearing days until Thursday 25 June 2015. More than 30 witnesses were called and cross-examined. There was further argument on 19 August, 8 October and 30 October 2015 on discreet issues, including on a contested application by BIC to amend its Commercial List Responses, which is referred to below.
The evidentiary material well exceeds 40,000 pages. The transcript runs to over 2,500 pages. The Court received numerous written submissions. ADF's written submissions exceed 250 pages. The Bank's submissions approach 100 pages.
BIC's submissions are extremely complex, heavily footnoted and are of the order of 300 pages. This excludes the Aide Memoire referred to below which runs to about 150 pages. At the conclusion of submissions, I asked for and was provided with an executive summary.
BIC's defences (including what are in effect cross-claims) are many and varied. During the course of BIC's submissions, it properly abandoned insupportable, indeed unmeritorious, contentions, including one that Diocesan ordinances were invalid. It also abandoned, on a particular basis more fully described below, contentions that the Bank breached its voluntary Code of Banking Practice, a claim for relief under the Contracts Review Act 1980 (NSW) (the Contracts Review Act), and a claim that the Bank engaged in conduct which was unconscionable in contravention of s 43(1) of the Fair Trading Act 1987 (NSW) or s 12BC or s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth).
Except for this limited abandonment, it is fair to say that BIC has taken every conceivable point. This extends to denying the existence of Certificates, the existence of which is proved by clear and cogent evidence, and putting in issue that Bishop Palmer would assent to ordinances necessary to discharge any obligation found to be owed by the Diocese, even if he were in a position lawfully and effectively to do so.
As one might expect in a matter of this complexity (BIC's submissions describe them as 'enormously complex'), the contestants' positions moved somewhat over the course of the hearing as thinking was refined and issues were debated.
I have sought to deal with all issues which were fairly in play, having regard to the manner in which these proceedings were conducted by the contestants. I have taken account of all arguments which I understood, in the end, the parties intended to motivate. I have, however, not attempted to restate all of them. This judgment and the orders which I consider should be made are those which the nature of the case requires as provided by s 90(1) of the Civil Procedure Act 2005 (NSW).

The Bank's Claims

The Bank frames its claim against BIC in two ways.
First, it argues that the Letter of Comfort, both by the express obligations undertaken in it and by virtue of the Certificate given in it, creates contractual obligations, binding and specifically performable at its suit, on BIC to ensure that the amount owed by 'the Debtor' (ADF) to the Bank is paid from church trust property held on behalf of the Diocese. In the alternative, it claims damages.
Second, it argues that BIC has duties at general law to the same effect of its contractual obligations, in the fulfilment of which the Bank is personally interested and which it is, under s 65 of the Supreme Court Act 1970 (NSW) (the Supreme Court Act), entitled to enforce.
That section provides: 65 Order to fulfil duty (1) The Court may order any person to fulfil any duty in the fulfilment of which the person seeking the order is personally interested. (2) The Court may, on terms, make an interlocutory order under subsection (1) in any case where it appears to the Court just or convenient so to do. (3) The powers of the Court under this section are in addition to any other powers of the Court.
The Bank puts that duties arise from cll 2, 4 and 5 of the Finance Ordinance and cl 32 of the ADF Ordinance, as affected by s 4 of the 1902 Act and s 2 of the 1961 Act, which make ordinances binding on members.
It submits that s 26(1) of the Trust Property Act (read with s 40) puts all Diocesan property (including all property held by APT, All Saints and BEOS), regardless of the trust purpose on which it is held, at the disposal of BIC for the discharge of its obligations.
The Bank seeks the following relief: 1. A declaration that by reason of cl 2 of the Finance Ordinance and the Certificate, BIC has a binding legal obligation to ensure that a sum equivalent to the amount owed by ADF to the Bank is paid to ADF from church trust property held on behalf of the Diocese, to enable ADF to meet its financial commitments to the Bank. 2. A declaration that all Diocesan property, regardless of the trust purpose for which such property is held, is subject to direction of BIC pursuant to s 26(1) of the Trust Property Act. 3. A declaration that the issue of the Letter of Comfort was an exercise of the discretion to sell or otherwise deal with Diocesan property under s 26(1) of the Trust Property Act, except as to the order of sale of the Diocesan property, to meet the obligations under the Letter of Comfort. 4. An order that BIC cause to be paid to ADF a sum equivalent to the amount owed by ADF to the Bank from Diocesan property. 5. An order that the present BIC members promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod to pay the said amount and realise such assets in such order of priority as specified in the ordinance in order to pay ADF from the proceeds. 6. A declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency in funds owing by ADF to the Bank from real and personal property comprising parochial church trust property held on behalf of the Diocese. 7. A declaration that cl 32 of the ADF Ordinance was an exercise of the discretion to sell or otherwise deal with parochial property under s 26(1) of the Trust Property Act, except as to the order of sale of such property, to meet the obligations under cl 32. 8. An order that BIC promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod holding parochial property and to realise such assets in such order of priority as specified in the ordinance to pay ADF. 9. An order that BIC pay or cause to be paid to ADF monies received from the levy. 10. An order that Bishop Palmer take all necessary steps to ensure the validity of any ordinance made by BIC in accordance with these orders. 11. An order that the APT, All Saints and BEOS comply with any ordinance made by BIC under order of the Court as soon as practicably possible.
In the alternative, it seeks: 1. A declaration that by reason of cl 2 of the Finance Ordinance and the Certificate, BIC has a binding legal obligation to ensure that a sum equivalent to the amount owed by ADF to the Bank is paid to ADF to enable ADF to meet its financial commitments to the Bank. 2. A declaration that all real and personal property comprising church trust property held on behalf of the Diocese, regardless of the trust purpose on which such property is held, is subject to direction of BIC pursuant to s 26(1) of the Trust Property Act.
The Bank's Summons contains the traditional prayer for such other orders as to the Court may seem fit.

ADF's Claims

ADF also puts its case in two ways.
First, it asserts a statutory right or entitlement to enforce cl 32 of the ADF Ordinance and cll 4 and 5 of the Finance Ordinance, which right it contends is derived principally from provisions in the Bodies Corporate Act, coupled with the ADF Ordinance and the Finance Ordinance.
Second, it makes a claim in contract based on the stand alone contractual effect of those Ordinances as affected by s 2 of the 1961 Act.
ADF contends that: 1. by cl 32 of the ADF Ordinance, BIC guaranteed to ADF that to the extent of any deficiency in funds in ADF, BIC would promote an ordinance to levy the necessary funds from the parishes; 2. by cll 2, 4 and 5 of the Finance Ordinance, BIC (as the managing body of the Diocese) is bound to procure payment to ADF to enable it to pay the Bank, and to that end, at least to promote an ordinance to levy the parishes.
It puts that a levy on the parishes would have both statutory and contractual effect, and that BIC is empowered by s 26(1) of the Trust Property Act, by ordinance, to enforce the levy.
It puts that the requirement in in cl 32 of the ADF Ordinance to 'promote an ordinance to levy the necessary funds from the parishes' does not merely entail obtaining funds that the parishes have on hand or may raise from parishioners, but includes the ability to levy funds by recourse to assets, including real property, held by APT on behalf of the parishes.
It puts that it must be expedient (within the meaning of that term in s 26(1) of the Trust Property Act) for church trust property of the Diocese to be sold in order for the Diocese to remedy the deficiency of funds in ADF, and thereby allow the creditors of ADF to be repaid. In support of this proposition it cites the Anglican Church's 'National Code for Personal Behaviour and the practice of pastoral ministry by clergy and church workers', called 'Faithfulness in Service', which states in its standards on financial integrity: You are not to avoid payment of your just debts and family support obligations.
ADF argues that the assets against which the Diocese can enforce the levy include assets held on trust for the benefit of a particular parish or for the benefit of the members of the Church within the particular parish, and that once the Diocese imposes a binding and enforceable levy on the parish, the satisfying of that levy must necessarily be within such a trust purpose as it is to the benefit of the members that their obligation to meet the levy be paid out of the parish's assets.
Initially, an order was sought that APT notify BIC pursuant to cl 1(c) of the Finance Ordinance of the defaults of the schools. That relief is no longer sought, because APT has notified BIC of the defaults. ADF has joined APT, All Saints and BEOS solely to ensure that they are bound by the Court's orders. No relief is sought against them.
ADF seeks the following relief: 1. A declaration that, by reason of cl 2 of the Finance Ordinance and the Certificates issued thereunder in its favour, BIC has a binding legal obligation to pay to ADF from church trust property held on behalf of the Diocese. 2. A declaration that all Diocesan property, regardless of the trust purpose for which such property is held, is subject to direction of BIC pursuant to s 26(1) of the Trust Property Act. 3. A declaration that the issue of the Certificates precludes any further exercise of discretion to sell or otherwise deal with Diocesan property under s 26(1) of the Trust Property Act, except as to the order of sale of Diocesan property to meet the obligations under the Certificates. 4. An order that the remaining members of BIC cause to be paid to ADF $11,050,762.90 from Diocesan property. 5. An order that BIC promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod to pay the said amount and realise such assets in such order of priority as specified in the ordinance in order to pay ADF from the proceeds. 6. A declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency in funds in ADF of $14,063,074.92 (the deficiency) from real and personal property comprising parochial church trust property held on behalf of the Diocese. 7. A declaration that cl 32 of the ADF Ordinance precludes any further exercise of a discretion to sell or otherwise deal with parochial property under s 26(1) of the Trust Property Act, except as to the order of sale. 8. An order that BIC promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod holding parochial property to ADF and to realise such assets in such order of priority as specified in the ordinance in order to pay the deficiency. 9. An order that BIC Members pay or cause to be paid to ADF all monies received from the levy. 10. An order that Bishop Palmer take all necessary steps to ensure the validity of any ordinance made by BIC in accordance with these orders. 11. An order that APT, All Saints and BEOS comply with any ordinance made by BIC under order of the Court as soon as practicably possible.
In the alternative, ADF seeks: 1. A declaration that it would be expedient for Diocesan property to be sold to allow BIC to comply with these orders. 2. A declaration that it would be expedient for parochial property to be sold to allow BIC to comply with these orders. 3. An order directing BIC to take such steps as they consider fit to comply with these orders within 28 days.
ADF's Summons includes the traditional prayer for further or other orders.

BIC's responses

A brief strident general synopsis of BIC's position is revealed in the introduction to its initial Outline of Submissions, which reads as follows: These proceedings are misconceived. They seek relief which is unorthodox (indeed unknown to the law), and which the Court either has no power to grant, or would not in its discretion grant. They betray a fundamental ignorance of basic principles of the law of trusts, the law of charities and the law of unincorporated associations, not to mention a miscomprehension of the more esoteric subject-matter of the legal structure and organisation of the Anglican Church.
BIC's responses to the Bank's case are as follows: 1. The Letter of Comfort was not intended to, and does not, give rise to binding legal relations because: 1. the Bank has no counter-party or parties. The Diocese is not a legal entity and therefore cannot enter contracts. Bishop Hurford was acting for a non-existent principal; 2. it is not in promissory terms; and 3. it is void for uncertainty. 1. If the Bank has any counter-parties, they can only be all members of the fluctuating class of persons comprising the voluntary association which is the Diocese, or the members of the management committee of the Diocese personally to the extent that they authorised Bishop Hurford to sign the Letter of Comfort. This could only be those members of BIC who held office at the date of the Letter of Comfort, not members who joined BIC later. The Bank has thus sued the wrong parties (or has not sued the right ones). 2. Bishop Hurford did not have authority to bind BIC members personally because: 1. there was no ordinance authorising him to enter into an obligation on behalf of the Diocese which would bind the then BIC members personally; and 2. on 12 December 2007, BIC resolved at best that Bishop Hurford issue a letter in the form of the specimen Letter of Comfort which did not include the cl 2 Certificate. In response to this, the Bank relies on the presumption of conclusivity conferred by cl 3 of the Finance Ordinance. BIC's riposte is that the Bank cannot rely on it because that provision is not incorporated into any contract with the Bank. 1. The Letter of Comfort does not impose any obligation to comply with any provision of the Finance Ordinance. 2. The Bank has no statutory entitlement or other civil right to enforce any ordinance because: 1. it is not a member of the Diocese; and 2. only ordinances connected with or in any way related to the property of the Church within the State of New South Wales (within the meaning of s 4 of the 1902 Act) are enforceable, and the Finance Ordinance is not such an ordinance. 1. All church trust property is subject to terms of trust which limit the use to which it can be put. The Bank was on notice of this and it has not established that there is any church trust property available to be the subject of a levy. 2. The terms of trust on which all church trust property is held will be breached by any imposed requirement that it be sold or otherwise disposed of, with the consequence that any ordinance requiring APT (or any other Diocesan body) to do so would be in contravention of ss 26(1) and 32 of the Trust Property Act as necessitating a breach of trust, and would therefore be ineffective by reason of s 6 of the 1902 Act. 3. Any contract by which BIC purportedly bound itself to exercise discretion under s 26(1) of the Trust Property Act is illegal and void or unenforceable. 4. The relief sought by the Bank is futile because the Court has no power to, and cannot, compel BIC to form the opinions required to be formed by ss 26(1) and 32 of the Trust Property Act. 5. The relief sought by the Bank requires unlawful acts in that: 1. orders to compel BIC to pass ordinances will induce a contravention of law or participation in a breach of trust, in that any such ordinance would be inconsistent with the trusts on which all church trust property is held, and passing it will put BIC in breach of ss 26 and 32 of the Trust Property Act; and 2. it would require APT, All Saints and BEOS to sell trust property inconsistently with express trusts upon which they hold all their property, and would contravene a law or statute in force in NSW because it would require trust property to be dealt with in breach of s 26(1) of the Trust Property Act, and it would divert property from the trusts to which it is subject, in breach of s 32 of the Trust Property Act. 1. Damages are not available because there is no loss, as the alleged contractual obligations of which specific performance is sought could not ever have been performed lawfully, or without futility. 2. The proceedings are charitable trust proceedings within s 5 of the Charitable Trusts Act and are incompetent because, under s 6(1), they have not been authorised by the Attorney General and the Court has not given leave to bring them. 3. Some church trust property, in particular certain bank accounts, are held in the name of parish officers who should have, but have not, been joined as parties.
A number of the defences raised by BIC against the Bank with respect to the Letter of Comfort are, mutatis mutandis, raised against ADF with respect to the Certificates.
BIC's responses to ADF's claim are as follows: 1. The Certificates were not intended to, do not give rise to legal relations, and are incapable of doing so because: 1. their language is consistent with the provision of a non-binding Letter of Comfort; 2. they are not in promissory language but are merely a confirmation that Bishop Hurford had provided the requisite certification under the Finance Ordinance; 3. it is unclear who the parties to any agreement arising from them are; 4. they are missing essential terms, for example, they do not state whether the liability accepted by the Diocese is primary or contingent; 5. the cl 2 certification and acceptance of responsibility on the part of the Diocese does no more than import the content of the Finance Ordinance, which sets out in cll 4 and 5 what is to occur if responsibility is accepted; 6. they do not incorporate cll 4 or 5 of the Finance Ordinance or any obligation on the part of BIC to comply with the Finance Ordinance; 7. neither cl 4 nor cl 5 of the Finance Ordinance creates an obligation to pass the ordinances which ADF claims should be passed; 8. ADF has no standing to enforce any ordinance. Only members of the Diocese have standing to do so and ADF is not a member; 9. only ordinances connected with or in any way related to the property of the Church within the State of New South Wales (within the meaning of s 4 of the 1902 Act) are enforceable, and the Finance Ordinance is not such an ordinance; 10. cl 4 of the Finance Ordinance is not capable of giving rise to a contractual obligation because it gives BIC plenary discretion to take such action as it may think fit; 11. cl 32 of the ADF Ordinance is not an ordinance connected with or in any way related to the property of the Church within the State of New South Wales (within the meaning of s 4 of the 1902 Act); and 12. there is no enforcement mechanism against property of parishes which would render the levy of which cl 32 speaks efficacious, a levy being no more than a request for payment made by BIC on the parishes, and unenforceable. 1. If there is a binding contract, ADF's counter-parties can only be all members of the fluctuating class of persons comprising the voluntary association which is the Diocese, or the members of the management committee of the Diocese personally to the extent that they authorised Bishop Hurford to sign the Certificates, which could only be those members of BIC who held office at the date of the Certificates, not members who joined BIC later. ADF has thus sued the wrong parties (or has not sued the right ones). 2. The Court should not accept that the existence of Certificates with respect to OAGS loans 5043, 5044, 5049 and MAGS loan 5042 has been proved by secondary evidence. 3. The Certificates issued by Bishop Hurford purporting to cover earlier loans and aggregating them with new loans (principally the Certificate dated 17 December 2009) are ineffective and do not constitute a valid 're-approval' of the earlier loans, so as to render members of BIC at the time of reissue liable on loans approved before they became members of BIC, because: 1. the re-issue was done administratively without the knowledge of the present members of BIC, and the reissued Certificates were never tabled in BIC; 2. Bishop Hurford did not have authority to bind old BIC in contract (by way of the Certificates) to ADF because no authority was ever given to him to do so by resolution of BIC, and if he did have authority, it was only from members of BIC at the time approval was given to each loan (and not from subsequent members); and 3. reissued Certificates are not to be construed as Certificates in respect of any 'new loans' included in them. 1. In respect of OAGS loans 5023, 5033 and 5049 and MAGS loan 5042, one or both of the conditions imposed by cl 2 (namely that APT had recommended approval of the advance and Synod or BIC had by resolution approved it), did not occur. In the case of OAGS loan 5023, there was no APT recommendation, in the case of OAGS loan 5033, there was no APT recommendation or BIC approval, in the case of MAGS loan 5042, there was no BIC approval, and in the case of OAGS loan 5049, there was no APT recommendation. BIC puts that they are not debarred by the presumption in cl 3 of the Finance Ordinance from putting authority in issue where the conditions imposed by cl 2 have not been met. 2. Relief should be refused for all the reasons put against the Bank, including that the proceedings are incompetent under the Charitable Trusts Act.
ADF answers BIC's contention that Bishop Hurford did not have authority to give any particular Certificate because there was no APT recommendation or BIC resolution, by relying on the presumption of conclusivity imposed by cl 3 of the Finance Ordinance. BIC takes issue with this, in particular as regards the 17 December 2009 Certificate, on grounds which are dealt with below.
A general synopsis of BIC's position from an alternative perspective to that in its written Opening Outline might be the following. It denies the existence of the Diocese as an institution capable of incurring obligations which it formally and solemnly undertook. It denies the authority of its former Bishop and titular and spiritual head to have incurred obligations on its behalf which he formally and solemnly undertook. It denies that obligations formally and solemnly undertaken are legally binding. It denies the existence of formal documents of obligation where there is clear and cogent evidence of their existence. It denies that ordinances passed to give protection to lenders including Diocesan lenders in the event of borrowers' default are effective to give any such protection. It denies that enabling legislation passed to give it control over church trust property gives it such control. It denies that its present Bishop would exercise powers and authority vested in him to discharge obligations formally and solemnly undertaken by his predecessor, even if he could do so. It denies the existence of any church trust property available to be used to discharge obligations it may be found to owe.
Analysis of the relevant Church rules against the factual background of this case does not, in my opinion, reveal much, if anything, that is esoteric.

Legally binding relations

The following questions arise: 1. do the terms of the Letter of Comfort, seen against the events which surround its inception, reflect an intention to create legally binding relations? 2. if so, should the Bank's counter-party be taken to be BIC?
Answering these questions necessitates application to the facts of the general legal principles which apply to determining whether parties intended to contract, taking into account the specific legal principles pertinent to contracts entered into on behalf of voluntary associations, it being common cause that, on any view, where the Letter of Comfort refers to the Diocese, it connotes a voluntary association with fluctuating membership. Consideration of the nature and effect of relevant ordinances, in particular as they relate to Bishop Hurford's authority, if any, to bind old BIC is required.
The Bank submits that the Letter of Comfort was intended to, and did, result in legally binding relations, and that its contract should be taken to be with the members of BIC for the time being. It puts that at the date of the Letter of Comfort, its counter-party was old BIC - on whose behalf Bishop Hurford acted - and that as at 19 February 2014, its counter-party had become the members of BIC by virtue of their occupation of office and by their explicit or implied adoption of the contract embodied in the Letter of Comfort.
BIC's stance is that the Bank 'contracted with no one' because the Diocese is a voluntary association with a large and fluctuating membership and it is impossible to find actual or implied authority on behalf of one member to bind any of the others. It follows, says BIC, that Bishop Hurford acted 'on behalf of no one', and as an agent for a non-existent principal. This would render Bishop Hurford personally liable if there otherwise was a contract. Indeed, he was initially sued for breach of warranty of authority, but the Bank as a result, I infer, of the settlement of the Board Case, no longer seeks to hold Bishop Hurford personally liable on any footing. Accordingly, Bishop Hurford will not, on his own, be exposed to liability.
BIC's alternative position is that the only contract the Bank can have is with the members of BIC as at 24 April 2008, and that there is no mechanism whereby the present (or later) members of BIC could have become bound.
Whether parties intend to create binding legal relations requires an objective assessment of the state of affairs between them, that is, an assessment of what was conveyed objectively by what was said or done: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25]; Norman; in the matter of Forest Enterprises Limited v FEA Plantation Limited [2011] FCAFC 99.
The existence of a contract is a consequence which the law imposes upon, or sees as a result of, what the parties have said and done: see Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 (Air Great Lakes) at 330 and 337.
Where those legal relations are said to be reflected in a written instrument, the parties' intentions are to be deduced from the terms of the instrument as a whole, seen against the events which surround its inception: Banque Brussels Lambert SA v Australia National Industries Ltd (1989) 21 NSWLR 502.
General evidence of surrounding circumstances is admissible to identify the persons or things referred to in a written contract: Giliberto v Kenny (1983) 48 ALR 620 at 623 [30]; Prenn v Simmonds [1971] 1 WLR 1381 at 1383 - 1384. If an issue in dispute is the identity of contracting parties, subsequent communications may legitimately be used against a party as an admission of the existence or non-existence of a subsisting contract: Tomko v Palasty [2007] NSWCA 258 at [63] - [68].
The Letter of Comfort is a commercial document. Its meaning is to be determined by what a reasonable business person would have understood it to mean: Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640.
Courts are astute to adopt a construction which will preserve the validity of a contract: Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494; Meehan v Jones (1982) 149 CLR 571 at 589.
Do the terms of the Letter of Comfort, seen against the events that surround its inception, reflect an intention to create legally binding relations? In my opinion, the answer is in the affirmative. Its purpose, formality, terminology and substantive content all evince that intention: 1. it was brought into existence as a component, insisted on by the Bank, of a significant commercial lending transaction; 2. it was required, given and taken as 'security' (whatever it was worth) for that transaction. The Bank's proposal letter of 12 November 2007 stated that the multi-option facility limit was to be 'secured by a letter of acknowledgement from the Church'; the Bank's 22 November 2007 Letter of Offer required 'A Letter of Acknowledgement by the Bishop of Bathurst, Anglican Church of Australia Diocese of Bathurst located at 3 Church St Bathurst NSW 2795'; the Letter of Offer contained an express acknowledgment that any 'Security' listed in the letter would extend to cover the borrower's obligations under the facility; and the covering letter enclosing the specimen Letter of Acknowledgement stated that the Bank would be relying upon it as its sole security. The giving of security implies bindingness; 3. it is a formal instrument under the hand and seal of the Bishop of the Diocese; 4. it records, under the signature of the Registrar, that it had (as was the fact) been registered in the Register of the Acts of the Bishop, which was available for inspection by the public; 5. it contains a Certificate pursuant to cl 2 of the Finance Ordinance under which the Diocese accepts responsibility for an advance by the Bank; 6. it describes its predecessor as the Letter of Guarantee dated 9 January 2008, and it withdraws it; and 7. its terminology is that of binding obligation, commitment and promise. It records and confirms APT's approval for the Bank to lend to ADF. It confirms ADF's power to borrow. It confirms the commitment of the Diocese to ensure that ADF meets its financial commitment to the Bank. It confirms the commitment of the Diocese to use its best endeavours and powers, conferred by legislative or other means, to resolve issues that may arise with the loan facilities.
In Air Great Lakes at 330 and following, Mahoney JA considered the relevance of actual subjective intention 'qua contract'. His Honour expressed the view that actual subjective intention is a factor that the law takes into account in determining whether a contract exists but is not, or not always, the determining factor. At 331, his Honour said: The result is therefore that intention to contract, in the subjective sense, is relevant to but not determinative of the existence of a binding contract. It acts, in a sense, as a limiting factor, that is, as a reason for not giving to what on the face of it is an exchange of congruent promises, the legal consequences which would otherwise be given to it. And on this basis, it is, in principle, relevant to know what was the actual subjective intention of each party, in the example that I have given, in order to determine whether the legal relationship of contract is to be held to exist. More correctly, it is relevant to know the intention of the one party where it is the intention of or known to the other. If it be relevant, in this sense, to know the intention of the party or parties that no contract result, is it relevant to know that it was the intention that a contract should result? I think it is. The significance of intention, in the example I have taken, is that the law sees it as relevant to the determination of whether the legal relationship of contract should flow from what the parties have said and done. It is, similarly, relevant to know that they both, or that one with the knowledge of the other, intended that a binding contract should ensue.
In this case, there is no reason for not giving effect to what, on the face of it, is an exchange of congruent promises. To the contrary, Bishop Hurford, undoubtedly a truthful witness, said the following during cross-examination: HIS HONOUR: Would I be correct in thinking that it never crossed your mind that anyone on behalf of the diocese would be suggesting that the promise hadn't been given? BISHOP HURFORD: No. It wouldn't even be a joke. I mean, it is a very public commitment and understood very clearly by all the elected representatives of the parishes sitting as Synod that this is the way forward, very clearly understood because in my final two years every effort was being made by Synod and all of the entities of the diocese to repay the debt. That was the meta narrative in all our behaviour.
With whom then, if anyone, did the Bank contract?
A voluntary association does not, in law, have any existence apart from its members, and in itself can acquire no rights and incur no obligations: Carlton Cricket & Football Social Club v Joseph [1970] VR 487 at 488. It is, however, possible for persons, natural or juristic, combining together for a purpose and identifying themselves by a name to enter into legal relations with others. Whether the result is a contract having legal force and in whom vests the resultant rights and obligations depends upon the particular circumstances and on the means adopted: Ex parte Goddard; Re Falvey (1946) 46 SR (NSW) 289 at 296; 63 WN 168 at 171; Peckham v Moore [1975] 1 NSWLR 353 at 359 (Peckham v Moore); Carlton Cricket & Football Social Club v Joseph [1970] VR 487 at 496.
The law does not require an association to have written governing rules, in the form of a constitution or otherwise, establishing the authority of officers and organs of the association and delimiting the rights and responsibilities of members: see K.L. Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand, (1st ed 1986, The Law Book Company Limited) at ch 4.
The nature and effect of the obligations of a member of a voluntary association are determined conceptually as part of the law of consensus or contracts. The court first ascertains what are the rules adopted by the members as regulating their relationship as members. Such rules may be derived from a written constitution or otherwise agreed in writing. Whether they create legally binding rights and obligations of a legal nature depends on the intention of the parties that they should do so. Whether, considered as a whole, the rules of a particular voluntary association were intended to create such rights and obligations must be determined according to the nature of the association, the terms of the rules, and the general context: Scandrett v Dowling (1992) 27 NSWLR 483 (Scandrett v Dowling) per Mahoney JA at 491 and 504.
Because an unincorporated association has no legal capacity, no contract can be made with the association itself unless provided by statute. Accordingly, when a person contracts on behalf of an unincorporated association, the rules of agency must be applied to ascertain the individuals who are liable as principals on the contract: see Stewart, Campbell, Baughen, The Law of Unincorporated Associations, (1st ed 2011, Oxford University Press) at ch 7.
Where the only contract which can be alleged is one with the members for the time being of an unincorporated association having a fluctuating membership, the allegation of contract will fail: Carlton Cricket & Football Social Club v Joseph at 497; Peckham v Moore at 364.
It is not uncommon for it to be found, where there is evidently a serious intention to contract, that the principals to a contract made on behalf of an unincorporated association are the members of its executive committee.
Such liability, if it is found, is not derivative but primary. Thus, in Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565 (Ellis), the plaintiff sued the then current Archbishop of the Roman Catholic Church for the Archdiocese of Sydney 'for and on behalf of the Roman Catholic Church for the Archdiocese of Sydney', for damages, alleging that he was repeatedly sexually assaulted by an assistant priest of that Church. It was held that there was no viable cause of action against the Archbishop as a representative of such a class, because the Catholic Archdiocese of Sydney was an unincorporated association which could not be sued in its own name because, among other reasons, it did not exist as a juridical entity. At 577 [49] - [51], Mason P said: Recognising their inability to sue an unincorporated body (as to which see London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 at 33, 38; Williams v Hursey (1959) 103 CLR 30 at 53-54; Smith v Yarnold[1969] 2 NSWR 410 at 414) plaintiffs have proceeded against persons orgroups within the body who have assumed some active or managerial role. The persons sued would have acted on behalf of the body as a whole, but this did not confer upon them some species of derivative immunity. If the activity in which they exercised palpable control gave rise to a contractual or tortious claim otherwise recognised by law, they are held liable as principals: see Hrybynyuk v Mazur (2004) Aust Torts Reports ¶81-774 (66,237) and generally Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand, (1986), Sydney, Law Book Co, Ch 8, (Tortious Liability). By such means, members of a committee of an unincorporated club orsociety have been found liable in contract (Bradley Egg Farm Ltd v Clifford[1943] 2 All ER 378; Ex parte Goddard; Re Falvey (1946) 46 SR (NSW) 289at 296; 63 WN (NSW) 168 at 171-172; Smith v Yarnold; Peckham v Moore[1975] 1 NSWLR 353) and tort, for example, as occupiers of dangerouspremises or for conducting or authorising particular activities (Ryan v Fildes[1938] 3 All ER 517; Smith v Yarnold). Nevertheless, care is required to select the members of the committee inoffice at the relevant time (Banfield v Wells-Eicke [1970] VR 481; Peckham vMoore). Liability remains personal not representative in nature.
A leading example of liability of individual members of a management committee is Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 (Bradley Egg Farm). The plaintiffs were poultry farmers who contracted with the Lancashire Utility Poultry Society, an unincorporated body with a large number of members, to have their birds tested for a disease called bacillary white diarrhoea. The contract was contained in six letters on the note paper of the society and signed by the technical manager. The plaintiffs sued for breach of contract to recover damages for the loss of a large number of fowls which became infected with fowl typhoid. Initially they cited the president, deputy president and the secretary and treasurer, seeking an order that those officers should pay or procure to be paid damages and the costs of the action out of the costs of the society. When the plaintiffs sought a representation order, which the defendants opposed, the names of all the members of all the executive council of the association at the time the contract was made were added as defendants, and the statement of claim was amended to allege that the contract was made with all the defendants other than the person who carried out the test, who was sued for negligence. The majority of the Court of Appeal, Scott and Goddard LJJ, concluded that the fact that a society entrusts its affairs and management to an executive council does not give that council authority to make contracts binding on all members, and that the proper form of judgment was against the members of the council personally.
In delivering the judgment of the majority, Goddard LJ said at 380 - 381: The society thus has some analogy to a members' club with this important difference, that, whereas the property of such a club belongs beneficially to the members jointly, the members of this society have no rights in the funds or property of the society at all. Its affairs are managed by a council, composed of the defendants, who are entrusted with the management and administration of its affairs. The president, deputy president, treasurer and auditors are appointed in general meeting. The secretary is appointed by the council, and the rules do not contain any provision for the appointment of any other officers or servants. In view of the objects of the society as set out in the rules, it is plain that persons must be engaged to further them, and that this appointment and the allocation of duties among them would be part of the duties of management and administration conferred on the council. Gates was appointed as technical manager and laboratory officer on 21 April 1939, at a meeting of the council. All of the defendant committee either voted for or knew and approved of his appointment. In our opinion, it is plain that Gates was employed by the council and must be regarded as their servant. Against whom but them could he claim his salary? It was argued that if he was the servant of anyone it was of the society, that is, of every member of the society, and that, if he in the course of his duties made contracts, he made them as agent for the members of the society jointly. In our opinion, this is an impossible contention. Because members of a society, especially in a case where they have no rights or interest in the funds or property of the society, entrust its affairs and management to a committee, that does not mean that they thereby give the committee authority to make contracts binding on them. Otherwise a person who pays a subscription of 7s 6d to this society might find himself involved in liabilities of an unknown amount. It is the defendant committee who are liable as Gates' principals, and they are his principals, not because they are members of the society, but because they are the committee entrusted with the function of directing the activities of this unincorporated body and putting them into execution. That includes the making and performing of contracts; and the manager appointed by them becomes their agent and servant to act on their behalf in making such contracts as they may direct and approve and appointing experts, etc. Exactly similar considerations apply to Stuart. They authorise his contracts and are liable upon them. He was engaged as a tester by the council and all its members knew and approved of his appointment and of his carrying out tests; payment for his services was received by the council and the moneys became part of the funds of the society of which they had the control. The council paid Stuart's salary; he was their servant or agent and they are therefore liable for his negligence.
Scott LJ, although agreeing with Goddard LJ, made the following additional observations at 386: That the plaintiffs intended to make a real contract with somebody is beyond doubt; but it is equally beyond doubt that they had never formed any intention in their own minds beyond the vague one of making a contract with the person or persons the law would hold responsible on the contract. They did not, of course, think about it at all; they merely assumed, with the confidence natural to a nation which normally carries out its contracts, that somebody would be responsible. They expected performance and not breach; but the rest was assumption which they never even began to think out. In these circumstances, what is the function of the law? Surely it is to imply an intention on the plaintiffs' part to make their contract with the person or persons to whom alone in the circumstances of the case the law regards as the persons responsible. That cannot be the society, for it does not exist. The law, therefore, has to choose from the various persons associated together under the umbrella of the society's name, those most concerned in the function of making contracts, those of the associated persons who were most directly concerned, and to discard those who were, for any reason, least directly concerned. In the latter category stand the mere members who, under the society's rules, have no liability beyond their annual 7s 6d membership subscription, and have no right to participate, now or on winding up, in the funds of the society. But the body of members want to see the purposes of the society implemented, almost in the same way as in the case of a charity (in the popular sense); and they appoint an executive council to carry out those purposes. Making a contract, whether for employment of servants, for purchase of office furniture, for keeping a bank account, or for carrying out tests to assist the branch of farming which produces utility poultry, is essentially a function which cannot be performed without somebody accepting personal responsibility to perform the contract and pay money; and the business men who accept the office of being on the executive council, seem to me to be the persons whom the law must regard as pledging their own credit in order to perform the duties which they voluntarily undertake for their so-called "society"; just as do the committee men of a club.
Bradley Egg Farm concerned a single, one-off short-term contract and there was no difficulty in identifying the individual members in office who were taken to have concluded it. There is, however, greater difficulty with long-term contracts made by members of a management committee in office at the time of the contract, where a breach occurs much later and they are no longer there.
In Peckham v Moore, Peckham entered into a contract of employment to play football with the Canterbury Bankstown rugby league football club, during the 1970, 1971 and 1972 seasons, as and when called upon to do so. The club was an unincorporated association with a membership of about 1100 which changed from time to time. Its affairs were conducted by a general committee of the members elected annually, and the committee members in 1972 were not identical with those in office in 1970. The contract was expressed to be between the player and the club and was signed by Moore, the club secretary, acting pursuant to resolution and authority for and on behalf of the club. Peckham made an application for an award of compensation for an injury suffered in 1972 in the course of his employment, and named as respondents the 1970 committee members. At first instance, Wall J held that Peckham was engaged by the respondents, for all three seasons, to give his services for the club. In allowing the appeal, the Court of Appeal considered that the committee of the club was the employer but the relevant time was when Peckham was placed on the payroll for the 1972 season, and it was to the committee then serving that he had to look if he wished to enforce his rights.
Hutley JA considered that it was clear from the agreement itself that the whole club membership was not intended by those who negotiated with Peckham on its behalf to be contracting parties, and that there was no reason for deducing that the committee did not intend to enter into legal relations. He observed that the Court in Bradley Egg Farm did not have to face the problem that the arrangement extended beyond the life of the committee. He considered that there was no way by which the contract of employment with the 1970 committee could be transferred to the 1972 committee, but construed what occurred as being that Peckham agreed to enter into an arrangement with the 1970 committee that he would play for the 1972 committee if they engaged him for that year, and that when they did, that committee became his employers. The contract was, in the first instance, with the committee for the year 1970, however each successive committee could take up the offer on the part of Peckham to play for the club and they did so when they put him on the payroll for that year. On this footing, there was no question of the transfer of the right to employ from one committee to another, or of the transfer of burdens from one committee to another.
Glass JA observed that the problem was to contrive some harmonious arrangement between the various discordant elements entitled to recognition. On the one hand, the player and the person acting for the general committee had a common intention of entering into a mutually binding arrangement over a three year term, although this was coupled with the erroneous belief, which they shared, that the club was a body which had the legal capacity to contract. At 367 his Honour said: The player dealt with the 1970 committee, but only the 1972 committee could direct his activities when he was injured. On the other hand, there is a judicial policy of giving effect to the evident intentions of the parties: Bradley Egg Farm Ltd .v. Clifford [1943] 2 All E.R. 378 provided they can be accommodated within the settled principles of contract law. Included among such principles is the rule that rights and liabilities arising out of a contract of personal service are not transferable: Nokes v. Doncaster Amalgamated Collieries Ltd [1940] A.C. 1014. I believe that the solution propounded by my learned colleagues represents the best reconciliation which may be made. This legal conclusion is that the applicant contracted with the 1970 committee during its term of office and offered to contract on similar terms with the committees in office during the succeeding years of the term. The consideration for his inability to withdraw his offer before acceptance by the later committees is found in the responsibility of the 1970 committee to him if his offer were not to be taken up. This solution involves considerations of law which are different from the legal determination of the Commission and must to the extent of that difference prevail. It follows that the respondents were liable to the applicant only if they were members of the general committee which was in office at the time when he suffered injury. This was not established by the evidence for the understandable reason that its legal relevance had not been appreciated.
It is possible for a contract to be construed as being one made with the members of the executive committee for the time being. As the learned authors of The Law of Unincorporated Associations (cited above) point out at 7.14: A committee member's resignation will not end his liability under contracts made whilst he was a member of the committee. However, if the contract is one made with the members of the executive committee for the time being, as is the case with contracts of employment and possibly other long-term contracts, the retiring member will cease to be liable for performance of the contract after his retirement. Where a member ceases to hold a specific role within the association for negotiating contracts with third parties, the members of the executive committee should give notice of this to any third party that has regularly contracted through that member. Otherwise they may be bound by contracts made by that member after his authority ceased. Members who subsequently join the management committee will not become liable under contracts that have already been made, unless their conduct shows they have adopted them, or contracts of employment are involved. They may also become liable under other long-term contracts if the court construes these as having been made with the members of the executive committee for the time being.
In Affleck v Newcastle Mind & Others [1999] ICR 852 (Affleck), employees of a branch of an unincorporated association which was a registered charity made complaints of unlawful discrimination on the ground of their sex, against the branch, the local authority, a principal officer in the social services department, and named members of both the charity and its executive committee. The question was who was their employer. At first instance, it was held that the employer was the membership of the charity as a whole.
The Employment Appeal Tribunal allowed an appeal, finding that there was continuity of employment and that the contract was made with the management committee and its members for the time being.
Morison J delivered the judgment of the Tribunal. At 853, his Honour held that the question as to who was the employer had to be answered by reference to the general law that applied to unincorporated associations. At 854, after finding that it was quite clear that the management function of the charity was vested in its executive committee, his Honour referred to the problem of continuity that arises with people who are employees of unincorporated associations, and to the fact that it might be thought that if a person was employed by a committee, and one member resigned, the employment was novated, resulting in a lack of continuity of employment. He went on to say the following: It is a fact that the law and reality have departed from time to time in the context of an unincorporated association: to such an extent that trades people dealing with unincorporated associations, such as clubs, could find themselves without remedy in the event, for example, that they had not been paid for the goods which had been supplied. The position was partially rectified in the mid-1940s as a result of the courts recognising the absurdity and unreality of that position. We are now moving into a new century, and since 1972 there has been legislation which has sought to protect the interests of employees, whether they be employed by companies or by unincorporated associations. We have no doubt that employees of unincorporated associations, whether they be registered as charities or not, do have continuity of employment despite changes in the composition in the committee which constitutes their employer. It is our view that the way that comes about is through the contract of employment being made with the management committee and its members for the time being.
In Affleck, Counsel for the Attorney General put that the same result could have been achieved by applying a section of the Employment Rights Act 1966, which had the effect, it was put, that there was a transfer of an undertaking every time the management of the committee changed. This proposition did not find favour. At 855 - 856, his Honour went on to say: It may not make any difference in this case, but, if it became necessary to choose between the two, we have to say that we would prefer the formulation which we put forward, namely that people who are employed by an unincorporated association are employed by the relevant management committee as from time to time composed. The reason why we take that view is because it seems to us to accord entirely with reality. Employees of a charity such as this would know when they were taken on that the management committee was not going to remain the same throughout the course of their employment. They would anticipate their employment would be continuous without any break in continuity as a result of an anticipated change in the composition of the committee. The concept of transfer does not fit entirely well with what happens when a committee member resigns and a new committee member is elected, but we agree with Mr. Henderson and embrace the argument which he was putting to us, which was that however it was to be achieved it would be a glaring loophole in the law if employees of unincorporated associations (in particular of those which are registered as charities) were to lose protection under the legislation through lack of continuity. Section 218 of the Act of 1996 is difficult to fit in with the objective to be achieved. We quite understand the force of the argument under section 218(2). It was also suggested in argument that section 218(5) might be capable of applying, treating the word "trustees" as apt to include the special definition of charity trustees within section 97(1) of the Charities Act 1993, but also it seems to us that that is stretching those words, having regard to the provisions of section 97(4). There is no easy answer, but we are happy to adopt a purposive approach to the construction of social legislation of this kind so as to ensure that those who are employed by unincorporated associations do not lose their continuity by an event which they know perfectly well when they take on their employment is almost inevitably going to occur, namely, a change in the composition of the committee by whom they are employed.
In Harrington v Coote (2013) 119 SASR 152, the Full Court of the Supreme Court of South Australia had occasion to consider facts and circumstances closer to home. The case - which came before the Court by way of referral from a single judge as one appropriate for hearing by the Full Court - concerned the suspension of Mr Coote from his licensed office as an Anglican priest (Rector of the parish of Happy Valley) within the Diocese of the Murray, South Australia (the Murray Diocese). The Murray Diocese is, unlike the Diocese in this case, an incorporated association whose rules have statutory force and are taken to operate as if they were the terms of a contract between the members of the association and between the members and the association.
The plaintiffs were members of the Professional Standards Board of the Murray Diocese which determined that Mr Coote was permanently unfit to hold any office. The plaintiffs sought, amongst others, a declaration that the Board had jurisdiction to determine the matter referred to it. Questions which arose included whether the matter was justiciable. The Court held that it was for two reasons, firstly, because the proper construction and legal effect of rules and ordinances of the Synod of the Murray Diocese were in dispute, and secondly, because there was a controversy over the extent of the plaintiffs' authority under the constitutions of the Church and the Murray Diocese which the Court found were binding by virtue of s 3 of the Anglican Church of Australia Constitution Act 1961 (SA) (the equivalent of s 2 of the 1961 Act in NSW), in that Mr Coote's appointment gave him rights connected with and related to Church property within the meaning of s 3 of that Act. (This is a topic which is discussed in more detail below, but is not directly relevant to the point presently under discussion). It was necessary for the Court to consider the second basis because not all of the parties were members of the incorporated association.
At 161 [22], Kourakis CJ (with whom Peek J agreed) concluded that s 3 of the 1961 South Australian Act gave legal effect to the National Anglican Constitution, the Constitution of the Murray Diocese, and the ordinances, canons and rules made thereunder insofar as they governed Mr Coote's licences as parish priest. His Honour held that those instruments legally bound Mr Coote on the one hand, and the incumbents of the responsible offices of the Church on the other, in all matters effecting Mr Coote's licence and authority as Rector of Happy Valley.
At 162 - 163 [25], his Honour made the following observation: I acknowledge the difficulties in identifying the persons who are the contracting parties of an unincorporated association. In my view, those difficulties are not as great in the case of a closely structured and continuing organisation like the Anglican Church which has clearly identifiable committees and tribunals with a readily ascertainable membership. The members of those bodies, and the ecclesiastical and other officers of the Anglican Church, on taking office, may be taken by that very act, to adopt and become bound by the legal relationships of their predecessors in office. I would hold that the bishop of the diocese and, from time to time, the parish priest are legally bound by the terms and conditions on which the licence was first granted. So too are the incumbents of any office or tribunal which has a power to affect the rights and interests granted by the licence. Furthermore, a breach of the constitutional instruments and canons and other rules of the Anglican Church by those office holders need not be treated as a breach committed by all members of the Anglican Church including the holder of the licence. In any event, an aggrieved parish priest sues on the contractual terms of the licence and not as a mere member.
In support of the proposition that members of Church bodies and the ecclesiastical and other officers may be taken, by the very act of taking office, to adopt and become bound by the legal relationships of their predecessors in title, his Honour cited Ward v Eltherington [1982] Qd R 561, in which McPherson J concluded that the members of the committee of a voluntary association were liable on a contract with engineers to do work for the association. It was not clear who was present at the committee meeting on the occasion on which the work was authorised. At 565 - 566, McPherson J said the following: The process of imputing an intention to make the contract with the committee, for which Bradley Egg Farm Ltd. v. Clifford (supra) is authority, seems however not to concern itself with a detailed investigation of the identities of those present when a particular authority was given, or contract made, or course embarked upon. As was said by Scott L.J. at p. 386 of the report of that case: "The business men who accept the office of being on the executive council seem to me to be the persons whom the law must regard as pledging their credit in order to perform the duties which they voluntarily undertake for their so-called 'society'; just as do the committee men of the club." This may involve the risk, in accepting membership of the committee of a club or other like unincorporated association, that a person may incur liabilities in substantial sums in respect of transactions which, because of his absence from the authorizing meeting of that committee, that person knows nothing about and to which he would not readily have consented if he had been present. But it can hardly be the rule that one may avoid liability simply by absenting oneself from all committee meetings, and it appears to me to be infinitely more unsatisfactory for the supplier to be deprived of remedy for services or goods supplied on the basis simply that particular committee members were absent when the vote was taken, or were not paying attention to the proceedings, or did not appreciate that personal liability might ensue. If theories of risk or loss distribution have a place in this context, then it seems preferable to let the risk or loss rest on those who might have prevented but failed to prevent the transaction rather than on those who, in all good faith, supplied goods or services in the expectation of payment or reward. In the present case, this aspect of the problem seems to me to be less troublesome because it is evident that the committee members knew or ought reasonably to have known, or found out, from the estimates (ex. 12, 13 and 20) and the plans (ex. 10 and 11), the extent of the work involved and its probable ultimate cost.
In Scandrett v Dowling, the Court had occasion to consider the effect of the Constitution of the Church, and in particular what force, if any, s 2 of the 1961 Act gave to its provisions.
A Bishop proposed to ordain women as priests without the General Synod's authorisation. Certain Church members sought to have him restrained by the Court, contending that his act was contrary to the Church Constitution and would amount to either a statutory breach or breach of a consensual compact with contractual force. Lengthy judgments were given by Priestley JA (with whom Hope A-JA agreed) and Mahoney JA.
Before me the parties debated whether the case is authority for the proposition that s 2 of the 1961 Act gives the force of statute to Church rules connected with, or in any way relating to, Church property, or only recognises the contractually binding effect of such rules. The distinction might be important with respect to whether s 65 of the Supreme Court Act is engaged.
Priestley JA (at 512, 520, 562 - 564 and 566) held that s 2 of the 1961 Act gave 'binding legal effect' only to those parts of the Church Constitution, and did 'not give any binding force at general law' to any parts of the Constitution not capable of being used for a purpose connected with, or in relation to, the property of the Church. At 554, his Honour held that other provisions of the Church Constitution formed a consensual compact binding only in foro conscientiae. His Honour concluded that the rules relating to the ordination of ministers in no way involved any property of the Church, and the Court should not treat the parties to the consensual compact as having agreed to its terms in the contemplation that it created legal relations between them.
On one view, this is a finding that, apart from internal Church rules capable of being used for a purpose connected with or in relation to the property of the Church, they are never binding at law. I do not so read it, firstly, because it was not necessary for his Honour to consider each and every provision of the Constitution, and secondly, because I consider that such a conclusion would be inconsistent with the holding of the High Court in Cameron v Hogan (1934) 51 CLR 358 at 370 - 371 (cited by Mahoney JA at 504), to the following effect: There are, however, reasons which justify the statement that, at common law as well as in equity, no actionable breach of contract was committed by an unauthorised resolution expelling a member of a voluntary association, or by the failure on the part of its officers to observe the rules regulating its affairs, unless the members enjoyed under them some civil right of a proprietary nature. As a generalisation it expresses the result produced by the application of a number of independent legal principles: it is not in itself the enunciation or explanation of a rule or rules of the common law. One reason which must contribute in a great degree to produce the result is the general character of the voluntary associations which are likely to be formed without property and without giving to their members any civil right of a proprietary nature. They are for the most part bodies of persons who have combined to further some common end or interest, which is social, sporting, political, scientific, religious, artistic or humanitarian in character, or otherwise stands apart from private gain and material advantage. Such associations are established upon a consensual basis, but, unless there were some clear positive indication that the members contemplated the creation of legal relations inter se, the rules adopted for their governance would not be treated as amounting to an enforceable contract. (Compare per Jessel MR, Rigby v Connol (1880) 14 Ch D at 487, and per Scrutton LJ, Rose and Frank Co v JR Crompton and Bros Ltd (1923) 2 KB at 288).
Whether a particular rule adopted by members of a voluntary association for their governance is binding depends on their intention that it be so. This requires, in each instance, an examination of the particular rule under consideration. In my view, it does not follow from the mere fact that an internal Church rule is not connected with or does not relate to the property of the Church that it is not binding between members of the voluntary association.
Because of the way in which the Court resolved the issue, neither the majority judgment nor that of Mahoney JA provide particularly useful guidance as to the juristic nature of the bindingness conferred by s 2 of the 1961 Act. Priestley JA's holding that s 2 did not apply to the rules with respect to ordination, coupled with the finding that those rules were otherwise not binding, rendered it unnecessary to do so. His Honour did (at 562 - 563) refer to the rules which are capable of being used for a purpose connected with, or in any way relating to, the property of the Church as having binding force at general law or as a matter of general law, but did not further elaborate on this.
Mahoney JA took a different view from that of Priestley JA, holding (at 505 and 508) that there were substantial reasons why the Court should conclude that, in general, legally binding rights and obligations can arise from the rules of the Church. His Honour accepted that, in general, the rules impose legally enforceable rights and obligations on its members, for example in relation to matters of property and generally in the Constitution, but considered that not all of the doctrines, rituals and disciplinary procedures imported into the rules were intended to operate as binding contractual terms. His Honour was not satisfied that the proposed ordination of women would breach the rules. He considered that if it did, the breach was not one which should be restrained by injunction or be the subject of declaration.
Although at one point (493), his Honour used the expression 'to an extent the Act of 1961 has given statutory force to those rules or some of them', (which might be taken as expressing a view that Church rules have the force of a statute), at 502 his Honour went on to say: But the question remains: what was the legal effect which it was intended to have? It would be possible to pursue interesting jurisprudential questions in this regard, both as to the classification of the rights intended to be created and the legal processes by which they are, by the Act, intended to be created. However, it is in my opinion sufficient to conclude that what the Act did in relation to the Constitution generally was to constitute or recognise that there was in existence a constitution of an Australia-wide voluntary association in the terms set forth in the Schedule. The purpose of the Act in this regard was to recognise that the Constitution in the Schedule constituted the rules, or part of the rules, of that voluntary association. But it does not follow from this that the Act intended that those rules should have the force of a statute so that such rights and obligations as arose from them were created by or had the force of the statute. The Act left the legal effect of those rules to be determined according to the law governing the rules of voluntary associations. The rules were to be enforced to the extent and only to the extent that the rules of a voluntary association with such a constitution would be enforced. Emphasis has been placed in the argument for the defendants upon the fact that the 1961 Act does not, in its operative parts, contain in terms any provision that "the Constitution set forth in the Schedule shall be the Constitution of the Church of England in Australia". It provides, as the defendants' argument stressed, only that the Constitution contained in the Schedule "shall be for all purposes connected with or in any way relating to the property of the Church of England in Australia" binding on the relevant persons within New South Wales. The thrust of this part of the defendants' argument is that the 1961 Act gives no force or effect to the Constitution beyond that which it would have as the constitution of a voluntary association in existence before or apart from the effect of the Act: it gives additional and statutory effect beyond that only for purposes connected with the relevant property. There are difficulties involved in the simple acceptance of this without qualification. It is to be recognised that the terms of s 2 of the 1961 Act have a particular similarity to the terms of s 4 of the 1902 Act. The 1902 Act was, it would appear, passed in relation to a voluntary association, the Church of England, already in existence in 1902 and therefore s 4 may be seen as giving statutory effect to the rules of that existing voluntary association in the sense of recognising the existence of them as rules of a voluntary association. If it be accepted that the new voluntary association, the Anglican Church (the Church of England in Australia) came into existence before or at the time of the 1961 Act, then s 2 of the 1961 Act may be accepted as operating generally in the same way. The 1961 Act in some respects goes beyond the 1902 Act. It gives effect to canons or rules made under the new Constitution or at least recognises that they may "contravene [a] law or statute in force for the time being in" New South Wales (s 3). And additional provisions in relation to property are made (see ss 4-7). The purpose of those provisions was to ensure that the constitution, as the rules of a voluntary association, was not frozen in its 1961 form but could be altered or affected, by subsequently made canons or rules.'
His Honour continued at 503, in what I consider to be the critical aspect of his holding, as follows: In the end, what is necessary to be determined for present purposes is whether the 1961 Act intended the whole of the Constitution to have statutory effect or whether its intention was that, apart from those provisions directly referred to in the Act, the general terms of the Constitution were to have effect merely as the rules of a voluntary association and to be enforceable to that extent. In my opinion it was the latter intention which appears from the Act as a whole. If this be the effect to be given to the Constitution generally and therefore to the portions of it affecting the ordination of women, then it is not necessary to attempt the construction of the relevant provisions as provisions of a statute. It follows that at this stage the plaintiffs have not established that the proposed ordination of women would involve a breach of the rules of the Anglican Church.
It follows from his Honour's reasoning that the 1961 Act intended only those provisions of the Constitution referred to in the Act to have statutory effect, and that the bindingness of other provisions would be left to be determined according to the law concerning voluntary associations. But his Honour did not elaborate on the juristic nature of the bindingness conferred by the Act. On his Honour's approach (which I respectfully consider to be correct), relevant rules not connected with or otherwise related to the property of the Church may be binding without having statutory force, but those affected by s 2 have statutory backing.
Consistently with this, in Fielding v Houison (1908) 7 CLR 393 at 439 Isaacs J said: The extent of the Synod's powers as between the members themselves rests then primarily on the term of the compact, but the nature of those powers so far as they exist is of the legislative order.
Mahoney JA's judgment did not extend to considering the position of third parties with respect to rules given statutory backing or otherwise, although it may be inferred that where there is no statutory backing, the rules bind only as rules of a voluntary association and a third party acquires no rights under them.
I observe that the Court in Scandrett v Dowling did not have to consider the effect on outsiders (non-members of the voluntary association) of the statutory intervention with respect to Church rules. This is a subject to which I will return later.
The governing rules (or consensual compact) of the Diocese consist of not only the Constitution but include a large skein of ordinances.
Provisions of the ADF Ordinance, the Finance Ordinance, the Trust Property Ordinance and the Administration Ordinance, in particular those dealing with BIC, are relevant. It is necessary to consider whether these Ordinances bind.
An examination reveals, clearly in my view, that they, or provisions in them pertinent to these proceedings, are either binding by virtue of s 2 of the 1961 Act because (to use the terminology of Priestley JA) they are capable of being used for a purpose connected with or in any way relating to the property of the Church, or because of the law of contract they were intended to create rights and obligations of a legal nature.
BIC argues that the Bank proceeds on the basis that BIC is contractually obliged to comply with cl 4 of the Finance Ordinance and cl 32 of the ADF Ordinance, and that this requires proving that they are ordinances for purposes connected with or in any way relating to the property of the Church in New South Wales, within s 2 of the 1961 Act. It puts that neither provision meets this requirement.
BIC argues that cl 4 of the Finance Ordinance is not an ordinance for a purpose connected with the property of the Church because it does not speak to any piece of real or personal property of or held on trust for the Church, and provides for actions which may be taken if there is default by the borrower, which actions are personal and not church trust property.
It puts that cl 32 of the ADF Ordinance also does not 'speak to any piece of real or personal property of or held on trust for the Church', but concerns making up the shortfall where ADF has 'any deficiency in funds'. This, it puts, concerns a shortfall which gives rise to personal liability on the part of the trustee where there is insufficient trust property within the fund out of which any right of indemnity and reimbursement can be exercised. A shortfall, it puts, is not church trust property. It puts that the 'criterion upon which cl 32 depends is the absence of church trust property.'
These submissions are, in my opinion, without substance, not least of all because the Bank does not proceed on the stated premise. The Bank does not rely only on s 2 of the 1961 Act to give the relevant Ordinances binding effect.
The Finance Ordinance, of which cl 4 is but a part, is concerned with raising finance for the activities of the Church in the Diocese without the necessity of executing formal securities. The Finance Ordinance is administered by the primary repository of church trust property in the Diocese. It provides a mechanism to obtain finance which necessitates, even if potentially, putting church trust property at risk but without any advance being secured by any legal or equitable mortgage over any real or personal property. It requires APT to report on defaults and to recommend to Synod or BIC what action should be taken. Such a recommendation may well recommend liquidation of church trust property. The Finance Ordinance contemplates the possibility that Synod or BIC may take such action by ordinance or otherwise to cause a reported default to be rectified by resorting to the liquidation of church trust property. Given that all property, real and personal, held for the Church is church trust property, everything that is used to discharge debts connected with the activities of the Church in the Diocese must be church trust property. It is clearly connected with or related to the property of the Church in the Diocese, and is clearly capable of being used for purposes in connection with it. This reality is in no way diminished by the fact that the Finance Ordinance does not speak to any particular piece of property. Were this to be a requirement, it would not operate with respect to property which became church trust property after the date of the Ordinance.
The ADF Ordinance is in no different position. It makes provision for the management and control of deposits, borrowing and raising funds from external sources, and lending monies to parochial units and organisations controlled by Synod. The monies ADF takes in and the choses in action it creates by lending are church trust property. The guarantee in cl 32, and the ordinance contemplated by it, is capable of being used directly in connection with or in relation to property of the Church. With what, other than church trust property, could the deficiency be made up? It is no coincidence that ADF's board comprises the Bishop, the Bishop's Registrar, not less than four members of APT, and not more than four other members appointed by APT.
These Ordinances can hardly be said to have much, if anything, directly to do with religious, spiritual or mystical ideas or ideals. Their basic underlying motivation might be the ultimate furtherance of such ideas or ideals, but their direct concern is the raising and use of money, and they smack rather of common law contract.
Nothing was said on behalf of BIC about the efficacy of the Trust Property Ordinance, presumably because it is an Ordinance, as its preamble records, for the control, management and investment of church trust property within the Diocese, and therefore given binding effect, at least between members, by s 2 of the 1961 Act.
Scant, if any, attention was paid during submissions to the status of the Administration Ordinance. It legislates comprehensively for matters relating to the administration of the Diocese, including the authority of officers and organs of the Diocese, and is evidently intended in matters of administration to bind. More than this, it contains provisions, such as cll 412 and 414, which relate directly to church trust property. Where cll 412 and 414 give BIC the power to exercise, in the place of Synod, statutory powers under the Trust Property Act, this is a statutory recognition of the existence and constitution of BIC in matters which relate directly to church trust property. For all purposes relevant to these proceedings I consider it to be binding, both because of s 2 of the 1961 Act and under the general law pertaining to voluntary associations.
At this point, it is appropriate to consider what is meant by 'levy' and 'levies' on the parishes as in cl 32 of the ADF Ordinance and cl 5 of the Finance Ordinance. The term is nowhere defined in any Church rule to which the Court was taken. In its ordinary meaning a levy is the imposing or collecting, as of a tax, by authority or force, to raise (a sum of money) by legal execution or process: see Macquarie Concise Dictionary (4th ed 2006, Macquarie Dictionary Publishers Pty Ltd) p 688; Oxford English Dictionary (2nd ed 1989, Oxford University Press) p 872; Watkinson v Hollington [1944] 1 KB 16 at 21 - 22. It is the equivalent of 'imposing': City of Vancouver v BCP Telephone Co [1951] SCR 3 at 6.
The two constituent elements of a levy are: a requirement to pay, and the imposition in binding fashion on the payer of that requirement by an empowered authority.
The term as used in the ADF Ordinance and the Finance Ordinance undoubtedly includes both elements. It is the mechanism whereby Synod or BIC (as the case may be) can, with binding and enforceable authority through an ordinance, obtain access to parochial assets to enable the Diocese to meet the guarantee in cl 32 of the Finance Ordinance and rectify the defaults contemplated by cll 4 and 5 of the Finance Ordinance.
The Ordinances do not limit or circumscribe the form the levy may take, except that it must be imposed by Synod or BIC (as the case may be) and it must be on the parishes.
As with the term 'diocese' (which is dealt with below), the term parish is somewhat protean. It is used to connote, amongst others, a purely geographical area with at least one consecrated church, the community of individuals who come together to pray there, and the group comprising Church members, corporations and other organisations and institutions operating at parish level. All meanings are connected with the geographical area concerned.
In my opinion, 'parish' and 'parishes' in cl 32 of the ADF Ordinance and cl 5 of the Finance Ordinance is to be given a wide meaning so as to connote the human communicant parish members, organisations, corporations and other institutions operating at parish level. The levying of a parish is the imposition of a requirement to pay out of property held by a trustee for the benefit of the parish. APT is, of course, such a trustee.
Support for this is to be found in various Church rules, examples of which follow.
Clause 16 of the Trust Property Ordinance recognises the existence of property being vested in the corporate trustees on behalf of any parish organisation or institution in the following terms: (1) Whenever any Church Trust Property is vested in the Corporate Trustees on behalf of any parish organisation or institution, the purpose of the trust and the terms and conditions upon which the property is held shall be ascertained and duly recorded and the relevant deeds, the record of the trust and all ancillary documents shall be filed in the Diocesan Registry in such a way as to be readily identifiable as appertaining to the parish organisation or institution concerned. (2) Whenever any Church Trust Property is vested in the Corporate Trustees otherwise than for the purpose of a parish organisation or institution, the purpose of the trust and the terms and conditions upon which the property is held shall be ascertained and duly recorded and the relevant deeds, the record of the trust and ancillary documents shall be held in the Diocesan Registry. (3) Whenever it seems to the Corporate Trustees proper so to do, they may give advice and directions as to how any money or other property held on behalf of the Diocese or any Parish Church organisation or institution thereof should be dealt with and, if it appears to the Corporate Trustees that such advice or direction is not being followed that fact may be reported by the Corporate Trustees to Bishop in-Council which shall in tum report the same to the Synod.
Clause 18(a) of the ADF Ordinance, which is under the heading 'Investment Policy', provides: The Board shall comply with the following investment policy. (a) The Fund may be invested in projects supporting ministry objectives of the Diocese of Bathurst or its parishes, schools or other organisations and no more than such sum as is determined by resolution from time to time by Bishop-inCouncil may be invested in any one Parish or organisation of the Diocese.
Clause 582 of the Administration Ordinance, which is under the heading 'Parish Organisations', provides: Every organisation formed by members of the Anglican church within a Parish exists for the furtherance of the work of the Parish, any church within the Parish, the Diocese or the missionary and other work of the Anglican Church of Australia or any of its organisations and may raise funds only for such purposes and for its own internal expenses.
Clause 600(1) of the Administration Ordinance records, relevantly, that '[a]ll grounds and buildings… of a Parish… are generally owned at law by the Anglican Church Property Trust Diocese of Bathurst on trust for the purposes of the Anglican Church of Australia in this Diocese'.
The statutory or contractual underpinning of the relevant ordinances gives BIC the ability to reach, in an enforceable way, all grounds and buildings of a parish via those who legally own or control it.
Primarily, this is through its ability to bind APT so far as it holds church trust property for parish purposes.
Secondarily, the Administration Ordinance includes provisions which give BIC this ability by providing for parishes to be governed by a Parish Council, whose functions include keeping books of account of all money received and expended by them, and opening and operating accounts considered appropriate for the purposes of the parish with ADF or the bank appointed by APT and endorsed by BIC to provide banking services to parishes and organisations of the Diocese.
Clause 597, which is headed 'Use of Parish Funds', provides relevantly that 'Funds of a Parish shall be held on trust for the purposes of the Anglican Church of Australia in that Parish and for such other Diocesan and missionary purposes as may be specified by Ordinance' and that 'Parish funds may be expended for Parish purposes or in accordance with the Ordinances and budgets passed by the Synod.' (It provides further that the provision does not apply to moneys of a Parish held pursuant to specific trusts insofar as those trusts are inconsistent with the clause.)
Clause 526 provides for Parishes to come under the 'Special Care' of the Bishop where it comes to the attention of the Bishop that the Parish has failed to conform with the provisions of any ordinance of the Diocese.
The effect of BIC's submission is that all of the ordinances which give Synod or BIC effective control of parishes and power to make ordinances or give directions to APT relevant to, but not only to, church trust property held for parish purposes are worthless and of no effect because they do no more than make provision for ordinances which parishes or any other Diocesan organisation are free to ignore.
I reject BIC's submission that a levy is no more than an unenforceable request to parishes in the meaning of communicant members of the Church at parish level, firstly because it attributes too narrow a meaning to the term parish, and secondly because an unenforceable request to pay is out of accord with the ordinary meaning of the word levy. BIC's submission would give to the words 'levy the parishes' in cl 32 of the ADF Ordinance a meaning inimical to the clear intent and rational and sensible operation of cl 32 of the ADF Ordinance. A request to parishioners to pay at their option is hardly a rational, sensible or effective method of giving a guarantee to cure a deficiency in funds. Clause 32 contemplates an ordinance for the purpose, in my view, of making the levies binding: A non-binding levy needs no ordinance. To be effective, it must also be capable of being directed to the realisation of church trust property used at parish level.
One further matter is worthy of observation. Whilst it is within BIC's power to ordain to levy parishes in legally binding fashion, and whilst under particular circumstances BIC may be bound to exercise that power, it is always open to BIC to promote and pass an ordinance directed only to communicant members of a parish in the form of a request, compliance with which would only be binding only in foro conscientiae, before resorting to a levy binding at law. In conceivable circumstances, and this may be a case in point, BIC might think it would be considered appropriate to do so.
In the event that parishioners responded to such a request, monies paid over would become church trust property, and at that point, be susceptible to being dealt with by compulsory levy.
On the face of the Letter of Comfort, Bishop Hurford was acting in his capacity as Bishop of, and on behalf of, the Diocese.
It is necessary to consider what is meant by the term Diocese in the Letter of Comfort, and what the role of BIC with respect to it is, in order to determine whether: 1. there should be implied an intention on the part of the Bank to make a contract with the members of BIC at the time of the Letter of Comfort (or at any other time); 2. there should be implied an intention on the part of the members of BIC at the time of the Letter of Comfort to undertake liability to the Bank as principals, and if so, whether Bishop Hurford was authorised by them to undertake that liability; and 3. the present members have undertaken personal liability to the Bank.
The word diocese appears repeatedly throughout relevant Church rules, but nowhere is it defined so as to elucidate what it means. Unhelpfully, the Administration Ordinance defines the Diocese as the Diocese of Bathurst.
The word diocese is derived from the Greek word for housekeeping. It originally connoted a governor's jurisdiction, and later in its ecclesiastical meaning, came to denote a bishop's jurisdiction: see Oxford English Dictionary (2nd ed 1989, Oxford University Press) pp 686 - 687.
In the context of the Church, it embraces a number of concepts and its meaning is, as a result, somewhat protean. It is used with varying meanings in Church instruments, including legislation and ordinances.
Examples of different meanings include:

merely a geographical area. Examples of this use include Art 3 of the Constitution for New South Wales in the 1902 Act, which refers to 'regulation of its affairs within the Diocese'; the reference in the preamble to the Trust Property Act to property held in Dioceses within New South Wales; and cl 202 of the Administration Ordinance which provides that 'To exercise his Episcopal authority the Bishop may divide the Diocese into Regions and Districts';
the unit of organisation of the Church. This is the meaning used in Art 7 of the Constitution in the Schedule to the 1961 Act which provides 'A diocese shall in accordance with the historic custom of the One Holy Catholic and Apostolic Church continue to be the unit of organisation of this Church and shall be the see of a bishop';
the sphere of the jurisdiction of a bishop, a district under the pastoral care of a bishop, or the district with its population falling under the pastoral care of a bishop. An example of this use is the reference to 'the people of the Diocese' in par 4 of the Fundamental Declarations and Ruling Principles in the Administration Ordinance;
a charitable organisation. This is how it is described in the notes to the Aggregated Financial Report of the Diocese for 31 December 2006;
the activities of the persons (natural and juristic), organisations, enterprises and entities comprising the entirety of the endeavours of the Church within the denoted geographical area. This seems to be the meaning used in the Profile; and
persons upon whom financial liability might be imposed. This appears to be the meaning used in Art 32(1) of the Constitution in the Schedule to the 1961 Act which provides 'Synod shall not make any canon or rule imposing any financial liability on any diocese except in accordance with this section'.

A number of these meanings are clearly not apposite to the Letter of Comfort, which provides certification and records commitments. Commitments cannot be given and honoured and duties cannot be undertaken or discharged other than by persons, natural or juristic. Where they are given by juristic persons, they can only be met through the intervention of human agency. In the Letter of Comfort, the Diocese must therefore mean persons, real or juristic. The question becomes one of identifying who these persons are.
The meaning for which BIC contends is the overall and fluctuating voluntary association of individual communicant members of the Church in the geographical area covered by the Diocese, associated by their shared faith. I do not accept this submission.
To begin with, it reflects a simplistic and unrealistic view of what the Diocese, as an association, has become. Its existence might ultimately be underpinned by shared faith, but it is now a significant organisation comprising numerous sub-organisations and corporations engaged, in some instances, in commercial activities intended to generate profits, with significant revenue and assets including real property, and subject to and governed in accordance with a complex skein of ordinances.
By way of illustration, the 'Aggregated Financial Statements for the Diocese for the year ended 31st December 2008', which aggregated, amongst others, All Saints, ADF, APT, BEOS and the Synod Management Fund - but excluded parishes and All Saints' Cathedral Chapter - disclosed annual revenue of over $17 million and operating expenses of over $19 million. The assets disclosed included real estate (apparently mainly churches, halls and ancillary buildings, clergy residences and investment properties) scheduled for insurance purposes with a value (not necessarily market value) of $377 million, and also cash and investments at current values of not less than $6 million.
The bulk of church trust property is held by APT. Other corporations also hold church trust property. On any realistic view, these corporations should be taken to be members of the overarching consensual compact regulated by ordinances containing what, in my opinion, are rules which bind the corporations as effectively as they bind individual members.
Bishop Hurford's attitude, as evinced by evidence given by him under cross-examination to the following effect, reflects reality: HIS HONOUR: Would I be correct in thinking that it never crossed your mind that the diocese would default on an obligation, legal or otherwise, which it undertook in the letters? BISHOP HURFORD: Absolutely, your Honour. Q. Would I be correct in thinking that ADF, APT were viewed by you as part of the same general organisation, and whatever could be done within that organisation, you didn't draw, find distinctions between entities and enterprises, you understood that a promise had been made, whatever its legal efficacy, and it didn't cross your mind that that promise would never be adhered to? A. Exactly right.
With whom then did the Bank contract?

Authority

Did Bishop Hurford have authority to bind old BIC to obligations under the Letter of Comfort?
The Bank puts that Bishop Hurford had express actual authority, implied actual authority or apparent (or ostensible) authority.
It puts that express actual authority was given at the 12 December 2007 meeting, and later confirmed by BIC in its report to Synod 2008.
As to implied actual authority and apparent authority, it puts that the position of the Bishop and the conduct of the members of the Church in the Diocese (in the geographical sense) implicitly confers and also represents to outsiders, such as the Bank, that the Bishop is a person with authority to give binding commitments on behalf of them and the corporate entities which are part of the organisation.
BIC denies that Bishop Hurford had any authority. It argues that he did not have actual authority, express or implied, because the 12 December 2007 meeting did not actually pass a resolution to give it to him, and that to the extent authority was given, it pertained to the specimen letter provided by the Bank which was different from the Letter of Comfort actually signed and which did not include a Certificate. BIC also puts that no ordinance authorised him to incur an obligation binding on old BIC.
I find that Bishop Hurford was given actual express authority on behalf of old BIC to issue the Letter of Comfort at the 12 December 2007 meeting. Moreover, BIC's later actions are consistent only with confirmation (or ratification) of that authority.
The correspondence from the Bank, including the specimen 'Letter of Guarantee' (the predecessor to the Letter of Comfort), was tabled at the meeting. The APT report, also tabled at the meeting, recorded its resolutions both to accept the Letter of Offer and issue a 'Letter of Guarantee' for $50.1 million. The BIC minutes record that there would be a percentage paid on any undrawn amount, and that certain of the changes would be advised to parishes.
Whilst it is true that the minutes of the meeting do not in terms record an actual resolution to approve the facility or the issue of the Letter of Comfort, they presuppose it.
There was a substantive body of oral evidence to the effect that the resolve of the meeting was that a 'Letter of Guarantee' be issued.
I accept the evidence of Ms Robey of having observed every member of old BIC approve the entry into the facility and the issue of the 'Letter of Guarantee'.
The following members of old BIC present at the meeting gave oral evidence of the unanimous resolve of the meeting: Bishop Hurford, Bishop Peter Danaher, Mr Adrian Scarra, the Reverend Canon Carla Archer, the Reverend Canon Frank Hetherington, Reverend Anne Wentzel, Sir Robert Woods, the Reverend Gary Neville, Mr Ray Norman, Mrs Janet Price and Ms Sue West.
Old BIC gave a written report to Synod in 2008. It includes a section describing 'actions taken by Bishop-in-Council since Synod 2007 in exercising the powers delegated to it by Synod'. A subsection of the report is headed 'Loans under Bishop's signature' and contains the following: The Bishop's Certificate that the Diocese of Bathurst accepts the responsibility for the following loans were given to the relevant bank or lending body after first being recommended by the Anglican Property Trust. … No 1 Anglican Development Fund ("ADF") $50,000,000 Multi-option facility with Commonwealth Bank - consolidation of Diocesan Banking … No 5 Anglican Development Fund Reduction -$10,000,000 in multi-option facility to $40,000,000
Item No 5 is a reference to the Letter of Comfort. If confirmation or ratification of Bishop Hurford's authority to give it was required, the report to Synod provides it.
The submission that old BIC did not authorise Bishop Hurford to issue the Letter of Comfort because the specimen did not contain a Certificate is without substance.
It was not suggested, nor could it properly have been, that any member of BIC should be taken to have been ignorant of the provisions of relevant ordinances, in particular the Finance Ordinance. As members of the association are bound, as I have found, by that and other Ordinances, they are taken to have such knowledge.
Clause 2 of the Finance Ordinance authorises the Bishop to certify Diocesan responsibility (where the advance exceeds the prescribed sum) if BIC has by resolution approved 'such advance', APT having previously recommended it. No resolution directed specifically to the issue of the Certificate is required. There is no dispute that APT recommended the advance and BIC resolved to approve it.
Every member of BIC for the time being must be taken to know that, once given, a Certificate gives rise to the obligations provided in the Finance Ordinance.
Thus, the fact that at the 12 December 2007 meeting, old BIC had before it a specimen which did not include a cl 2 Certificate has no impact on Bishop Hurford's authority to give the Certificate. That authority sprang from elsewhere.
I think that, fairly regarded, the authority which the meeting gave Bishop Hurford was wide enough to cover the issue of the Certificate in any event. If the authority was not express, it was clearly implied.
There is another basis upon which I consider Bishop Hurford's authority to give the cl 2 Certificate is established. Clause 2 of the Finance Ordinance, in terms, limits the authority of the Bishop to give the Certificate where APT has recommended approval of the advance and, where the advance exceeds the prescribed sum, Synod or BIC has by resolution approved the advance. Yet, even when these circumstances have not been met, cl 3 provides that where the Bishop has given the Certificate, the beneficiary can take it as conclusive evidence of authority. Thus, in effect, where the Bishop gives a Certificate, whilst there may be internal consequences because of his failure to heed the requirements of cl 2, the external consequence is that the beneficiary can take it as conclusive that he had authority. The practical effect is that authority is conferred by the Ordinance by the mere fact of the Bishop giving the Certificate.
These findings make it unnecessary to deal with apparent or ostensible authority, but I will nevertheless deal with it.
The basic principle was explained by the High Court in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [36] as follows: Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. ''The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.'' It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. See too Crabtree-Vickers v Australian Direct Mail Advertising & Addressing Co (1975) 133 CLR 72.
The Bank relies on the evidence of Mr Grundy (which I accept) who says he read and noted the contents of the Profile which put the Bishop at the top of the Diocesan structure, and that at all material times he assumed that Bishop Hurford had the authority to make representations on behalf of the entities of the Diocese, including each of the entities referred to in the Profile, including APT, BIC and ADF.
Mr Grundy says further that at all material times he understood that Bishop Hurford had authority to make representations on behalf of the Diocese and the entities within it, and that those representations would be binding upon those entities. He says that he held that understanding because Bishop Hurford held the position of the Bishop of the Diocese which was at the top of the diagram in the Profile, and that he had observed through his dealings with members of the Diocese including Mr Shackleton, Mr Scarra and Ms Chirgwin, that Bishop Hurford assumed a leadership role and that he was accorded great respect within the Diocesan offices. In particular, Mr Grundy recalled that meetings he attended with Bishop Hurford were arranged on Bishop Hurford's behalf by his staff from the Diocesan offices and they were conducted in the Diocesan offices, usually in the Board room. Bishop Hurford was attended by staff from the Diocesan offices. He wore a purple shirt with clerical collar and large cross suspended from a cord. Bishop Hurford would preside over the meeting and the persons who attended would act in a deferential manner towards him, for example, Bishop Hurford would always chair or lead meetings. Mr Grundy says that the other attendees at the meetings would usually refer to Bishop Hurford as 'Bishop', appeared to show great respect and deference to Bishop Hurford when he spoke, and appeared to act in accordance with Bishop Hurford's instructions and wishes.
There are aspects of the Bank's assertion of ostensible authority which have some difficulties. A number of the elements which it says were a part of the holding out cannot properly be described as representations by or on behalf of any particular member of BIC or BIC as a whole, for example, Bishop Hurford's mode of dress. Also, acts of deference do not necessarily imply authority. The Profile was given to Mr Grundy from Mr Scarra alone, and there is no suggestion that old BIC knew of this.
However, if the 12 December 2007 meeting did not actually confer authority on Bishop Hurford to give the Letter of Comfort (which even in its specimen form was to be under the hand of the Bishop), the members of old BIC at the meeting undoubtedly held out and conveyed that Bishop Hurford had authority to do what was necessary in connection with the facility. I take the tenor of Mr Grundy's evidence on the issue to be that he relied, in concluding that Bishop Hurford had authority, on what happened at meetings, including that one. If Bishop Hurford did not have actual authority, he was clothed with ostensible authority.

Continuity

I will now deal with the issue of whether, and if so how, BIC became bound by the obligations undertaken by old BIC pursuant to the Letter of Comfort.
The Bank puts that continuity was achieved in at least one of three ways. First, the members of BIC, by accepting appointment to that committee, adopted and become bound by the legal relationships of their predecessors in title. In support of this submission, it relies on Harrington v Coote. Second, the members of BIC adopted or ratified the decision of their predecessors to give and be bound by the Letter of Comfort. Third, by joining BIC, the members became the privies of the earlier members and are estopped from denying that they are bound by the Letter of Comfort.
BIC puts that there is no juridical basis, and Harrington v Coote does not identify one, for a finding that BIC became bound by the legal relationship of their predecessors in office. It puts that Harrington v Coote is plainly wrong and should not be followed because, inconsistently with Ellis, it applies a 'status based' approach. By this I take BIC to mean an approach whereby members of BIC become bound to legal obligations by reason of, and only of, having the status of a member of BIC. It puts that the Full Court was not sitting as an appellate Court and the relevant finding was obiter and has not otherwise been followed. It puts that the circumstances in Harrington v Coote differ from the present ones in that they concerned obligations solely amongst members of the Anglican Church, whereas this case concerns a third party seeking to enforce members to meet obligations. It puts that Ward v Eltherington does not support Harrington v Coote because that case did not concern whether committee members were bound by contracts of their predecessors in office, but whether members of a committee absent from the authorising meeting of that committee were bound by a contract entered into by that committee.
As Morison J pointed out in Affleck, in the mid-1940s the Courts recognised the absurdity and unreality of the position that persons having bona fide dealings with unincorporated associations could find themselves without remedy. In the circumstances of the Diocese, conclusions that the Bank had contracted with no one, and that old BIC was bound but new BIC is not, would be a similar departure from reality.
Kourakis CJ's holding is a timely recognition of that absurdity with respect to contractual dealings with an organisation such as the Diocese. Not only do I not consider his Honour to be wrong, I respectfully entirely agree with him. Not only do I consider there to be a juridical basis for his Honour's conclusion, I consider that the result reached by his Honour is inevitable when the conventional rules of contract and agency are applied. No question of a 'status based' conclusion, either contrary to Ellis or at all, is involved.
The Bank's contract is with BIC for the time being. By accepting appointment to BIC, a new member, by voluntary outward act, brings him or herself within the description of the counter-party. This is no more than the operation of the objective theory of contract which requires some outward conduct on the part of such a person which a reasonable person in the position of the Bank would construe as agreement to be bound.
Acceptance alone of appointment to a standing committee designated and regulated by comprehensive ordinances plainly intended, amongst others, to ensure continuity and the proper discharge of obligations, is sufficient outward expression of agreement to be bound by contractual obligations undertaken by that standing committee, and which are still on foot.
In my opinion, support for the approach taken in Harrington v Coote is to be found in Ward v Eltherington. That decision simply recognises that the ordinary rules of agency apply. A management committee acts as a committee, and it is not open to a member to deny the authority of that committee to bind him or her, notwithstanding absence from a particular meeting or ignorance of a particular resolution. In that case, the principles were applied so as to bind absent members. In this case, a new member in effect ratifies what was previously done by the committee which he or she joins.
In my respectful view, it is the application of these principles which Kourakis CJ had in mind in Harrington v Coote by his statement that officers, upon taking office, may be taken by that very act to adopt and become bound by the legal relationships of their predecessors in office. I do not consider that his Honour had in mind abrogating a significant aspect of the general law of contract. His Honour's approach is as apt to dealings between a voluntary association and an outsider as they are to dealings amongst members.
Under cl 411(h) of the Administration Ordinance, BIC has a duty to discharge all duties specifically assigned to it by Synod from time to time under ordinances. Such duties include those (both express and implied) imposed by the Finance Ordinance to meet the responsibility undertaken pursuant to a cl 2 Certificate. The time for performance of that duty is upon default by the borrower, and it applies to BIC as then constituted irrespective of how it was constituted at the time the original obligation was undertaken. This necessarily implies continuity. Clause 411(a) gives BIC the duty to administer such funds as may from time to time be placed under its control by ordinances or otherwise. This too necessarily implies, indeed requires, continuity.
The Administration Ordinance is statutorily underpinned by both s 2 of the 1961 Act and Art 2(2) of the New South Wales Constitution. The latter provides expressly for continuity. This is no different from that which Morison J had in mind in Affleck when concluding that employees of unincorporated associations have continuity of employment despite changes of composition in the committee which constitutes their employer.
As Kourakis CJ further said at 160 in relation to the South Australian equivalent of s 2 of the 1961 Act: It is a necessary implication of s 3 of the ACAC (SA) that those officers of the Anglican Church who have responsibility for its property may sue or be sued to enforce the provisions of the National Anglican Constitution, and canons and rules made thereunder, in relation to Church property.
Additionally, continuity is statutorily underpinned by Art 2(2) of the New South Wales Constitution, which provides that ordinances are binding on the Bishop and the Bishop's successors and all other members of the Church within the Diocese so far as they may concern their respective rights, duties and liabilities as holders of any office within the Church in the Diocese. The rights, duties and liabilities of BIC to comply with duties imposed on BIC, as it is constituted from time to time, are rights, duties and liabilities which they have as holders of an office within the Church in the Diocese.
I also observe that the traditional difficulties attendant with transfer of contracts for the provision of personal services are absent here.
Further, and in any event, there were additional outward expressions of acceptance. Bishop Palmer's statement at the meeting with the Bank on 26 February 2013 that he had inherited hundreds of documents signed by his predecessor and did not have to reissue them is one. Another is his letter to Mr Copp of the Bank of 8 November 2013, in which he stated his commitment to honour his obligations as Bishop of Bathurst under the 'Letter of Acknowledgement', asserted that the Diocese had fulfilled its obligations under that letter, said that he had continued to honour the undertakings under it, and asserted that on the very day of his consecration he had chaired a meeting of BIC at which the sale of OAGS and MAGS was agreed to. The letter concluded with his advice that the Diocese had acted as required under the 'Letter of Acknowledgement' and had already taken such steps as was able within legislative and other means to discharge its undertakings.
It was not suggested, nor could it reasonably have been, that Bishop Palmer was not speaking on behalf of BIC in writing the letter. He clearly was.
There is a significant body of evidence, identified below, proving that members of new BIC knew of the facility and its use, or became aware of the Letter of Comfort. By the same token, there was no evidence that any member distanced himself or herself from the facility or the Letter of Comfort: 1. Bishop Palmer, Reverend Canon Moody, Reverend Canon Finlay, Reverend Watterson, Mr Leatherland and Mrs Coral McFarland gave evidence that they knew that a letter in the nature of the Letter of Comfort had been given to the Bank by Bishop Hurford on behalf of the Diocese in relation to the facility from the Bank; 2. Bishop Palmer, Mrs Ellen Sharp, Sir Robert Woods, Reverend Canon Moody, Reverend Canon Finlay, Reverend Canon Yager, Reverend Watterson, Reverend Hodson, Reverend Gardiner, Mrs Marilyn Baker, Mr Graham Leatherland and Mrs Coral McFarland gave evidence that they knew that the Bank had provided the facility to the Diocese; 3. Bishop Palmer, Reverend Canon Moody, Reverend Canon Finlay, Reverend Canon Yager, Reverend Watterson, Reverend Hodson, Reverend Gardiner, Mrs Marilyn Baker and Mr Graham Leatherland gave evidence that they knew that the funds lent by the Bank were being on-lent by ADF to Diocesan entities; 4. Bishop Palmer, Mrs Ellen Sharp, Reverend Canon Moody, Reverend Canon Finlay, Reverend Canon Yager, Reverend Watterson, Mrs Marilyn Baker, Mr Graham Leatherland and Mrs Coral McFarland gave evidence that they knew that ADF was making a profit from the on-lending of the monies in the form of the margin between the interest rate which the Bank charged ADF and the interest rate which ADF charged the Diocesan entities; and 5. Reverend Canon Moody and Reverend Canon Finlay gave evidence that they knew that, in approving guarantees to ADF in respect of Diocesan entities, they were facilitating the on-lending of money which the Bank had provided to ADF.
It follows that I reject the submission that the Bank has sued the wrong parties.
In my opinion, BIC is now responsible to perform any obligations undertaken in the Letter of Comfort.
Very little was put by the Bank in support of the proposition that new BIC became the privies of old BIC, or are estopped from denying they are bound by the Letter of Comfort. It is difficult to see how the Bank could succeed on these bases if it fails as a matter of contract. Given my earlier findings, it is not necessary to deal further with this aspect.

Certainty

Are the terms of the Letter of Comfort sufficiently certain to impose enforceable obligations, and if so, what are they?
The Bank submits that the Letter of Comfort imposes obligations which can be divided into two categories.
First, those which are imposed by the Finance Ordinance, as incorporated into the Letter of Comfort by virtue of the cl 2 Certificate, being: 1. under cl 4 of the Finance Ordinance, in any case of default by any organisation or corporation in meeting its obligations in respect of any advance made to it (as referred to in cl 1(c)), to take such action by ordinance or otherwise to cause the same to be rectified; 2. under cl 5 of the Finance Ordinance, to pay any principal interest to the Bank out of the Diocese of Bathurst Synod Management Fund, monies which the Diocese is called on to pay by reason of default of a Diocesan organisation or corporation in paying a loan for which approval had been given, and then, if necessary, to obtain a refund or recoupment by levies on all of the parishes of the Diocese.
Second, those which the Letter of Comfort in terms expressly imposes which are: 1. to ensure that the Debtor (ADF) meets its financial commitment to the Bank; 2. to use its best endeavours and powers conferred by legislative or other means to resolve issues that may arise with the facility; and 3. to take control of ADF's affairs to facilitate clearance of the loan amount outstanding, if requested by the Bank, in the event of loan default.
Third, the Bank submits that BIC has a binding obligation under cl 32 of the ADF Ordinance to promote an ordinance to levy the necessary funds from the parishes to the extent of any deficiency in funds.
The Bank submits that these obligations, properly construed, are obligations to take such steps as are within BIC's power to procure that there is paid to ADF, from church trust property held on behalf of the Diocese, sufficient money to enable ADF to pay the Bank, and that to the extent necessary, are obligations on BIC to promote ordinances to levy Diocesan organisations so as to achieve that result.
BIC argues that the inclusion in the Letter of Comfort of the Certificate does not have the effect of incorporating any provision of the Finance Ordinance because, as I understand the submission, the Certificate is a bare acknowledgment of acceptance of responsibility which has no positive content. Its fall-back position is that the acceptance of responsibility does no more than import the content of the Finance Ordinance, which provides in cll 4 and 5 what is to occur if responsibility is accepted. It puts that cl 4 is not in promissory terms, but that if it is so construed, the promise is illusory because an inherent discretion is reserved to Synod or BIC to take such action 'as it may think fit'. It said little about cl 5.
It argues that the undertaking to use best endeavours and powers to resolve issues is neither promissory nor sufficiently certain to give rise to an enforceable promise.
The polemic whether the Certificate incorporates the terms of the Finance Ordinance into the Letter of Comfort is, in my opinion, sterile. The Letter of Comfort conveys acceptance, pursuant to cl 2 of the Finance Ordinance, of responsibility for the advance to be made by the Bank. However, it does not describe the nature or limit of that responsibility. For this, one needs to turn to the Finance Ordinance itself. BIC's submission that responsibility does not extend beyond what is provided in the Finance Ordinance itself has substance. But, by the same token, the responsibility extends at least as far as that described in the Finance Ordinance. Clauses 4 and 5 are the pivotal clauses. I reject BIC's submission that acceptance of responsibility is purely passive. Responsibility without a correlative positive obligation is empty. An acceptance of responsibility is a positive commitment to discharge it.
A promise which is meaningless or which is not truly promissory, such as one which is made to perform wholly at the promisor's choice, is not binding and is illusory: Placer Development Limited v The Commonwealth of Australia (1969) 121 CLR 353. To be binding, a promise must commit the promisor to a future course of action sufficiently certain to be enforceable. A promise to pay a loan when the debtor considers itself in a position to do so is illusory or uncertain: Bailes v Modern Amusements Pty Ltd [1964] VR 436. See too Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130. How Synod or BIC goes about procuring payment is a matter left to them.
Clause 4 is in open-ended terms, reflecting the fact that it applies where the Trust reports a default to Synod or BIC. Arguably, the field of operation of cl 4 is restricted to those cases of default where the Diocese has not been called on to pay, because cl 5 covers the position when it has. However, where the default is in non-payment, it is difficult to see what form rectification of the default could take other than payment (in cash or in kind) itself. What steps are open or necessary to be taken to rectify the default will of course depend on the nature of the default. Whilst it leaves to Synod or BIC the form of the action to be taken, it requires them to take action to ensure that the default is rectified. A promise is not illusory because the promisor has some discretion in how its obligations are to be performed. It is only necessary that there be an obligation that the promise be performed and that the discretion is contained within defined parameters: M. Furmston and G.J. Tolhurst, Contract Formation: Law and Practice, (1st ed 2010, Oxford University Press) par 11.20; Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 151; Allcars Pty Ltd v Tweedle [1937] VLR 35; Thorby v Goldberg (1964) 112 CLR 597; Yaroomba Beach Development Co Pty Ltd v Coeur De Lion Investments Pty Ltd (1989) 18 NSWLR 398 at 404.
Clause 4 does not leave Synod or BIC the option of doing nothing at all. The obligation is not illusory because it requires sufficiently defined action, in particular in the circumstances which have arisen here: Meehan v Jones (1982) 149 CLR 571; Head v Kelk (1963) 63 SR (NSW) 340; Egel v Drogemuller [1936] SASR 407.
Whatever shortcomings there may be with cl 4 as regards open-endedness, cl 5 suffers no such difficulty. It is in clear, specific and unqualified terms. It was not put that it is uncertain. Clearly it is not. It applies where there is default by an organisation or corporation to pay an approved loan and the Diocese has been called on to pay. That is this case.
It is common cause that ADF is a corporation in respect of which approval was recommended and given. ADF has defaulted. The Bank has judgment to prove it. It was not suggested by BIC, correctly given the terms of the letters of demand of 19 and 24 February 2014, that the Diocese has not been called on to pay.
Clause 5 requires payment to the relevant bank or lending body out of the Diocese of Bathurst Synod Management Fund. It presupposes enough money to pay. It brings with it the necessary implication and obligation that BIC will make sure there is enough money there to pay so as to give the Bank the benefit of the promise: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. How they do so is a matter for them and is of no interest to the Bank.
One thing is clear: cl 5 equates responsibility with liability to pay.
In my opinion, cl 4 is effective to ground relief in contract in the form of an order that BIC rectify the default, and cl 5 is effective to ground relief in contract in the form of an order that BIC pay the amount owed to the Bank out of the Diocese of Bathurst Synod Management Fund.
In each instance, however, the operation of the orders can extend only so far as there is property available to meet the liability. Determining what property should be liquidated or used to pay, and determining whether it should be done by ordinance or other means, is a matter for Synod or BIC. As it happens, as at 25 February 2015, the Synod Management Fund was in credit to the tune of $19,062.06 only.
The use of the word 'Furthermore' which the Letter of Comfort goes on to use after the cl 2 Certificate indicates that the confirmations, commitments and undertakings which follow are complementary to those which are brought about by the cl 2 Certificate itself. I reject the submission that confirmation of a commitment or undertaking does not embody a commitment or undertaking.
These are commitments to ensure that the Debtor meets its financial commitment to the Bank and to use best endeavours and powers conferred by legislative or other means to resolve issues that may arise with the loan facilities. They are not commitments to pay in circumstances where ADF itself does not pay, but are commitments to make ADF pay out of resources at its disposal.
An undertaking to use 'best efforts' or 'best endeavours' imposes a positive obligation, the extent of which is governed by what is reasonable in the circumstances: see Hospital Products Limited v United States Surgical Corporation and Others (1984) 156 CLR 41; Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640. Best endeavours do not mean second best endeavours, although what is required is less than going beyond the bounds of reason but more than casual or intermittent activities: Sheffield District Railway v Great Central Railway Co (1911) 27 TLR 451; Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135; Pips (Leisure Productions) Ltd v Walton (1980) 43 P & CR 415.
I observe that the obligation to use best endeavours does not qualify or limit the obligation to exercise powers.
One thing, however, is tolerably clear. It would not, in the circumstances of this case, be reasonable for BIC not to procure payment out of the Diocese of Bathurst Synod Management Fund because the Fund did not have the money when BIC, having the power to put it in funds, did not do so.
These various obligations work congruently with the obligation imposed by cl 32 of the ADF Ordinance.
Together they are capable of the following commercial, rational and sensible operation, although BIC at its option can remedy any default or deficiency as it otherwise sees fit.
Where there is a default, BIC must cause it to be rectified by taking action by ordinance or otherwise. Where the default is non-payment, BIC must pay the lender out of the Diocese of Bathurst Synod Management Fund, having the option thereafter, if it so chooses, to levy the parishes. The assumption is that the monies in the Fund will come from sources other than the parishes in the first instance. If there is not enough money from non-parish assets to pay a liability owed by ADF because it has a deficiency, the parishes must be levied under cl 32 of the ADF Ordinance. Parish assets are apparently viewed as last resort.
In no scenario is the Bank seeking to enforce the Finance Ordinance or the ADF Ordinance, but rather contractual obligations undertaken by the Diocese in the Letter of Comfort which are properly to be construed having regard to the terms of the relevant instruments.
The Bank has standing to enforce these obligations because there is privity of contract. For this purpose, it does not need to be a member of any voluntary association.
At this point it is appropriate to deal with a submission put on behalf of BIC, which I took to go to contractual certainty as well as to the availability of relief, based on cl 5(c) of the New South Wales Constitution (referred to earlier), which provides relevantly that: Notwithstanding anything in clause 4 or any rule made thereunder - no ordinance shall take effect or have any validity unless within one month after the passing of the same the Bishop shall signify assent thereto in writing provided that any ordinance to which the Bishop shall not assent may be referred by resolution of the Synod, to the Provincial Synod and if the Provincial Synod shall assent to the ordinance, the ordinance shall take effect on the Provincial Synod giving its assent
Clause 4 of the Constitution (also referred to earlier) is entitled 'Rules for conduct of business' and provides for Synod to make rules on specified topics within that parameter.
The thrust of BIC's submission is that the discretion given by cl 5(c) to the Bishop is a plenary personal one, in the exercise of which the Bishop may be called upon to take account of not only temporal things but also spiritual ones, and which discretion should therefore be characterised as one of a partly spiritual nature. It puts that the exercise of such a discretion is at large, cannot be properly reviewed or controlled by the Court, and that its existence has the consequence that it is solely within the Bishop's power to assent or not to assent to any ordinance, which renders any promise to pass an ordinance illusory and uncertain. It is also put that the Court has no power to order the exercise of this discretion.
BIC's submission is unsustainable for a number of reasons.
To begin with, it is based on the predicate that the passing of an ordinance, assented to by the Bishop, is in all cases necessary and essential for the discharge of the obligations undertaken by the Letter of Comfort. There is no such predicate.
The Letter of Comfort itself, and for example cl 4 of the Finance Ordinance where they refer to 'legislative or other means' and 'take action by ordinance or otherwise', contemplate steps not requiring an ordinance. For instance, no ordinance is required for a payment to be made out of the Synod Management Fund in accordance with cl 5 of the Finance Ordinance.
An ordinance is only required where the existing Church rules do not already make adequate provision or where a standing ordinance specifically requires it, such as in the case of cl 32 of the ADF Ordinance for a levy of the necessary funds from the parishes.
Where the Letter of Comfort itself records a commitment to use best endeavours and powers, it refers to legislative or other means. No ordinance would be required for BIC to give directions and advice to APT as contemplated in cl 12 of the Trust Property Ordinance. It is by no means clear that the levy on the parishes contemplated in cl 5 requires an ordinance. It requires no more than the Synod or BIC to 'determine'. Where cl 411(h) of the Administration Ordinance refers to the duty of BIC to discharge all duties specifically assigned to it from time to time by Synod under 'Ordinances or resolutions', it distinguishes between the two types of decisions. Schedule B to the Administration Ordinance contains rules of Synod. Paragraph 124 of that Schedule distinguishes, in the order of business, between notices of motion and ordinances.
Next, in my opinion, if an ordinance is necessary and essential to achieve the committed contractual outcome, the Letter of Comfort both expressly and by necessary implication binds the Bishop for the time being to assent to such an ordinance: see Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 at 77; City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163 at 184; MacarthurCook Fund Management Ltd v Zhaofeng Funds Ltd [2012] NSWSC 911 at [92] - [99].
By his accession to the office of Bishop and his membership of BIC, Bishop Palmer is bound to discharge that obligation. Whilst there is room for the exercise of discretion as to the precise form of any ordinance he may consider reasonable, he is not free to thwart the commercial intent of the Letter of Comfort by declining assent to any and every ordinance. It is difficult to see how matters of spirituality can intrude, but in any event, they would provide no refuge for breach of a legal obligation.
Finally, I am by no means convinced that, on its proper construction, cl 5(c) of the New South Wales Constitution applies here. In my view, properly construed, cl 5(c) is a limitation on rules made under cl 4, which are rules for conduct of business, not a limitation on ordinances in respect of matters concerning the order and good government of the Church as provided.

Banking Code of Conduct, Contracts Review Act and Unconscionable Conduct

BIC pleaded that the Bank is in breach of express obligations undertaken by it pursuant to the Code of Banking Practice, and claimed an injunction restraining the Bank from enforcing the contract or damages which BIC claimed it is entitled to set off against any liability they have to the Bank for breach of any obligation under the Finance Ordinance.
It also pleaded that any contractual obligation on the part of BIC incorporating the obligation to comply with the terms of the Finance Ordinance was unjust in the circumstances relating to the contract between the Bank and BIC at the time the contract was made within the meaning of s 7 of the Contracts Review Act, or was the consequence of the engagement by the Bank in conduct which was unconscionable in contravention of s 43(1) of the Fair Trading Act 1987 (NSW) or s 12BC or s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (collectively the consumer legislation).
In final submissions, the Bank made it clear that it was not contending that any member of BIC was personally exposed to a money judgment (damages or otherwise), except for such damages caused by BIC in failing to take steps ordered to be taken by the Court. The substance of its position is that it seeks that BIC take steps to realise church trust property to procure payment to it, and only seeks to hold BIC liable for such damage as it incurs by BIC failing to take steps to access church trust property which is available for that purpose. As a consequence, BIC abandoned its contentions of breach of the Code of Banking Practice, entitlement to Contracts Review Act relief, and breach by the Bank of the consumer legislation. ADF took a slightly different position, on a basis not entirely clear, that BIC could still be liable to it for damages on some footing if specific performance or other relief in mandatory form was not available but it had established liability on the part of BIC. If such relief were found to be available, BIC seeks to preserve its position on the voluntary Code of Banking Practice, Contracts Review Act and consumer legislation. I see no basis for such relief.
The personal liability undertaken by BIC does not extend beyond discharging the obligations which the Letter of Comfort imposes on them, to take steps to access assets available to assuage ADF's default. The parties have all approached the matter on this footing. Taking of such steps is a matter entirely within BIC's power. They may only incur personal financial exposure if they fail to discharge these obligations.
It has thus become unnecessary to deal with these contentions in any detail. It is, however, appropriate to record that, in my opinion, they had no prospect of success.
The Code of Banking Practice has no application in casu.
The following were the provisions of the Code relied on by BIC: 1.1 This Code is a voluntary code of conduct which sets standards of good banking practice for us to follow when dealing with persons who are, or who may become, our individual and small business customers and their guarantors. 2 Our key commitments to you 2.1 We will: ... (b) promote better informed decisions about our banking services: (i) by providing effective disclosure of information; ... 2.2 We will act fairly and reasonably towards you in a consistent and ethical manner. In doing so we will consider your conduct, our conduct and the contract between us. ... 3.2 If this Code imposes an obligation on us, in addition to obligations applying under a relevant law, we will also comply with this Code except where doing so would lead to a breach of a law (for example, a privacy law). ... 10 Terms and conditions 10.2 The terms and conditions of our banking services will: … (c) be consistent with this Code; … 10.3 Any written terms and conditions will include a statement to the effect that the relevant provisions of this Code apply to the banking service but need not set out those provisions. … 28 Guarantees 28.1 This clause 28 applies to every guarantee and indemnity obtained from you (where you are an individual at the time the guarantee and indemnity is taken) for the purpose of securing any financial accommodation or facility provided by us to another individual or a small business (called a "Guarantee"), except as provided in clauses 28.15 and 28.16. 28.2 We may only accept a Guarantee if your liability: (a) is limited to, or is in respect of, a specific amount plus other liabilities (such as interest and recovery costs) that are described in the Guarantee; or (b) is limited to the value of a specific security at the time of recovery. 28.3 A Guarantee must include a statement to the effect that the relevant provisions of this [Banking] Code apply to the Guarantee but need not set out those provisions. 28.4 We will do the following things before we take a Guarantee from you: (a) we will give you a prominent notice that: (i) you should seek independent legal advice and financial advice on the effect of the Guarantee; (ii) you can refuse to enter into the Guarantee; (iii) there are financial risks involved; (iv) you have a right to limit your liability in accordance with this Code and as allowed by law; and (v) you can request information about the transaction or facility to be guaranteed ("Facility") (including any facility with us to be refinanced by the Facility); ... 28.5 We will not ask you to sign a Guarantee, or accept it, unless we have: (a) provided you with the information described in clause 28.4 to the extent that that information is required by this Code to be given to you; and (b) allowed you until the next day to consider that information. We do not have to allow you the period referred to in clause 28.5(b) if you have obtained independent legal advice after having received the information required by clause 28.4. … 39 Application and transitional provisions 39.1 On and after the commencement date: (a) we will be bound by this Code in respect of: (i) any banking service that we commence to provide to you; and (ii) any Guarantee (as described in clause 28) we obtain from you,
The Code defines 'you and your' to mean: a person who, at the time the banking service is provided, is an individual or a small business that is our customer (or, where this Code specifically applies to potential customers, a potential customer of ours) and includes, in clauses 28, 33 and 39, any individual from whom we have obtained, or propose to obtain, a Guarantee
'Small business' is defined to mean: a business having: (a) less than 100 full time (or equivalent) people if the business is or includes the manufacture of goods; or (b) in any other case, less than 20 full time (or equivalent) people; unless the banking service is provided for use in connection with a business that does not meet the elements in (a) or (b).
The provisions of the Code relied on apply in terms to individual or small business customers and guarantors, neither of which description is apposite to the position of BIC here. They were not customers and they are not guarantors.
There was nothing unjust in the circumstances relating to the Letter of Comfort at the time that it was given, or at any time at which any member of BIC became bound by it, and there was nothing about the conduct of the Bank which can remotely justifiably be characterised as unfair, unreasonable, unethical or unconscionable. The Bank took the Letter of Comfort from BIC as constituted at that time. It had no control over how BIC would be constituted from time to time, nor any means of knowledge as to who would be appointed and when. I see no occasion for the exercise of any discretion under the Contracts Review Act or the consumer legislation in favour of BIC.

Section 65 of the Supreme Court Act

As a strict alternative to its claim in contract, the Bank submits that BIC has the following duties in the fulfilment of which it, the Bank, is personally interested within the meaning of s 65 of the Supreme Court Act, and that it is open to the Court under that provision to order them to fulfil them: 1. under cl 3 of the Finance Ordinance, to accept the cl 2 Certificate in the Letter of Comfort as conclusive evidence that the provisions of the Finance Ordinance were duly complied with; 2. under cl 4 of the Finance Ordinance, to take action by ordinance or otherwise to cause ADF's default to be rectified; 3. under cl 5 of the Finance Ordinance, to pay out of the Synod Management Fund the amount which the Diocese has been called on to pay by reason of ADF's default; and 4. under cl 32 of the ADF Ordinance, to promote an ordinance to levy the necessary funds from the parishes to cure ADF's deficiency.
The Bank puts that the Finance Ordinance and the ADF Ordinance were made pursuant to either the National Constitution or the Provincial Constitution, and have binding force pursuant to either s 4 of the 1902 Act or s 2 of the 1961 Act, as being ordinances connected with or related to the property of the Church.
The Bank further puts that these ordinances impose duties, statutory or at general law, in the fulfilment of which it is personally interested.
Avowedly relying on Scandrett v Dowling, BIC puts that these ordinances do not give rise to statutory obligations, but only reflect the terms of a non-binding consensual compact between members. It puts that no intention to create private rights from the terms of delegated or subordinate legislation (in the form of ordinances) on the part of the legislature, enacting the 1902 or the 1961 Act, can be inferred.
It puts that by virtue of those enactments, statutory obligations are created, but they only apply internally as between members of the Church, and the Bank has no standing to enforce them.
BIC suggests that the position is analogous to that created by s 140 of the Corporations Act which provides: (1) A company's constitution (if any) and any replaceable rules that apply to the company have effect as a contract: (a) between the company and each member; and (b) between the company and each director and company secretary; and (c) between a member and each other member; under which each person agrees to observe and perform the constitution and rules so far as they apply to that person.
But the Bank does not rely on any ordinance as, in its own right, constituting a contract between it and the Diocese. Its contract is the Letter of Comfort. The terms of the Letter of Comfort are to be ascertained and construed by reference to the relevant Ordinances.
The inquiry here is whether: 1. the Finance Ordinance or the ADF Ordinance impose any duties within the meaning of that term in s 65 of the Supreme Court Act, and if so, on whom; 2. the Bank is personally interested in the fulfilment of any such duty; and 3. if so, it is just or convenient to make an order that it be fulfilled.
Section 140 of the Corporations Act has been held to create a statutory contract, with the consequence that a person not privy to it cannot enforce it: Hickman v Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881; Residues Treatment & Trading Co Ltd v Southern Resources Ltd (No 2) (1988) 51 SASR 177; Eley v Positive Government Security Life Assurance Co Ltd (1875) 1 Ex D 20, affirmed (1876) 1 Ex D 88.
The Bank's claim for relief under s 65 of the Supreme Court Act, however, proceeds on a different basis, namely that the 1902 Act or the 1961 Act make the Finance Ordinance and the ADF Ordinance binding under general law, and they impose duties in the fulfilment of which the Bank is personally interested irrespective of whether the duty is undertaken, in binding fashion, directly to it. Section 140 of the Corporations Act therefore does not provide a useful analogy.
There is in any event a significant difference between the terms of s 140 of the Corporations Act and the terms, respectively, of s 4 of the 1902 Act and s 2 of the 1961 Act. Section 140 gives a company's constitution effect as a contract between the company and each member, director and secretary and between members. In contrast, ss 4 and 2 make the provisions of the Constitutions and ordinances made under them relating to the property of the Church binding on members of the Church. I see no reason why a duty binding as between members cannot be the subject of an order under s 65 of the Supreme Court Act at the instance of a third party, where the duty is imposed for the direct benefit of that party.
An important, if not decisive, consideration in determining whether a person is personally interested in the fulfilment of a duty is whether it is imposed for the benefit, especially the direct benefit, of that person.
Clause 3 of the Finance Ordinance can immediately be put to one side. The provision provides for conclusivity. If it is operative, the Diocese is precluded from denying compliance with the requirements imposed in cl 2 of that Ordinance. As I have said earlier, its practical effect is to authorise the Bishop to give the Certificate. It does not impose any duty.
The full reach of s 65 of the Supreme Court Act has not received extensive judicial consideration at any level. The section is worded generally. It has been recognised that it enables the Court to issue orders in the nature of mandamus but stripped of the technicalities which historically restricted the efficacy of such orders. The section is worded in more general terms than its predecessor, s 165 of the Common Law Procedure Act 1899 (NSW), where the word 'duty' meant one of a public or quasi-public nature: see LexisNexis Butterworths, Ritchie's Uniform Civil Procedure NSW, vol 2 (at Service 98) p 15,471 and the authorities cited there. The learned authors suggest that it is doubtful that the section was really intended to alter the substantive law, but that arguably it has that effect. I respectfully disagree with the learned authors. Given the general words used, it is difficult to see how in applying them the section was not intended to alter the substantive law.
The words of the section do not restrict its operation to duties of a particular kind, other than implicitly to those recognised under the law. The provision applies to 'any' duty. The controls are that the duty must be one in the fulfilment of which the person seeking the order is personally interested, and the Court must consider it to be just or convenient to make an order that it be fulfilled.
In The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc (1994) 181 CLR 404 at 421, the plurality said: It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in their express words
Scandrett v Dowling is of limited assistance here. The fulcrum of the majority decision is that s 2 of the 1961 Act applies only to rules capable of being used for a purpose relating to church trust property. The relevant Church rules there under consideration (concerning the ordination of ministers) were not so capable and therefore were not given binding force by virtue of the statute and were otherwise part of a consensual compact, not binding other than in foro conscientiae. Mahoney JA differed to the extent of concluding that, whilst the rules of the Church were in general intended to be binding, the rule sought to be invoked in the case was of a type not intended to be binding.
Critical differences between that case and this one are that: 1. the Finance Ordinance and the ADF Ordinance are capable of being used for a purpose relating to church trust property and therefore have statutory backing; 2. those Ordinances are otherwise of a type intended to be binding in any event; 3. Scandrett v Dowling did not concern the position of outsiders; and 4. no reliance was there placed on s 65 of the Supreme Court Act.
Clause 2 of the Finance Ordinance imposes on the Bishop, his successors, and all members of the Church holding office (in this case as members of BIC), a duty to discharge the responsibility accepted by the Diocese pursuant to the Certificate given. The nature and extent of that responsibility is illuminated by cll 4 and 5, and it includes the duty to pay the amount which the Diocese has been called on to pay by the Bank by reason of ADF's default, and to take such action, by ordinance or otherwise, as is necessary to achieve this.
Clause 32 of the ADF Ordinance imposes on BIC the duty to levy the necessary funds from parishes to cure the deficiency in ADF's funds, and to promote such ordinances as may be required to do so.
In my opinion, the Bank is plainly personally interested in the fulfilment of these duties.
I consider that one matter relevant to whether it is just or convenient to make an order that they be fulfilled is whether there is church trust property accessible to be used to discharge these duties.

Church trust property

The Diocese, being a voluntary association, does not have any existence apart from its members. Consequently, all real and personal property held for the benefit of the Church in the Diocese (that is, church trust property) is vested in trustees. By far the greater part of church trust property in the Diocese is held by APT, although each of All Saints, BEOS and ASUCC also holds church trust property. Each is a corporate trustee or corporate body of trustees within the meaning of that term in s 4 of the Trust Property Act. Unless it is necessary to distinguish between them, I shall refer to APT, All Saints, BEOS and ASUCC collectively as the corporate trustees. Their rights and entitlements to deal with church trust property are recognised, and in some respects regulated and circumscribed, by the provisions of the Trust Property Act, supplemented by ordinances, in particular the Trust Property Ordinance.
Putting aside the dim, even unrealistic, prospect that funds might be raised by BIC from the pockets of parishioners by the imposition of a levy on individual communicant members (even if this could be done in some binding fashion - which I highly doubt - seeing as they are free to give up their membership at any time), the only realistic source of revenue which might be utilised to ensure that ADF meets its financial commitment to the Bank is what can be obtained from the realisation of church trust property. Hence the Bank's (and ADF's) focus on relief intended to bring about that result.
The overarching question is whether any church trust property is within the reach of the Bank and ADF, legally and practically. By legally, I mean susceptible to orders of the Court which require steps to be taken to access it. By practically, I mean in fact available so that there is utility in any orders requiring it to be accessed.
The Bank and ADF contend that BIC has effective power to access all church trust property, the source of its power being: 1. s 26(1) of the Trust Property Act (read with s 40) which empowers it, by ordinance, to direct the corporate trustees, if it appears to it to be expedient by reason of circumstances subsequent to the creation of the trusts of such property, that it be sold or otherwise dealt with as directed; and 2. cl 12 of the Trust Property Ordinance which empowers it to give the corporate trustees a binding direction, except insofar the trusts on which it holds property otherwise provide.
No reliance is placed on s 32 of the Trust Property Act as providing any relevant route of access.
BIC's answer is that it has no such power because: 1. each item of church trust property in the Diocese is held subject to a charitable trust on specific terms; 2. it would be in breach of those terms for any church trust property to be used for the purpose of discharging any obligation to the Bank under the Letter of Comfort, or to ADF under the ADF Ordinance (in the language of cl 12 of the Trust Property Ordinance, 'the trusts upon which it holds property otherwise provide'); and 3. the precondition for giving a direction under s 26(1) is that it must appear to BIC to be expedient by reason of circumstances subsequent to the creation of the trusts, and it is impossible because of the breaches of trust that it will entail, to form an opinion that it is expedient to sell church trust property currently being used for trust purposes and apply the proceeds to pay a levy or otherwise pay the Bank directly, or indirectly, through ADF.
It says that 'stripped of any appearance of ecclesiastical overtones', the Bank and ADF lent money without real security and are seeking to recover it from the corporate trustees rather than the borrower, and the corporate trustees cannot pay without engaging in a breach of trust unless the trusts are varied, with the consequence that no ordinance purporting to require them so to act can be valid. It puts that the Bank's misconception apparently stems from its failure to appreciate that the Diocese is not monolithic, and that all church trust property is held on such separate charitable trusts.
BIC puts further that there is no basis upon which the Court can compel BIC to form the opinion required by s 26(1), or oust from it the function of deciding whether or not to exercise power under it. It puts that it is not for the Court to substitute its own opinion for that which the repository of the power might form. As a fall-back position, it puts that if the Court is minded to grant some relief, a course which BIC puts would only be justifiable if the Court were satisfied that there is some church trust property available, that relief should be very limited and should only be subject to BIC complying (if compliance is possible).
On the way in which the parties have approached things, three issues which arise and require determination are: 1. whether all church trust property is held on trusts, the terms of which would be breached were it to be used to pay the Bank or cure ADF's deficiency in funds; 2. whether, even if church trust property is so held, s 26(1) of the Trust Property Act allows BIC, in the circumstances that have arisen here, by ordinance, to direct that it be sold or otherwise dealt with to pay the Bank or cure ADF's deficiency in funds; and 3. if so, whether the Court can and should make orders requiring BIC to give such a direction.
The main thrust of the Bank and ADF's cases and BIC's defences with respect to church trust property is directed to property, including parish property, legally owned by APT. There is, however, apparently church trust property, properly designated parish property, in the hands of parish officials. This apparently includes money in bank accounts. Because of the existence of parish assets in the hands of parish officials, BIC puts, as I understand it, that there has been a non-joinder of parish officials as regards any potential relief which might reach those assets. These types of parish assets, as well as assets held by APT for the specific use for parishes, are apparently off-balance sheet. The relief sought does not, as I read it, extend to binding any trustee other than the corporate trustees. There has accordingly been no non-joinder. I do not consider that such trustees are proper parties, even though it is open to BIC to levy them, including to discharge obligations to the Bank and ADF.
There was debate as to which side bears the onus of establishing the existence or non-existence, as the case may be, of the terms of the trusts.
BIC put an untenable submission that because, as framed, part of the relief sought by the Bank and ADF is directed to all church trust property, unless the Bank and ADF establish that every item of Church property is in play, their case should fail. The proposition is based on the non sequitur that if not all relief is available, none is. To approach the matter in this fashion would be inimical to the overriding purpose specified in s 56(1) of the Civil Procedure Act 2005 (NSW) which is the just, quick and cheap resolution of the issued in the proceedings. It also overlooks the provisions of s 90(1) of the Civil Procedure Act 2005 (NSW), Pt 36 r 36.1 of the Uniform Civil Procedure Rules 2005 (NSW) and s 63 of the Supreme Court Act, which respectively provide as follows: 90 Judgments generally (1) The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires. … 36.1 General relief At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion. … 63 Final determination The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided.
The existence of accessible church trust property is not a necessary averment for a contractual claim except where the breach alleged is of a term which requires such property to be made available. Likewise, it is not a necessary averment for a claim of breach of duty except where the breach alleged is of a duty which requires such property to be made available. It is not an element of every cause of action which the Bank and ADF motivate, but it is an element of some, for example, the claims relying on cl 32 of the ADF Ordinance, where the content of the duty is to levy the parishes. I have not found it necessary to embark on an in depth analysis of where it is and is not an element respectively.
The approach which I have taken is that, because any relief which might otherwise be open is likely to be inutile unless some church trust property is available, the Bank, and for its part ADF, have the overall practical onus, as part of establishing an entitlement to relief, of establishing that such property is available. However, given that all church trust property is held on trust, without evidence as to the terms, one might in the first instance infer that it (or at least some of it) is held on general trust for the benefit of the Diocese. I have treated the Bank and ADF as having an overall onus, but I consider that BIC has an evidentiary burden, once the Bank (and ADF) shows that there is church trust property prima facie available, of showing that it is beyond reach. Additionally, I have taken the approach that it is sufficient for the Bank and ADF to establish that there is some property available. It is also to be borne in mind that evidence is to be weighed according to the power of the party to produce it, and here BIC, rather than the Bank or ADF, has it. Slight evidence from the Bank and ADF is enough: Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371 - 372. In the end, because of the factual findings I have made, questions of onus and evidentiary burden are of little or no importance.
From an evidentiary perspective, the parties approached this issue respectively as follows. BIC adduced evidence, comprising in excess of 40 volumes of material, which it says establishes specific terms of trust for all church trust property in the Diocese. This did not include a further significant body of material which BIC sought to have admitted into evidence. I declined to allow this amongst others because of lateness. This was the subject of an ex tempore judgment on 4 June 2015.
During the hearing, BIC produced a volume entitled 'Trust Property Aide Memoire Folder' (the Aide Memoire) containing over 140 pages of schedules, with references to the documentary material in evidence, identifying what it says are 460 trusts of property held by APT, trusts of two properties, a water licence and personal property other than scholarship and building funds held by All Saints, and trusts of two properties and personal property held by BEOS.
The Aide Memoire categorises, with some overlap, the trusts of real property into those created by consecration or a trust instrument, those inferred from usage and other circumstances, and those inferred from usage and other circumstances in addition to a trust created by consecration or a trust instrument.
Of the 460 trusts where APT is the corporate trustee, via the Aide Memoire, BIC asserts that: 1. 164 are specific trusts of real property which it asserts were created by consecration or a trust instrument. In relation to 13 of these, there is additional evidence of usage and other circumstances from which a trust is to be inferred; 2. 46 are specific trusts of real property to be inferred from usage and other circumstances; and 3. 250 are specific trusts to be inferred from records of the Anglican Managed Investment Fund of personal property, being separate funds of which: 1. 110 are created by a will, ordinance or other trust instrument or evidenced by a Declaration of Trust; and 2. 140 can be inferred from records of the Anglican Management Investment Fund.
The Bank and ADF (which appeared to take something of a lead role on this subject): 1. took the general stance that BIC had not established specific terms in respect of all church trust property; 2. took issue with BIC's contention that with respect to certain property, specific trusts for specific purposes are to be inferred from usage; 3. selected a series of trusts in respect of which they say the evidence establishes no more than the existence of a trust for the benefit of the Church or the Diocese generally; and 4. identified trusts of real and personal property held on trust for the benefit of particular parishes, putting that such property becomes available upon BIC levying the parish.
The Court was faced with the dilemma whether it was necessary (or appropriate) to embark upon a detailed examination of thousands of documents to determine whether specific terms of trust are established for each trust, and what they are. BIC put that this was necessary, a contention with which the Bank and ADF took issue. The possibility of the Court referring the question to a referee for enquiry and report under Uniform Civil Procedure Rules 2005 (NSW) Pt 20, r 20.14 was also canvassed.
I concluded that it is neither necessary nor appropriate in the interests of the just, quick and cheap disposition of the real issues in this case to embark on such an exercise for the following five reasons: 1. I am satisfied that there exists church trust property (both real and personal) which is or might become available for the purposes of paying the Bank or alleviating ADF's deficiency in funds, without there being any necessity to act inconsistently with presently standing trust terms; 2. I have concluded that s 26(1) of the Trust Property Act, properly construed, allows BIC by ordinance to direct APT to sell or otherwise deal with church trust property if it appeared to it to be expedient to do so, even if this was inconsistent with presently standing trust terms; 3. even if there were to be orders which required BIC to take steps entailing the realisation of church trust property it would, at least in the first instance, be left to BIC to decide on selection; 4. a final contest on the availability of particular church trust property is, if necessary, appropriate to be had at the stage of execution of any orders; and 5. it is open, at least as a preliminary step, for BIC to impose a levy on the parishes binding only in foro conscientiae.
I record that until 30 October 2015 (that is until well after the main hearing), there had been a disconnect between BIC's pleadings and the evidentiary material upon which BIC proposed to rely. In particular, it had not pleaded, either adequately or at all, the existence of trusts said to arise from usage and other circumstances.
BIC foreshadowed an application to amend its Commercial List Responses, and the Bank and ADF foreshadowed their opposition. BIC served its proposed amendments on or about 8 October 2015. Drafts were handed up in Court on that day. I dealt with the application on 30 October 2015. The Bank and ADF put, with some force, that they had not had a full and fair opportunity to investigate BIC's trust evidentiary material with respect to alleged trusts by usage.
I nevertheless granted the application so that the issue was fully in play, but made it clear that, so far as I reasonably could, I would protect their position to further deal with this issue should the need arise. To this end, I can do no more than record that in granting the application, I took into account that it was not readily apparent to me what further responses the Bank and ADF could make to BIC's evidentiary material on that subject beyond those which they had already made, that I had refused BIC's application for leave to rely on additional evidence, and that I considered it neither necessary nor appropriate to conduct a detailed examination of all 460 alleged individual trusts. If I am wrong with respect to the findings (favourable to the Bank and ADF) on church trust property which are set out below, with the consequence that for that reason alone the Bank and ADF are held to be not entitled to any relief, they may well have suffered significant prejudice by the allowing of the amendment.
I turn to consider the substance of BIC's contention that all church trust property is held on trusts, the terms of which would be breached were it to be used to pay the Bank or cure ADF's deficiency in funds.

Real Property

At the outset, it is appropriate to observe that the contestants all approached the matter on the footing that church trust property is held on charitable trust. I have proceeded on the assumption that it is sound.
It is also apt to observe that the charitable trust is a form of express trust; certainty as to the intention to declare a binding trust is strictly insisted upon in charitable as in private trusts; and the selection of the charitable objects may be left to the discretion of trustees: see generally J.D. Heydon and M.J. Leeming, Jacobs' Law of Trusts in Australia (7th ed 2006, LexisNexis Butterworths) at ch10, especially at [1001], [1060], [1061].
ADF selected a number of properties said by BIC to be subject to specific terms of trust with a view to establishing otherwise. It is necessary to deal with these in some detail. The identification number of the property is that used in the Aide Memoire.

60: Vacant Land at Uarbry Road - Parish of Coolah-Dunedoo

The Aide Memoire places this property in the category of a trust created by consecration or a trust instrument. The property was acquired by conveyance in 1886 'To the Church of England Property Trust Diocese of Bathurst'. The Aide Memoire describes the trust purposes (which I accept as being derived from the conveyance - which is largely illegible): to have and to hold unto and to the use of the said Church of England Property Trust Diocese of Bathurst its successors and assigns for ever
BIC argues that the trust purpose is 'for the purposes of a Parish'. The terms of the trust, however, are wider. It is for the benefit of the Church in the Diocese in general.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would be within the terms of the trust. In the terminology of cl 12 of the Trust Property Ordinance, the trust does not otherwise provide.

129, 130: 3870 Beaconsfield Road, O'Connell - Parish of Kelso

The Aide Memoire places this property, described as 'St Thomas's House, Church, Hall and Cemetery', in the category of a trust created by consecration or a trust instrument, for the purpose of a church.
In addition, it asserts the existence of specific trusts for the purposes of a cemetery, rectory and hall to be inferred from usage and other circumstances.
Both properties were acquired on 18 December 1879 by Crown grant under s 5 of the Crown Lands Alienation Act of 1861 (NSW), 'upon Trust for Church of England purposes'. This is not a trust on specific terms but a trust for general Church purposes. Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trust does not otherwise provide.
The Aide Memoire recites the terms of consecration of the church, presumably taken from an instrument, although the actual document does not appear to be in evidence. There seems to be little doubt that the church building standing there was consecrated, that is, set apart and dedicated for religious use. In the words of the consecration, the edifice or structure was 'separated and set apart' from all profane and common uses. I am prepared to infer that at all relevant times it has been used for that purpose.
For each year from at least 1913 until 1984, the Diocese published a year book containing information about the Diocese including its budget, a list of consecrated churches in the Diocese, and a list of churches licenced for public worship but not consecrated. From at least 1917 to 1984, the Diocese year book recorded St Thomas's, O'Connell as having been a consecrated church in the Diocese from 23 October 1869.
The year books record that the Parish of Kelso has a rectory which I am prepared to infer, although the evidence leaves the matter in some doubt, is the rectory on the property, and that building has at all relevant times been used for that purpose. The evidence does not establish, but I am prepared to assume that there is a hall and cemetery on the land and that this has been so at all relevant times.
BIC also relies, as evidence of usage, on five instances of people (presumably parishioners) making bequests of money to APT to be used for specific purposes with respect to the church, rectory or hall.
The Diocese maintains a 'Land Terrier' (a term apparently deriving from 15th century French and medieval Latin) being a 'book of land', or as the Diocese describes it, 'a record system for its land and property holdings differing from a land registry in that it is maintained for the organisation's own needs and may not be publicly accessible'. BIC relies on the 'Terrier of Land' for 2010 with updates to March 2012 ('the Terrier'). This document lists the property at 3870 Beaconsfield Road, O'Connell as 'St Thomas's house, ch, hall, cemetery'.
I am not satisfied that the consecration had the effect of, or that the other evidence of usage proffered establishes any, narrowing of the clear terms of the express trust created by the Crown grant.
Where there is a formal instrument of trust, the words of which are not ambiguous, they will prevail. As Lord Romilly MR said in Attorney-General v Gould (1860) 28 Beav 485 at 501; 54 ER 452 at 458 - 459 (cited with approval in Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 667 - 668): … Usage is only important in a legal point of view, where there is an absence of any instrument of endowment, or where the words of the instrument produced are ambiguous; in such cases, usage constitutes presumptive evidence of the trusts on which the charity was established, but when the deed of foundation is produced, and is precise, that presumption is excluded.
The consecration preceded the express trust instrument.
Section 4 of the Trust Property Act contains a definition of church trust property which evidently assumes that a trust of real or personal property can be established by consecration. I am prepared to assume, although with some hesitation because submissions on the subject were at best scant, that consecration can have proprietary rather than merely religious consequences.
Dedication by way of consecration is not inconsistent with the express trust instrument. The same can be said for the making by parishioners of sporadic bequests intended to be used for specific purposes, and the Diocese's internal recording of the description of the land as 'St Thomas's house, ch, hall, cemetery'. This evidence does no more than reflect a particular use, within the general terms of the trust, to which the property is being put at a particular time.
Moreover, a consecration can be reversed by deconsecration. If consecration brings about a narrowing of trust purposes, deconsecration would result in the re-expansion of those purposes. I do not consider that the terms of the express trust can operate in this ambulatory way. It is also to be observed that the consecration is directed only to the edifice or structure of the church, whereas the land has on it not only the church but St Thomas's house, a hall and a cemetery, none of which, on the evidence, have been consecrated.
Finally, in the land terrier there are two entries relating to 3870 Beaconsfield Road. One of them has the description 'St Thomas's site - vacant land'. The evidence does not establish precisely where the church or other buildings sit. Clearly not all of the land is being put to the uses asserted.

75, 76, 77: 98 Kendal St, Cowra - Parish of Cowra

The Aide Memoire places these lots, which it describes as 'St John's Church, Hall, Office', in the category of a trust created by consecration or a trust instrument. The property was acquired by six Land Grants on 7 June 1893.
Three of the Land Grants recite the trust purposes as follows: Upon Trust for the erection thereon of a Dwelling House for the Clergyman duly appointed to officiate in the said Church, or otherwise for the benefit of the said Church, in conformity with the Provisions of the said Act, and of "The Church of England Property Act of 1889", or any other Act relating thereto, and for no other purpose whatsoever (emphasis added)
The other three recite the trust purposes as follows: Upon Trust for the erection thereon of a Church in connection with the Church of England in New South Wales or otherwise for the benefit of the said Church, in conformity with the Provisions of the said Act, and of The Church of England Property Act of 1889, or any other Act relating thereto, and for no other purpose whatsoever (emphasis added)
These are not trusts on terms specific as BIC would have it, but are trusts for the benefit of the Church in general. Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide.

160: 20 Ross St, Oberon - Parish of Oberon

This property is in the same position as the one referred to immediately above.
The Aide Memoire places this lot, which it describes as a rectory, in the category of a trust created by consecration or a trust instrument. It also asserts that the trust purpose is for a church and cemetery. Part of the land was acquired by Crown grant on 13 August 1912, which recited the trust purposes as follows: upon trust for the Erection thereon of a Church in connection with the Church of England in New South Wales or otherwise for the benefit of the said Church, in conformity with the Provisions of the said Act, and of The Church of England Property Act of 1889, or any other Act relating thereto, and for no other purpose whatsoever (emphasis added)

188: 7647 Bylong Valley Way, Bylong - Parish of Rylstone/Kandos

The Aide Memoire places this lot, which it describes as St Stephen's Church and Cemetery, in the category of a trust created by consecration or a trust instrument. The land was acquired by conveyance from a Mr and Mrs Tindale, made on 18 October 1878. The material in evidence is barely legible. However, the Aide Memoire, which I take for present purposes to be accurate, recites the trust purposes as follows: upon trust for the purposes generally of the Church of England in this Colony particularly to permit a Church Vestry Room or other Offices to be erected and built on the said piece of ground and to be used occupied and enjoyed as and for the place of public Religion
These terms are not materially different from those which pertain to the two properties dealt with immediately above.

55: 11-17 Binnia St, Coolah - Parish of Coolah-Dunedoo

The Aide Memoire places this lot, which it describes as St Andrew's Residence, in the category of a trust created by consecration or a trust instrument. The trust instrument is a conveyance from a Mr Thomas Goddard made on 22 July 1898. The material in evidence is barely legible. However, the Aide Memoire, which I take for present purposes to be accurate, recites the trust purposes as follows: upon trust for the use and benefit of the members of the Church of England at Coolah
BIC argues that the trust purpose is 'for the purposes of a Parish'.
This is an example of an instance where ADF puts, in my opinion with some force, that a levy on the parish would bring repayment to it within the express trust purpose. In addition, I consider that it is for the use and benefit of the members of the Church of England at Coolah, although not only for their benefit, for the trust property to be used to discharge an obligation undertaken on behalf of the Diocese of which the parish concerned is part.

170, 171, 172, 173: 43-47 Currajong St, Parkes - Parish of Parkes

The Aide Memoire places these lots in the category of a trust to be inferred from usage and other circumstances.
BIC puts that the trust purpose, to be inferred from evidence of long usage, is 'for the purposes of a Parish', namely the Parish of Parkes.
The Terrier describes 170, 171 and 172 (43 - 45 Currajong St) as 'House once Dr Barton's house, rooms'. With respect to 173 (47 Currajong St), the Terrier contains the somewhat enigmatic description '? Georgio's, leased'.
There is evidence that these properties were valued together in March 2012 at $455,000. The valuers, Jones Lang Lasalle, described 45 Currajong Street as having the primary/current use of 'Retail/commercial' and 'Hairdresser'. 47 Currajong Street was described as 'Mostly car park'.
This evidence falls well short of establishing any terms of trust to be inferred from usage narrower than for the benefit of the Church in the Diocese as a whole.
Realisation of these properties to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or, in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

96: 162 Brisbane St, Dubbo - Parish of Dubbo

The Aide Memoire places this lot in the category of a trust to be inferred from usage and other circumstances. It and the Terrier describe it as 'Op Shop, Brotherhood House'. BIC puts that the trust purpose, to be inferred from evidence of long usage, is 'for the purposes of a Parish', namely the Parish of Dubbo.
In 2000, APT acquired this property from The Brotherhood of the Good Shepard Limited for $150,000.
This evidence falls short of establishing any terms of trust narrower than for the benefit of the Church in the Diocese as a whole.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

181: Bogan Rd, Peak Hill - Parish of Parkes

The Aide Memoire places this lot in the category of a trust to be inferred from usage and other circumstances. It and the Terrier describe it as 'Vacant land'. It was acquired by Memorandum of Transfer from Rebecca Emma Newbigging (Widow) and William Tanswell (Farmer) dated 10 May 1928. (The dates in the Terrier do not match this). BIC puts that the nature of the trust purpose, to be inferred from evidence of long usage (consisting of the date of acquisition and the information in the Terrier), is 'for the purposes of a Parish', namely the Parish of Parkes.
The evidence does not establish any terms of trust to be inferred from usage narrower than for the benefit of the Church in the Diocese as a whole.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

47: 33 Barton St, Cobar - Parish of Cobar

The Aide Memoire places this lot in the category of a trust to be inferred from usage and other circumstances, the trust purpose being for a house. It and the Terrier describe it as 'House'. The property was acquired by way of Memorandum of Transfer dated 3 June 1881, and was vested in APT by a 1920 Ordinance made under the Trust Property Act. The schedule to the Ordinance contains no description. There is in evidence a valuation of the property in 2012 from which it may be inferred that it is being let because it is earning rental income.
The evidence does not establish any terms of trust to be inferred from usage narrower than for the benefit of the Church in the Diocese as a whole.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

51: 8 Pope St, Nymagee - Parish of Cobar

The Aide Memoire is unclear as regards this property. It places it in the category of a trust created by consecration or a trust instrument but also asserts facts from which usage is to be inferred, namely that it was 'acquired for nominal consideration from Samuel Edward Marsden, then Bishop of Bathurst'. BIC puts that the trust purpose, to be inferred from evidence of long usage, is 'for the purposes of a Parish', namely the Parish of Cobar.
The Memorandum of Transfer in evidence shows that it was given by one Hubert Gray Burrell to Marsden on 10 March 1884. I infer that Marsden paid nominal consideration. There does not appear to be any evidence of consecration or express trust terms. Additionally, the property appears in the Terrier against the enigmatic entry '? vacant land'.
The evidence does not establish the existence of any trust narrower than for the benefit of the Church generally.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

219: 6 Court St, West Wyalong - Parish of West Wyalong

The Aide Memoire places this lot in the category of a trust created by consecration or trust instrument for the purposes of a church. 6 Court Street does not appear in the land Terrier. The Terrier does, however, record 8 - 14 Court Street as being 'St Barnabas Church, Hall, flats'. I am prepared to conclude that on part of the land there stands a consecrated church because year books for 1937 and for 1968 - 1982 record this. However, I also conclude that a hall and flats also stand there. APT's property trust accounts as at 31 December 2014 disclose income related to flats and funds held in a sinking fund.
For reasons which are set out above, I do not consider that the act of consecration establishes the limited trust for which BIC contends. It also can have no effect with respect to the hall and flats, which apparently stand nearby.
The evidence does not establish any trust other than one for the Church in the Diocese generally.
Realisation of this property to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide. In any event, were a levy on the Parish made, use to satisfy it would be within trust purposes.

Personal Property

APT holds a significant amount of money in many different designated accounts. A document entitled 'APT Other Property Trust Accounts Balances 31 December 2014' discloses that APT held $4,735,433.48, appropriated across 141 named accounts. Of this, $1,212,926.96 is designated as 'non Trust accounts' which I take to mean trust money but not allocated in the books of the Diocese to any particular purpose.
The trust account designations include the Diocesan Ministry Fund, the Synod Management Reserve Fund, and the Bishop's Discretionary Fund, described respectively in the Aide Memoire as being for the purposes of the ministry of the Anglican Church of Australia in the Diocese, raising reserve funds for the Synod Management Fund of the Anglican Church in the Diocese, and for the purposes of the Bishop of Bathurst of the Anglican Church of Australia to be used at his discretion. This indicates trusts for general purposes.
This evidence falls short of establishing any terms of trust narrower than for the benefit of the Church in the Diocese as a whole.
Use of these funds to honour the Letter of Comfort or make up ADF's deficiency would not be a breach of trust, or in the terminology of cl 12 of the Trust Property Ordinance, the trusts do not otherwise provide.
There are also a significant number of accounts held with respect to particular parishes. Were a levy on the parishes made, use to satisfy it would be within trust purposes.

Conclusion

It follows that I find that there is available church trust property, both real and personal, which can be utilised to honour the Letter of Comfort and make up ADF's deficiency without breaching any trust.

Section 26 of the Trust Property Act

The Bank and ADF rely on s 26 of The Trust Property Act as providing a mechanism enabling access to church trust property to satisfy BIC's obligations.
Section 26 appears in Pt 6 of the Trust Property Act which is entitled 'Sale, exchange, mortgage, lease etc of trust property'. The text of the section has been set out earlier, but for ease of reference and given its centrality, it is set out immediately below. 26 Synod may direct sales or other dealings (1) It shall be lawful for the synod of the diocese for which any church trust property is for the time being held if it shall appear to such synod expedient by reason of circumstances subsequent to the creation of the trusts of such property by ordinance to direct that such property be sold, exchanged, mortgaged, or let on mining, building, occupation, or other leases, or otherwise dealt with in manner provided by such ordinance, and to provide for accepting the surrender of any lease thereof and for laying out and dedicating parts thereof for any purpose or purposes, and to provide for the application of the real and personal property arising from any such sale, exchange, mortgage, letting, or other dealing as aforesaid: Provided that in the cases of the Diocese of Canberra and Goulburn no such ordinance in respect of property held for the sole benefit of some particular parish shall be assented to under the Anglican Church of Australia Constitutions Act 1902, or any Act amending or taking the place of the same, without the consent in writing of a majority of the members of the parish council (if any) for the time being of the parish, and in the case of property gratuitously granted or assured within twenty years preceding the time being by any private donor without the like consent of such donor if living. (2) Despite subsection (1), an ordinance in relation to property held for the sole benefit of some particular parish in the Diocese of Sydney may only be assented to under the Anglican Church of Australia Constitutions Act 1902: (a) either: (i) with the written consent of a majority of the members of the parish council (if any) for the time being of the parish, or (ii) if the ordinance was passed by at least two-thirds of the members of the synod of the Diocese of Sydney present and voting, and (b) with the written consent of any living private donor who gratuitously granted or assured the property to the parish within the period of 20 years before the date of assent to the ordinance.
First, the contestants are divided with respect to the scope of operation of the section.
The Bank and ADF put that the section has wide operation and gives Synod (or BIC in this case) power to direct the corporate trustees to sell or otherwise deal with church trust property provided only two preconditions are met, namely the existence of circumstances subsequent to the creation of the trusts, and it appearing to BIC that by reason of such circumstances it is expedient to give a direction that the property be sold or otherwise dealt with. They put that the section empowers the giving of a direction that church trust property be used as BIC may direct, irrespective of whether there are specific terms of trust which otherwise would govern the property concerned.
BIC contends for a much narrower operation, putting that the section operates only to provide power to convert one form of trust asset into another form, but not so as to permit what results to be used other than in accordance with any express terms of trust that applied to the first form. It puts that the purpose of s 26 of the Trust Property Act is to provide a power to deal with church trust property where the trust instrument does not provide.
BIC also puts that s 5 of the 1902 Act is an impediment to Synod or BIC directing a corporate trustee to deal with church trust property other than in accordance with the terms of any express trust which applies. The section appears, above but for ease of reference is set out immediately below: 5 Church property to be held subject to constitutions All persons now or at any time afterwards holding any real or personal estate in trust for or in any way on behalf or for the use of the Anglican Church of England, except in so far as the real or personal estate may be the subject of any express trust, and then so far as such express trust shall not extend, and except lands, the management of which may be already specially provided for by ordinance of Synod or by Act of Parliament, shall hold the said real and personal estate subject to the provisions of the constitutions and of any ordinances or rules made thereunder, and shall be bound by them as fully in all respects as if the constitutions, ordinances, and rules were contained in a deed of conveyance and trust of the real and personal estate.
BIC also prays in aide s 6 of the 1902 Act (also reproduced earlier), which provides that no ordinance or rule to be made under or by virtue or in pursuance of the constitutions shall be in contravention of any law or statute in force for the time being in this State.
BIC puts that the function of this section is to ensure that the consensual compact embodied in the Constitution is subordinate to any express trust which cannot be overridden by any ordinance, ensuring that charitable trusts are preserved.
The Trust Property Act was enacted to consolidate some 60 Acts of Parliament relating to the property of the Church in New South Wales, including the Church of England Property Act 1889 (52 Victoria) (NSW) and the Church Acts Repealing Act of 1897 (NSW) (the 1897 Act).
The 1889 Act was, according to its Preamble, an Act to provide for the vesting of properties held on trust for the benefit of the Church of England and to grant powers of dealing with the same discharged from trust or consecration in certain events. Section 2 provided relevantly: In any case in which Diocesan or other moneys, lands, churches, schools, or other buildings and hereditaments belonging to and situate within the limits of any Diocese in this Colony now existing, or which may hereafter be created, are now, or may hereafter be vested in the Bishop of any such Diocese, or other trustee or trustees (including corporate trustees appointed by or under the "Church of England Trust Property Incorporation Act of 1881"), and are held upon any express trust (whether by consecration or otherwise) for the use and benefit of the Church of England, and by reason of circumstances which have occurred since such consecration or the creation of other such express trust, it has, in the opinion of the Synod of any such Diocese, become impossible or inexpedient to carry out or observe the particular purpose or purposes to which such Diocesan or other moneys, lands, buildings, and hereditaments, or any of them, are, by such consecration or other trust, devoted, it shall be lawful for any such Synod, from time to time, by rule or ordinance (passed on the third reading thereof by a majority of the said Synod according to the regulations of the said Synod), to declare such their opinion, and by the same or any subsequent rule or ordinance to direct that any such lands, buildings, or hereditaments shall be sold, demised, mortgaged, or let on mining, building, or occupation leases, including the laying out and dedicating of streets, or otherwise dealt with, and that such Diocesan and other moneys be applied in manner in such rule or ordinance to be specified freed from such consecration or trust as the case may be, and such consecration or trust shall thereupon, by force of the said rule or ordinance, cease and determine.
The 1897 Act was, according to its Preamble, relevantly, an Act to bring lands held for Church purposes under the provisions of Ordinances of Synod. Section 2 provided that: All lands which, at the date of the commencement of this Act, are held by any persons or person, or corporation, as trustees or trustee upon trust for any parochial church purpose in connection with the Church of England in any diocese in this Colony, and whether subject to the provisions of the said Church Acts, or any of them or not (and in the case of lands so subject whether made so subject by reference in the deed or instrument creating the trust or otherwise), except lands, the management of which may be specially provided for by Ordinance of Synod or by Act of Parliament, shall be held subject to the provisions of any Ordinance or Ordinances in force for the time being in such diocese freed and discharged from the provisions of the trust deeds and of the said Church Acts, but not diverted from the purposes to which the said lands are respectively devoted.
BIC puts that the operation of these earlier provisions was limited to particular kinds of trusts, namely where property was devoted to particular purposes by reason of consecration or other trusts and to lands held for parochial Church purposes, and given that the Trust Property Act consolidated these earlier provisions, it should not be read as intending 'to obliterate differences between these types of trusts'. In support of its contention it also suggests that the composition and hierarchy of the Church is relevant because, whilst the Diocese may make ordinances, services are delivered to parishioners by parishes at a local level not by the Diocese, the needs of one parish may not correspond to another, and it is important that trusts relevant to each parish remain distinct. It cites as an example that 'the purposes and objects of advancing the Christian religion according to the rites of the Anglican Church at St George's Church, Parkes would not be served by realising its property and applying the proceeds to pay for the restoration of Holy Trinity Church, Kelso, as this would be to deprive the community in Parkes of a place of worship in favour of improving the religious facilities in a different community.'
In my opinion, the section should be construed as having wide operation rather than the narrow one contended for by BIC.
Section 26 is an empowering provision. It allows BIC, when it considers it expedient, by ordinance to direct without imposing any restriction how property is to be dealt with. It uses words of wide import including 'otherwise dealt with' and 'for any purpose or purposes'. The limitation suggested by BIC is not to be found in the express words of the section and it would be inappropriate to read them into it: The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc.
BIC's construction is unduly narrow. It would frustrate the plain legislative purpose of permitting the Diocese to deal and use church trust property when expedience justifies it, in the light of circumstances prevailing subsequent to the creation of a trust. An indication of the wide ambit the provision was intended to have can be seen by reference to the second reading speech for the Bill (New South Wales, Parliamentary Debates, Legislative Assembly, 30 November 1916, 3139), when the Attorney-General, Mr D.R. Hall, referred to the fact that year after year, the Church of England had to come to Parliament to ask for special legislation to enable it to accomplish some purpose which was in itself highly desirable and upon which practically no discussion took place. He made mention of the fact that twice during the previous session, ordinary public business had been interrupted to deal with laws proposed in the interests of the Church. He went on to say: I think the Church of England is the only church which has no general Act giving it power over its property throughout the State, and the main purpose of the bill is to meet that situation. There are some sixty Acts of Parliament relating to the property of the Church of England, and this bill will practically consolidate all these measures. The bill will enable the controlling body of the diocese in each district of New South Wales to control the property in that particular district. There are, I believe, seven dioceses in New South Wales, each with its local synod which exercises control over the affairs of the church in its particular district. The synod in each case is representative of the whole of the members of the church in the district.
I do not consider that any support for BIC's position is to be found by reference to the 1889 and 1897 enactments. To the contrary, they were repealed and the references to specific forms of trusts were removed. The clear implication is that so were any limitations which those words had imposed.
The 1889 Act contained no requirement that the proceeds of any dealing directed by Synod remained subject to terms of trust which earlier affected it. To the contrary, the provision made it clear that if the power there was exercised, Diocesan and other monies which resulted from the sale or other dealing were to be applied in accordance with what the rule or ordinance specified, freed from such consecration or trust as the case may be, which consecration or trust by force of the rule or ordinance ceased and determined. The exercise of the power under that section was conditioned upon Synod forming the opinion that it had become impossible or inexpedient to carry out or observe the particular purpose or purposes to which the property concerned was devoted. It would hardly make sense for the proceeds of property sold under those circumstances to have to be devoted to those same purposes.
Section 26 of the Trust Property Act is clearly intended to have wider operation than s 2 of the 1889 Act. Whilst it too empowers Synod (or BIC) to direct the sale or other dealing of trust property, it is conditioned only on a view as to expedience. It does not require an opinion of impossibility or inexpedience. Its terms are to be contrasted with s 32 which provides for the power of Synod to vary trusts. The exercise of the power is conditioned upon formation of an opinion of impossibility or inexpedience and is akin to a statutory cy-pres jurisdiction, enabling Synod to create new trusts: see Attorney-General and Others v Church of England Property Trust Diocese of Sydney (1933) 34 SR (NSW) 36. This is a different type of power.
The narrower construction and the example proffered by BIC of parish property (or its proceeds) having to stay where it is are both undermined by the express provision in s 26(1) of the Trust Property Act for parish property in the Dioceses of Canberra and Goulbourn and Sydney, where additional consent and voting requirements are required. The implication is that property held for the sole benefit of other parishes elsewhere can be dealt with.
Additional support for a wide construction is to be found in ss 29 and 30 of the Trust Property Act (which are in Pt 6), and which provide protection for purchasers of trust property and for the ordinance requiring sale or other dealing to direct where monies arising should be paid, including to third persons.
Section 5 of the 1902 Act provides no impediment to BIC from exercising the powers conferred by s 26(1) of the Trust Property Act, even where there is an express trust. A complete answer to BIC's submission is that s 3(1) of the Trust Property Act expressly provides for s 5 of the 1902 Act to be amended as far as is necessary for the purpose of the Trust Property Act.
A further answer is to be found by reference to s 7 of the 1902 Act, which provides that the Act shall not repeal or in any way cut down or abridge the provisions of the 1897 Act. Section 2 of the 1897 Act, as has been earlier mentioned, provided for lands then held by any person or corporation as trustee upon trust for any parochial church purpose, except lands the management of which was specifically provided for by ordinance of Synod or by Act of Parliament, to be held subject to the provisions of ordinances in force, freed and discharged from the provisions of the trust deeds and Church Acts, but not diverted from the purposes to which the said lands were devoted. The result is that properties acquired by the time of the 1897 Act are susceptible to being dealt with by ordinance in any event. A number of specific properties dealt with above were acquired before this time.
It follows that even if church trust property is held under express terms, s 26(1) of the Trust Property Act allows BIC, in the circumstances that have arisen here, by ordinance, to direct that it be sold or otherwise dealt with to honour the Letter of Comfort or make up ADF's deficiency without breaching any trust, or for that matter any ordinance or identified law.
The requirement in s 26(1) of the Trust Property Act that it appear to BIC to be expedient to deal with church trust property is no impediment to the grant of relief which might require either of them to exercise their power under it. To the contrary. It is a facultative provision which removes any impediment to BIC directing the corporate trustee by ordinance to access trust property, irrespective of the terms of the trust. It is to be observed that s 26(1) provides that '[i]t shall be lawful' for Synod, by ordinance, to give a direction for property to be sold or otherwise dealt with.
Clause 12 of the Trust Property Ordinance gives BIC the power to direct the corporate trustees in relation to their functions 'except insofar as the trusts upon which it holds property otherwise provide'. This provision works congruently with s 26(1) of the Trust Property Act, which expands BIC's power so as to make it lawful for BIC to give a direction even where the trusts upon which the corporate trustees hold property otherwise provide.
I record that BIC made a late submission that trust property cannot be dealt with by the corporate trustees other than by ordinance made under the provisions of the Trust Property Act, because none of the trust instruments contain an express power of sale. This submission is unsustainable. The trustees have power to do whatever is not inconsistent with the terms of trust, and the absence of an express power of sale does not mean they do not have such a power anyway. If property is devoted to an abstract end or purpose, the details of its application or use must be considered as a means to the end: The Attorney-General for New South Wales v The Perpetual Trustee Company (Limited) and Others (1940) 63 CLR 209 at 223 per Dixon J and Evatt J. The question is academic because BIC has the power of sale under the Trust Property Act anyway.
It is not for the Court to substitute its own opinion for that of Synod or BIC. The Court cannot direct them to form a particular opinion or determine the terms of any particular ordinance to be passed, and I do not propose to do any such thing. The order of sale and distribution of burden is a matter for them. The orders sought by the Bank and ADF which require joint and several burden on all Diocesan organisations are inappropriate.
However, the presence of s 26(1) means that it is not open to BIC to say that it is impossible for it to honour the Letter of Comfort or make up ADF's deficiency. Section 26(1) is no place of refuge.
It is to be remembered that by s 32 of the ADF Ordinance, BIC has expressly committed itself to promote an ordinance. It is not open to any member of BIC, including the Bishop, to dishonour that commitment. To permit them to do so would be to permit them, contrary to principle, to take advantage of their own wrong: Alghussein Establishment v Eton College [1991] 1 All ER 267.
More than this, the evidence of Bishop Palmer and other current members of BIC is that the only reason steps have not been taken to realise church trust property to provide funds to pay the Bank is that, based on legal advice which they have received, this cannot lawfully be done. Bishop Palmer's evidence went even further, as the following extracts from his cross-examination (T:887 - 888, 890, 902) reveal, to the point that if church trust property were able to be sold but his obligations under the Letter of Comfort were moral only, not legal, he would still discharge them. NEWLINDS: By the time you became the bishop, both in name and in power the advice that you were operating on was that it would be illegal for the diocese to access any of the trust assets for the purpose of paying the bank? BISHOP PALMER: Yes. Q. May we take it that during the course of deciding, as the leader of Bishop in Council, what should be done about the situation with the bank, you actually read the Bishop's letter of 24 April 2008 on which the bank was making demand? A. Yes. Q. You saw that it was signed by your predecessor, Bishop Hurford? A. Yes. Q. Under seal? A. Yes. Q. On an official looking letterhead of Bishop Hurford, which included the coat of arms of the diocese? A. Yes. Q. For all intents and purposes, it looked like an official document? A. Yes. Q. Whatever they might mean within it, you observed that Bishop Hurford, on behalf of the diocese, had made a number of promises to the bank? A. Yes. Q. Ordinarily your position would be, as a bishop taking over from an earlier bishop, that if at all possible, one should honour promises made by your predecessor? A. If it at all possible. Q. It would be appropriate, would it not, to do everything one could do to try and honour such a promise; correct? A. Everything that is lawful. Q. To coin a phrase, to move heaven and earth, if one could; yes? A. Everything that is lawful. Q. And nothing that is unlawful? A. Thank you. Q. We have heard evidence from a number of members of Bishop in Council of the current Bishop in Council to the effect that their position in relation to the Bishop's letter of 24 April 2008 is that they would honour those promises if they believed they could; is that your position? A. My position is that I would honour those commitments. Q. If you thought you could legally? A. If I thought I could legally. … HIS HONOUR: Bishop, I am not altogether sure that I follow what you say. What Mr Newlinds is putting to you, as I understand it, is this: if the trust assets were available to be sold, but your obligations under the letter were moral only and not legal, would you discharge them? BISHOP PALMER: Your Honour, the answer to that is yes. … MCGRATH: I accept it has, with difficulty, led you to the answer that if legally you could access the trust assets, you would cause those assets to be used to pay the bank. That's where you've ended up, isn't it? BISHOP PALMER: Yes. It is.
Evidence to the same general effect was given by the following other members of BIC: Venerable Francis Hetherington (T:881), Very Reverend Anne Wentzel (T:536 - 537), Reverend Canon Craig Moody (T:676), Reverend Canon Margaret Finlay (T:652), Reverend Canon Grahame Yager (T:423), Reverend James Hodson (T:344), Reverend Gary Neville (T:852), Reverend Leigh Gardiner (T:443 - 444), Mrs Marilyn Baker (T:568), Mr Graham Leatherland (T:1301), Mrs Coral McFarland (T:593), Mr Ray Norman (T:609); Mrs Janet Price (T:634), and Mrs Sue West (T:494).
Reverend Brett Watterson (T:375 - 376) was not prepared to concede that, except for obtaining legal advice, he considers that the Diocese should repay the Bank with whatever means it has available to it, because his opinion is that they had the potential to pay back through the schools, but the Bank took that opportunity from them. I interpolate that the evidence established that the schools had no realistic ability to do this, but this is presently of no moment.
The evidence of Mrs Leigh Haywood was somewhat more equivocal, reflecting, in my observation, that as a lawyer she had a heightened sense of avoiding concessions. Although she made no concession of the nature of those made by the other named members, her view was that nothing could be done because to the extent that there is real property, it is held by the parishes and the Diocese does not have any more money.
I find that the position of the others would carry the day if there was a contest within BIC.
In light of this evidence, given that there is no legal impediment to accessing church trust property, the Court may safely conclude that the condition upon which the exercise of power under s 26(1) of the Trust Property Act depends, will be fulfilled. Anyway, it is difficult to imagine how it can be considered to be anything other than expedient for BIC to discharge its legal (and perhaps even only moral) obligations. The Court is in the position where evidence of facts between the time when the cause of action arose and the time of trial produces certainty where there would otherwise be uncertainty, and where there is fact rather than hypothesis: see TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 in a different, but in my view, analogous context.
Somewhat surprisingly, BIC submitted that Bishop Palmer's evidence was insufficient to ground a positive finding that he would assent to any necessary ordinance, because during his cross-examination (extracts of which appear above), his attention was not fairly drawn to whether the subject of the line of questioning would cause him to assent or not to assent. The submission did concede that there was insufficient evidence to find that he would refuse assent too. It was put that what he would do is simply unknown.
I reject this submission. Although there are a number of contraindications, including the very manner in which these proceedings have been conducted on his behalf, I choose to take Bishop Palmer at his word, that he will do everything within his power to cause the Diocese to honour its obligations as determined by the Court. I observe that no re-examination was directed to him with a view to eliciting from him that his position on assenting to an ordinance is in any way qualitatively different to his position regarding any other step he might be able to take.
I also propose to credit Bishop Palmer, and for that matter other members of BIC, with an intention to meet, so far as they can, the letter or spirit of the obligation of Faithfulness in Service in the Church's National Code for Personal Behaviour.

The Charitable Trusts Act

BIC did not develop its submission (which was not made in its written Opening Outline) that these proceedings are incompetent because they are charitable trust proceedings under s 5 of the Charitable Trusts Act, and under s 6(1) such proceedings are not to be commenced unless the Attorney General has authorised the bringing of the proceedings or the Court has given leave to bring them.
The submission is without merit. These are not charitable trust proceedings as defined. BIC and ADF sue to enforce private civil rights in contract, under a statute or both. Neither sues as beneficiary of or in relation to the administration of a trust. The intrusion of charitable trusts is in every real sense incidental. They only arise in the context of whether assets are available to meet the asserted obligation.
The duty of the Crown, as parens patriae, is to protect property devoted to charitable purposes, and that duty is discharged by the Attorney General on behalf of the Crown. He represents the beneficial interest, that is, the objects of the charity: J.D. Heydon and M.J. Leeming, Jacobs' Law of Trusts in Australia (7th ed 2006, LexisNexis Butterworths) at [1067].
This role is traditionally referred to as representing 'all absent charities'. Hence is it not a requirement for the Attorney General to be present where the proceedings concern a gift to an already established institution: Re King; Jackson v Attorney General [1917] 2 Ch 420 at 427 - 428.
The objects of the charity are well and truly present and have been an active contradictor. It is not suggested that the presence of the Attorney General would serve any constructive purpose. Referral to the Attorney General would be an exercise in futility. His joinder is not necessary: Metropolitan Petar & Ors v Mitreski & Ors [2001] NSWSC 976. In any event, these proceedings are not a nullity.
There is no good reason why, to avoid any doubt, leave should not be given under s 6(1) (and none was identified), and every good reason why it should. I will give any opportunity to any party, who so wishes, to be heard further as to why an order should not be made.

Effect of Ordinances and Certificates

ADF's claim has two components: that based on cl 32 of the ADF Ordinance, which it contends requires BIC to levy funds from the parishes to cure its deficiency, and that based on rights which it says arise from the issue of the Certificates, which it contends requires BIC to cause the default under the MAGS and OAGS loans to be rectified.
BIC takes the position that the Finance Ordinance and the ADF Ordinance are not binding as between it and ADF. This necessitates consideration of ADF's position under the Finance Ordinance and the ADF Ordinance, in particular its right to enforce provisions in them for its benefit. That position is also pertinent to the juridical effect of the Certificates, because they are not issued in a vacuum but pursuant to the Finance Ordinance and in the context of the various other enactments and ordinances.
BIC takes the position that all Certificates are wholly ineffective because they were not intended to, and do not, give rise to legal relations.
I have already concluded that the Finance Ordinance and the ADF Ordinance are connected with or related to the property of the Church in the Diocese, and are capable of being used for purposes in connection with it, so that they are binding by virtue of s 2 of the 1961 Act. I have also concluded that they are binding in contract because it was intended that they create rights and obligations of a legal nature.
With respect to the bindingness of the pertinent Ordinances, ADF's position differs from and is even stronger against BIC than that of the Bank in two important respects. Firstly, ADF is a body corporate formed under and governed by the provisions of the Bodies Corporate Act. Secondly, it is an insider Diocesan corporation, the direct and indirect subject of ordinances embodying rules intended to be binding.
In the case of ADF, important additional considerations favouring the conclusion that these Ordinances were intended to be binding are that they give ADF distinct and critical protections in carrying out its functions and facilitating the financial activities of the Church.
First, it is protected against any deficiency in funds by the guarantee in cl 32 of the ADF Ordinance. This protection inures not only for the benefit of ADF as a corporation, but, as this case demonstrates, for the benefit of ADF's Board who had to face legal proceedings against them in the Board Case for what they did whilst acting in that capacity.
Second, it is given the protections in cll 4 and 5 of the Finance Ordinance upon the default of a Diocesan borrower (in this case MAGS and OAGS), of obligations under an approved loan.
ADF relies, as between it and BIC, on 6(2) of the Bodies Corporate Act as an additional source of bindingness for the Finance Ordinance and the ADF Ordinance. That section (which is quoted above but is repeated here for convenience) provides: (2) Each body corporate constituted by or under this Act shall have and may exercise and perform the powers, authorities, duties and functions conferred or imposed by any ordinance of the Synod of the diocese at whose instance the body corporate was constituted: (a) upon the unincorporated body, the members of which are incorporated by or under this Act, or (b) upon the body corporate.
Both the Finance Ordinance and the ADF Ordinance are such ordinances.
Under the ADF Ordinance, it is a power and function of ADF, and it is authorised, to lend money to Diocesan institutions.
The Preamble to the ADF Ordinance provides: C It is expedient that the Fund be administered by a separate corporate body to ensure that any borrowings and moneys raised are managed and serviced and to investigate applications for loans and to generally administer the provisions of this Ordinance
Under cl 4, the Board of ADF is appointed as the trustee of the Fund and shall administer the Fund.
Clauses 14 and 15 provide for the Powers and Authorities of the Board. Clause 14(c) provides that the Board has power: to investigate and, if thought fit, approve loans including those of parishes, schools and other organisations of the Diocese which are subject to the control of Synod for such purposes authorised by this Ordinance as the Board may approve from funds under its control.
Clauses 15(a), (c) and (k) provide that the Board has power: (a) borrow or raise money and secure the repayment thereof and interest in such manner as the Board may think fit, to secure the same or the repayment or performance of any debt, contract, guarantee or other liability incurred or entered into by the Board or by an organisation of the Diocese which is subject to the control of Synod, to guarantee the obligations of an organisation of the Diocese which is subject to the control of the Synod and in relation to the foregoing to do so by mortgaging or charging all or any property, present and future of the Board or of an organisation which is subject to the control of Synod; … (c) lend and advance money or give credit to any parish, school or other organisation subject to the control of Synod, whether on security or not and to take security (if any) for money lent or advanced or credit given by it; … (k) authorise any person or persons on its behalf to sign and execute any contract or security and to sue for and recover any monies due to it under any contract or security.
The Finance Ordinance provides a structure to enable the financing of the activities of the Church within the Diocese without the necessity of executing formal securities.
Properly construed, s 6(2) of the Bodies Corporate Act does not give any additional binding effect to these Ordinances, beyond by expressly providing for ADF to be able effectively to exercise powers, authorities and duties conferred or imposed by them.
Section 6(2) gives ADF standing with statutory backing to enforce ordinances which give it powers and functions in the same way that s 2 of the 1961 Act gives statutory backing to the bindingness of ordinances. It recognises ADF's position as a party to the consensual compact with respect to ordinances which give it powers, authorities, duties and functions. I reject BIC's submission that ADF has no standing to enforce any ordinance.
In my opinion, the Certificates were intended to, and do, give rise to legally binding relations. This is apparent from an examination of the form and wording of the instruments and from the context in which they were issued. They were to facilitate financing the activities of the Anglican Church within the Diocese without the necessity of executing formal securities, but nevertheless to give ADF effective protection.
BIC's submission that the language of the Certificates is consistent with the provision of a non-binding Letter of Comfort is unsustainable. To the contrary, the language of the cl 2 certification is that of the formal acceptance of responsibility pursuant to the formal instrument which is the Finance Ordinance. A statement that responsibility is accepted is no less promissory than a statement that responsibility will be met. The ambit of the responsibility is set out in the Finance Ordinance, in particular cll 4 and 5. Additionally, each Certificate commences with a statement that MAGS or OAGS (as the case may be) requires a loan to be 'guaranteed by the Diocese of Bathurst'. This is the language of legal commitment. That commitment is effectuated by means of the certification that follows it.
I reject BIC's submissions that the Certificates are no more than a confirmation that Bishop Hurford had provided the requisite certification under the Finance Ordinance, and that as a consequence the Certificates are without any substantive effect. First, the issue of a Certificate itself is the communication of acceptance of responsibility by the Diocese to the lender. No confirmation is involved. In any event, confirmation can have contractual effect. Second, the giving of a Certificate brings the conclusivity provided for in cl 3 of the Finance Ordinance into play, a subject dealt with further below.
For the reasons which I have given with respect to the Letter of Comfort, I reject BIC's submissions that the Certificates are ineffective because it is unclear who the parties to any agreement arising from them are. ADF's counterparties can only be all the members of the fluctuating class of persons comprising the voluntary association which is the Diocese, or the members of the management committee of the Diocese personally to the extent that they authorised Bishop Hurford to sign the Certificates (with the consequence that only members of BIC who held office at the date of a pertinent Certificate can be responsible under it). Where Bishop Hurford under each Certificate accepts responsibility on behalf of the Diocese, this means the Diocese represented by BIC for the time being.
I reject BIC's submission that the Certificates are ineffective because they are missing essential terms, for example, a term specifying that liability accepted by the Diocese is primary or contingent. The nature of the obligation, which is a matter of construction, is revealed by the terms of the Certificate itself read with the Finance Ordinance. There is nothing to suggest that upon default, ADF's rights against the Diocese are anything other than primary. Even if they were contingent, this would not render the Certificates ineffective. BIC's submissions did not extend to identifying the nature of any such contingency.
BIC also puts that the Certificates are ineffective because the certification and acceptance of responsibility on the part of the Diocese does no more than import the content of the Finance Ordinance, which sets out in cll 4 and 5 what is to occur if responsibility is accepted. This I take to be a submission that the Diocese has the responsibilities imposed on it by cll 4 and 5 of the Finance Ordinance, irrespective of whether a Certificate is issued or not, with the consequence that the Certificate is ineffective. I reject this submission. As this case itself demonstrates, at the lowest, a Certificate provides protection for a lender without formal security where the Diocese seeks to absolve itself from responsibility on the footing that the Bishop who issued the Certificates was not authorised to do so. If in this case, the Diocese would have the responsibilities imposed by cll 4 and 5 irrespective of the issue of a Certificate, a matter which need not be determined, the submission would not assist BIC in any event. I observe that ADF has approached the matter on the footing that the responsibility which the Diocese accepts under the Certificates does not extend beyond that described in the Finance Ordinance. I am not convinced that this is the case, but it is not necessary to consider this further.
For similar reasons, I reject BIC's submissions that the Certificates are ineffective because they do not incorporate cll 4 or 5 of the Finance Ordinance or any obligation on the part of BIC to comply with it, or create an obligation to pass the ordinances which ADF claims should be passed. They need not do so to be effective. Their issue has the consequences, including conclusivity, for which the Finance Ordinance provides.

Certificates for OAGS loans 5043, 5044, 5049 and MAGS loan 5042

ADF relies on a series of Certificates covering designated MAGS and OAGS loans. There are four Certificates pertaining to the loans referred to immediately above which ADF cannot physically produce. They are not contained in the Diocesan registry, and BIC has not produced them. ADF seeks to prove their existence by secondary evidence.
The applicable legal principles are not in dispute. Nor is there any issue about the content of any Certificate, if its existence is otherwise proved. The Certificates are in a standard form, modified only so as to refer to the particular loan covered. No point is taken as to the admissibility of the evidence adduced by ADF to prove their existence.
A party seeking to prove, by secondary evidence, the existence and contents of original documents needs to bring clear and convincing proof as to their existence and contents, in the same order as the proof required to establish an entitlement to rectification of a written instrument: Maks v Maks (1986) 6 NSWLR 34 at 36; Mack v Lenton (1993) 32 NSWLR 259 at 261; Chapman v Luminis Pty Ltd (No 2) [2000] FCA 1010 at [29]; Minassian v Minassian [2010] NSWSC 708 at [44].
BIC's position is that the Certificates in question ostensibly came into existence in circumstances of considerable informality in late 2010 and 2011, and that '[g]iven the mess in which previous documentation was held' the Court should not accept secondary evidence of their existence.
The Court heard evidence from the ex-Diocesan Registrar, Mrs Ellen Sharp, of attempts on her part to match Certificates on record in the Registry with loans that had been made, and from the current Registrar, Ms Karen Trafford, that some agenda papers and minutes of bodies could not be located in the Registry. There is substance in BIC's assertion that the records of the Diocese are in somewhat of a mess. This, however, does not point against the existence of documents of which there is some evidence. Rather, it explains why they cannot be found.
There is clear and cogent evidence, described below, of the existence of each of the Certificates pertaining to these loans. In each instance, I find that they were given.

MAGS loan 5042

At a meeting of ADF on 29 April 2011 (chaired by Bishop Hurford), ADF recommended to APT the issue of 'a Letter of Guarantee' for this loan. The minutes record the following: General Business Macquarie Anglican Grammar School Mr Higham raised the status of the Macquarie Anglican Grammar School overdraft, which is close to its limit, and noted that the cashflow recently provided shows that while the total 2011 operating loss is expected to be $1.5m, there is a need to provide $200,000 in April. They will not be able to meet this from overdraft. Mr Higham noted that it is within the power of the APT to issue a Letter of Guarantee for $200,000, should they so wish. RESOLUTION 23 / 2011: THAT the ADF recommend to the APT the issue of a Letter of Guarantee for the ADF's loan to Macquarie Anglican Grammar School of $200,000 for part 2011 operating losses, for a period of 17 years to 2028, and with interest only repayments until 2018.
In addition, Bishop Hurford gave unchallenged affidavit evidence of having reviewed the minutes and of his understanding that ADF allowed $200,000 to be paid to MAGS in April/May in anticipation of a formal application being made. He deposed as follows: A letter of guarantee was subsequently prepared for the $200,000, in order to allow the funds to be provided without a formal application.
He went on to enumerate (in detail - which it is not necessary to set forth here) the considerations he took into account in preparing the Certificate and whether he should provide it.
I consider this to be clear and cogent evidence sufficient to conclude that a Certificate for MAGS loan 5042 was brought into existence.

OAGS loan 5043

Minutes of a BIC meeting on 15 December 2010, presided over by Bishop Hurford, record the intention to give a Certificate for this loan, as follows: RESOLUTION 144 / 2010: THAT Bishop-in-Council issue a Bishop's Letter of Guarantee to the Anglican Development Fund as security for a loan to Orange Anglican Grammar School for up to $1,710,000 (plus $160,000 demountable rental cost) for capital works funding for 2010 and 2011 as follows: 2010 / 2011 $ 700,000 Car park, kiss & drop, land shaping and extension of services (total expected project cost up to $840,000, less amounts allocated to 2010 capital works of approximately $140,000) $ 60,000 Demountable capital cost - including delivery, connection of services removal at end of hire period (to be amortised over 4 years) 2011 $ 950,000 Construction of 4 permanent classrooms and student facilities up to $1,500,000, less the grant from the Block Grant Authority of $550,00 [sic] $1,710,000 Howell / Hetherington Carried

On 13 April 2011, BIC, again presided over by Bishop Hurford, resolved as follows to increase the loan, revoke the earlier Certificate for it and issue a new one: Loan to Orange Anglican Grammar School Mr Higham reminded members of Bishop-in-Council the background to this application as brought to them at the February, 2011 meeting, noting that this is the formal application for finance that was foreshadowed on that earlier date. He notes that it is proposed merely to extend the existing loan facility, rather than issue a separate guarantee for the addition $65,000. RESOLUTION 51 / 2011: THAT Bishop-in-Council approves: (i) the increase in the borrowing limit of the loan to Orange Anglican Grammar School for the construction of Stages 3 and 4 by $65,000 from $1,710,000 to $1,775,000; and (ii) revocation of the Bishop's Letter of Guarantee for $1,710,000 and issuance of a Bishop's Letter of Guarantee for $1,775,000 to secure the loan. Leatherland / Scarra Carried
Clause 411(c) of the Administration Ordinance imposes on BIC the specific duty: To make arrangements for the sessions of the Synod of the Diocese; to prepare the business to be brought before the Synod; to propose such business as may be necessary to bring before Synod and to report to each session of Synod the activities of Bishop-in-Council as the Standing Committee of the Synod during the intervening period.
The BIC report to Synod for 2011, which is contained in the Synod Handbook for that year, records that these Certificates were in fact given, in a section which reads as follows: 5 - LOANS UNDER BISHOP'S SIGNATURE The Bishop's Certificate that the Diocese of Bathurst accepts the responsibility for the following loans were given to the Anglican Development Fund after first being recommended by the Anglican Property Trust. … Dec 2010 8/2010 - Orange Anglican Grammar School for 2010/2011 capital works including demountable capital cost, 2011 construction of permanent classrooms (revoked & replaced by 2/2011) $1,710,000 … April 2011 2/2011 - Orange Anglican Grammar School for 2010 / 2011 capital works including demountable capital cost, 2011 construction of permanent classrooms (revoked & replaced by 2/2011) $1,775,000

OAGS loan 5044

The minutes of the BIC meeting on 15 December 2010 record the intention to give a Certificate for this loan, as follows: RESOLUTION 145 / 2010: THAT Bishop-in-Council issue a Bishop's Letter of Guarantee to the Anglican Development Fund as security for a loan to Orange Anglican Grammar School of up to $500,000, being for part of operating losses for 2011, noting that a further application for operating losses for the balance of 2011 will be made upon finalisation and adoption of the 2011 budget. Howell / Heatherington Carried
In the section of it referred to above, the BIC report to Synod for 2011 contains the following entry for this Certificate: Dec 2010 9/2010 - Orange Anglican Grammar School for part 2011 operating Losses $500,000

OAGS loan 5049

Minutes of a BIC meeting on 19 October 2011, presided over by Bishop Hurford, record the intention to give a Certificate for this loan, as follows: RESOLUTION 115 / 2011: THAT Bishop-in-Council authorise the issuance of a Bishop's letter of guarantee to the Anglican Development Fund as security for a loan to Orange Anglican Grammar School for the sum of $670,000 to fund the balance of 2011 operating losses. Howell / Leatherland Carried
The BIC report to Synod for 2012, which is contained in the Synod Handbook for that year, records that this Certificate was in fact given in a section which, relevantly, contains the following: 5 - LOANS UNDER BISHOP'S SIGNATURE The Bishop's Certificate that the Diocese of Bathurst accepts the responsibility for the following loans were given to the Anglican Development Fund after first being recommended by the Anglican Property Trust. Date Borrower & Purpose Amount Oct 2011 Orange Anglican Grammar School for balance of 2011 operating losses $670,000

What the 17 December 2009 Certificate for OAGS loan 5033 covers

During the hearing, there was a complex debate as to what part, if any, of OAGS loan 5033 was covered by the 17 December 2009 Certificate (the 17 December Certificate). The 17 December Certificate, issued by Bishop Hurford, is in the following terms: Dear Sir ORANGE ANGLICAN GRAMMAR SCHOOL The Orange Anglican Grammar School Council in the Diocese of Bathurst requires further funding of $2,000,000 bringing the total loan facility to $12,700,000 to be guaranteed by the Diocese of Bathurst to be drawn down as set out below - Overdraft facility up to $500,000 Operating losses 2010 $1,000,000 Capital Expenditure - Stage 2 $500,000 Total $2,000,000

The purpose of the additional loan is to provide funding to complete Stage 2 of the physical development of the School site including professional fees, infrastructure, conversion of existing building for school uses and provision of infrastructure for the first demountable classrooms for the senior school and to provide further for budgeted operating losses for 2010. The original loan of $9,000,000 was to provide $800,000 working capital for the purposes of Orange Anglican Grammar School (including initial capital expenditure and development expenditure and operating losses for 2006 and 2007), to fund the acquisition of 5 rural residential properties to be aggregated to establish a campus ($4,200,000), to fund Stage 1 of the physical development of the School site including professional fees, infrastructure, conversion of an existing building for school uses and provision of infrastructure for the first demountable classrooms for the junior school ($2,800,000) and to provide for operating losses in the years 2008 ($500,000), 2009 ($500,000) and 2010 ($200,000). The additional loan of $1,700,000 was to provide funding for the first part of Stage 2 of the physical development of the School site ($900,000) and to provide for additional expected operating losses for 2009 ($800,000). Pursuant to Clause 2 of the Bathurst Anglican Finance Ordinance, I now certify that the Diocese of Bathurst accepts responsibility for an advance by your fund by way of a loan. It is understood that such advance or so much thereof as shall for the time being remain owing and interest thereon at the usual rate charged by your fund and any account fees shall be payable to your fund in accordance with the terms of the loan. Should there be any default in meeting interest or repayments when they become due, please communicate with the Bishop's Registrar of this Diocese. It is noted that in addition to the foregoing Letters of Guarantee has [sic] been issued to cover an overdraft facility of $500,000 and a temporary loan of $462,500 to be drawn upon only if the second tranche of BER monies is not received n [sic] time to meet commitments to builders. Could you please arrange for the cancellation and return to this office of the existing Guarantee for $10,700,000 dated 2nd September 2009.

The 17 December Certificate was issued pursuant to a BIC resolution on 16 December 2009, which contains the following: Loan Guarantees The request by Orange Anglican Grammar School Council for further funding from the Anglican Development Fund for capital expenditure and operating losses was noted, and the Executive Summary was received and discussed. The Anglican Development Fund Board approved funding of $2,200,000 for operating losses for 2009 and 2010 and capital expenditure of up to $1,400,000. At its meeting held in August 2009 Bishop-in-Council resolved to authorise the Bishop to issue Letters of Guarantee for the Anglican Development Fund for (1) up to $2,100,000 for Orange Anglican Grammar School comprising up to $1,300,000 to fund stage 2 capital works programme and $800,000 to fund the balances of the losses for 2009 (including January 2010) and (2) for up to $462,500 as a bridging loan for Orange Anglican Grammar School in respect of the government funded building works pending final payment by the Federal Government, upon which the loan shall be immediately repaid. Subsequently a Letter of Guarantee was issued for $1,700,000 of that $2,100,000 following advice to the ADF Board that the School was not required to build the Northern Distributor underpass which was estimated to cost $400,000. At its meeting in February 2008 Bishop-in-Council approved that a Letter of Guarantee be issued for $9,000,000 for Orange Anglican Grammar School which included operating losses of $200,000 for 2010. The Letters of Guarantee issued for Orange Anglican Grammar School to date total $11,662,500 of which $9,300,000 has been drawn down. The amounts remaining to be drawn are $800,000 for operating losses for 2009, $900,000 for capital expenditure, $462,500 for the BER grant bridging facility and $200,000 for operating losses for 2010 - a total of $2,362,500. A further amount of up to $400,000 has been approved by Bishop-in-Council for capital expenditure (in August, 2009). The operating losses for 2009 are expected to be $1,200,000 leaving $100,000 to be applied to losses in 2010. The total borrowings required by Orange Anglican Grammar School will be $13,662,500. RESOLVED: THAT that [sic] Bishop-in-Council authorise the Bishop to issue a Letter of Guarantee for the Anglican Development Fund for $1,600,000 for Orange Anglican Grammar School to provide an additional $100,000 for capital expenditure and $1,500,000 to fund the balance of operating losses for 2010.
The parties each produced additional written outlines which were incomprehensible. After further debate, I ordered the parties to produce a joint memorandum setting out where they agreed and disagreed and the reasons for disagreement.
As to what the 17 December Certificate covers, the joint memorandum states that they disagree on whether it can be relied on by ADF in respect of the amount of $500,000 referrable to the Overdraft facility referred to in the first paragraph. ADF contends that in respect of OAGS loan 5033, the amount approved and covered is $1.7 million, whereas BIC contends that it is $1.2 million. However, the fruit of their joint labours is that they also agree that the question is academic because drawdowns under it never exceeded, and the amount claimed in respect of this loan is, $1,181,458.67, which is less than the amount BIC accepts the Certificate covers in respect of this particular loan. There are further issues concerning the 17 December Certificate dealt with below.

Reissue or replacement of Certificates

As appears from the table (which appears earlier in this judgment) of unpaid loans which make up ADF's deficiency in funds, ADF relies on the 17 December Certificate as replacing a number of other Certificates.

OAGS loan 5029

This loan was approved for the purpose of what was called the stage 2 capital works programme. BIC approved Bishop's Letters in an amount of $1.4 million, being $1.3 million approved 19 August 2009 and $100,000 approved 16 December 2009.
Two Certificates were issued in respect of this loan, one on 2 September 2009 for $900,000 and the 17 December Certificate which ADF contends was issued and effective for $900,000 plus $500,000, replacing the 19 March 2008 Certificate in respect of the $900,000 and adding a further $500,000, and which BIC contends was effective regarding OAGS loan 5029 only in respect of $500,000. BIC contends that Bishop Hurford did not have authority on behalf of BIC as at 17 December 2009 to withdraw the 2 September 2009 Certificate and issue a 'replacement' in respect of the $900,000 in its place because BIC had not authorised the withdrawal and replacement.

OAGS Loan 5022

OAGS Loan 5022 (Tranche 1) was approved for the purpose of covering operating losses for 2009. BIC approved the amount of $500,000 on 13 February 2008.
OAGS Loan 5022 (Tranche 2) was approved for the purpose of covering operating losses for 2009. BIC approved the amount of $800,000 on 19 August 2009.
OAGS loan 5022 (Tranche 1) (for $500,000) was originally covered by a Certificate dated 11 December 2008. ADF contends that this Certificate was replaced by the 17 December Certificate.
BIC denies the efficacy of the 17 December Certificate on the grounds that: 1. Bishop Hurford had no authority to issue it because the meeting did not consider the 'reissuing' of any Certificate with respect to particular loans or at all; 2. there was no recommendation made by APT or approval by BIC of loans matching $2,000,000 covered for the first time by the Certificate. BIC merely noted what ADF had already done; 3. Bishop Hurford did not have authority to bind BIC for amounts the subject of earlier Certificates, the authority for which is to be attributed to old BIC; 4. the presumption of conclusivity provided in cl 3 of the Finance Ordinance does not avail ADF because: 1. the Finance Ordinance is not binding or enforceable because it is not incorporated into the Certificate and is not connected with and does not relate to the property of the Church of England within the State of New South Wales; 2. the efficacy of the Certificate depends on Bishop Hurford's authority to give it in the first place, which authority is in dispute; 3. it is evidentiary only and will not prevail where evidence establishes it to be inaccurate because of fraud or manifest error (although no fraud or manifest error is asserted); and 4. to be valid, it has to have been prepared by a properly qualified official with due care and proper investigation, and the evidence does not establish this.
The submission that the 17 December Certificate is ineffective because the BIC meeting of 16 December 2009 did not consider the reissuing of any Certificate with respect to any particular loan, is without merit.
At that meeting, BIC noted that the total borrowings required by OAGS would be increased to $13,662,500 (although only $9,300,000 under Certificates totalling $11,662,500 issued to that time had been drawn down) after the additional borrowing under consideration was made, and authorised the Bishop to issue a Certificate for the additional amount. The 17 December Certificate was clearly issued to cover the total loan facility at that time. The Bishop already had authority to issue a Certificate or Certificates for earlier borrowings now to be comprehended in one larger one.
The submission, in any event, raises a false issue because if the 17 December Certificate was ineffective to cover loans already the subject of Certificates, they will be covered by earlier Certificates. It would, in my view, be a perverse result were the 17 December Certificate to be effective to cancel earlier ones, but to be ineffective to cover loans covered by the cancelled Certificates.
The 17 December Certificate, in terms, only cancelled the 2 September 2009 Certificate and not the 11 December 2008 or 19 March 2008 Certificates which covered OAGS loan 5022 (Tranche 1) and OAGS loan 5017 (for $2,800,000).
I reject the submission that Bishop Hurford did not have authority to bind BIC and that each Certificate binds only the members of BIC at the time it was given. I have dealt earlier with the meaning to be attributed to the word Diocese in the Letter of Comfort and cl 2 of the Finance Ordinance.
The underlying rationale for the giving of a cl 2 Certificate is evident from the preamble to the Finance Ordinance. It is a part (and clearly a critical part) of the 'method of financing the activities of the Anglican Church within the Diocese of Bathurst without the necessity of executing formal securities'. The suggestion that responsibility under a cl 2 Certificate rests solely upon those members of BIC who held office at the time the Certificate was given is inimical to the idea of it constituting security. Given the regular rotation of the membership of BIC, such a Certificate would in most, if not all, cases be ineffective or worthless.
I reject BIC's submission that the 17 December Certificate was ineffective because there was no recommendation by APT or approval of loans matching $2,000,000.
Clause 2 of the Finance Ordinance gives the Bishop authority to give a Certificate where APT has recommended approval of the advance up to the prescribed sum ($20,000). Where the advance exceeds the prescribed sum, a resolution, relevantly, by BIC authorising the Certificate is required. Where this happens, no recommendation by APT is required. The absence of a recommendation by APT is thus irrelevant because the advance covered by the 17 December Certificate exceeded the prescribed sum, and BIC by its resolution of 16 December 2009 approved the advance by increasing the total borrowings to $13,662,500.

Conclusivity

I reject BIC's submission that ADF does not have the benefit of conclusivity given to a cl 2 Certificate by cl 3 of the Finance Ordinance.
In this context, it is necessary to consider ADF's position under the Finance Ordinance and the ADF Ordinance, in particular its right to enforce provisions in them for its benefit.
Clause 3 of the Finance Ordinance is an important part of the protection given to ADF as a lending body. It operates where the internal authorising provisions of the Finance Ordinance have not been complied with. It is an important protection for a lending body or persons (including parishioners) who have advanced their money in circumstances where they may not be privy to the intromissions of BIC. It is not needed where there has been compliance.
As I have earlier said, the authority of the Bishop to give the Certificate is conferred by the Ordinance itself having regard to the intended operation of cl 3. In any event, Bishop Hurford had actual authority conferred by resolution to issue the 17 December Certificate.
There is no fraud or manifest error in this case. Far from it. The submission that the 17 December Certificate was not prepared by a properly qualified official with due care and proper investigation was not developed, for good reason. Only Bishop Hurford could have given it. He acted under no misapprehension. He acted in good faith and for proper purposes. From his evidence it is clear that were he in a position to influence events, he would honour it now.
The 17 December Certificate is effective because it is conclusive evidence that the provisions of the Finance Ordinance have been complied with.

Conclusions and Relief

I have found that the Letter of Comfort and each of the Certificates relied upon by ADF gives rise to obligations legally binding on BIC. In my opinion, declarations in appropriate terms should be made.
The specific obligations upon BIC which flow from my findings include: 1. the obligation reflected in cl 4 of the Finance Ordinance to cause ADF's default to the Bank to be rectified; 2. the obligation reflected in cl 5 of the Finance Ordinance to ensure that the principal interest, and other monies owing to the Bank are paid out of the Diocese of Bathurst Synod Management Fund; and 3. the obligation reflected in cl 32 of the ADF Ordinance to make up the deficiency in ADF's funds by promoting an ordinance to levy the necessary funds from the parishes.
In addition to its other grounds of resistance, BIC put a submission that orders for specific performance or mandatory injunctive relief should be refused because of the impossibility of supervision by the Court. I see no difficulty in the grant of either form of relief to reflect these obligations. The ultimate effect of any appropriate orders is no more than payment. I see no difficulty in the Court supervising the settling of the terms of an appropriate ordinance if BIC finds itself incapable of doing it, or is unwilling to do it. In addition, Uniform Civil Procedure Rules 2005 (NSW) Pt 40, r 40.8(a) provides that if a judgment requires a person to do an act and the person does not do the act, the Court may direct that the act be done by a person appointed by the Court. It is premature to consider whether there should be further or other orders, including orders requiring compliance with any ordinance properly passed or for damages or other appropriate relief if the Court's orders are not complied with.
The Bank's and ADF's various claims have been 'brought to judgment'. On one view, various different remedies are available, as illustrated by the fact that if the Bank is paid out, ADF's deficiency will be pro tanto reduced, and if ADF's deficiency is otherwise made up and funds consequently flow to the Bank, the Bank's debt will be reduced, possibly even eliminated. It may be that in accordance with established principle, the Bank and ADF are put to an election to choose which remedy to pursue: United Australia Limited v Barclays Bank Limited [1941] AC 1 at 30 [H.L.].
Either way, the terms of appropriate orders will require to be settled.
In the first instance, I propose to stand the proceedings over to a date in the new year to enable the parties to consider these reasons and the appropriate form of orders, to consider whether they wish to be heard further on the making of an order under s 6(1) of the Charitable Trusts Act, and to draw to my attention any issues which they consider have not been, but still require to be, dealt with. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 December 2015

Anglican Church Trust Property Act 1917(NSW)

Common Law Procedure Act 1899(NSW)

named) Anglican Church of Australia Constitutions Act 1902(NSW)

Anglican Church of Australia Constitution Act 1961(SA)

At a glance

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Legislation Cited (15)

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