Macedonian Orthodox Community Church of St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand

Judgment 1On 6 February 2012, I made an order in these proceedings pursuant to s 63 of the Trustee Act 1925 (NSW) that the plaintiff (the Property Trust ) is justified in seeking instructions and obtaining legal advice as to its prospects of successfully defending proceedings (the Substantive Proceedings ) which have been brought against it by Bishop Dobrijevic and the Serbian Orthodox Church in Australia and New Zealand Properties Limited ( Properties Limited ). I indicated at that time that I would publish the reasons for my decision subsequently. These are those reasons. 2The Property Trust is the registered proprietor of land on which is erected St Sava's Monastery and other buildings and which is used as a cemetery (the Property ). It is estimated that the Property is worth between $4.1 million and $15 million. Apart from the Property, the Property Trust also holds approximately $37,000 in cash. 3In 1963, the Serbian Orthodox Church split into two groups, one known as the Free Serbian Orthodox Church and the other as the Serbian Orthodox Church. The plaintiffs in the Substantive Proceedings claim that, as a result of the adoption of constitutions by entities associated with the two churches, those entities have been replaced by the Metropolitanate of Australia and New Zealand of the Serbian Orthodox Church and that, as a consequence: (a)The Property is to be applied for the maintenance and propagation of the Orthodox Christian faith through Properties Limited; (b)Alternatively, the original purposes of the charitable trust to which the Property is subject should be altered so as to allow the Property to be applied cy-pr e s towards the maintenance and propagation of the Orthodox Christian faith through Properties Limited. The plaintiffs in the Substantive Proceedings also claim that the Property Trust has committed breaches of trust. 4In these proceedings, the Property Trust seeks judicial advice on whether it would be justified: (a)In seeking instructions and obtaining legal advice as to the prospects of success of defending the Substantive Proceedings; and (b)In defending the Substantive Proceedings. However, the only advice sought at present is advice to the effect of that referred to in paragraph 4(a). 5These proceedings were served on the plaintiffs in the Substantive Proceedings and on the Attorney-General. The Attorney-General made no submissions in relation to the present application. The plaintiffs in the Substantive Proceedings do not object to the court giving the advice sought by the Property Trust. However, Ms Taylor, who appeared for the plaintiffs in the Substantive Proceedings, submitted that the advice should be qualified in a number of ways, which I will come to. 6Section 63(1) of the Trustee Act provides: A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. 7The relevant principles to be applied by the court in determining whether to give advice under s 63 were set out by the High Court in Macedonian Orthodox Community Church of St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; 237 CLR 66. In that case Gummow ACJ, Kirby, Hayne and Heydon JJ explained that there is only one jurisdictional bar to relief under s 63. That bar is that: [T]he applicant must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument. (at [58]). There are no implied limitations on the discretionary factors the court may take into account in giving the advice sought under s 63: at [59]. 8Two other points emerge from the judgment of the plurality of the High Court which are particularly relevant to the present application. 9First, in deciding whether the court should give the advice, it is necessary to consider the nature of the trust and the issue that calls for resolution. As Gummow ACJ, Kirby, Hayne and Heydon JJ explained: 67. ... Where there is a non-charitable private trust involving a conflict between beneficiaries, or between beneficiaries alleging a breach of trust out of which a trustee has profited and that trustee, and where the defendants in those proceedings have a personal capacity to fund the defence, it might not be correct to give the trustee an opinion, advice or direction. The position is not necessarily the same where the trust is for a charitable purpose, where the public interest is involved since ex hypothesi the trust is beneficial to the public, where none of the contestants in the litigation about the trust is suing or defending in order to augment, defend or seek the restoration of personal assets, and where a crucial question is the precise terms of the purpose for which the trust exists. 68. Nor is the position necessarily the same where the charitable trust is for religious purposes: since religious controversies do not commonly come before the courts unless they involve disputes about property rights they will often take the form of an allegation of breach of trust and a claim that the trustee be removed. That circumstance may have less weight against the grant of the opinion, advice or direction than it would in disputes about a private trust. [footnote omitted] 10Secondly, the fact that allegations of breach of trust are made against the trustee is not necessarily a reason for refusing to give advice under s 63. Again, as the plurality in Macedonian Orthodox Community Church explained at [70]: In particular, trustees who are sued, particularly for breach of trust, may sometimes experience uncertainly about whether they will be able to obtain indemnity as to the costs of their defence under s 59(4) in any event. Perhaps they will if their breach is excused under s 85(2); but they cannot be sure, in advance, that the court's discretionary power to excuse the breach will be exercised in their favour, and one of the matter to be excused is their failure to obtain the court's direction under s 63 or otherwise. This points strongly to the conclusion that an application under s 63 by a trustee sued for breach of trust (including a breach of trust alleged to arise in the very defence of the proceedings) is not to be seen as one which should rarely if ever succeed. Instead it should be seen as a standard instance to which s 63 can in appropriate circumstances apply. 11The Substantive Proceedings clearly concern the administration of the trust; and consequently advice on whether those proceedings should be defended also concerns the administration of the trust. There is a question whether judicial advice is strictly necessary in relation to whether the Property Trust would be justified in seeking instructions and obtaining legal advice in relation to its prospects of successfully defending the proceedings since, at present, the Property Trust does not propose to pay those legal costs out of the trust property. However, the expectation is that, once the advice is obtained, the Property Trust will seek an indemnity and, in those circumstances, it seems to me the present application concerns the administration of the trust. 12It also seems to me appropriate that the Property Trust incur legal fees in determining whether the Substantive Proceedings should be defended. There is a public interest in ensuring that charitable trusts are properly administered. To some extent, that public interest is protected by the presence of the Attorney General in the Substantive Proceedings. However, the Property Trust is in a unique position to investigate whether there is a real issue concerning the relief sought in the Substantive Proceedings; and, if there is, there is a public interest in ensuring that that matter is brought to the attention of the court. The fact that allegations of breach of trust are made against the Property Trust does not affect the position. Those allegations are connected to the question whether the Property Trust should remain the trustee of the charitable trust in question and, as I have said, there is a public interest in ensuring that the court is properly informed of the matters concerning that issue before determining whether to grant the relief sought in the Substantive Proceedings. 13The plaintiffs in the Substantive Proceedings do not object to the order. However, Ms Taylor submitted that the advice should be qualified in four respects. 14First, Ms Taylor submitted that a cap should be placed on the amount of costs that should be incurred in obtaining the advice. Second, Ms Taylor submitted that a timeframe should be placed on when the advice should be obtained. Third, Ms Taylor submitted that the advice should be obtained from counsel who do not act for the Property Trust in the Substantive Proceedings. Fourth, Ms Taylor submitted that the advice should be subject to and be able to be revoked by any order of the trial judge in the Substantive Proceedings. 15In my opinion, none of these qualifications is appropriate. 16As to a cap, the Property Trust does not seek to pay the legal fees it incurs out of the trust property. Ultimately, it is likely to seek an indemnity in respect of the legal fees that it incurs. There may be a question about the reasonableness of the fees that it has incurred at that time. If there is, that question can be addressed then. 17As to the imposition of a timeframe, I do not think that any timeframe should be imposed. Ms Taylor did not explain precisely how the court could impose a deadline by when the advice was to be obtained. Presumably it could be done by giving judicial advice to the effect that the Property Trust would be justified in seeking instructions and obtaining legal advice as to the prospects of success of defending the Substantive Proceedings provided that that advice was obtained by a specified date. But framing the advice in that way illustrates the difficulty with the submission put by Ms Taylor. To a substantial extent, the question of when the Property Trust obtains advice is outside its control. It may depend on factual enquiries of persons outside its control. It will depend on the availability of counsel and when counsel actually completes the advice. It cannot be the case that the Property Trust would be justified in obtaining advice by a particular date but not afterwards. The Property Trust has indicated that it expects to obtain the advice within four weeks. The orders it sought included an order that the proceedings stand over to 27 April 2012. Having regard to the nature and complexity of the enquiries that must be made, I do not think that that is an unreasonable length of time to enable the Property Trust to obtain the advice and consider what to do in light of it. In my opinion, that provides the plaintiffs in the Substantive Proceedings with sufficient protection that the matter will not drag on indefinitely. 18As to the question of independent counsel, it is usual for counsel to advise on proceedings and to conduct those proceedings in the event that they are either brought or defended. I can see no reason for departing from the usual position in this case. In any event, this question can be addressed if and when the Property Trust seeks judicial advice concerning the defence of the Substantive Proceedings. 19As to the question of revocation of the advice, Ms Taylor pointed out that an order of that type was made by Palmer J at first instance in Application of Macedonian Orthodox Community Church of St Petra Inc (No 2) [2005] NSWSC 558; 63 NSWLR 441 at [85]. However, that order was made in different circumstances. In that case, the judicial advice concerned whether the trustees were justified in defending the proceedings. The advice was to the effect that the trustees were. However, Palmer J allowed for the possibility that the proceedings would develop in a way which meant that it was not appropriate for the trustees to continue to defend the proceedings. The direction made by Palmer J catered for that possibility. Here the costs will have been incurred before the Substantive Proceedings are heard. To allow for the possibility that the order might be revoked by the trial judge would defeat the very purpose of obtaining judicial advice: namely, to give some certainty to the Property Trust. 20It is for these reasons that I made the orders I did.