Application of Macedonian Orthodox Community Church St Petka Incorporated (No 4) [2007] NSWSC 254

G.O. Blake SC - Applicant COUNSEL : T.G.R. Parker SC - Objectors (Plaintiffs in 3369/97) R.P.L. Lancaster - Attorney General

McConnell Jaffray - Applicant SOLICITORS : Sachs Gerace Lawyers - Objectors (Plaintiffs in Proceedings 3369 of 1997) I.V. Knight - Attorney General

2451/04 Application of Macedonian Orthodox Community Church St Petka Inc (No 4)

1 I delivered reasons for judgment in the latest stage of these proceedings on 23 November 2006. I indicated then the orders which I proposed to make and stood the matter over for the Association to bring in Short Minutes of Order reflecting my reasons for judgment. 2 The matter was listed before me on 9 February 2007. Mr Parker SC, who appears for the Bishop, informed me that he had only just seen the orders proposed by the Association and needed time to respond. The matter was stood over to 28 February. Mr Parker delivered eight pages of submissions and Mr Blake responded with five pages. 3 The Association seeks that I now give the advice which I foreshadowed in my judgment of 23 November 2006. The Bishop submits that: "3 (a) the Court should defer consideration of the Association's application for authority to defend the claims against it so far as those claims relate to the 'Schedule A Property Issue' except to make orders on an interim basis (i.e. subject to revocation) permitting the Association to use the Schedule A Property to fund (up to a defined level) the filing of its Defence to paragraphs 7A and 22 of the Statement of Claim;

(b) if, contrary to (a), the Court proposes to determine the Association's application for authority to defend up to trial the claims against it so far as those claims relate to the 'Schedule A Property Issue', that application should be dismissed;

(c) the Association's application for an order permitting it to use the Schedule A property to pay costs already incurred, allegedly in relation to the 'Schedule A Property Issue', should be dismissed;

(d) the interim orders permitting the Association to use the Schedule A property to pay costs incurred between 7 and 21 May 2004 to prepare for trial and in obtaining Mr Blake's advice on prospects should be revoked, or alternatively revoked so far as the work in question did not relate to the 'Schedule A Property Issue'." The first submission

4 The Association has foreshadowed an application to Hamilton J to have the Schedule A Property Issue determined as a further separate question. At a directions hearing on 14 February 2007 Hamilton J declined to hear such an application until the Association's Defence on all issues had been filed. In those circumstances, the Bishop submits that any authority given to the Association to use Schedule A Property conferred by the Court's advice in this application should not extend beyond the filing of the Association's Defence. 5 I do not agree that the advice should be limited in the way the Bishop proposes. As I have observed in my judgment, I think that I should decide questions of principle at this stage: how those decisions are actually implemented, if they can be implemented, will depend upon the constant shifts and manoeuvrings of the parties in this litigation. 6 The basic conclusion to which I have come is that the Association is justified in having recourse to the Schedule A Property (other than the Church Land) to defend the Schedule A Property Issue, but only if such expenditure will not be fruitless, i.e., only if the available funds will not be exhausted before the Schedule A Property Issue is decided with finality. 7 It is impractical and inappropriate for me to give directions to the Association at each twist and turn in the path on the way to a final hearing of the Main Proceedings as to whether expenditure of trust funds on the next step is justified. That is a decision that the Association will have to make for itself in the light of its own knowledge of its circumstances and its strategies and in the light of the decisions in principle which I have made. The second submission

8 In pressing his submission that, in any event, the Court should not give any of the judicial advice sought, the Bishop seeks to argue the prospects of the Association's success in the Main Proceedings. He says that the Association must fail. I do not intend to enter into a discussion of the fate of the Main Proceedings in the course of a judicial advice application. 9 The Bishop says further that it is questionable whether, in fact, with the Schedule A Property funds available, the Association can fund the defence of the Schedule A Property Issue to completion. The Association has put forward, in its Fifth Supplementary Statement of Facts, figures which show how it can properly fund the Issue to completion. The Bishop wishes to contest those figures. If I permitted that course, it would doubtless engender yet another protracted and expensive piece of litigation as a spin-off to the Main Proceedings. I should not permit that to happen. 10 It is for the Association to ensure that it adheres to the guidelines I have set out in my judgment. The figures which it has put forward as demonstrating its capacity to fund the litigation seem, on their face, to support its position. If they are not given in good faith, the Association and its officers will not have the protection of the judicial advice. The third submission

11 The Bishop submits that an order justifying payment of costs already incurred is not "prospective" and prejudges an issue in the Main Proceedings. I do not agree, for the reasons given in my judgment. 12 The Bishop says that the figures shown by the Association for costs already incurred are insufficiently particularised. 13 I do not think it is appropriate for the Court in these proceedings to act as a taxing master or assessor in vouching the costs paid and payable by the Association to date and whether those costs are reasonable. The Court needs to know the figures to ascertain broadly whether they seem appropriate and whether, if the amounts are paid from the trust funds, it appears that there will be sufficient remaining to pay the future proper costs of the Schedule A Property Issue. The figures given by the Association satisfy that fairly basic requirement. If the interim orders which I make in these proceedings are not revoked or varied at the conclusion of the Main Proceedings, then whether the costs actually paid by the Association as a result of this advice are proper may be the subject of assessment and an accounting. The fourth submission

14 The Bishop submits that all interim costs orders previously made in the proceedings should be revoked so that all questions of costs are left to the Main Proceedings. For the reasons I have given in my judgment, I do not think that that is the appropriate course. Orders

15 I will now give the advice foreshadowed in my judgment. The orders I make are as follows:

1. the Court notes the undertaking to the Court by the Association by its Counsel that:

a) if the Association is unsuccessful in proceedings number 3369 of 1997 ("the Main Proceedings");

b) the Bishop applies to the trial judge in the Main Proceedings for revocation of the interim costs orders affecting the Main Proceedings which have been made in these proceedings;

c) the trial judge thinks it just and expedient for the purpose of dealing with that application to make a direction in accordance with this undertaking;

the Association will disclose to the Bishop and his legal advisers, to the extent deemed necessary by the trial judge, the Opinions of the Association's Counsel, Mr G. Blake SC, as to its prospects of success in the Main Proceedings which have been provided to the Court on a confidential basis in these proceedings. 2. The Association would be justified in defending the Main Proceedings on the issue of the terms of the trust declared by Hamilton J on 7 February 2007 and without limiting its generality: (a) the allegations in paragraphs 7 and 22 of the Statement of Claim (version 7);

(b) the allegations that are raised by the Association by way of defence to the allegations in paragraphs 7 and 22 of the Statement of Claim (version 7); (Schedule A Property Issue) . 3. The Association be entitled to have recourse to the property in Schedule A in the judgment Metropolitan Petar v Mitreski [2003] NSWSC 262, other than the Church Land, for the purpose of paying its reasonable costs of defending the Main Proceedings as to the Schedule A Property Issue as follows: (a) $78,666.01 for the period from 9 July 2004 to 9 February 2007;

4. The directions and orders in paragraphs 2 and 3 are subject to the proviso that expenditure by recourse to the Schedule A Property is justified only if the Association is reasonably of the opinion at the time of making the expenditure that, if the expenditure is made, the Association will have sufficient funds remaining from which it can properly pay the costs of defending the Schedule A Property Issue to finality.

5. The Association be entitled to have recourse to the property in Schedule A in the judgment Metropolitan Petar v Mitreski [2003] NSWSC 262, other than the Church Land for the purpose of paying its reasonable legal costs of obtaining an assessment of its costs ordered to be paid by the opponents in Macedonian Orthodox Community St Petka Inc v His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2006] NSWCA 160.

6. The Association have liberty to apply to vary the amounts in paragraph 3 above.

7. The foregoing orders are subject to, and may be revoked by, an order of the trial judge in the Main Proceedings, or by a subsequent order in these proceedings.
8. Costs of the proceedings to date reserved.

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