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

ex tempore Judgment 1In August 2011, proceedings were commenced by his Grace Bishop Irinej Dobrijevic, who is the head of the Metropolitanate of Australia and New Zealand of the Serbian Orthodox Church, and the Serbian Orthodox Church in Australia and New Zealand Properties Ltd ("Properties") against the Free Serbian Orthodox Church-Diocese for Australia and New Zealand Property Trust ("Property Trust"), Mr Branko Rupar, Mr Ratomir Nesic, Mr Ilija Cubrilo and Mr Petar Mandic, who are the four directors of the Property Trust and, as sixth defendant, the Attorney General of New South Wales, who has given authority for the bringing of proceedings by the plaintiff: see s 6(1)(a) of the Charitable Trusts Act 1993. I shall refer to these proceedings (2011/247393) as "the main proceedings". 2By these separate proceedings, the Property Trust has sought judicial advice pursuant to s 63 of the Trustee Act 1925 in relation to its conduct of the main proceedings. An application by the Property Trust for advice was heard on 6 February 2012 by Ball J and his Honour ruled that the Property Trust was justified in seeking the advice of Mr Garth Blake SC "as to its prospects of successfully defending [the main proceedings]". 3Bishop Irinej and Properties did not then oppose the giving of judicial advice to the Property Trust but maintained that the obtaining of counsel advice should be subject to four restrictions, none of which restrictions were imposed by Ball J. 4An application has now been brought for further judicial advice following the obtaining by the defendants in the main proceedings of an advice from Mr Blake SC. The Property Trust framed its request for judicial advice as follows (see par 7 of the Third Statement of Facts): "The opinion, advice and direction of the Court is sought on the questions of whether the Property Trust would be justified: (a) in defending the main proceedings on the following issues: (i) the terms of the trust on which the Property Trust holds [453 Wallaroo Road ("the Property")]; (ii) whether the terms of the trust should be altered to allow the Property to be applied cy-près; and without limiting their generality; (iii) the allegations in the following paragraphs of the statement of claim: (A) [2] to [4], [7] to [26], [28] to [30], [38] and [39], and [42] to [47]; (B) [27(b)] so far as the following questions: (1) the validity of the action whereby Mr Dragan Saracevic was purportedly stripped of his clerical rank; (2) whether it is a term of the trust that only canonical services can be conducted at the Property; (3) whether any services conducted at the Property were "non-canonical"; (C) [27(c)] so far as the following questions: (1) whether it is a term of the trust that only clergy of the church in communion with the Serbian Orthodox Church can conduct services on the Property; (2) whether the Old Calendar Orthodox Church of Greece Holy Synod in Resistance is in communion with the Serbian Orthodox Church; (D) [31] so far as the following questions: (1) whether the 15 September 2007 amendments have application to the Property; (2) the effect of the 15 September 2007 amendments if they have application to the Property; (iv) the allegations that are raised by the Property Trust by way of defence to the allegations in paragraph (iii); (b) for the purpose of paying its reasonable costs and disbursements of defending the [issues in (a)(i) and (ii) above] in having recourse to: (i) its cash assets that are not required for its ordinary recurrent expenditure; and (ii) funds that may be realised by encumbering the Property; to the extent that moneys standing to the credit of the [Property Trust's defence fund] are not required for its legal costs of prosecuting the [present judicial advice proceedings], of defending the remaining issues and of any separate legal costs of the directors [i.e. the second to fifth defendants in the main proceedings] of defending the main proceedings: (iii) $3,464.43 for past costs; (iv) $242,695 for future costs." 5The formulation for advice, particularly (b), is of concern to Bishop Irinej and Properties and, following outlines of the case and some of the issues involved, there have been discussions between the legal representatives of the defendants, the plaintiff and the Attorney General. A form of orders has been discussed between the parties which is supported by all of them and which include the giving of advice in the form of short minutes of order, which I propose to make. 6It is necessary to explain the background to the dispute to understand the nature of the advice sought, but given the outcome to which I have earlier referred, I will endeavour to set this out as succinctly as possible. The Serbian Orthodox Church has its Holy See in Belgrade in Serbia, formerly Yugoslavia. When Yugoslavia was controlled by a communist government, dioceses in the United States, Canada, Western Europe and Australia-New Zealand resolved to form the Free Serbian Church as a response to what was, or was believed to be, the effect of Yugoslavian government control and interference in the Serbian Orthodox Church. The Free Serbian Orthodox Church-Diocese of Australia and New Zealand was established in 1964 as part of this process and it became known as the Serbian Orthodox Diocese of Australia and New Zealand, New Gracanica Metropolitanate. After the collapse of communism in Eastern Europe, a process of reconciliation was begun which led to a formal agreement in 1991 between the Free Serbian Church and the Serbian Orthodox Church, and later to the establishment of the Metropolitanate of Australia and New Zealand of the Serbian Orthodox Church approved by the Holy Assembly of Bishops of the Serbian Orthodox Church in May 2011. Bishop Irinej was appointed as Bishop Administrator of the Free Serbian Church by instrument dated 2 June 2009 and 24 August 2009. 7The Property Trust was established in 1969. Its memorandum of and articles of association before 15 September 2007 contained provisions which included a provision that "the trustees shall consist of twelve persons of whom six shall be ministers and six communicants or adherents of the Diocese" (clause 29), and that "the office of a trustee shall be vacated if he or she ceases to be a member of the Diocese or a member of one of the churches in any state of Australia affiliated with the Diocese (article 34 (g) and (j)). 8On 13 January 1981, the Free Serbian Orthodox Diocese, an unincorporated association, acquired land pursuant to an instrument of transfer dated 24 November 1980 at 453 Wallaroo Road, Wallaroo, New South Wales upon which there has been constructed a complex of buildings known as the Monastery of Saint Sava New Kalenich ("the Property"). The Property has a value of between $4 million and, according to one valuation, considerably more than that. 9The Property Trust became the registered proprietor of the Property by virtue of an instrument of transfer dated 30 December 1981, for a consideration of $1. 10Bishop Irinej and Properties claim in the main proceedings that the Property Trust in 1981 took the Property subject to a trust which trust has the object of advocating "the religious purposes of the Diocese" and that it is thereby a trust for charitable purposes and they assert that this obligation is implied by virtue of clauses of the memorandum of association of the Property Trust and by various articles as well as the circumstances of it taking a transfer of the property from the Diocese. They assert that by failing to recognise what has been agreed upon by the Free Serbian hierarchy, namely the re-amalgamation of the two wings of the church, the Property Trust has ignored the purposes of the charitable trust for which it was established. The plaintiffs in the main proceedings also claim that the Property Trust has refused Bishop Irinej and clergy of the Serbian Orthodox Church access to the Property and prevented them from conducting church services at the Property and that it has: (1) prevented use of the Property for the public worship of the Orthodox faith through the Serbian Orthodox Church; (2) engaged Mr Dragan Saracevic, a former priest who has been stripped of his clerical rank, to conduct what are "non-canonical church services at the Property"; (3) allowed the Property to be used for non-canonical church services by clerics of a group calling themselves the "Old Calendar Orthodox Church of Greece Holy Synod in Resistance", which group, it is alleged, "are not in communion with the Serbian Orthodox Church"; (4) passed on 15 September 2007, amendments to the memorandum of association of the Property Trust which have the effect of removing the Property from the control of the Serbian Orthodox Church, and, for example, permitting a member to retain membership notwithstanding that he or she ceases to be a member of a church affiliated with the Free Serbian Church. 11The main proceedings were commenced some ten months ago and at this point no defence has been filed by the defendants but Mr Blake SC, helpfully, this morning iterated aspects of the defence which will be filed, which includes challenging the plaintiffs' assertion that anything done towards the process of amalgamation or re-amalgamation of the two wings of the Serbian Orthodox Church affects or bind the Free Serbian Church. 12The defendants challenge the assertion that non-canonical services have been performed or have occurred and in effect they maintain that nothing has changed in relation to the purpose for which the trust was established and in respect of the terms of the trust on which the Property Trust holds the Property. The defendants accept that the trust was established for a charitable purpose but there is, obviously, or will be, a contest about what the content of that charitable purpose is or should be. There is an alternative claim by Bishop Irinej and Properties for a cy-près scheme. That is resisted by the defendants on a similar basis. 13Mr Blake SC identified essentially three issues which will arise in the main proceedings: (1) whether, through a series of constitutional amendments, there has been constituted a union of what were the two separate churches and, as part of that, determining what are the purposes of the charitable trust; (2) if the plaintiffs fail in the contention that there has been an alteration to purposes, whether there is any room for a cy-près scheme; and (3) whether there has been any breach of trust by the trustee in taking the steps that it has taken. 14I think it is fairly obvious that wrapped up in those questions is the question of the legitimacy of the amendments to the constitution that occurred in 2007 and there is, what has been helpfully described by both Mr Blake SC and Mr Sturt Glacken SC, who appears with Ms Julie Taylor for the plaintiffs, a clearly complex history in relation to the Serbian Orthodox Church and its relations with Dioceses outside the former Yugoslavia. 15The question of whether the hierarchical nature of the Serbian Orthodox Church impacts upon the position of the Free Serbian Church, and the purposes of the charitable trust on which the Property is held by the Property Trust, will need to be considered in the main proceedings. 16There is in the second statement of facts (there being also a first statement of facts, third statement of facts and fourth statement of facts provided to the Court in support of the application for advice) reference to the advice given by Mr Blake SC and reference to the fact that Mr Blake SC's opinion is to the effect that the Property Trust has sufficient prospects of success of defending the substantive proceedings on various issues identified in the third statement of facts. The advice was originally given earlier in May 2012 but due to an error or possible inconsistency detected, Mr Blake SC made an amendment to that advice and re-signed it this morning, 22 May 2012. It is that advice upon which the defendants rely to support the prospects of defending the proceedings. It was agreed that, as matters have transpired, I did not need to read the advice and I accept that Mr Blake SC's advice is to the effect stated and note that Ball J's determination implicitly regarded the outcome of that advice as a significant matter in determining whether the proceedings should be contested. 17There was agreement about the matters to which the Court should have regard in circumstances such as this, which were those identified by Palmer J in his decision which later went on appeal to the High Court (see Re Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 and Re Application of Macedonian Orthodox Community Church St Petka Inc (No 4) [2007] NSWSC 254 and on appeal in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 ("St Petka v His Eminence Petar")), namely that: (1) there is involved here a charitable trust and there is a public interest, accordingly, in the determination of matters affecting that trust; (2) it is important for the purpose and terms of the trust to be identified for the regular administration of the trust and that the outcome, if adverse to the defendants, would be very significant given that the Property is: (a) obviously, the most significant aspect of the Property Trust; (b) is of considerable value; and (c) the property used for, amongst other things, services connected with the church and other community or church related activities. (3) there is currently, as revealed in the statements of facts, a fund of $138,000 available to the Property Trust, which fund has been described as a fighting fund which enables the main proceedings to be defended without recourse to the church property that is itself in issue in the proceedings or indeed to other trust property with which the plaintiffs have no interest. The estimate of costs till the end of the hearing exceeds the amount of the fund as it currently stands but the fund contains a substantial amount and the case would be able to progress to the point where prospects can be more precisely considered based upon the evidence obtained and presented by both sides. 18Counsel for the Property Trust supports the form of the proposed orders. There was some discussion about the significance of the Property Trust's consent in circumstances where the purpose of obtaining judicial advice is to protect a trustee from claims by disgruntled beneficiaries, using that word in a very broad sense: see St Petka v His Eminence Petar [64] - [74]. Given the broad nature of the charitable purposes involved here, the question of consent or agreement of the opposing party to the main litigation, whilst not determinative, is I think of some relevance to be taken into account in determining whether or not to exercise my discretion to give judicial advice in respect of steps to be taken by the Property Trust. 19The Attorney General, for whom Ms Naomi Sharp of counsel appears, did not put any submissions against the proposal and that is also significant in the context where, under the legislation, if any, for example, parishioner wished to take action against the trustee, they would need either the agreement of the Attorney General to the commencement of such proceedings or the approval of the Court: see s 6 of the Charitable Trusts Act. Ms Sharp indicated that the Attorney General regarded as appropriate that the Property Trust put on a defence so that the plaintiffs and the court could understand better the position of the defendants. The proposal in respect of which advice is now sought permits the defendants to do all things necessary or reasonably incidental to the conduct of the main proceedings, which includes filing a defence, but provides that it is subject to revocation by the trial judge or by a subsequent order in these proceedings, so that there is a measure of protection to parties other than the trustee, should matters change or new information become available. 20In these circumstances, I think it is appropriate that judicial advice be given to the effect contained in the short minutes of order, which for clarity I set out below: "1 The plaintiff, Free Serbian Orthodox Church-Diocese for Australia and New Zealand Property Trust, would be justified in doing all things necessary or reasonably incidental to conduct its defence of proceedings 2011/24793 [the main proceedings] in which it is the [f]irst [d]efendant on such bases as it may be advised from time to time until further order. 2 Order 1 is subject to, and may be revoked by, an order of the trial judge in proceedings 2011/24793 [the main proceedings] or by subsequent order in these proceedings. 3 Reserve costs. 4 Liberty to apply."