Metropolitan Petar v Mitreski

Supreme Court of NSW|2005-03-31|Before: Hamilton J

CITATION : Metropolitan Petar v Mitreski [2005] NSWSC 330

HEARING DATE(S) : 28 February, 14 and 31 March 2005

DECISION : Further amendment of statement of claim in part refused and in part allowed. Insofar as leave to maintain the proceedings after this amendment is necessary, leave is granted under s 6 of the Charitable Trusts Act 1993.

LEGISLATION CITED : Charitable Trusts Act 1993 s 6

AG v Pearson (1835) 7 Sim 290 AG v Shore (1836) 7 Sim 309n Guazzini v Pateson (1918) 18 SR (NSW) 275 Horton v Jones (No 2) (1939) 39 SR (NSW) 305 Hunter v Hunter [1938] NZLR 520 Letterstedt v Broers (1884) 9 App Cas 371 Metropolitan Petar v Mitreski [2001] NSWSC 976 Metropolitan Petar v Mitreski [2001] NSWSC 994 Metropolitan Petar v Mitreski [2003] NSWSC 262 Metropolitan Petar v Mitreski [2003] NSWSC 1089 CASES CITED : Miller v Cameron (1936) 54 CLR 572 Officer v Haynes (1877) 3 VLR Eq 115 Porteous v Rinehart (1998) 19 WAR 495 Titterton v Oates (1998) 143 FLR 467 Ford & Lee, "Principles of the Law of Trusts" (3rd ed, 1996) [8370] Lewin on Trusts (17th ed 2000) par 13-44 Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 466 - 467 IVA Scott on Trusts (4th ed, 1989) par 387 Story's Equity Jurisprudence s 1289 Tudor on Charities (9th ed, 2003) par 5-037

His Grace Metropolitan Petar, the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (P1) The Very Reverend Father Mitko Mitrev (P2) Lambe Mitreski (D1) Pero Damceski (D2) Boris Minovski (D3) PARTIES : Eftim Eftimov (D4) Mile Marcevski (D5) Macedonian Orthodox Community Church St Petka Incorporated (D6) Naum Despotovski (D8) Attorney General for State of NSW (D9)

T G R Parker and R E Steele (Ps) COUNSEL : G O Blake SC (D1 - 6 & D8) V Colaluce (Solicitor) (D9)

Sachs Gerace Lawyers (Ps) McConnell Jaffray (D1 - 6 & 8) SOLICITORS : I V Knight, Crown Solicitor (D9)

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

1 HIS HONOUR: This is an application for leave by the plaintiffs to file a sixth amended statement of claim. The application is made in the following context. There has already been one trial in these proceedings in relation to questions ordered to be decided separately. Those questions were as follows (Metropolitan Petar v Mitreski [2003] NSWSC 262 ("my substantive judgment") at [47]): "(a) Whether the property referred to in Schedule A and any other property referred to in paragraph 11 of the Further Amended Statement of Claim ("the Property") was, prior to it being vested in the Sixth Defendant, held upon any and if so what trust, (i) for the purposes of the Macedonian Orthodox Church (as that term is defined in the Further Amended Statement of Claim); (ii) for some other purpose or beneficiary,. And [sic] if so what purpose or beneficiary. (b) Whether any trust found under (a) above is a valid charity. (c) Whether effect of the vesting of the Property in the Sixth Defendant was that the Sixth Defendant thereafter held the Property free of either trust.'" 2 In the judgment delivered after that trial I answered those questions as follows (see my substantive judgment at [102]): "(a)(i) & (ii) The property referred to in Schedule A was prior to the transfer of the legal titles to the sixth defendant held upon trust to permit the trust property to be used by The Macedonian Orthodox Church St Petka Rockdale as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion. I am unable on the evidence to answer the question as to other property. (b) Yes. (c) No. " 3 I determined the form of declarations to be made as a result of these answers as follows, although those orders have not finally been made, to the intent that there should ultimately be only one set of orders and, consequently, one substantive appeal (Metropolitan Petar v Mitreski [2003] NSWSC 1089 at [3]): "The orders that I propose to make are as follows:

1 Declare that the property referred to in Schedule A hereto ("the trust property") was prior to the transfer of the legal titles to the sixth defendant held upon charitable trust to permit the trust property to be used by the Macedonian Orthodox Church St Petka Rockdale NSW Australia as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement practice and promotion of the Macedonian Orthodox Religion ('the trust').

2 Declare that in accordance with the terms of the trust and in the events which have happened the trustee is bound to permit the sixth defendant to use the trust property as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement practice and promotion of the Macedonian Orthodox Religion." 4 Subsequently there was an application to strike out a portion of the fifth amended statement of claim dealing with the subject matter of the proposed second trial. I delivered a judgment in which I struck out a portion of the fifth amended statement of claim, being pars 22 to 30, with leave to replead: Metropolitan Petar v Mitreski [2005] NSWSC 22. The basis on which pars 22 to 30 were struck out was that they did not plead in a consistent and orderly way all matters to be relied on at the second trial as justifying the removal of the sixth defendant as trustee. The present application follows on from that judgment. 5 The plaintiffs bring forward a sixth amended statement of claim pursuant to that leave. But they also seek amendment of portions of the statement of claim not struck out and of which leave to replead was not granted, eg, the insertion of par 4A and part of the amendment of par 7. More importantly, these amendments relate, not to the subject matter of the second trial, but to subject matter already dealt with in the first trial. To the extent that they are consistent with the way in which that trial was conducted and the decision in it, that is not a problem. But to the extent that that is not so, a problem arises. 6 The trust, as it was alleged at the time of the first trial (in the further amended statement of claim filed on 14 December 2001), was a trust arising from the written declaration in the document of 8 March 1977 and taking effect from the acquisition of the first piece of real estate on 5 April 1977 (further amended statement of claim pars 5 to 7). It was a trust arising in that fashion and in only slightly different terms that I have decided existed and exists: see my substantive judgment [102]. It is true that the further amended statement of claim alleged in par 4 the previous collection of funds. But no trust arising at that stage was pleaded as material to these proceedings. Now, the plaintiffs seek, by insertion of a par 4A and an amendment to par 7, to allege a trust earlier and different in its terms, arising at the time of the collection of funds and persisting to this day. This is not within the leave to replead granted. It is made years later, after a lengthy trial and judgment on the issues of the subsistence and terms of the trust, presumably with a view to being agitated on appeal. No explanation is given as to why it is raised now and was not raised earlier. In accordance with the principles as to the finality of litigation, this amendment will not be allowed. I should say that, quite independently of this reason, it seems to me that the amendment would be futile and should be refused on that ground: Horton v Jones (No 2) (1939) 39 SR (NSW) 305. It seems to me that any earlier trust must have been subsumed into and superseded by the subsequent trust formally declared and attaching to the real estate into which were poured the funds collected and to which the earlier trust was said to attach. 7 The other area of controversy is whether pars 33 and 34 as now propounded should be allowed. These are within the leave to replead which was granted. As originally brought forward, they were subject to the objection that a large number of facts were alleged in particulars which should by their nature have been pleaded in the substantive provisions of the pleading. This has been remedied in a new form of pleading now propounded. Objection is still taken that these allegations are not adequately pleaded or particularised. 8 By the conduct pleaded in par 33, the sixth defendant is alleged in par 34 "to have deliberately and openly disregarded" specific provisions of Church law. The conduct is not alleged to constitute a breach or breaches of trust. But it is put in subsequent provisions of the pleading as constituting one or part of the grounds on which the trustee should be removed. Somewhere there has been a suggestion that the only remaining issue in these proceedings is as to whether and how the trust found to subsist applies to assets of the sixth defendant other than real estate. But this is not correct. There are serious issues as to whether various actions alleged do in fact constitute breaches of trust. Further, to any extent that they do, there are issues as to whether any breaches of trust established justify the removal of the trustee or whether the removal of the trustee is otherwise justified. 9 This application must be viewed against the law relating to the removal of trustees. The locus classicus is the statement in Story's Equity Jurisprudence s 1289: "But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not, indeed, every mistake or neglect of duty or inaccuracy of conduct of trustees which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property, or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity."

This passage has been cited with approval in the Privy Council in Letterstedt v Broers (1884) 9 App Cas 371 at 385 - 386; in this Court by Street CJ in Eq in Guazzini v Pateson (1918) 18 SR (NSW) 275 at 292; and in other cases. 10 In Miller v Cameron (1936) 54 CLR 572 at 580 - 581, Dixon J said: "The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised. But in a case where enough appears to authorize the Court to act, the delicate question whether it should act and proceed to remove the trustee is one upon which the decision of a primary Judge is entitled to especial weight."

See also Porteous v Rinehart (1998) 19 WAR 495 and Titterton v Oates (1998) 143 FLR 467; and see generally Ford & Lee, "Principles of the Law of Trusts" (3rd ed, 1996) [8370]; Lewin on Trusts (17th ed 2000) par 13-44. 11 The principles which may be derived from the authorities include the following: (1) The court has a wide discretion to remove or not to remove a trustee. (2) The overriding considerations are the interests of the beneficiaries, the security of the trust property and the efficient and satisfactory execution of the trust, including the faithful and sound exercise of the trustee's powers. (3) A trustee will generally be removed for wilful breach of trust. (4) A trustee may be removed where there has been displayed an antagonism or hostility towards the trust or a beneficiary: Officer v Haynes (1877) 3 VLR Eq 115; Hunter v Hunter [1938] NZLR 520. 12 Relevant textbooks discuss the application of these principles in the case of charitable trusts: See Tudor on Charities (9th ed, 2003) par 5-037; Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 466 - 467. In IVA Scott on Trusts (4th ed, 1989) it is stated at par 387: "A trustee of a charitable trust may be removed as trustee for the same reasons for which a trustee of a private trust may be removed. Thus he may be removed for serious breaches of trust, for unfitness, for long-continued absence and the like. He can also be removed where his views are hostile to the purposes of the trust, as in the case of a religious trust where he ceases to hold religious views that it is the purpose of the trust to promote."

The cases generally cited concerning hostility to the purposes of charitable trusts include AG v Pearson (1835) 7 Sim 290 and AG v Shore (1836) 7 Sim 309n. On these principles it seems to me that the material alleged in the proposed pars 33 and 34 is material in the proceedings and, subject to what follows, ought to be allowed. 13 As I have said, complaints were made about the form of these paragraphs in relation to their adequacy and particularisation. Specifically, it was said that it was not made plain what the relevant provisions of Church law were and that it did not appear on the face of the allegations that Church law had been breached. 14 I do not think that it is appropriate to determine these matters on this application. The plaintiffs have chosen to cast their allegations in terms of breach of Church law. Those allegations may be established or not established at the trial. Insofar as there is inadequate particularisation, that may be dealt with so far as necessary by the requesting of particulars. For the foregoing reasons, I am of the view that the most recently proposed pars 33 and 34 should be allowed to be included in the sixth amended statement of claim. 15 The plaintiffs should therefore bring forward for filing a further draft of the sixth amended statement of claim which omits par 4A, the amendments to par 7 so far as they relate to the proposed par 4A, and any consequential material, but may include pars 33 and 34 as now propounded. …oOo… 16 After I delivered the foregoing reasons, some further debate took place before me as to whether any further leave is necessary under the Charitable Trusts Act 1993 ("the CTA") s 6(1)(b) in respect of the amendments as I have allowed them. Leave under s 6(1)(b) was originally granted on 6 November 2001: see Metropolitan Petar v Mitreski [2001] NSWSC 976; Metropolitan Petar v Mitreski [2001] NSWSC 994. In dealing with the application for further leave, it should be made plain that, whilst I have refused to allow the proposed par 4A to be inserted in the sixth amended statement of claim, together with an amendment of par 7 consequential upon that, there is in the sixth amended statement of claim as allowed to be filed some amendment as to the form of charitable trust originally alleged by the plaintiffs. 17 This amendment was not opposed by the other parties and accords with the approach I took in [5] above, in that it is consistent with the way that the trial was conducted and within the decision which was come to. However, as it differs from the charitable trust as it was pleaded at the time that leave was originally granted under s 6(1)(b) of the CTA, Mr Blake, of Senior Counsel for the defendants, raises the question as to whether further leave is necessary. The Attorney General has already submitted in writing that further leave would not have been necessary, even if I had allowed the insertion of par 4A in the sixth amended statement of claim and the propounding of a different and earlier trust from that with respect to which the first trial was conducted. 18 Whether further leave is necessary is a somewhat nice question. As there is no dispute among the parties as to the course which the matter should hereafter follow, I do not think it appropriate to take up time and effort deciding it at this stage. I think the situation should be resolved in the following way, and none of the parties objects to my taking this course. Insofar as leave to maintain the proceedings after the filing of the sixth amended statement of claim is necessary under the provisions of s 6 of the Charitable Trusts Act 1993, that leave is granted. 19 Mr Blake has put to me a submission that costs should not be reserved but should be dealt with at once. However I do not propose to accede to that submission. The costs of the application will be reserved. **********

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