Church of the Foursquare Gospel (Australia) Ltd v New Hope Church Swansea Inc

Introduction

1. By Statement of Claim filed on 20 September 2017, Church of the Foursquare Gospel (Australia) Ltd (Foursquare), a company limited by guarantee and a registered not-for-profit entity, commenced proceedings against New Hope Church Swansea Inc (New Hope), Colin Grigg (Pastor Grigg) and Debra Grigg.
2. Pastor Grigg had, until 19 October 2016, been a director of Foursquare, and had been associated with the Foursquare "denomination" for almost 40 years. Since 2002, he had been the pastor to a congregation of churchgoers in the Swansea area of New South Wales. He had succeeded Pastor Ernie Wing and his wife, Pastor Elaine Wing, who in turn had succeeded Pastor Albert Booth as pastor of the congregation. Albert Booth was Eileen Wing's father and it was in his name that one of the properties with which this case is concerned (the Belmont Street Property) was purchased in 1967.
3. For many years subsequent to its purchase, the property was known as the Swansea Revival Centre. Foursquare is currently the registered owner of the Belmont Street Property, it having been transferred to it for nominal consideration by Albert Booth on 28 August 1998, many years after he had ceased to be pastor of the congregation. Foursquare formerly owned another property (the Josephson Street Property) prior to its sale on or about 20 November 2015. The case also concerns questions of entitlement to the proceeds of that sale.
4. In April 2017, the members of the congregation led by Pastor Grigg incorporated pursuant to the Associations Incorporation Act 2009 (NSW) to form New Hope.
5. Subsequent to the sale of the Josephson Street Property but prior to New Hope's incorporation, the congregation, through its Council, resolved to withdraw its association from the Foursquare Gospel Church and communicated this by letter to Foursquare on 25 September 2016. It would appear that, at some point in time subsequent to 1967, the congregation which had originally been led by Pastors Booth and then Wing had in some way affiliated with Foursquare. The Foursquare Constitution as adopted at its Annual General Meeting of 29 April 2006 and which was in evidence made provision for the "rechartering" or withdrawal of local churches from the Foursquare denomination. That is what the congregation sought to do by its letter of 25 September 2016 to which I have referred above.
6. By its Statement of Claim, Foursquare sought various declaratory orders in relation to the Belmont Street Property together with an order for possession. Pastor Grigg and his wife were and remain living at the property, having occupied it as a manse since late 2010, although it is also being used for Bible study meetings; prayer meetings; evangelism classes; Bible College classes and pastors' and leaders' meetings.
7. It is important to note that Foursquare did not, in its Statement of Claim, claim to be beneficially entitled to the Belmont Street Property. Rather, it contended that it held it on a charitable trust for the religious purposes of the Church of the Foursquare Gospel Ltd, its movement and followers. This is a familiar form of trust for the holding of "church property" on behalf of an ever evolving congregation: see Glebe Administration Board v Commissioner of Pay-roll Tax (1987) 10 NSWLR 352 at 357.
8. Foursquare also sought declarations in relation to the proceeds of sale of the Josephson Street Property including that those proceeds were held by New Hope and the Griggs on trust for Foursquare. Foursquare also sought an order for payment of the proceeds of sale to it.
9. By its Defence, New Hope denied Foursquare's claims and, by Cross-Claim, sought declarations consistent with its position that both the Belmont Street Property and the proceeds of sale of the Josephson Street Property were held on charitable trust for the religious purposes of the congregation now constituted by New Hope. Implicit in that claim is that the current congregation, now governed by New Hope's Constitution and legally represented by New Hope, is the successor to the body of individuals who voluntarily associated with each other in worship and communion at the time of the acquisition of the Belmont Street Property.
10. The Attorney General for New South Wales (Attorney General), who had given his consent to the commencement of proceedings pursuant to s 6 of the Charitable Trusts Act 1993 (NSW), was joined as the Fourth Defendant in the proceedings by orders made on 21 June 2018 and it is appropriate that the Attorney General be joined as Second Cross-Defendant to the Cross-Claim.
11. These proceedings were originally set down for a 5-day hearing commencing on 6 May 2019 however in the week prior to the hearing Foursquare indicated that it proposed to file a Notice of Discontinuance for the whole of the proceedings on the basis that it would pay the costs of the defendants as agreed or assessed. A Notice of Discontinuance giving effect to that proposal and the orders in respect of costs to which the other parties consented was filed electronically on 5 May 2019.
12. Notwithstanding discontinuance of Foursquare's claim, New Hope pressed for the relief sought in its Cross-Claim and filed detailed written submissions and formulated Proposed Short Minutes of Order which make provision both for the joinder of the Attorney General as Second Cross-Defendant to the Cross-Claim and the relief sought in the Cross-Claim.
13. Very helpful written submissions were also filed on behalf of the Attorney General which were to the effect that there was sufficient evidence to provide a basis for the Court to find that the Belmont Street Property was purchased and held by Albert Booth (the original pastor or leader of the congregation) on trust for the local congregation as it existed from time to time.

The Hearing

1. Foursquare did not participate in the hearing of New Hope's Cross-Claim. No appearance was made on its behalf on 6 May 2019, even for the purposes of being excused from the hearing. As Mr Meek SC who appeared for New Hope correctly submitted however: "It is not the practice of this Court to make declarations by consent without a hearing on the merits or in the absence of any facts which support the grant of a declaration: Starr v George [2019] NSWSC 60 at [6] per Henry J citing George Zoltan Ajkay v Hickey & Co Pty Limited [2011] NSWSC 822 at [7]; Bokhari v Bokhari [2014] NSWSC 1474 at [7]; HOOSH Inc (Haberfield out of school hours) v State of New South Wales [2017] NSWSC 379 at [7]. The party seeking the declaration must be able to secure a proper contradictor - someone presently existing who has a true interest to oppose the declaration sought: Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 per Lord Dunedin; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 438 per Gibbs J."
2. Mr Meek further submitted, however, that: "The requirement of a proper contradictor is capable of being satisfied in cases where initially the opposing party had an interest in resisting the relief sought but subsequently ceases its opposition to the declaratory relief: Zetting v Müller [2017] NSWSC 659 at [12]-[16] per Parker J citing ACCC v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56; see also Hill v Dunn [2019] NSWSC 419 at [42]-[47] per Henry J."
3. In Zetting v Müller [2017] NSWSC 659 (Zetting v Müller) at [13], Parker J noted, by reference to [19-115]-[19-125] of J.D. Heydon, M.J. Leeming, P.G. Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (6th ed., 2015), that there was room for debate as to whether what appeared to be described by Lord Dunedin in Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 as a requirement, viz. the securing of a proper contradictor, was an essential pre-condition to the making of a declaration or was simply a matter going to discretion. Parker J went on to note that: " … it is not necessary for me to enter into this debate in the present case. In Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378, the Full Federal Court had to consider whether it was open to the Court to make a declaration of contravention of the Trade Practices Act 1974 (Cth) in circumstances where the defendant did not oppose that course. The Court held at [30] that the requirement of a proper contradictor was satisfied. This was because when the proceedings had been commenced the defendant had an interest in resisting the relief sought by the ACCC, including the declaratory relief. By the end of the case, the defendant had dropped its opposition to the declaratory relief sought by the ACCC, but this was a matter which went to discretion, not jurisdiction."
4. In my opinion, although Foursquare did not play any active role in the hearing of the Cross-Claim - it neither filed any written submissions in opposition to it nor, as I have noted above, did it participate in the hearing - because the evidence filed in support of the Cross-Claim was in substance responsive to that which had been filed by Foursquare in support of its claim, issue was more than adequately joined, and the matter did not fall to be determined in a complete evidentiary vacuum. Just as in Zetting v Müller where the defendant chose ultimately not to contest the plaintiff's claim, here the decision by Foursquare not to contest the Cross-Claim by New Hope, having originally advanced a case and filed extensive evidence entirely inconsistent with it, means that the Court can have a degree of confidence in making the declarations sought, subject of course to satisfying itself as to the existence of a proper basis for the making of such declarations.
5. For the reasons that follow, I am satisfied that, with one exception, the declaratory relief sought by New Hope should be granted.

Belmont Street Property

1. The principal declaration sought by New Hope in relation to the Belmont Street Property is that: "The land at 14 Belmont Street Swansea (folio 72/5688) ("the Belmont Street Property"): (a) was as from 13 December 1967 dedicated to use for public worship and prayer according to the tenets of belief of the particular local Christian church community which: (i) has been known variously and from time to time, as the "Full Gospel Church", "the Revival Centre" and "the Swansea Revival Centre", and (ii) formed the congregation, met, and worshiped at the Belmont Street Property at or shortly after the time of dedication, being then an unincorporated body of persons ("the Congregation"); and (b) consequently, as from 13 December 1967, was held on trust for the charitable religious purposes of the Congregation ("the Belmont Street Property Trust")."
2. New Hope has filed a number of affidavits in support of this declaration and the relief sought in its Cross-Claim more generally and these were read without objection. There was also tendered a chronological bundle of documents which became Exhibit 1. Much of the evidence was summarised in para 5 of the submissions filed on behalf of the Attorney General, for whom Mr El-Hage appeared, and I have drawn upon that summary in what follows in addition to the written and oral submissions of Mr Meek.
3. As I have already noted, the Belmont Street Property was originally purchased in the name of the original pastor of the congregation, Albert Booth.
4. The evidence I have reviewed supports the conclusion that the purchase of the Belmont Street Property was funded by tithes and collections from the initial congregation and by funds borrowed from the Commonwealth Bank of Australia. In relation to the latter, a mortgage executed by Albert Booth on 27 November 1967 (the CBA Mortgage) identifies "The Full Gospel Church of Australia" as "debtor". The mortgage is executed on behalf of the "Full Gospel Church of Australia" by three "trustees" including Mr Booth.
5. There does not appear to have been at the time of the CBA Mortgage any legal entity by the name "Full Gospel Church of Australia" in existence (otherwise there would have been no need for the mortgage to be executed on its behalf by three individuals styled as "trustees") but it is to be inferred that the congregation which contributed to the purchase of the Belmont Street Property was in some way affiliated with the religious organisation bearing this name.
6. In this context I note that it is unclear on the evidence whether, as at 13 December 1967, the congregation was part of the body identified as the Full Gospel Church of Australia or whether it was simply a body of congregants who, whilst not formally part of the Full Gospel Church body or denomination, nonetheless adhered to all or some of the tenets of belief of that church body or denomination prevailing at that time.
7. Although a later incorporated entity "The Full Gospel Churches of Australia Ltd" came into existence and its 2004 Constitution was in evidence, bona fide attempts to locate the constitution or charter of the Full Gospel Church of Australia as (and if) such a document existed in 1967 at the time of the acquisition of the Belmont Street Property were unavailing. The observations of Lindsay J in Lincu v Krnjulac [2014] NSWSC 532 at [5] are, however, apposite in this context. His Honour said: "The fact that the Church is without a written constitution, and a trust deed prepared at the time of acquisition of the land for the Church cannot be found, is not to say that the Church has no constitution or that property held for its purposes cannot be validly so held. The absence of writing, in the present case, is an evidentiary complication, not one fatal to the case the plaintiffs seek to make: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 667 [149] et seq."
8. Other evidence before me included: 1. a document apparently prepared by the Local Council's Planning Committee recording recommendations made following a meeting held on 19 August 1970, which identifies the applicant for development consent for the Belmont Street Property as the "Full Gospel Church, 14 Belmont Street … "; 2. correspondence from the Local Council regarding a development application for the Belmont Street Property, dated 27 August 1970, which is addressed to "Full Gospel Church, 14 Belmont Street … "; 3. the development application lodged by Albert Booth in December 1973, for the Belmont Street Property, which describes the owner, the builder and the applicant as "Swansea Revival Centre"; 4. architectural plans which, it seems, were submitted to the Local Council and which record "the client" as being the "Swansea Revival Centre"; 5. correspondence from the Local Council regarding the Belmont Street Property, dated 20 March 1974, which is addressed to "The Secretary, Swansea Revival Centre 14 Belmont Street … ".
9. Mr Meek submitted, and I accept, that: "The materials from Lake Macquarie Council show that the Belmont Street property was used as a place for worship and the strong inference is that the property: (a) was purchased, and paid off, for the purpose of public worship according to the system of belief of the particular Christian church community congregation; and (b) became at the time of purchase subject to trust for the advancement of religion, not for the benefit of particular individuals, and that its purchase was directed to the benefit of the public."
10. There was also the evidence of John Gilbert, a current member of the congregation, that, during a conversation in December 2016, Albert Booth told him that the Belmont Street Property was "acquired to build a church".
11. Of particular significance was the evidence of Margaret Sneddon, who was a member of the initial congregation. She says the initial congregation was known as the "Swansea Revival Centre", that the congregation purchased the Belmont Street Property, that the property was used for Christian worship by the congregation and that, prior to the purchase of the Belmont Street Property, Albert Booth said to her "[t]he Property is being purchased for use to be The LORD's House, for our congregation's place of worship and as a house of prayer for our congregation". No evidence was filed in reply to or otherwise contradicting Mrs Sneddon's evidence. It is of particular note, in this context, that Foursquare had filed an Affidavit in Chief by Albert Booth.
12. Margaret Sneddon and Colin Grigg also gave evidence that members of the local congregation carried out building works in the late 1970s to convert the shop originally at the Belmont Street Property into a church building or place suitable for Christian worship. That evidence indicates that tithes and offerings paid by the local congregation were used to pay for at least some of those works.
13. In Radmanovich v Nedeljkovic (2001) 52 NSWLR 641; [2001] NSWSC 492 at [149], Young CJ in Eq. said: "If a trust for the advancement of religion is set out in some formal document in full and complete terms, there is no problem in ascertaining what the trusts are which affect the fund or property. However, in many instances the trusts will be imperfectly spelt out. It has long been recognized that to ascertain what are the terms of the trusts is a most difficult matter of fact for a court. What must be discovered is the intention of the founders."
14. The evidence I have referred to above satisfies me that I should make the declaration sought by New Hope in the terms set out in [19] above. It follows that Foursquare, to which legal ownership of the Belmont Street Property was transferred in 1998, as noted in [3] above, holds the property subject to the Belmont Street Property Trust.
15. Consequential orders for the removal of Foursquare as trustee of the Belmont Street Property Trust and the appointment of New Hope as trustee of that trust are, in my opinion, appropriate notwithstanding that this relief was not sought in the original Cross-Claim but only notified in a set of Proposed Short Minutes of Order circulated by New Hope in the week prior to the hearing.
16. The congregation has, by its letter of 25 September 2016 noted in [5] above, plainly severed its relationship with Foursquare and the diametrically competing contentions disclosed on the pleading and the tone of some of the inter partes correspondence I was taken to in the course of the oral hearing make it inappropriate for Foursquare to remain as trustee. Foursquare's complete and unexplained non-participation in the hearing reinforces my views in this regard. I am also satisfied that New Hope is an appropriate replacement trustee.
17. The evidence which has been summarised above also, in my opinion, supports the making of a declaration sought by the Cross-Claimant to the effect that New Hope is the successor body to the original congregation that was in existence at the time the Belmont Street Property was acquired.

Josephson Street Property Proceeds

1. The Josephson Street Property, which was first purchased in 1988 by Foursquare but ultimately funded by tithes and offerings by members of the congregation of New Hope, was, as I have already noted, sold in or about November 2014.
2. Pastor Grigg says, in unchallenged evidence, that Foursquare through its President, Wayne Magee, informed him that the proceeds of the sale of Josephson Street Property belonged to the New Hope church and that the church council had full authority to disburse the funds in any way that it thought fit. That was consistent with other evidence to the effect that the purpose of the original purchase of the Josephson Street Property was for use by the church community forming the congregation at the time of that purchase.
3. New Hope submits, and I accept on the evidence, that there is no suggestion that the Josephson Street Property was originally purchased for anything other than the use of the then New Hope congregation.
4. In these circumstances, I am prepared to make a declaration to the effect that the proceeds of sale from the sale of 1A Josephson Street, Swansea, New South Wales (folio 70/5688) are held by New Hope on trust for the charitable religious purposes of the congregation.
5. Any claim by Foursquare to an interest in the proceeds of sale, as originally made in the now discontinued Statement of Claim and in correspondence which was in evidence and to which I was taken, is obviously inconsistent with this declaration. There is utility, in view of these inconsistent claims, to making the negative declaration sought by New Hope, namely that Foursquare has no interest in the proceeds of sale of the Josephson Street Property.

Consequential Orders

1. Given the declaration that I have indicated I am prepared to make in relation to the Belmont Street Property including the removal of Foursquare as trustee and its replacement by New Hope, it is appropriate that the consequential or machinery orders that I have included in the final orders set out in [49] below should also be made.
2. New Hope has also sought an order that Foursquare pay any stamp duty and all costs and expenses associated with the vesting of title of the Belmont Street Property in New Hope. In the course of oral argument, I indicated that I was not prepared to make such an order but would reserve liberty to New Hope to renew its application for such relief in the event that the Office of State Revenue assessed more than the nominal duty of $50 for which s 54(3) of the Duties Act 1997 (NSW) provides in respect of a transfer of dutiable trust property to a person as a consequence of the retirement of a trustee or the appointment of a new trustee. New Hope will, of course, be appointed as a new trustee of the Belmont Street Property Trust as a result of the declarations I propose to make, and any stamp duty would therefore be reasonably expected to be nominal.

Costs

1. New Hope seeks an order that Foursquare pay the costs of the Cross-Claim up to and including 18 July 2018 on the ordinary basis and then, after 18 July 2018, on the indemnity basis. 18 July 2018 was the date on which New Hope filed the bulk of its evidence in response to Foursquare's claim and its support of the Cross-Claim
2. The basis for this submission is that, following the receipt of the New Hope evidence, it must have been clear to Foursquare that not only did it not have a proper basis to maintain its own claim but it had no grounds to oppose the relief being sought on the Cross-Claim by New Hope. Reliance was placed on Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 (Degman). In that case, indemnity costs were awarded in circumstances described by Holland J at 358 as follows: "It is sufficient to say that the allegations of fact she made as the basis of her defences and causes of action were in my opinion false and deliberately concocted by her in an attempt to deny the plaintiff its right and to shift all blame and legal liability to the plaintiff from herself to the second cross-defendant. As well as that, she so conducted herself in the proceedings, by multiplying allegation upon allegation, and by prevaricating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonable have expected to incur in litigation of genuine issues."
3. I do not consider that an order for indemnity costs is appropriate. The facts were not straightforward and, as New Hope accepted, some were cloaked in obscurity. Issue was squarely joined on the Cross-Claim even though Foursquare did not file any evidence in reply to that filed by New Hope. This was, in part at least, to be explained by the fact that much of New Hope's evidence was also replying to that which had already been filed by Foursquare. The circumstances of this case were far removed from those that led Holland J to make an indemnity costs order in Degman.
4. Further, as Mr Meek accepted, it was necessary for New Hope to satisfy the Court of the case for making the orders it sought whether or not Foursquare actively opposed the relief being sought. Once this is taken into account, the case for making an indemnity costs order of the kind sought is less compelling than it might otherwise have been.
5. Whilst it is regrettable that Foursquare only appeared to reach a landing as to whether or not it would pursue its own claim and contest that of New Hope relatively late in the day, I do not perceive in that conduct such unreasonableness as would warrant the making of an exceptional indemnity costs order.

Orders and Declarations

1. For the foregoing reasons, I would make the following declarations: 1. The land at 14 Belmont Street, Swansea (folio 72/5688) ("the Belmont Street Property"): 1. was as from 13 December 1967 dedicated to use for public worship and prayer according to the tenets of belief of the particular local Christian church community which: 1. has been known variously and from time to time, as the "Full Gospel Church", "the Revival Centre" and "the Swansea Revival Centre", and 2. formed the congregation, met, and worshiped at the Belmont Street Property at or shortly after the time of dedication, being then an unincorporated body of persons ("the Congregation"); and 1. consequently, as from 13 December 1967, was held on trust for the charitable religious purposes of the Congregation ("the Belmont Street Property Trust"). 1. The Cross-Claimant is the successor body to the Congregation 2. The proceeds of sale from the sale of 1A Josephson Street, Swansea (folio 70/5688) are held by the Cross-Claimant on trust for the charitable religious purposes of the Congregation. 3. The First Cross-Defendant has no interest in the said proceeds of sale.
2. In addition to those declarations, I would make the following orders: 1. The Cross-Defendant to the Cross-Claim be designated as the First Cross-Defendant. 2. The Attorney General be joined to the proceedings in respect of the Cross-Claim as the Second Cross-Defendant. 3. Pursuant to the Trustee Act 1925 (NSW), s 70, the First Cross-Defendant be removed as trustee of the Belmont Street Property Trust. 4. Pursuant to the Trustee Act 1925 (NSW), s 70, the Cross-Claimant be appointed as trustee of the Belmont Street Property Trust. 5. Pursuant to the Trustee Act 1925 (NSW), s 71, the Belmont Street Property vest, subject to the terms of the Belmont Street Property Trust, in the Cross-Claimant forthwith. 6. The First Cross-Defendant execute within 14 days of the date of these orders all necessary documents and do all things required in order to give effect to order 5 above. 7. In the event that the First Cross-Defendant fails to execute the necessary documents to give effect to order 5 within 14 days of the date of these orders, pursuant to s 94 of the Civil Procedure Act 2005 (NSW), direct the Registrar in Equity to execute such documents as are necessary to give effect to order 5. 8. The First Cross-Defendant pay the costs of the Cross-Claimant of and incidental to the Cross-Claim. 9. The First Cross-Defendant pay the costs of the Second Cross-Defendant of and incidental to the Cross-Claim. 10. Liberty to apply on 3 days' notice in relation to the working out of these orders. 11. Liberty to relist the matter on 14 days' notice in the event that stamp duty assessed in respect of the transfer of the Belmont Street Property exceeds that provided for in s 54 of the Duties Act 1997 (NSW).
3. These orders are, of course, without prejudice to any subsequent application, if the need or occasion arises, pursuant to the Charitable Trusts Act 1993 (NSW) for a cy-pres scheme in respect of the Belmont Street Property.

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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: 09 May 2019