Gutnick v Bondi Mizrachi Synagogue

Engel v The Adelaide Hebrew Congregation Incorporated [2007] SASC 234; (2007) 98 SASR 402 CASES CITED : Davies v The Presbyterian Church of Wales [1986] 1 WLR 323 Tradition Australia Pty Ltd v Gunson [2006] NSWSC 298; (2006) 152 IR 395

TEXTS CITED : R P Meagher, J D Heydon & M J Leeming: Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th ed (2002)

Rabbi Moshe David Gutnick PARTIES : v Bondi Mizrachi Synagogue

COUNSEL : Plaintiff: I M Neil SC & D W Chin Defendant: J Stoljar SC & D Sulan

SOLICITORS : Plaintiff: Frankel Lawyers Defendant: Slater & Gordon

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2047/09 Rabbi Moshe David Gutnick v Bondi Mizrachi Synagogue JUDGMENT 1 HIS HONOUR: The plaintiff is employed by the defendant as the rabbi and chief minister of the Bondi Mizrachi Synagogue. He has held that position since 1987. The defendant is a company limited by guarantee and owns the assets of the synagogue. It is through it that the synagogue is conducted. Its members are members of the congregation of the synagogue. 2 An extraordinary general meeting of the general members of the defendant has been convened to be held tonight at 8pm. The purpose of the meeting is to consider and, if thought fit, to pass resolutions that: " 1. A report by the Board of the Bondi Mizrachi Synagogue of the financial position of the company be received.

2. That the employment of Rabbi Moshe Gutnick (the plaintiff) be terminated on the grounds of redundancy. " 3 The plaintiff seeks an interlocutory injunction until further order to restrain the members of the defendant from voting on or adopting resolution 2, or any resolution to the effect that his employment as rabbi, chief minister and spiritual head of the defendant's congregation be terminated on the ground of redundancy or otherwise. He also seeks to restrain the defendant's officers from carrying out any act purporting to terminate his employment. 4 The order which the plaintiff seeks is qualified such that his position as rabbi could be terminated if written agreement is made between the parties to that effect, or if: " A properly constituted Din Torah has first determined in accordance with Orthodox Jewish Law that the termination of the plaintiff's employment is justified on a ground recognised by the usages, customs, practices and traditions of Judaism. "

5 The plaintiff claims that it is an express or, if not express, an implied term of his contract of employment with the defendant that he has "hazaka" (also called "chazakah" or "chazoko"), meaning that he has life tenure in his position. He says that the effect of his having hazaka is that his employment cannot be terminated except with his consent, in which case he is entitled to be paid by the defendant a sum equivalent to amounts that he would have been paid if his employment had continued for the rest of his life, or if a properly constituted Din Torah has determined that in accordance with Jewish law his employment can be terminated. The plaintiff says that such termination, if he has hazaka, is only justified if there has been a fundamental failure to perform rabbinical duties. 6 The plaintiff also contends that his contract of employment with the defendant contains a submission to arbitration through a tribunal which is to be specially constituted under Jewish law by a process of nomination called zabla, pursuant to which the defendant and the two arbitrators are to appoint a third arbitrator with specified qualifications. The plaintiff says that the reason there was an agreement to apply the process of nomination known as zabla is that, whereas in the usual case a dispute arising under a contract of employment of a rabbi such as is in question in this case would be determined by a Jewish court of law called a Beth Din, because he has occupied the office of a judge of the Sydney Beth Din recourse to that tribunal is inappropriate in his case, and the parties, therefore, agreed to an alternative tribunal. 7 The defendant denies that the plaintiff has hazaka. It also denies that the contract between it and the defendant includes a submission to arbitration. The plaintiff says that irrespective of whether there is a contractual submission to arbitration, adherents to the Jewish faith are required to submit a dispute, such as the one which has arisen, to determination in accordance with Jewish law before a Din Torah. As to this, the defendant's position is that if it were required by a Din Torah to submit the dispute for determination under Jewish law it would do so. 8 However, it says that if the relief which the plaintiff seeks is granted that it is probable that its directors will appoint an administrator and it would then be for the administrator to decide whether voluntarily to submit to such a process. 9 The first question on this application is whether there is a serious question to be tried that the contract between the plaintiff and the defendant includes an express or implied term that the plaintiff has hazaka. If so, the next question is whether there is a serious question to be tried that the plaintiff at a final hearing would be entitled to specific performance or an injunction to restrain termination of the contract without the parties first having had the dispute determined in accordance with Jewish law. In relation to both issues there is a question as to whether the parties should be required to submit their dispute to a Din Torah. 10 If there is a serious question to be tried that the defendant is not entitled to terminate the plaintiff's contract, either because the plaintiff is entitled to hazaka or because the defendant cannot take that action without first having that issue resolved in accordance with Jewish law, then there is a question as to whether the balance of convenience favours the grant of interlocutory relief. As to that the defendant says that the real issue in this case is as to the quantum of damages which the plaintiff claims he is entitled to. The defendant says that damages are an adequate remedy. The defendant also says that the claim for an interlocutory injunction to restrain the putting of the resolution to the meeting of members is premature, although the defendant does contend that the resolution, if passed, would itself be effective under the articles of association of the defendant to terminate the plaintiff's contract of employment without any further action being taken by the Board. 11 The plaintiff was employed under a written contract dated 8 December 1987 as rabbi of the synagogue for a period of three years. The contract provided that between the end of the 24th month and the end of the 33rd month from the commencement of his duties the synagogue could exercise an option to renew his appointment for a further period and at a salary and on conditions to be negotiated. It was provided that: " In respect of this term of appointment it is agreed that neither party can claim Chazokoh in respect of the tenure of the Rabbi. It is further agreed that should either party seek to claim a right of Chazokoh then this agreement and contract shall be deemed to be void ab initio."

12 The plaintiff's employment was not a full-time employment. 13 It does not appear from the evidence on this application that anything was done between the end of two years after the plaintiff first commenced his duties and the end of 33 months from the commencement of his duties by way of exercise of the purported option of renewal. Evidently, there were discussions between the parties as to the terms of the renewal of the plaintiff's employment. 14 The plaintiff contends that at a meeting of members of the defendant in September 1990 it was agreed that his contract should be renewed and that he should have the benefit of hazaka. He says that at this time he insisted that he would only agree to continue as the rabbi of the synagogue if he had hazaka. The minutes of the meeting of members of the synagogue held on 4 September 1990 record that the matter of Hazaka was discussed, but they do not record that the members agreed that the plaintiff should have hazaka. The only evidence on this application of a person who attended the meeting, Mr Romm, is that hazaka was not agreed to at that time or, indeed, at all. 15 No new formal contract of employment appears to have been entered into at the expiry of the three-year term under the 1987 agreement. Certainly no fresh written contract was signed by any party. 16 The plaintiff says that in 1994 or 1995 he had further discussions with members of the Board in relation to the terms of his employment, as a result of which a memorandum was prepared which reflected the effect of those discussions. The plaintiff says that in the course of those discussions he told Mr Schneider, who was then a Board member, that he had been given hazaka by a general meeting in 1990 and he wanted that as the foundation of any agreement. The memorandum which is said to have been prepared at that time provides in clause 1 that the Mizrachi Synagogue noted the decision of the membership at the 1990 annual general meeting to give the plaintiff life tenure subject to normal Halachic principles (that is principles of Jewish law) of hazaka, breaches of which include inappropriate and unsatisfactory performance. That memorandum was not signed. It does not appear that it was submitted for the approval of members. 17 In 1990 and 1994 the articles of association of the defendant provided: " CONTRACTS WITH OFFICIALS 87. The Board of Management shall have the right to engage or sign agreements, contracts with any official of the Synagogue except the Rabbi, Minister or Chazen (Reader) who must be approved by the General Body, in respect of those persons whom they are empowered to engage under these articles:- (1) Before such agreement is signed the terms thereof must be communicated either to the members at General Meeting or to the Board of Management whichever is entitled under the constitution to make such engagement. (2) It shall cause to be inserted in any such Agreement at clause under which the Minister or other Officer can for sufficient reason be dismissed by the body which made the engagement. " 18 The terms of article 87 are not clear, but the possibilities appear to be either that an agreement with the rabbi is to be made by the Board of Management with the approval of the members in general meeting or that the agreement is to be made between the Rabbi and the defendant, with the latter acting through the general meeting. In either case, it does not appear from the current evidence that a contract was made in 1994 or 1995 in accordance with article 87 in terms which would include the memorandum at annexure E. However, that is not the end of the position because the plaintiff continued to serve as Rabbi after 1994 and 1995, and, indeed, continues so to serve. 19 New articles were adopted on 28 April 1997. Article 87 was deleted. New article 12.3 provides: " 12.3 Contracts with Officials 12.3.1 Every new appointment of a Synagogue Official shall previously have been approved by the Association at a General Meeting subject to such terms and conditions as the Board will determine. 12.3.2 Upon the appointment of a new Synagogue Official the official shall enter into a contract with the Board upon such terms have been agreed between the Synagogue Official and the Board. 12.3.3 Such contract may be amended by agreement between the Synagogue Official and the Board. 12.3.4 Every contract, agreement or arrangement with any Synagogue Official whether oral or in writing, shall be expressed to be subject to a condition that the contract agreement or arrangement, whether expressed to be for a fixed period or otherwise, shall be terminable forthwith upon either of the following events, that is to say:- (a) If the Association resolves to dismiss such Chief Minister, Minister or Reader for conduct unbecoming such person or when such person has been guilty of misconduct; or (b) If the Association resolves by a majority of at least two-thirds of the General Members present at a General Meeting called for that purpose on the requisition of at least 30 General Members of the Association that the contract, agreement or arrangement should be rescinded. " 20 The defendant contends that it is pursuant to clause 12.3.4(b) that the Association is entitled by a vote of two-thirds of the members to rescind the contract of employment with the plaintiff. 21 In 2004 there were discussions between the plaintiff and members of the Board. On 12 February 2004 one of the Board members circulated the memorandum of 1994 or 1995 describing it as "a copy of the Rabbi's contract". Other Board members circulated a document setting out what they contended to be the rabbi's responsibilities, which was a source of disagreement. 22 On 11 April 2004 the plaintiff wrote to Board members stating that he was: " ready, willing and able to continue performing my obligations in accordance with the 'memorandum of agreement between Bondi Mizrachi Synagogue and Rabbi Moshe D Gutnick. "

23 The discussions that took place at that time did not result in any new agreement being signed, but it seems reasonably clear that the plaintiff was asserting that he was prepared to continue to serve on the basis of the earlier document, which included the provision that he have hazaka. It also seems reasonably clear that this was not submitted to the decision of members. 24 I think there are substantial obstacles in the way of a conclusion that it was an express term of a contract adopted in accordance with the articles of the company that the plaintiff should have hazaka. No such contract was ever submitted for the approval of members in accordance with article 87 of the original articles. Nor does there appear to have been any formal resolution of the Board as to the terms of such an agreement. However, there is a serious question to be tried that after the expiry of the 1987 contract the employment of the plaintiff as rabbi continued without there being an express exclusion of hazaka as was provided for in the 1987 agreement. There is a serious question to be tried that hazaka applies unless it has been expressly excluded. 25 The plaintiff deposes that under Halachah (that is Jewish law) it is an established principle that a rabbi is to have hazaka even without any express contractual term or any decision by his employer granting him that status: " In accordance with Halachah ... a rabbi's continued employment in the absence of a contract that is specifically expressed to be for a fixed term and without any specific and express exclusion of Hazaka contained in such a contract is sufficient to constitute a creation of a Hazaka. "

26 The plaintiff has sufficient qualifications to express that opinion, and I do not understand it to be directly contradicted. Although, that having been said, it must be borne in mind that this is an interlocutory application. It is sufficient to say that there is a serious question to be tried that there is an implied term of the contract between the parties that the plaintiff is entitled to hazaka. 27 The question would also arise at a final hearing whether the plaintiff's insistence from 2004, if not earlier, that he have hazaka would entitle him to the benefit of hazaka in the absence of his position being rejected by the Board, and notwithstanding the fact that the contract incorporating hazaka was not submitted to members for their approval. 28 If it were an implied term of the plaintiff's employment prior to 28 May 1997 that he have hazaka then it may be doubted that the adoption of article 12.3.4 could qualify that term. Moreover, the insistence of the plaintiff that he have hazaka from 2004 and the acquiescence or at least the failure of the Board to reject that assertion raises substantial questions as to whether the plaintiff may be entitled to the benefits of hazaka, even if it was not an implied term of his contract prior to 1997 and notwithstanding the adoption of article 12.3.4(b). 29 The defendant contends that whether or not the plaintiff has hazaka his contract of employment would not be specifically enforced. The defendant contends that Equity would not compel the parties to adhere to a relationship involving the provision of personal services. Nor would it compel adherence to a relationship of trust or confidence. In this respect I was referred to the decision of the Full Court of the Supreme Court of South Australia in Engel v The Adelaide Hebrew Congregation Incorporated [2007] SASC 234; (2007) 98 SASR 402 where Doyle CJ, with whom Bleby and Vanstone JJ agreed, said (at 405 [20] and 410-411 [45]) that an Australian court would not specifically enforce an entitlement to act as Rabbi. The grounds for that statement were not elaborated and it is, with respect, not self-evident. 30 The first question is whether or not that question should be determined by a Din Torah in accordance with Jewish law. 31 The memorandum of agreement between the defendant and the plaintiff, which is unsigned and which was apparently brought into existence in 1994 or 1995, contains a submission to arbitration by three arbitrators. There is a serious question to be tried as to whether or not that document was adopted by the Board and the plaintiff as setting out the terms of the plaintiff's employment, at least in 2004, and, if so, there is a serious question to be tried as to how article 1 of that document and article 12.3.4 of the defendant's articles of association interact. 32 Unless an administrator is appointed and the administrator takes a different view, I understand the defendant to accept that if it is required to submit to a Din Torah under Jewish law it will do so. 33 The plaintiff's evidence, which is not contradicted, is that whether or not there is a contractual submission to arbitration or other determination under Jewish law, the defendant is required to submit its dispute to a court under Jewish law. Moreover, I accept that if the question were to be determined in a civil court there is a serious question to be tried that the plaintiff at a final hearing, if he makes good his claim to hazaka, would be entitled to an order for specific performance. One of the exceptions to the principle that the courts will not enforce contracts for personal services is the case of ecclesiastical offices (Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th ed (2002) at [21.5] and [145]; Davies v The Presbyterian Church of Wales [1986] 1 WLR 323 at 329.) 34 In any event, the present question is more confined. It is whether the defendant can terminate the plaintiff's employment as Rabbi prior to that question being resolved in the defendant's favour by a Din Torah. There is a distinction between restraining a particular purported termination of employment and restraining any termination of employment (Tradition Australia Pty Ltd v Gunson [2006] NSWSC 298; (2006) 152 IR 395 at [25]). 35 Where what is in question is a spiritual or ecclesiastical office, different questions arise than they do in the ordinary employment context, and I do not accept that damages would necessarily be an adequate remedy. Whilst it is true that in negotiations between these parties the plaintiff has expressed his preparedness to resign his position on payment of a particular sum of money, that preparedness has been expressed in the context of particular proposals involving either the purchase or the merger of the synagogue with other entities. 36 The most substantial point put by the defendant in opposition to the grant of interlocutory relief is that on the balance of convenience such relief ought not to be granted because of the defendant's financial position. The President of the Board of the defendant deposed on 25 March 2009 that if the resolution terminating the plaintiff's employment on the grounds of redundancy is not passed it is likely that the Board will resolve to appoint an administrator so that the defendant does not trade whilst insolvent. 37 However, the plaintiff proffers an undertaking in these terms: " 2. Subject to paragraph 3 of this undertaking, and until the final decision or award, however called, under the Zabla Agreement takes effect, the plaintiff will waive his entitlement to any salary, remuneration or financial benefit, however called, to which he is otherwise entitled under his contract with the defendant on and after 31 March 2009 ( Payments ), such that the defendant will not accrue any liability to pay the Payments, or any amount thereof, to the plaintiff. 3. If the defendant fails to do all things necessary on its part to (a) nominate an arbitrator in accordance with the Zabla Agreement forthwith after the conclusion of the festival of Passover on 16 April 2009, (b) otherwise to perform the Zabla Agreement, or (c) otherwise to procure and bring about an arbitration under the Zabla Agreement, the plaintiff shall be entitled to serve a written notice on the defendant's solicitors requiring the defendant to remedy its failure within 14 days of the date of the notice, in default of which the plaintiff shall be entitled to serve a second written notice on the defendant's solicitors by which paragraph 2 of this undertaking shall cease to apply or have any effect in relation to any Payments to which the plaintiff is thereafter entitled under his contract with the defendant." 38 The "Zabla agreement" referred to in paragraph 3 of the plaintiff's proposed undertaking is defined as an agreement to nominate an arbitrator in accordance with clause 19 of the memorandum, which is annexure E to the plaintiff's first affidavit, that is, the unsigned memorandum of agreement between the plaintiff and the defendant. The defendant does not accept that there is an agreement between the parties which incorporates clause 19, although open offers have been exchanged between the parties by which both propose that certain issues be determined by a Din Torah, including a zabla, if both parties so wish. The effect of the plaintiff's offer is that if the defendant is prepared to have the question of the plaintiff's entitlement to hazaka determined by a Din Torah, that is to say three arbitrators nominated through the process called zabla as described in article 19 of that memorandum, then no liability will be incurred by the defendant to pay remuneration to the plaintiff until, presumably, the arbitrators have determined the plaintiff's entitlement. Even then for the period of waiver, that is to say for the period from today, the plaintiff would not be claiming remuneration. 39 It is in that context that the defendant's claim that an administrator would be appointed if an injunction were granted should be assessed. The plaintiff's undertaking should relieve the defendant of the bulk of its expenses which have apparently given rise to its present financial position until the arbitration process is concluded. 40 It seems to me that the balance of convenience favours this dispute being determined by a Jewish tribunal in accordance with Jewish law. The evidence before me would not justify an order compelling such an arbitration, and that is not the relief sought in the present application. But in the light of the attitude expressed by both parties in the open offers which have been exchanged, I think it likely that if injunctive relief is granted the dispute will be referred to an appropriate Jewish tribunal for determination and I see no reason that that determination would not take place within a reasonably prompt time. 41 Also relevant to the balance of convenience are defects in the notice accompanying the notice of meeting. The articles require the Board to provide an explanatory memorandum setting out the case for and against resolutions sought from the meeting. In purported compliance with that requirement, the Board has included an explanatory memorandum purportedly setting out arguments in favour of making the position of the plaintiff redundant and arguments against making the position of the plaintiff redundant. Although this was not at the forefront of the plaintiff's argument and, indeed, was not part of the case on which the plaintiff relied to show a serious question to be tried for the grant of an injunction, it seems to me that there are serious questions, to say the least, as to the adequacy of the notice insofar as it sets out the argument against making the decision of the plaintiff redundant. The notice simply does not set out the contention of the plaintiff which is advanced in this case as to why the resolution should not be passed. 42 Although courts are very wary about restraining meetings of companies on the ground of deficiencies in the notice convening the meeting, usually because such questions can be determined after the meeting has been held, in this case the deficiencies in the notice are relevant to the balance of convenience as to why the injunction sought should be granted. It seems to me that if the resolutions were passed prima facie there would be strong grounds for the plaintiff to contend that the resolution was, in any event, void, because the notice accompanying the resolution did not fully and fairly inform and instruct the members about the matters required by article 6.3.5. 43 The status quo is that the plaintiff has been in a position of rabbi since 1987. Steps are sought to be put in train to have this present dispute resolved through the processes of Jewish law. It seems to me that the status quo ought to be maintained. Whilst it is arguable that if the resolution were passed that would not itself result in a termination of the plaintiff's employment, the contrary is also arguable, and, indeed, is asserted by the defendant. 44 For these reasons, subject to any submissions the defendant may have as to the precise terms of the order sought by the plaintiff, I propose to make orders in accordance with paragraph 1 of the short minutes of order handed up by senior counsel for the plaintiff and to note the undertakings in paragraphs 1 to 4.

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