Post-incorporation property
51Following incorporation, further and replacement Holy Objects and Ancillary Property were acquired by the Association, and further Funds were received by it. The Association also acquired three further Investment Properties: Unit 6, in June 1992; Unit 7, in March 2002; and Unit 4, in April 2003.
52The trust status of this property ("the Post-incorporation Property") was not determined by Hamilton J. Indeed, the defendants emphasise his Honour's conclusion (at [102]) that he was unable on the then evidence to answer the question as to the trust status of the non-Schedule A property, and submit that the plaintiffs bear the onus of establishing, by evidence additional to that before Hamilton J, that there was an intention that property acquired post-incorporation be held on charitable trust (said to be inconsistent with some of the terms of its constitution) by the Association, or some reason in law why it should be so held. However, I am unable to read his Honour's conclusion as determining any issue as to the status of the non-Schedule A property, or indeed as anything more than a statement to the effect that at that stage, in the context of a preliminary hearing which was not required to resolve all issues, the evidence was insufficient to enable a conclusion one way or the other. In particular, I do not read it as a determination that (as the evidence was insufficient to establish otherwise) it was not trust property, nor as in any way telling more against than in favour of a conclusion that the non-Schedule A property was held on the same trust as the Schedule A property. It simply left the question open, for later resolution.
53The plaintiffs contend that the Post-incorporation Property is trust property. The defendants say that it is property of the Association for its own benefit in accordance with its constitution. Elaborate submissions were made in respect of the impact of the Associations Incorporation Act (in both the 1984 and 2009 versions) on the contention that the Association acquired property on trust; in particular, it was said that to hold property on terms of the trust declared by Hamilton J would be inconsistent with the Association's constitution and thus contrary to the legislation. However, I can see nothing in the legislation, or the constitution of the Association, that precludes it from acquiring or holding property on trust. Insofar as its constitution prescribes how the Association will deal with its property, that is to be construed as a reference to its beneficial property, not property that it holds as a trustee. I do not accept that the legislation gives paramountcy to the Association's constitution over the terms of any trust affecting property that it might acquire. In particular, clause 26 of the Association's constitution does not mean that the Association cannot receive and hold property upon trust, nor that property previously held upon trust by the trustees of the predecessor unincorporated association vested absolutely and free of any trust in the incorporated association upon incorporation.
54The defendants submitted, correctly, that there was no suggestion at the time of the acquisition of the Post-incorporation Property that the directing minds of the Association believed that there was any such trust as has been declared, and that in those circumstances the requisite intent to establish a trust in respect of such property could not be established. However, the absence of subjective belief that there was such a trust, if accepted, does not preclude a conclusion that the property upon acquisition became trust property, if for example it was acquired with funds sourced in trust property, or it was acquired for the purposes of the trust.
55It is also correct, as the defendants submit, that after the incorporation of the Association, one matter that told in favour of the pre-incorporation property being held in trust no longer operated, namely the legal difficulties then inherent in gifts to unincorporated associations. However, while mentioned by Hamilton J (at [63]), this did not loom large in his Honour's judgment, which in this respect depended primarily on ascertaining the settlor's intention from the terms of the trust deed and the circumstances surrounding the acquisition of the church land, and then on attribution to the settlors of the same intention in respect of the other Schedule A property. And contrary to the defendants' submissions, there are sound reasons why the express trust established by and pursuant to the 1977 deed should extend to property acquired later by a different legal entity, namely the incorporated Association, including first, that the Association is the successor of the Trustees; secondly, that the pre-incorporation trust property vested in it upon incorporation; and thirdly, that there was thereafter no segregation between trust and non-trust assets, income, expenditure, and activities. In those circumstances, at the very least the defendants bore the onus of showing what of its property was not attributable to the trust, which they did not essay to do - with one exception to which I shall come.
56Association Funds . Although a full set of the Association's accounts is not available, there does not appear to have been any change in the manner in which the parish's finances were managed after its incorporation. Servicing of the loans obtained to acquire properties was taken over by the Association. There was no apparent change in the sourcing and collection of funds: Church Donations, income from the Investment Properties and income from the Child Care Centre continued to be received, and appear to have been applied as they were before incorporation. Post-incorporation assets, and the income derived from them, do not appear to have been segregated or treated differently in any way from the pre-incorporation assets.
57When, in 1997, the faction opposed to the Bishop came into control of the Association, it kept the church open and services according to Macedonian Orthodox Church liturgy were celebrated there, at first by Fr Dzeparovski and then by Fr Despotoski. In 2001, these moved to the adjacent church hall, while the Church itself was renovated. Fr Despotoski's services appear to have ceased when Hamilton J granted an injunction in July 2003, but further (unauthorised) Orthodox Christmas services were conducted in January 2004. In March 2004, Hamilton J granted an injunction restraining the conduct by the Association of any services at St Petka, and income from collections in church services presumably substantially ceased from this point. However, the Association continued to open the church, at least from time to time, and to collect moneys donated for candles and other icons when this happened.
58Even if some parishioners of St Petka were conscious, in making Church Donations, that the Association had become a corporate entity, this was no more than the uncommunicated subjective intention of a handful of parishioners, and does not prove the objectively ascertained intentions that informed the bulk of the Church Donations. And even if the Church Donations were, at law, gifts to the Association, equity would not permit the Association to assert its legal ownership free of any trust obligation where it received such gifts as a result of its status as trustee or as a result of its use of the trust property. In my view, this was clearly the case here. The church, and the icons and other Holy Objects in it, were used to solicit the Church Donations, while the Association purported to be carrying out its obligations under the trust to operate the church as a parish church of the Macedonian Orthodox Church. The Church Donations would never have come into the Association's hands otherwise. Accordingly, their proceeds are trust property.
59A similar analysis applies to donations other than Church Donations (that is, donations made directly to the Association by will, or by gift inter vivos , including, for example, government grants shown in the accounts). Although such gifts may not have been solicited through the church, they were received by the Association because of its position as the entity that owned the church and administered the affairs of the parish; that is to say, because of its role as trustee.
60The Association also continued to operate, and derive income from, the Child Care Centre, and to receive income from the Investment Properties (both pre-incorporation and, as they were purchased, post-incorporation as well). Income from the Child Care Centre and the pre-incorporation Investment Properties flowed from the ownership of trust property and is impressed with the same trust: a trustee is not allowed to profit personally from his status as trustee or from the use (authorised or not) of trust property [ Jacobs on Trusts (7 th edition, 2006), [1742]; Paul A Davies (Australia) Pty Limited v Davies [1983] 1 NSWLR 440].
61This suffices to establish that the Parish Funds were substantially comprised of trust moneys. Once that conclusion is reached, the trustee will not be permitted to say, as against the interests of the trust, that it breached its obligations as trustee, one of which is an obligation not to mix trust funds with the trustee's personal funds. So far as can be ascertained, neither after the change in control of the Association in 1997, nor even after Hamilton J's decision in April 2003, was there any segregation of pre-incorporation assets or the income derived from them. Even if the Association were permitted to assert that other moneys in its accounts were its own personal property, at the least the onus falls upon the Association to make good such an assertion and to prove what component represents its personal funds.
62Litigation Funds . The Association has contended - through an affidavit of Mr Kotevich - that certain donations made to it from about May 2004 were made specifically for the purpose of assisting it with the costs of these and related proceedings. The evidence relating to these so-called "litigation funds" is less than satisfactory, as it does not disclose in any admissible way the circumstances in which they were raised, and there is no evidence that they were segregated from the trust property. The Association would only be justified in treating a donation received by it as not being trust property if the donation were solicited otherwise than as trustee and without the use of any of the existing trust property - including the church, the Holy Objects and the Child Care Centre. That is unlikely to be so in respect of much of the "litigation funds"; for example, it appears from Mr Kotevich's affidavit that he has classified Church Donations received after December 2006 as "litigation funds".
63Holy Objects and Ancillary Property . The same conclusions follow in respect of post-incorporation Holy Objects and Ancillary Property. To the extent that they were acquired out of Association Funds, they are impressed with the trust that attached to the funds applied to their acquisition. To the extent that any Holy Objects or Ancillary Property were acquired by donation, the conclusions set out above with respect to donations of money apply: Holy Objects at least were self-evidently donated for religious purposes because of the role of the Association in furthering the religion of the Macedonian Orthodox Church.
64Investment Properties . Units 7 and 4 were acquired, in 2002 and 2003 respectively, after incorporation of the Association, with deposits, apparently sourced from Association Funds. It is probable that the same was so for the earlier acquisition of unit 6 in 1992. The balance of the purchase moneys for Units 7 and 4 was sourced in funds borrowed for that purpose from the National Australia Bank, and again it is probable that the same was so for the earlier acquisition of unit 6. All three units have since been sold.
65There are many bases for concluding that, notwithstanding that the then directing minds of the Association may not have believed that there was any such trust as has since been declared, these properties upon acquisition became trust property. One is that these units were in the same building as the pre-incorporation investment units, and were acquired as part of a long-term plan to acquire all of the units in the building and then convert it to strata title, presumably in the hope of increasing its value as a result. As trustee in respect of the pre-incorporation units, the Association was bound to use the opportunity of acquiring the later units, if at all, in its capacity as trustee for the benefit of the trust. It is beside the point that under its constitution the Association's purposes were substantially if not wholly charitable, if they were not the purposes of the trust. For example, if a professional trustee company were the trustee of several charitable trusts, and it used the trust property of one to acquire property upon trust for another of them, the property would nonetheless be held upon constructive trust for the first charity. A second is that the loans were secured, not only on the newly purchased units, but also on the existing (pre-incorporation) units, representing a use of trust property. Related to that is that the borrowings were supported by the availability of ongoing income (including Church Donations and income from the pre-incorporation Investment Units and the Child Care Centre). This is not irrelevant: while it is correct that whether land is subject to a trust is assessed at the time of acquisition, the circumstance that at that time it was intended that trust assets and/or income be used to service loan repayments informs a judgment that it was intended to be held on those trusts. In these circumstances, the proceeds of the loans, and the properties into which they can be traced, are trust property [ Paul A Davies (Australia) Pty Limited v Davies, 448B, 451, 457]. A third is that the Association did not maintain any segregation of trust and non-trust assets, but treated all as held on the same basis and for the same purposes. This manifests an intention that the post-incorporation units be held on the same basis and for the same purpose as the Schedule A property.
Conclusion
66The characterisation of the non-Schedule A property depends on the Association (and its unincorporated predecessor) receiving it in the capacity of, or because of its status as, a trustee. Before 1993, there was no corporation, and the legal owner was a number of individuals - the Trustees - expressly as trustees. As at 1993, bank accounts were held in names of the Trustees; it could not have been for themselves, and it could not have been for a trust different from that applicable to the Church land. Until 1993, all property was held on the same trust. Later, when the older (trust) properties were used as security for borrowings to acquire the newer properties, and income was generated from use of trust properties, and where there was no segregation of pre- and post-incorporation funds, with all being deposited into general bank accounts, so that all were mixed, there is no basis for supposing that they were held on different bases, and all should be regarded as an accretion to the single pool of trust property. While it is not impossible that accretions to a charitable trust can be held on narrower terms than the original corpus, as in Attorney-General for the State of Queensland; ex rel Nye and Others v The Corporation of the Lesser Chapter of the Cathedral Church of Brisbane and Another (1977) 136 CLR 353, that was in circumstances where the accretion was sourced in donations and intent of the donors that their gifts be for a particular narrower purpose was plain, a situation far removed from accretions arising from the use of extant trust property.
67Accordingly, the whole of the Association's assets acquired up to May 2004 were and are trust property, as also are its assets acquired since then, except to the extent that the Association demonstrates that identifiable moneys held by it were donated for the purpose of funding the litigation. As expenditure on costs of litigation has exceeded, by a very substantial margin, moneys received from such donations, it is improbable that any remaining property of the Association represents these donations.
68My reasoning supports the conclusion that, if the Court of Appeal were to uphold the plaintiffs' appeal from Hamilton J's judgment, to the effect that the trust was not as declared by Hamilton J for use of the property by the Association, but rather for religious purposes of the Macedonian Orthodox Religion or the Macedonian Orthodox Church in more general terms, the non-Schedule A property would still be held on the terms of any trust that applied to the Schedule A property.