Metropolitan Petar v Mitreski

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3369/97 HIS EMINENCE PETAR THE DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOX DIOCESE OF AUSTRALIA & NEW ZEALAND & ORS v LAMBE MITRESKI & ORS JUDGMENT 1 HIS HONOUR: Before me is a motion to suspend the interlocutory programme for the preparation for trial of the outstanding questions in these proceedings commencing before me on 9 August 2004. The programme, which was laid down on 11 May 2004, is tight and there is virtually no room for play in it if the matter is to be ready for trial on 9 August. The suspension of the programme would necessitate the vacation of the fixture. The same portion of the matter was fixed for a trial to commence on 15 March 2004. On 3 March 2004 I vacated that fixture: Metropolitan Petar v Mitreski [2004] NSWSC 122 ("my March judgment"). 2 The application to vacate that fixture was made by reason of the plaintiffs amending the statement of claim to claim squarely as a breach of trust the use of funds of the trust to conduct the defence of the proceedings. The defendants' legal representatives had come to the belief that they could not continue to act with any confidence in their costs being met from the trust fund in the light of this allegation. The defendants desired to obtain judicial advice as to the propriety of the use of the funds. As I indicated in my March judgment I found the situation a difficult one. However, I expressed the view that the proceedings were difficult, complicated and technical and that the possibility of the defendants having to conduct the proceedings without legal representation involved the possibility of injustice to the defendants: see my March judgment [4] and [6]. 3 After the vacation of the fixture, the defendants made an application to the Court for judicial advice under s 63 of the Trustee Act 1925 ("the TA"). That application was heard by Palmer J on 6 May 2004 and his Honour delivered judgment on 7 May 2004: Application of Macedonian Orthodox Community Church of St Petka Incorporated [2004] NSWSC 388. It is not necessary for me to canvas in detail the reasons for which Palmer J gave the advice that he did. His Honour did accept that, without recourse to the trust property, the sixth defendant would be without means of conducting its defence in these proceedings. He also accepted (see [19]) that it was certainly possible that the resolution of the outstanding allegations as to breaches of trust might require far more precise identification of the terms of the trust than I had been asked to make for the purpose of deciding the separate questions which were decided by my judgment of 4 April 2003: Metropolitan Petar v Mitreski [2003] NSWSC 262. His Honour advised that it was appropriate to use funds of the trust to continue to prepare these proceedings. His Honour placed two qualifications on that. One, which may be called the Megarry qualification, was the qualification that the directions were subject to, and might be revoked by an order by the trial Judge in the present proceedings or any direction or order made on further consideration of the summons for judicial advice. The other qualification was that the use of the funds justified by the advice was only use up to and including 9 July 2004, which his Honour took, in effect, to be the end of the interlocutory programme necessary for preparing the matter for trial in August 2004. 4 His Honour commented that the reason for the limitation in time was that the defendants had not yet obtained an advice of counsel as to their prospects of success in defending the proceedings. His Honour did accept that there were reasons why that had not been able to be done up till that time, and obviously contemplated that such an advice should be available before his Honour considered, after 9 July 2004, whether the advice that the expenditure was justified should be treated as continuing beyond that date. 5 His Honour was asked on 7 May 2004 to stay his orders or directions giving the advice, but declined to do so. The defendants' advisers continued after that time to prepare the matter, although they did not file the defence in accordance with adjustments to the timetable that I made on 11 May 2004 after Palmer J's judgment had been delivered. However, the situation was radically changed yesterday when the defendants' solicitors were informed formally for the first time that it is the plaintiffs' intention to appeal from Palmer J's judgment. The appeal intended to be brought is an appeal as of right. Part 70 r 6 of the Supreme Court Rules 1970 provides for an appeal to the Court of Appeal from advice under s 63 of the TA. It seems clear enough from the terms of that rule, that the right of appeal is absolute and not subject to leave of the Court of Appeal. It may be inferred from s 63(11) of the TA that a person affected by the advice as well as the trustee has a right of appeal, although the terms of that section are perhaps not as clear as the terms of Part 70 r 6. In any event, the plaintiffs claim that they have an appeal as of right to the Court of Appeal which they seek to exercise. It is not for a Judge of this court sitting in a Division, but rather for the Court of Appeal, to determine whether the appeal is or is not an appeal as of right. 6 Mr Blake, of Senior Counsel for the defendants, puts to me today that, in effect, the announcement of this intention to appeal takes the matter back to the situation as I faced it when I delivered my March judgment. He submits that, if the Court were to refuse an adjournment by refusing to vacate the August fixture, this would, in effect, terminate the proceedings, bringing the matter within the principle enunciated in Sarli v SPC Limited (1993) 67 ALJR 841 at 843: see also Frugtniet v State Bank of New South Wales [1999] NSWCA 458 and Spencer v VMD Packaging Pty Limited [2001] NSWCA 118. If this be thought to put the matter too high, he submits that, bearing in mind the very difficult theological and construction issues outstanding in this case, it would be virtually impossible for the defendants without legal representation to defend the proceedings in a practical sense and that this would cause serious injustice because they would be unable to secure a fair trial of the issues. He says there needs to be a trial fair to both parties. 7 Mr T G R Parker, of counsel for the plaintiffs, has made the primary submission that the application should be refused. He has said the fact that the sixth defendant has no money to defend the proceedings is not a valid ground for an adjournment. He controverts that the refusal of the application would, as a practical matter, terminate the proceedings. He has said nothing is different now from what it was on 7 May, because of the possibility of revocation built into Palmer J's orders made that day and because an appeal has been on the cards since that time. 8 It may be that to speak of the lack of legal representation of the defendants as practically terminating the proceedings puts the matter too high. However, I adhere to the view I expressed in [6] of my March judgment of the great difficulty of the defendants conducting the proceedings in any realistic way in the absence of legal representation, a view apparently shared by Palmer J as set out above. If, of course, there is no hope of defendants having any representation, then cases simply must be tried with the defendants appearing in person. But this is a case returned to the situation that I faced on 3 March, where the defendants are at this time without an assurance of representation, but still have a possibility of representation. Indeed, that possibility at the moment stands enlarged, because, unless and until overturned by the Court of Appeal, there is now the expressed view of a Judge of this Court that there is justification for funds of the trust to be used for preparation of the case with the potentiality of that advice being enlarged to cover the conduct of the trial, dependent upon the obtaining of and presentation to the Court of further advice. 9 Mr Parker has also made the complaint that as yet there is no assurance of there being a properly arguable defence, because the further advice is absent. But I have already observed that this timetable is acknowledged by all to be extremely tight and, since the tools have been picked up again, the defendants have been attempting to meet their timetable obligations. Although they did not file a defence yesterday, the evidence is that they were close to doing so when the plaintiffs' intention to appeal was communicated. 10 I also take the view that that firmly announced intention to appeal is considerably different in quality from the announcement of a possibility of an appeal and from an application for a stay of proceedings immediately upon the delivery of Palmer J's judgment. In my view, it is in a sense a natural and probable consequence of that firm announcement that the defendants' lawyers should again feel unable to keep working. Perhaps more importantly, the sixth defendant itself is not willing to continue without the assurance of judicial advice, where it is being alleged that its very continuance in defending the proceedings or undertaking to pay lawyers for their work should themselves be regarded as breaches of trust on its part. 11 In general terms, applications for adjournment should not be refused unless justice can be done in no other way. The balancing exercise I now have to do is not dissimilar from that which I had to do on 3 March. I adverted then to long delays in the conduct of these proceedings initially on the plaintiffs' part. The proceedings were commenced in 1997 and, until there was a change of counsel in 2001, went virtually nowhere, something that was certainly at that stage not at the defendants' door. Whilst it would be very desirable from a lot of points of view for these proceedings to be finalised, it is difficult to see that the inconvenience of a further delay occasioned by the plaintiffs' decision to appeal Palmer J's decision is not outweighed by the fear of injustice to defendants who cannot at the moment employ legal representation, but who may be able to do so if Palmer J's decision is confirmed. In those circumstances I am of the view that the application should be acceded to and that I should suspend the programme of preparations for the trial and vacate the fixture of the matter for trial commencing on 9 August 2004 before me. 12 It was submitted by Mr Parker that, if I were to do that, it should be on condition that the defendants at least be directed to complete their defence and their discovery. But I do not think that that is so. There is little sense in the defendants in person trying to complete a pleading largely, but not completely, settled by senior counsel, or by engaging in the process of discovery with all its complications. It was also suggested that a condition should be imposed as to the payment of costs of various matters, including the costs of the application of 3 March 2004 and of this application. But, in my view, the appropriate course is for the costs of this application to be reserved. 13 The orders I make are: (1) Suspend the operation of the directions made on 23 March 2004 as varied on 11 May 2004. (2) Vacate fixture of the matter for trial before me to commence on 9 August 2004. (3) Matter stood over to 10 August 2004 at 9.30 am before me for directions. (4) Liberty to restore on 12 hours' notice. (5) Costs of application reserved.

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