Moala v Free Wesleyan Church of Tonga in Australia

Issue 1, the membership rule: Who are the members of the defendant Association?

My conclusion was that the Fellowship's membership rule required at least 3 months active participation in the Fellowship's activities by baptised persons, as demonstrated by the actions of regular attendance at church services and allocation to, and regular attendance at, class group meetings.

Issue 2, cessation: Which of the plaintiffs who were members of the Association had ceased to be members because they have left congregations or ceased their involvement with it or did not reply to the Secretary's letter of 27 July 2015 by stating that they wished to remain a member of the Association?

I found that, of the paragraph 10 admitted founding members, the eleventh, twelfth, fifteenth, sixteenth, twenty-first and twenty-seventh plaintiffs ceased to be members and that of the paragraph 12 disputed foundation members the ninth, tenth, thirteenth, twenty-second, twenty-third, twenty-fourth, twenty-eighth, twenty-ninth and thirtieth plaintiffs ceased to be members.

Issue 3, the 2015 amendments: Were the 2015 rules validly adopted, and if not, do the 1991 rules continue to apply?

I found that the 2015 rules were not validly adopted. My provisional view was that the Association's 1991, as modified by the new Model Rules applied.

Issue 4, estoppel: is the Association estopped from denying the membership of six persons, being the first, third, fourth, sixth, seventh and twenty-sixth plaintiffs ('the estoppel plaintiffs') who contended that the Association is estopped from denying that they became members after its incorporation on 3 March 1991?

I found that no, in this case estoppel could not operate to prevent the defendant from denying the membership of the estoppel plaintiffs. However, I found that the twenty-sixth plaintiff, Mr Halahala, was a foundation member.

2 By the end of the trial it was common ground between the parties that no person became a member of the Association by following the requirements of its 1991 Rules, and that therefore no one became a member of the Association between 3 March 1991 and 18 July 2015.

3 After the judgment of 29 March 2019, I ordered a process to be followed for the parties to decide claims for membership under the membership rule that I had identified. On 16 August 2019, I decided an issue about the position of persons who were children at the time the Association was incorporated.[2] Eventually, the parties were able to resolve whether claimants for membership satisfied the membership rule and further scheduled hearings were not needed. The parties agreed that a costs order made on 12 September 2019 should be vacated and that each party was to bear their own costs of this proceeding from 18 April 2019 'to the date of these orders' i.e. 9 October 2019.

4 However, there remain the costs of the earlier part of the proceeding, which was argued on 15 and 17 April 2019 and in subsequent written submissions. This judgment deals with those costs.

5 To give some context to this judgment, I will first refer to the evidence led at the trial and the pleadings when the proceeding was first transferred to this Court.

6 The witness Mr V Tautalanoa was the first secretary of the Fellowship and described its formation and growth. He described the adoption of the Constitution and that no membership registry book was kept. He gave evidence that there was no requirement for a person to have attained the status of Lotu Fehu'i in order to be a member of the Fellowship. The plaintiffs' second witness, Ms A Grima, the first Treasurer of the Fellowship, gave similar evidence, as did the third witness, Mr P Ofamo'oni.

7 Other witnesses called as part of the plaintiffs' case gave evidence about their role in the Church and their contributions to it. They included: Mr T Kafoika, Mr T Vea, Mrs V Tautalanoa, Mr S Halahala, Mr S Taunislia, Ms T Kalu and Ms C Moala. Ms Moala, the first plaintiff, gave extensive about how the Melbourne congregations of the Church held meetings,[3] about her understanding of how she became a member of the Fellowship,[4] and about the 2015 meeting, including the delivery of proxy forms.

8 The defendant's witnesses included the current Minister, Reverend S Tu'Akoi. He gave evidence about the Church in Tonga, the rules of the Church, how a person became a member of the Church, the modelling of the Sydney and Melbourne Churches on the Tongan Church, the nature of class groups in the Melbourne Church and about Church meetings and who could participate and vote at them. He also gave evidence about particular plaintiffs who he said had left the Church.

9 Ms L Beeson gave evidence of how she become a member of the Fellowship and later of the Association, about the need to be a Lotu Fehu'i to be a member and about particular plaintiffs who had left the Association.

10 Mr S Finau gave evidence about the establishment of, and practices in, the Sydney Association. Mr M Taufa gave evidence about the Tongan Church, included how persons became a Lotu Fehu'i, her involvement in the Melbourne Fellowship, becoming Lotu Fehu'i in the Melbourne Church, the incorporation of the Church as an Association and how she came to leave it.

11 Mr R Wall gave evidence about the practices of the Church after it became an incorporated Association, about its rules and about the meeting of 18 July 2015.

12 Ms S Palivi gave evidence about how persons became members of the Tongan Sydney Churches, her involvement with the Melbourne Fellowship, the incorporation of the Church and her membership of the Association, the requirement that a person must be a Lotu Fehu'i to be a member and the practice of Misinale.

13 Ms H Tu'Akoi gave evidence about the Secretary's letter of 17 July 2015, the meeting of 18 July 2015 and her membership of the Melbourne Church.

14 Mr F Langoia gave evidence about becoming a member of Tongan Church, in which he had been a Minister, and his involvement with the Melbourne Church.

15 This proceeding had been commenced in the Magistrates' Court, which has jurisdiction under the Act, but was transferred to the Supreme Court by consent orders on 2 September 2015. Obviously, the costs of the proceeding thereafter increased.

16 The original complaint filed in the Magistrates' Court on 19 November 2014 was brought by Christine Moala and other plaintiffs against the Church and others. It sought orders under s 67 of the Associations Incorporation Reform Act 2012 ('the 2012 Act') requiring the defendants[5] to: (a) compile a proper list of members in accordance with and which accorded with the list of members set out in schedule B of the complaint; and (b) call a meeting of members in accordance with that list of members.

17 The plaintiffs alleged that the actions of the then defendants in: (a) failing to keep the place of worship at Werribee open; (b) closing and locking out of members of the Church from the Werribee property; and (c) not compiling a proper list of members and giving those members notice of annual general meetings of the Church constituted oppressive conduct under s 68 of the Act. The plaintiffs sought declarations and injunctions restraining the Church from barring and excluding the members of the Church from attending the Werribee property. In an amended complaint they sought orders that the defendant association be wound up.

18 In the meantime, separate proceedings were commenced in this Court in 2014 by the Church against Peter Ofamo'oni seeking orders in respect of the Werribee Church property. In those proceedings, the Church undertook that it would not sell, deal with or otherwise dispose of the Werribee Church property until a nominated date and the defendant, Pita Ofamo'oni (the group representee), undertook that he would permit the plaintiff to inspect the property as to its state and condition upon 7 days written notice, which inspection would not unreasonably interfere with the operation of the property as a Church.

19 The plaintiffs' first statement of claim in this proceeding after its transfer to this Court, alleged that the plaintiffs each fell within clause 3 of the 1991 Rules, that the Church had no membership application form as required by the Act, had failed to maintain a register of the proper members, had locked out the plaintiffs from the Werribee Church, had not sent notice of an annual general meeting that was held on 18 July 2015, that the plaintiffs had been wrongly denied the opportunity to vote at the meeting and had been induced to believe that they were members of the Church. The plaintiffs pleaded that it would be unconscionable for the first defendant to deny their membership and that the sale of the Werribee Church property was ultra vires. They repeated allegations of oppressive conduct in breach of s 68 of the 2012 Act. Declarations and injunctions were sought as well as an alternative winding up order.

20 On 7 December 2015, the defendants proposed the following preliminary questions for determination:

(a) What were the legal requirements for membership of the Association in accordance with the relevant Associations Incorporation Acts and the Rules of the Association and the model Rules between 1991 and 17 July 2015.

(b) As a matter of law can the defendants be estopped from denying that persons who have not complied with legal requirements for membership of the Association are members of the Association?

21 The plaintiffs proposed the following as a preliminary question:

Who were the members of the Free Wesleyan Church of Tonga in Australia (Victoria) Inc reg No. A0022699W ('the Association') as at 1 July 2014?

22 In their defence to the further amended statement of claim, the defendants pleaded that from 4 March 1991, which was the date of incorporation, the Rules of the Church were governed by rules filed with the 'Registrar of Incorporations' established under s 39 of the Associations Incorporation Act 1981, supplemented where necessary by the model rules in force from time to time. They pleaded that clause 3 of the Rules did not define membership, but set out generally the criteria that a person had to meet to be eligible to be a member. They pleaded that the 1991 rules were silent as to the ways in which a person might cease to be a member, but that by application of the model rules, that occurred if the member died, resigned, or were expelled pursuant to the Association's rules.

23 Whilst admitting the Secretary was to maintain a register of members, they pleaded that they now did have a register of members but did not previously. They admitted that there was no pro forma application form for membership of the Church before 15 June 2015. They admitted that the Church sought to close the Werribee premises from about 11 October 2014 and sought injunctive relief barring unauthorised persons from entering the premises. They denied that the Church and/or defendants could be estopped from denying that persons who had not complied with the legal requirements for membership were members of the Association.

24 They pleaded that between the time of the Association's incorporation on 4 March 1991 and 18 July 2015, s 3 of the 1991 Rules contained the Association's membership requirements and rule.

25 The successful plaintiffs seek an order for their costs, either under s 67(4)(c) of the 2012 Act, the terms of which are set out below, or in the exercise of the Court's discretion as to costs. They argued that of the four principal issues decided by the judgment, three were resolved, or substantially resolved, in their favour. They succeeded on the Lotu Fehu'i argument, the invalidity of the resolutions passed at the meeting on 18 July 2015 and on whether particular individuals' memberships ceased upon their failure to respond to the Secretary's letter of 27 July 2015. They did not call any of the original founding members who were said to have left the Association, and the issue about cessation of membership occupied limited court time. Had the defendant succeeded in its contention that persons who did not reply to the secretary's letter as required ceased to be members and established the validity of the 18 July 2015 resolutions, then each plaintiff, including the original founding members, would have ceased to be members before they commenced this proceeding. In those circumstances, the conduct of the defendant and those acting on its behalf was unreasonable and improper, and they were responsible for the plaintiffs commencing this proceeding in the first place. Section 67(4)(c) of the 2012 Act therefore applied, and the defendant ought to pay the successful plaintiffs' costs of the proceeding. In addition, the defendant has had the benefit of costs orders made against the plaintiffs during the proceeding and, unlike those in control of the defendant, the plaintiffs are personally liable for any costs that they have to pay the defendant.

26 I stated in the principal judgment that the proceeding was adjourned on a number of occasions, principally because of issues with the plaintiffs' pleadings and decisions to allow them to file amended statements of claim.[6] I made some orders as to those costs and later in this judgment decide further costs issues about hearings that occurred after the mediation agreement of 10 March 2017.

27 The defendant sought orders that the plaintiffs, with the exception of the six successful foundation members and Mr Halahala, pay two thirds of its costs of the proceeding, including reserved costs. The defendant accepted that it should pay the six successful founding members' costs, subject to the rule of thumb which is discussed below, and submitted that there should be no order as to Mr Halahala's costs. It submitted that the award of costs should reflect the parties' success on the issues.

28 The defendant submitted that the Court should made a single order for costs. In Hughes v Western Australian Cricket Association (Inc),[7] Toohey J acknowledged that where a litigant succeeded on only a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. His Honour also stated:

It is relevant, but not conclusive, to consider how much time of the hearing was taken up with evidence and submissions relating to those issues on which the applicant failed. This is not an easy task because much of the evidence bore upon more than one cause of action. Counsel for the applicant did offer some dissection of time spent, by reference to the evidence of particular witnesses and to address and noted what he contended was the relatively little time taken up in addresses on those issues upon which the applicant failed.

29 Most of the plaintiffs were unsuccessful. Either they had ceased to be members having been foundation members or, as with five plaintiffs, claimed membership under the 1991 rules, although they had not applied for membership form as required by those rules.

30 So far as the time occupied at the trial with particular issues, the defendant contended that the estoppel claim, which it successfully opposed, occupied 30 per cent of trial time, the question of the 1991 rules and claims made under them another 30 per cent, the issue of admission and ceasing to be a member under the 2015 rules and the validity of the 2015 meeting another 30 per cent, and the issue of the validity of the secretary's letters of 27 July 2015 10 per cent.

31 I do not accept these estimates and consider that, in any event, they overlook the fundamental contribution to the litigation caused by the defendant's failure to maintain a register of members and membership application forms and in pursuing the Lotu Fehu'i argument.

32 I found that six of the paragraph 10 plaintiffs, being admitted founding members, ceased to be members prior to 1991 because they had left the Association. None of them gave evidence, rather they argued through the plaintiffs' counsel that they did not cease to be members through non-attendance, because the Association had never applied such a rule. For similar reasons, I found that nine of the paragraph 12 disputed founding members had ceased to be members.

33 The defendant submitted that it should not have to bear the costs of proving that particular plaintiffs were no longer members of the Association because they had ceased to be involved in the Church.

34 The defendant also pointed to the fact that the plaintiffs had only conceded that no one had become a member under the 1991 Rules on the penultimate day of the trial.

35 In respect of the unsuccessful plaintiffs' costs, the defendant referred to the Court of Appeal's discussion of the 'rule of thumb' approach to the award of costs in Chen v Chan[8], where it said that:

Where a number of parties have had the same representation, there is a 'rule of thumb' as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.

36 Professor Dal Pont wrote in The Law of Costs that:

The general rule assumes that a plaintiff has been successful against all defendants, and so can enforce a costs order against those defendants jointly or severely. But where the plaintiff does not succeed against each defendant, costs usually follow the event - the plaintiff pays the successful defendant's costs, but receives an order for costs incurred in suing the unsuccessful defendant. A defendant, it is reasoned, should not be required to pay more than one set of costs merely because he or she proves unsuccessful. As a 'rule of thumb' (and thus not an inflexible rule, but a guide to be applied according to the justice of each case), the partially successful plaintiff cannot look to each of the unsuccessful defendants for more than an equal proportionate share of the costs not solely referrable to his or her claim against one or other of the defendants individually, in addition to the costs that are so referrable.

The position is arguably different where multiple plaintiffs sue by the one lawyer, and not all succeed. In this case, a successful plaintiff may recover all his or her costs from the defendant, whereas unsuccessful plaintiffs must pay the defendant's costs as occasioned by their having been joined unless the court otherwise orders.[9]

37 In my opinion, the rule of thumb approach is not appropriate in this case because of the centrality of a number of the issues on which the plaintiffs succeeded. The rule is a guide, and not a principle that must be invariably applied in cases when only some plaintiffs are successful.

38 The seven plaintiffs who succeeded are entitled to have their costs of the proceeding paid by the defendant on a standard basis, save for any costs that have been dealt with by prior orders that remain in operation and the additional costs orders made as a result of this judgment. Mr Halahala, who succeeded in establishing that he was a foundation member, is entitled to the same order as the other successful plaintiffs, although he did not succeed the estoppel argument.

39 There is then the question of the unsuccessful plaintiffs, being twenty two of the remaining twenty nine plaintiffs.

40 The unsuccessful plaintiffs do not suggest that the defendant pay their costs. The question rather is whether they should pay the defendant's costs on the basis that costs follow the event.

41 In my opinion, the circumstances of this case make it inappropriate, as an exercise of discretion, that the unsuccessful plaintiffs should have to pay the defendant's costs. Such an order would be unjust and would not reflect the outcome of this proceeding. It is particularly significant that the defendant, as an Association, has not applied the rules that bound it by law.

42 The first principal issue required the identification of the Fellowship's membership rule immediately prior to the incorporation of the Fellowship on 3 March 1991, and particularly whether the member had to have attained Lotu Fehu'i status. This issue occupied most time in evidence and submissions and was the main legal and factual issue that led to the lengthy and unfortunate litigation amongst members of the Tongan community in Melbourne, who worship God in the Free Wesleyan Church of Tonga. The litigation, in all likelihood, has resulted in the expenditure of hundreds of thousands of dollars. The exploration and determination of the Lotu Fehu'i issue led to extensive evidence explaining the operation of the Church, the role of Lotu Fehu'i and other positions in the Church and how a regular attender at Church attained the status of Lotu Fehu'i. The written rules of the Fellowship contained no requirement that a person be a Lotu Fehu'i in order to be a member. While the defendant argued that this was the Church's custom and practice, I did not accept this argument. The defendant therefore failed on the major issue in the case.

43 The Lotu Fehu'i argument had consequential effects in the proceeding. It led to the plaintiffs making the estoppel argument, arguing, perhaps understandably, that their service and financial contributions to the Church made it unconscionable for it to depart from their assumption that they were members. The defendant succeeded on the issues of estoppel , on whether particular plaintiffs had ceased to be members and whether any members had been validly admitted to the Association under the 1991 rules, the latter issue only being conceded on the penultimate day of trial.

44 Another major consideration was that the Fellowship, and later the defendant Association under the 1991 Rules, had failed to maintain a register of members and that the Association had not required the completion of membership application forms. That rendered it uncertain as to who was a member. The maintenance of a membership register is an important matter, and s 56 of the 2012 Act requires that it contain information about members and when persons have ceased to be members. Failure to maintain such a register is a criminal offence punishable by a fine. The failure to maintain a register aggravated the conflict between factions in the Church over the control of property, particularly the Werribee Church building. The lack of a membership register meant that the question of whether members could cease to be members by departure or inertia had to be argued, a process which would have been unnecessary if a register had been kept. In my opinion, the litigation was substantially caused by the defendant's failure to follow the rules of Association and the requirements of the 2012 Act by its attempt to add to the written Fellowship rules a requirement that a member had attained Lotu Fehu'i status. Even when a membership register was compiled in 2015, it was based on the incorrect premise that members had to be Lotu Fehu'i.

45 Another consequence of the Association's failure to maintain a register of members is that the Association has been conducting this litigation without many persons entitled to have a voice in its affairs being recognized as members.

46 The Association did not follow the law of Victoria in conducting its affairs. There appears to have been a lack of awareness of the governance requirements of an incorporated association.

47 The issue of the validity of the amendments to the rules passed at the Association's meeting on 18 July 2015 also occupied considerable time. I held that they had been invalidly adopted. Persons who were entitled to notice of the meeting were not given it and proxies were wrongly excluded.[10] Many people who voted in favour of the resolutions were not members and not entitled to vote. This state of affairs was also contributed to by the Association's failure to keep a proper membership register and the fact that some members did not receive the Secretary's letter of 27 July 2015. The defendant unsuccessfully argued that some plaintiffs ceased to be members because they did not respond to the Secretary's letter. Had the defendant succeeded on this argument and established that the 18 July 2015 resolutions had been validly adopted, each plaintiff, including the original founding members, would have ceased to be members before they commenced this proceeding. No plaintiffs would have had standing to commence the proceeding. Again, there would have been no need for this argument if a proper membership register had been kept.

48 By this proceeding, all parties have obtained the Court's ruling as to the membership rule of the Fellowship and the Association. They had significantly divergent views about who were members and they have obtained the benefit of the Court's ruling on the membership issue.

49 Little time in the proceeding was taken by the issues of the identification of the plaintiffs who had ceased to be members and whether any of the paragraph 13 plaintiffs had become members by satisfying the requirements of the 1991 rules. Few of the paragraph 10 and 12 plaintiffs, who I found had ceased to be members, were called as witnesses. Equally, few of the paragraph 13 plaintiffs were called to give evidence. While the defendant succeeded on these issues, they occupied little time.

50 I have considered separately the position of the plaintiffs who ceased to be members. First the six paragraph 10 departing founding members of 2006, who walked out.[11] They were not called and did not dispute the defendant's evidence of their departure, but the plaintiffs argued that there the Association did not have a practice that members lost their membership by non-attendance. Again this issue took comparatively little time in the case and is unlikely to have arisen if a register of members had been kept.

51 A similar position exists with respect to the ten disputed founding members - the paragraph 12 plaintiffs.[12] To quote from the principal judgment:

The plaintiffs did not admit the defendant's evidence that nine of the disputed founding members had ceased involvement with the Church and had ceased to be a member. But I informed counsel that I was likely to accept the defendant's evidence if there was no contrary evidence. The plaintiffs, with the exception of Mr Halahala, provided no evidence contradicting the evidence relied on by the defendant that these plaintiffs had ceased to be involved with the Church.

I accept that evidence in respect of all of the plaintiffs save for Mr Halahala, the twenty-sixth plaintiff, who has remained an active member of the Church and who has not ceased to be actively involved with the Church. Although I do find that Mr Halahala did not become Lotu Fehu'i until 1994, I consider that under the membership rule as I have described it, he was a foundation member of the Fellowship and remains a member of the Association.[13]

52 Again, I doubt that the issue regarding the paragraph 12 plaintiffs would have arisen if a register of members had been kept. The issue about their membership took little time in the proceedings and I do not consider that they should have to pay the defendant's costs of the proceeding.

53 In circumstances where the defendant failed to maintain a membership register and argued that only persons who were Lotu Fehu'i were members, I consider that it was reasonable for the estoppel plaintiffs to contend that their involvement with the Church and their substantial financial contributions should prevent the defendant from denying their membership. Because of that conduct I consider that the plaintiffs who made estoppel claims should not have to bear the defendant's costs of those claims, other than those already provided for by orders which remain in operation or orders made as a result of this judgment.

54 In summary, the six plaintiffs won on all significant issues. The seventh, Mr Halahala, succeeded on the fundamental issue that he was a foundation member and remained a member of the Association although he was unsuccessful on his estoppel claim. The issues on which the other plaintiffs were unsuccessful occupied little time. I take into account that the purpose of a costs order is not to punish the unsuccessful party, but to recompense the successful party.[14] But it is also a relevant consideration in exercising the costs discretion that the proceeding was substantially contributed to by failures of the Association to observe its rules and thereby comply with the law, and in that sense its conduct probably brought about the litigation.[15] One circumstance where a successful defendant may not receive its costs is when its conduct has induced the plaintiff to bring the proceeding and 'without which it would probably not have been brought'.[16]

55 I have also considered whether the unsuccessful plaintiffs should be ordered to pay a percentage of the defendant's costs. In my opinion, because of the defendant's its substantial contribution to the commencement of the proceeding, that would not produce a just outcome.

56 I consider that the successful plaintiffs should receive their costs of the proceeding and that there should be costs orders in respect of particular hearing days and pleading amendments that I deal with separately. Otherwise, the other parties, i.e. the parties other than the successful plaintiffs, should bear their own costs of the proceeding.

The Associations Incorporation Act 2012 s 67(4)(c)

57 There is a second basis upon which I reach the conclusion stated in the last paragraph. The 2012 Act envisages that disputes arising from the conduct of incorporated associations are to be primarily resolved by the Magistrates' Court, but this proceeding was transferred to this Court. Section 67(4) provides that:

The Magistrates' Court may refuse to make an order on the application or may make an order for costs against a party, whether successful or not, if it is of opinion that -

...

(c) the unreasonable or improper conduct of a party has been responsible for the making of the application, or has added to the cost of the proceedings.

Upon the transfer of a proceeding, that power is given to this Court.

58 For the reasons I have given I consider that the defendant's conduct in failing to maintain a proper register of members and contending that only those persons who had attained the status of Lotu Fehu'i were members, substantially caused the litigation and added to its length and costs. As mentioned, had that argument succeeded many long standing Church attenders and financial supporters would not have qualified for membership. I consider that this conduct substantially added to the costs of the application.

59 Whilst I would not describe this as improper, I consider that it was unreasonable conduct, as those words are used in s 67(4)(c), and has been responsible for the making of the initial application in the Magistrates' Court and the continuation of the proceeding in this Court following transfer. Whether conduct is unreasonable conduct depends on the facts of the case. The combination of the failure to observe its own rules, by not having an admission form or a membership register, as is also required by the 2012 Act, pursuing the Lotu Fehu'i argument and making significant, but invalid, changes to the 1991 rules in 2015 was unreasonable conduct and substantially contributed to the litigation and 'the making of the application'.

60 The parties went to mediation in February 2017, and settled some significant issues to permit a way forward once the membership rule and the founding members could be identified. However, an issue arose as to the meaning of the following clause in the mediation agreement dated 10 March 2017:

1. If the parties cannot agree who the founding members of the Association are by 4.00 pm on Friday 17 March 2017, then the parties agree to seek a declaration from the Court as to who the current members are. Otherwise:

(a) the 2014 proceeding be struck out with no order as to costs and all unpaid costs orders will be discharged;

(b) the 2015 proceeding be struck out on all issues, apart from the issue of membership and all unpaid costs orders will be discharged;

(c) the parties take all necessary steps to enable the relevant membership question to be determined by the Court in the 2015 proceeding on 26 April 2017;

(d) upon the Court resolving who the members are, the steps referred to in paragraphs 1(b)-(g) above proceed with the persons the Court as a result that the members being substituted for the founding members in each of the steps;

(e) until the Court resolves the relevant membership question in accordance with paragraphs 2(a)-(d) above, the current committee remain responsible for the day to day admission of the church and the association.

61 The parties disagreed on whether the words in clause 2(b) applied to all costs incurred prior to the making of the mediation agreement, as the plaintiffs argued, or, as the defendant contended, only to costs orders other than those relating to the litigating of membership issues. The defendant identified the plaintiffs' claims against the defendant of oppressive conduct in the operation of the Association as another significant issue.

62 The plaintiffs' argument was that because all unpaid costs orders would be discharged, the defendant was prevented from seeking costs orders on any basis before 10 March 2017 by the terms of the mediation agreement of that date. But the defendant argued that reserved costs were not covered by the phrase 'and all unpaid costs orders will be discharged'. Clause 2(b) did not deal with the question of reserved costs, because unlike clause 2(a) it did not contain the words 'with no order as to costs' or anything to like effect such as that 'the parties will bear their own costs to date' and it was only agreed that 'all unpaid costs orders will be discharged'.

63 In written submissions delivered after the hearings, the defendant focused on the 'estoppel days', being directions days where substantial argument was devoted to the validity of the plaintiffs' estoppel plea, and argued that clause 2(b) did not release the plaintiffs' potential liability for reserved costs relating to estoppel arguments.

64 In interpreting clause 2(b) of the mediation agreement, I will apply the principles for the construction of commercial contracts recently stated by the High Court and referred to by the defendant. These are as follows. Ordinarily, the construction of a commercial contract or terms of settlement is possible by reference to the contract alone, especially where its terms are unambiguous. However, sometimes, recourse to events, circumstances and things external to the contract is necessary. For instance it may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background [and] the market in which the parties are operating'.[17]

65 The difference in wording between clauses 2(a) and (b) is significant and provides some support for the defendant's construction argument. But the difference in wording is not decisive when the difference in purpose of the two subclauses is considered. Clause 2(a) deals with the 2014 proceeding, which had been completely finalised. The words 'with no order as to costs' is an understandable component of a clause finalising a proceeding. The purpose of clause 2(b) differs: it ended parts of the 2015 proceeding, but left the most important issue, that of membership, alive. It expressly discharged all unpaid costs orders and must have done so with the intention of discharging them, whether or not they related to membership issues. The defendant's construction argument would have the effect that reserved costs, at least relating to membership arguments, including estoppel issues, would still be capable of argument and the Court asked to disentangle the parts of the costs the payment of which had been reserved, that related to membership, from costs reserved that related to other issues. That would result in the incongruous outcome that when the Court had ordered the plaintiffs to pay costs they would not have to pay them, but when the Court had not determined responsibility for costs on a particular day, but had reserved them, the plaintiffs might still be liable for costs. That hardly seems a likely intention in a mediation agreement whether viewed as a commercial compromise or otherwise. While it gains some support from the literal words of clause 2(b), it has little to commend it on the grounds of commercial efficacy or otherwise.[18]

66 I consider that the parties intended to release their liabilities or potential liabilities as at 10 March 2017 for all costs unpaid and reserved. They then were to proceed to deal with the membership issues with costs incurred after that date unaffected by the mediation agreement.

67 The defendant did seek orders that a number of the costs that had been reserved should be paid to them by the unsuccessful plaintiffs. I do consider that a number of the costs associated with pleading disputes and particular hearings in 2017 must be awarded against the plaintiffs. I will next deal with the hearings in respect of which the defendant seeks additional costs orders that occurred after the 10 March 2017 mediation agreement. I would add that, if I had accepted the defendant's submission about the meaning of clause 2(b) of the mediation agreement, the only additional costs order that I would have made in respect of matters occurring before 10 March 2017 would have been for the costs of 16 September 2016 and for the costs thrown away by the defendant by reason of the fifth further amended statement of claim delivered that day.

68 I will next deal with costs of the days or actions after 10 March 2017, for which the defendant claimed costs.

69 At a hearing on 31 March 2017**,** I gave directions that the plaintiffs deliver a further statement of claim that clearly identified the relief they sought, the persons they alleged were members of the Association, and the basis for those allegations. Other directions were given for a trial to commence on 1 May 2017. As appears below, on 22 August 2017 I awarded the defendant its costs thrown away as a result of the pleading delivered under this order.

70 The trial commenced on 1 May 2017, but was adjourned on 5 May 2017, mainly because of problems with the plaintiffs' pleadings, which had been discussed throughout the hearings that week.

71 The plaintiffs delivered a seventh further amended statement of claim dated 5 May 2017. They pleaded the mediation agreement and that various persons were founding members and other persons members.

72 On 25 May 2017, after considering written submissions, I made orders on the papers giving the plaintiffs leave to serve a further statement of claim, and ordering that the defendant file and serve a memorandum indicating any opposition to it. In my reasons for those orders I did accept one of the defendant's principal objections to the plaintiffs' proposed amended statement of claim.

73 I consider that the plaintiffs should pay the defendant one quarter of its costs of and incidental to the ruling and orders of 25 May 2017.

74 On 23 June 2017 I gave a written ruling following receipt of written submissions concerning the plaintiffs' seventh further amended statement of claim delivered on 1 June 2017. The defendant contended that the estoppel plea was confusing and unclear. I accepted that aspects of it were unclear, and I refused the plaintiffs leave to rely on the pleading, but I gave them leave to deliver a further pleading.

75 I consider that the defendant is entitled to a substantial part of its costs for challenging that proposed pleading. The plaintiffs must pay 75 per cent of the defendant's costs of and incidental to the ruling and orders of 23 June 2017.

76 By a ruling of 17 October 2017,[19] I concluded that the estoppel pleading, in the latest pleading, contained a valid pleading in respect of some of the plaintiffs. I also decided that the plaintiffs should have leave to deliver a further pleading about membership with amendments dealing with matters raised by the defendant.

77 The plaintiffs' counsel was unfortunately unable to continue with the case just prior to 17 October 2017, and I re-listed the matter for mention on 20 October 2017. On that day, I refused the plaintiffs' application for leave to file a seventh further amended statement of claim in the form delivered. I refused the defendant's application that the plaintiffs' estoppel plea in respect of nine plaintiffs be struck out with no leave to re-plead.

78 I ordered that the costs of the plaintiffs' application to further amend their statement of claim, including the costs of the hearings on 12 September and 17 October 2017, be paid by the plaintiffs on a standard basis. I otherwise reserved costs. I refused the defendant's application for an order that it be able to tax its costs immediately. I see no reason to make any further order in respect of the costs of that day. The defendant 'did not press its submission that the reserved costs of the 20 October mention relate[d] to the estoppel issue'.

79 On 26 October 2017 the plaintiffs, who had recently engaged new counsel, sought a trial date in February 2018. I gave the plaintiffs leave to file a further seventh amended statement of claim in accordance with the directions contained in my ruling of 17 October 2017.[20] I re-listed the proceeding for directions on 24 November 2017, so that any application by the defendant about the seventh further amended statement of claim could be determined. I fixed a date for trial and reserved costs. I consider that this was substantially a mention day following the plaintiffs need to engage new counsel for the plaintiffs. I do not consider that any particular costs order should be made in respect of this day.

80 The plaintiffs delivered a further amended seventh statement of claim. Some reasonably minor matters were raised by the defendant about it. A new timetable was ordered for the delivery of a defence and a list of the plaintiffs' witnesses and the defendants' outlines of evidence. Costs were reserved. I consider that this hearing was substantially a pre-trial mention and I do not propose to make any additional or further costs order in respect of it.

81 The plaintiffs in their seventh further amended statement of claim filed in December 2017 listed the paragraph 10 founding members, the paragraph 12 disputed founding members, the paragraph 13 persons who were alleged to have become members after 1991, and the estoppel plaintiffs. The defendant in its defence dated 11 December 2017 pleaded to each of paragraph 10, 12, 13 and to the claims of the estoppel plaintiffs. It pleaded that a number of the plaintiffs who had been founding members, and some other plaintiffs, had ceased to be members. It alleged that no other plaintiffs had applied for membership or been admitted to the Association under the 1991 Rules.

82 This was a mention after the plaintiffs had failed to comply with court orders regarding outlines of evidence. I ordered some adjustments to the timetable and I reserved costs. I consider the defendant is entitled to costs of that mention.

83 None of these orders apply to the second plaintiff or his estate who ceased to be a party (order of 15 February 2018).

84 All costs orders made after 23 February 2017 remain unaltered save for the following additional costs orders:

(a) 25 May 2017 - the plaintiffs must pay the defendant one quarter of its costs of and incidental to the written ruling and orders of 25 May 2017 on a standard basis;

(b) 23 June 2017 - the plaintiffs must pay 75 percent of the defendant's costs of and incidental to the ruling and orders of 23 June 2017 on a standard basis; and

(c) 19 December 2017 - the plaintiffs must pay the defendant's costs of the mention on 19 December 2017 on a standard basis.

85 The defendant is to pay the following seven plaintiffs' costs of the proceeding: Ana'uta Grima, the fifth plaintiff, Vika Tautalanoa, the eighth plaintiff, Tevita Kafoika, the fourteenth plaintiff, Falepuna Kafoika, the nineteenth plaintiff, Mele Lino, the twentieth plaintiff, Fohe Tautalanoa, the twenty- fifth plaintiff and Sione Halahala, the twenty-sixth plaintiff.

FREE WESLEYAN CHURCH OF TONGA IN AUSTRALIA (VICTORIA) INC

[1] Moala v Free Wesleyan Church of Tonga in Australia (Victoria) Inc [2019] VSC 205 ('the Principal Judgment').

[2] Moala v Free Wesleyan Church of Tonga in Australia (Victoria) Inc [2019] VSC 544.

[4] Principal judgment [214]-[216], [355], [365]-[371].

[5] The second, third, fourth and fifth defendants ceased to be parties to the proceeding by order of 1 May 2017.

[8] [2008] VSCA 233, [10].

[9] GE Dal Pont Law of Costs (2018, 4th ed, LexisNexis), 329.

[10] Principal judgment [314]-[403].

[11] Principal judgment [287]-[290].

[12] Principal judgment [302]-[308].

[13] Principal judgment [307]-[308].

[14] Northern Territory v Sangare [2019] HCA 25; (2019) 372 ALR 117.

[15] Cf Ritter v Godfrey [1920] 2 KB 47 at 53 and Bryns v Davie [1991] VicRp 93; [1991] 2 VR 568.

[16] Ritter v Godfrey [1920] 2KB 47 at 53.

[17] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at 116-7 (French CJ, Nettle and Gordon JJ).

[18] Cf Gollin & Co Ltd v Karnlee Nominees Pty Ltd [1983] HCA 38; (1987) 153 CLR 455 at 464.

[19] Moala & Ors v Free Wesleyan Church (Ruling No 4) [2017] VSC 635.

[20] Moala & Ors v Free Wesleyan Church (Ruling No 4) [2017] VSC 635.