Anglican Development Fund Diocese of Bathurst v Palmer

[2015] NSWSC 1856

Supreme Court

New South Wales

Medium Neutral Citation:	Anglican Development Fund Diocese of Bathurst in its own capacity and in its capacity as trustee of the Anglican Development Fund Diocese of Bathurst (receivers and managers appointed) –v– The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst; Commonwealth Bank of Australia –v– The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst [2015] NSWSC 1856
Hearing dates:	14, 15, 16, 20, 21, 22, 23, 27, 28, 29, 30 April 2015, 4, 5, 6, 7, 11, 12, 13, 14, 18, 19, 20, 21, 26, 27, 28 May 2015, 4, 9, 10, 11, 15, 16, 17, 18, 24, 25 June 2015, 19 August 2015, 8, 30 October 2015
Decision date:	10 December 2015
Jurisdiction:	Equity - Commercial List
Before:	Hammerschlag J
Decision:	See paragraphs 610 and 611
Catchwords:	CHURCHES AND RELIGIOUS ASSOCIATIONS – Anglican Church of Australia – Diocese of Bathurst (the Diocese) – constitution, management and powers – church property and trusts – CONTRACTS – a Diocesan corporation (the Debtor) borrowed money from a bank (the Bank) – in a letter under his signature and seal (the Letter of Comfort) the Bishop of the Diocese certified pursuant to a Church Ordinance that the Diocese undertook responsibility for the loan and also confirmed that the Diocese was committed to ensuring that the Debtor met its financial commitment to the Bank and undertook to use its best endeavours and powers conferred by legislative and other means to resolve issues which may arise with the loan – under another Church Ordinance the Debtor is guaranteed by the Diocese to the extent that should it have any deficiency in funds the Bishop-in-Council (BIC) is to promote an ordinance to levy the necessary funds from the parishes – whether the Letter of Comfort was intended to create legally binding relations – who are the parties to it – whether its terms are certain – AGENCY – whether the Bishop was authorised to bind BIC – VOLUNTARY ASSOCIATIONS – whether BIC as the management committee of the voluntary association which is the Diocese is liable to perform obligations undertaken in the Letter of Comfort – CHURCH LAW – whether certain ordinances (including the Ordinance under which the Debtor’s deficiency is guaranteed) are binding as between BIC and the Bank and BIC and ADF – whether Certificates given by the Bishop are legally binding – STATUTORY CONSTRUCTION – Supreme Court Act s 65(1) – whether BIC owes an enforceable duty to the Bank in which it is personally interested – EQUITY – trusts and trustees – church trust property – whether there exists church trust property accessible to BIC to discharge its obligations – RELIEF – appropriate relief
Legislation Cited:	Anglican Church of Australia (Bodies Corporate) Act 1938 (NSW) Church of England Trust Property Incorporation Act 1881 (44 Victoria) (NSW) Corporations Act 2001 (Cth) Church of England Property Management Act 1866 (Act 30 Victoria) (NSW) Anglican Church of Australia Constitutions Act 1902 (NSW) Anglican Church of Australia Constitution Act 1961 (NSW) Anglican Church Trust Property Act 1917 (NSW) Charitable Trusts Act 1993 (NSW) Contracts Review Act 1980 (NSW) Fair Trading Act 1987 (NSW) Australian Securities and Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW) Common Law Procedure Act 1899 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Church of England Property Act 1889 (52 Victoria) (NSW) Church Acts Repealing Act of 1897 (NSW)
Cases Cited:	Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Norman; in the matter of Forest Enterprises Limited v FEA Plantation Limited [2011] FCAFC 99 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Banque Brussels Lambert SA v Australia National Industries Ltd (1989) 21 NSWLR 502 Giliberto v Kenny (1983) 48 ALR 620 Prenn v Simmonds [1971] 1 WLR 1381 Tomko v Palasty [2007] NSWCA 258 Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640 Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 Meehan v Jones (1982) 149 CLR 571 Carlton Cricket & Football Social Club v Joseph [1970] VR 487 Ex parte Goddard; Re Falvey (1946) 46 SR (NSW) 289 Peckham v Moore [1975] 1 NSWLR 353 Scandrett v Dowling (1992) 27 NSWLR 483 Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565 Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 Affleck v Newcastle Mind & Others [1999] ICR 852 Harrington v Coote (2013) 119 SASR 152 Ward v Eltherington [1982] Qd R 561 Cameron v Hogan (1934) 51 CLR 358 Fielding v Houison (1908) 7 CLR 393 Watkinson v Hollington [1944] 1 KB 16 City of Vancouver v BCP Telephone Co [1951] SCR 3 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Crabtree-Vickers v Australian Direct Mail Advertising & Addressing Co (1975) 133 CLR 72 Placer Development Limited v The Commonwealth of Australia (1969) 121 CLR 353 Bailes v Modern Amusements Pty Ltd [1964] VR 436 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 Allcars Pty Ltd v Tweedle [1937] VLR 35 Thorby v Goldberg (1964) 112 CLR 597 Yaroomba Beach Development Co Pty Ltd v Coeur De Lion Investments Pty Ltd (1989) 18 NSWLR 398 at 404 Head v Kelk (1963) 63 SR (NSW) 340 Egel v Drogemuller [1936] SASR 407 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Hospital Products Limited v United States Surgical Corporation and Others (1984) 156 CLR 41 Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640 Sheffield District Railway v Great Central Railway Co (1911) 27 TLR 451 Hawkins v Pender Bros Pty Ltd [1990] 1 Qd R 135 Pips (Leisure Productions) Ltd v Walton (1980) 43 P & CR 415 Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163 MacarthurCook Fund Management Ltd v Zhaofeng Funds Ltd [2012] NSWSC 911 Hickman v Kent or Romney Marsh Sheep-Breeders’ Association [1915] 1 Ch 881 Residues Treatment & Trading Co Ltd v Southern Resources Ltd (No 2) (1988) 51 SASR 177 Eley v Positive Government Security Life Assurance Co Ltd (1875) 1 Ex D 20 The Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Company Inc (1994) 181 CLR 404 Hampton Court Ltd v Crooks (1957) 97 CLR 367 Attorney-General v Gould (1860) 28 Beav 485 Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 Attorney-General and Others v Church of England Property Trust Diocese of Sydney (1933) 34 SR (NSW) 36 The Attorney-General for New South Wales v The Perpetual Trustee Company (Limited) and Others (1940) 63 CLR 209 Alghussein Establishment v Eton College [1991] 1 All ER 267 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Re King; Jackson v Attorney General [1917] 2 Ch 420 Metropolitan Petar & Ors v Mitreski & Ors [2001] NSWSC 976 Maks v Maks (1986) 6 NSWLR 34 Mack v Lenton (1993) 32 NSWLR 259 Chapman v Luminis Pty Ltd (No 2) [2000] FCA 1010 Minassian v Minassian [2010] NSWSC 708 United Australia Limited v Barclays Bank Limited [1941] AC 1
Texts Cited:	K.L. Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand, (1st ed 1986, The Law Book Company Limited) Stewart, Campbell, Baughen, The Law of Unincorporated Associations, (1st ed 2011, Oxford University Press) Macquarie Concise Dictionary (4th ed 2006, Macquarie Dictionary Publishers Pty Ltd) Oxford English Dictionary (2nd ed 1989, Oxford University Press) M. Furmston and G.J. Tolhurst, Contract Formation: Law and Practice, (1st ed 2010, Oxford University Press) LexisNexis Butterworths, Ritchie’s Uniform Civil Procedure NSW, vol 2 (at Service 98) J.D. Heydon and M.J. Leeming, Jacobs’ Law of Trusts in Australia (7th ed 2006, LexisNexis Butterworths) New South Wales, Parliamentary Debates, Legislative Assembly, 30 November 1916, 3139 (Attorney-General, D.R. Hall)
Category:	Principal judgment
Parties:	Proceedings 2014/75940 Anglican Development Fund Diocese of Bathurst in its own capacity and in its capacity as trustee of the Anglican Development Fund Diocese of Bathurst (receivers and managers appointed) – Plaintiff The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst – First Defendant Ellen Sharp – Second Defendant The Venerable Francis Hetherington – Third Defendant The Very Reverend Anne Wentzel – Fourth Defendant Robert Woods – Fifth Defendant The Reverend Canon Craig Moody – Sixth Defendant The Reverend Canon Margaret Finlay – Seventh Defendant The Reverend Canon Grahame Yager – Eighth Defendant The Reverend Brett Watterson – Ninth Defendant The Reverend James Hodson – Tenth Defendant The Reverend Gary Neville – Eleventh Defendant The Reverend Dr Max Wood – Twelfth Defendant The Reverend Leigh Gardiner – Thirteenth Defendant Marilyn Baker – Fourteenth Defendant Graham Leatherland – Fifteenth Defendant Coral McFarland – Sixteenth Defendant Ray Norman – Seventeenth Defendant Janet Price – Eighteenth Defendant Sue West – Nineteenth Defendant Leigh Edwards – Twentieth Defendant Anglican Property Trust Diocese of Bathurst (ABN 15 968 693 964) – Twenty-first Defendant All Saints’ College Bathurst Council (ABN 43 418 897 717) – Twenty-second Defendant Bathurst Endowment of the See Board (ABN 89 509 521 070) – Twenty-third Defendant Proceedings 2014/75947 Commonwealth Bank of Australia (ABN 48 123 123 124) – Plaintiff The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst – First Defendant Ellen Sharp – Second Defendant The Venerable Francis Hetherington – Third Defendant The Very Reverend Anne Wentzel – Fourth Defendant Robert Woods – Fifth Defendant The Reverend Canon Craig Moody – Sixth Defendant The Reverend Canon Margaret Finlay – Seventh Defendant The Reverend Canon Grahame Yager – Eighth Defendant The Reverend Brett Watterson – Ninth Defendant The Reverend James Hodson – Tenth Defendant The Reverend Gary Neville – Eleventh Defendant The Reverend Dr Max Wood – Twelfth Defendant The Reverend Leigh Gardiner – Thirteenth Defendant Marilyn Baker – Fourteenth Defendant Graham Leatherland – Fifteenth Defendant Coral McFarland – Sixteenth Defendant Ray Norman – Seventeenth Defendant Janet Price – Eighteenth Defendant Sue West – Nineteenth Defendant Leigh Edwards – Twentieth Defendant Anglican Property Trust Diocese of Bathurst (ABN 15 968 693 964) – Twenty-first Defendant All Saints’ College Bathurst Council (ABN 43 418 897 717) – Twenty-second Defendant Bathurst Endowment of the See Board (ABN 89 509 521 070) – Twenty-third Defendant
Representation:	Counsel: Proceedings 2014/75940 A.G.Bell SC with P. Dowdy, B. Koch and E.L. Beechey – Plaintiff G.O. Blake SC with W.A.D. Edwards – First to Twenty-Third Defendants Proceedings 2014/75947 A. McGrath SC with S. Aspinall and J.D. Williams – Plaintiff G.O. Blake SC with W.A.D. Edwards – First to Twenty-Third Defendants Solicitors: Proceedings 2014/75940 Henry Davis York – Plaintiff Bridges Lawyers – First to Twenty-Third Defendants Proceedings 2014/75947 Henry Davis York – Plaintiff Bridges Lawyers – First to Twenty-Third Defendants
File Number(s):	2014/75940; 2014/75947
Publication restriction:	Unrestricted

Judgment

What this case is about

Relevant legislation and ordinances

Constitutional and administrative

Church property

Finance

Some other Diocesan organisations and enterprises

The Bank Facility

The Collapse

The Proceedings

The hearing

The Bank’s Claims

ADF’s Claims

BIC’s responses

The Bank Case

Legally binding relations

Authority

Continuity

Certainty

Banking Code of Conduct, Contracts Review Act and Unconscionable Conduct

Section 65 of the Supreme Court Act

Church trust property

The ADF Case

Effect of Ordinances and Certificates

Certificates for OAGS loans 5043, 5044, 5049 and MAGS loan 5042

What the 17 December 2009 Certificate for OAGS loan 5033 covers

Reissue or replacement of Certificates

Conclusivity

Conclusions and Relief

Judgment

What this case is about

1. HIS HONOUR: The Anglican Church in Australia (the Church) was originally known as the United Church of England and Ireland. In 1902 its name was changed to the Church of England in Australia, and in 1976 it became the Anglican Church of Australia.

2. The Church has a highly formalised governance structure. It is organised into geographical areas, each called (in one of its meanings) a diocese. Each diocese is the see of a bishop. There are 23 dioceses in Australia, one of which is the Diocese of Bathurst (the Diocese). The Diocese was formed in 1870 by the transfer of territory from the dioceses of Sydney and Newcastle. There have been some territorial adjustments since. Dioceses are organised on a provincial basis. Apart from Tasmania (which for historical reasons is treated separately), each Australian State corresponds to a Church province. Each diocese comprises smaller geographical areas called (in one of its meanings) parishes, within which there must be at least one licensed or consecrated church. The Diocese comprehends 34 parishes, three of which are in Bathurst, two are in Orange, and one is in Dubbo. In one of its meanings parish connotes merely a geographical area.

3. Nationally, governance of the Church resides in a committee known as General Synod, presided over by a bishop designated the Primate.

4. The Diocese is governed by its own Synod, which has a term of three years and meets at least annually. Unless otherwise stated, references to Synod are references to the Synod of the Diocese.

5. The activities of the Diocese are many and varied. They include commercial and other enterprises conducted through numerous corporate entities.

6. At no level does the Church itself, as an institution, have corporate existence. It is a series of unincorporated voluntary associations at different levels: national, provincial, diocesan and perhaps even parish.

7. Synod makes ordinances for the order and good government of the Church in the Diocese. Ordinances are, in effect, part of the rules of the voluntary association or consensual compact. However, as will appear below, their bindingness is affected by statute. Ordinances are amended from time to time. The most current version is designated by the year in which it was originally passed and the year in which it was last amended. The Diocese has a constitution. Under it, ordinances are binding upon the bishop and the bishop’s successors and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holders of any office in the Church within the Diocese. When Synod is in recess, its powers are delegated to a committee known as Bishop-in-Council (BIC).

8. BIC was originally established by an Ordinance cited as the Bishop-in-Council Ordinance 1912, as a council which, ‘[i]n matters pertaining to the temporal affairs of the Church’, would assist the Bishop, and with whose consent he would act in all such matters. That Ordinance was repealed by the Bishop-in-Council Ordinance 1990, the repeal not to extend to affect anything validly done pursuant to the repealed Ordinance. The current Ordinance regulating BIC is the Anglican Diocese of Bathurst Administration Ordinance 2003 – 2011 (the Administration Ordinance).

9. The Anglican Church of Australia (Bodies Corporate) Act 1938 (NSW) (the Bodies Corporate Act), which was assented to on 26 October 1938, is an Act to make provision for and with respect to the constitution of bodies corporate for the purposes of managing, governing and controlling institutions and organisations of the Church.

10. Sections 4, 6 and 9 of the Bodies Corporate Act provide:

4   Power to constitute further bodies corporate

(1)    In this section the expression unincorporated body means the board, committee, council or other body constituted (either before or after the commencement of this Act) by or under the authority of an ordinance of the Synod of a diocese for the purpose of managing, governing or controlling any institution or organisation of the Church of England, or of holding, managing and dealing with any church trust property.

(2)    The Synod of a diocese may, by ordinance, declare that it is expedient for the purpose of managing, governing or controlling any institution or organisation of the Church of England or of holding, managing or dealing with any church trust property subject to the control of that Synod, that the persons who for the time being are the members of the unincorporated body named in the ordinance should be constituted a body corporate under the name set out in the ordinance.

(3)    Where any such ordinance is passed the Governor may, by order published in the Gazette, declare that the persons who for the time being are the members of the unincorporated body shall be a body corporate, and, as from the date of such publication or from such later date as may be specified in the order, such persons shall become and be a body corporate under the name set out in the ordinance.

(4)    Any such body corporate shall for the purposes of this Act be deemed to have been constituted at the instance of the Synod of the diocese which passed the ordinance declaring the expediency of constituting the body corporate.

…

6    Powers and functions of bodies corporate

(1)    Each body corporate constituted by or under this Act shall have perpetual succession and a common seal, may enter into contracts in its corporate name, may sue and be sued, and may take and hold any real or personal property.

(2)    Each body corporate constituted by or under this Act shall have and may exercise and perform the powers, authorities, duties and functions conferred or imposed by any ordinance of the Synod of the diocese at whose instance the body corporate was constituted:

(a)    upon the unincorporated body, the members of which are incorporated by or under this Act, or

(b)    upon the body corporate.

…

9   Vesting of property

…

(4)    Where the members of an unincorporated body are constituted a body corporate by or under this Act, the body corporate shall have and be subject to all the rights, powers, remedies, liabilities and obligations and may exercise and discharge all or any of the rights, powers and remedies which the members of the unincorporated body would have had and been subject to and might have exercised and discharged if the body corporate had not been so constituted.

…

11. In 1990, Synod delegated the power under s 4(2) to BIC.

12. In 1998, by an Ordinance then known as the Anglican Diocese of Bathurst Stewardship for Ministry Fund Ordinance 1998, Synod ordained to establish a fund to be administered by a separate and independent body, to be known as the Anglican Diocese of Bathurst Stewardship for Ministry Fund, to receive deposits from persons or organisations (not being diocesan organisations, corporations or parishes) and to invest such monies for the purposes of returning a surplus to be used to provide financial support for ministry objectives for the Diocese. On 24 February 1999, the Governor declared the fund to be a body corporate in accordance with s 4(3) of the Bodies Corporate Act. By the Anglican Diocese of Bathurst Stewardship for Ministry Fund Amendment Ordinance 2004, its name was changed to the Anglican Development Fund Diocese of Bathurst. I will refer to it as ADF or the Fund. The name of the principal ordinance which established ADF was changed at the same time to the Anglican Development Fund Diocese of Bathurst Ordinance 1998 – 2008. The current version is 1998 – 2010 (the ADF Ordinance).

13. In 2007, it was decided that the Diocese would go, after a fashion, into the business of banking. ADF was chosen to be the Diocesan ‘banker’. The idea was that instead of parishes and other Diocesan bodies individually borrowing money from commercial banks in dribs and drabs, as to that time had been the case, Church borrowing and lending would be centralised. All necessary funds would be borrowed by ADF from a bank and ADF would on-lend it to Diocesan organisations. It was intended that ADF would profit by lending at interest rates higher than the ones at which it borrowed. The ADF Ordinance was amended to give its Board the power to lend and advance money or give credit to any parish, school or any organisation subject to the control of Synod, whether on security or not, and to take security (if any) for money lent or advanced or credit given by it. The ADF Ordinance included a provision requiring its Board to adopt a Prudential Code of Practice.

11. A number of banks were approached. The Commonwealth Bank of Australia (the Bank) was finally selected as the institution from which ADF would borrow. The Bank’s Relationship Manager, Mr Graeme Grundy, wrote that the Bank was ‘honoured’ to be selected as the preferred provider of financial services.

12. At the time, the Bank had (and perhaps still has) a specific lending policy styled Credit Counter-party Standards (or CCS), which applied to extending credit facilities to religious organisations. The Bank classified (and perhaps still does) religious organisations into two groups, A and B. Group A religious institutions were described as entities where special arrangements had been agreed to which dispensed with the need to lodge normal securities. These were listed as the Anglican Church, the Baptist Church, the Roman Catholic Church, the Church of Christ, the Presbyterian Church and the Uniting Church of Australia. From these institutions, the Bank would (and perhaps still will) accept as sole security for borrowings a letter of acknowledgment on the letterhead of the religious organisation executed by its authorised representatives. Group B religious organisations were all other religious organisations where no special security arrangements had been agreed to. In their case, a first ranking mortgage over the religious organisation’s freehold land and improvements (i.e. the church and other specialised structures) was to be obtained.

13. By Letter of Offer dated 22 November 2007, the Bank offered ADF a facility of $50.1 million. This was accepted by ADF on 11 December 2007. The facility limit was reduced to $40 million pursuant to a request by ADF made on 7 April 2008.

14. The only ‘security’ required and taken by the Bank for repayment of the loan was a letter dated 24 April 2008, under the hand and seal of the Right Reverend Richard Hurford (who held office as Bishop of the Diocese from 10 February 2001 until his retirement on 6 November 2012), in the following form:

text version of letter (645 KB, pdf)

This type of instrument is variously described as a Bishop’s Letter, Bishop’s Guarantee, Bishop’s Certificate, Episcopal Certificate, Letter of Comfort and Letter of Acknowledgement. I shall refer to the 24 April 2008 letter as the Letter of Comfort.

18. The Anglican Property Trust Diocese of Bathurst (APT or the Trust) is a Diocesan corporate entity. APT’s original name was the Church of England Property Trust Diocese of Bathurst. It was constituted as a body politic and corporate under the provisions of the Church of England Trust Property Incorporation Act 1881 (44 Victoria) (NSW). As trustee, it owns a significant amount of property, real and personal, within the Diocese.

19. The ADF Board comprises the Bishop of the Diocese, the Bishop’s Registrar, members of APT and members appointed by APT.

20. Clause 32 of the ADF Ordinance provides:

32   Guarantee

The Fund shall be guaranteed by the Anglican Diocese of Bathurst to the extent that should there by [sic] any deficiency in funds, Bishop-in-Council shall promote an ordinance to levy the necessary funds from the parishes.

21. By the Bathurst Anglican Church Finance Ordinance 1959 – 2010 (the Finance Ordinance), APT has the power and duty to investigate all applications for guarantee by the Diocese to any bank or other lending body or persons for loans for parochial or other purposes which may be referred to it by Diocesan organisations, and to report to the Bishop any loan proposed to be made, together with its recommendation in respect thereof.

22. Clause 2 of the Finance Ordinance (hence the reference in the Letter of Comfort) provides:

In any case in which the Trust has recommended approval of an advance as aforesaid the Bishop may and he is hereby authorised and empowered to certify to the Bank or other lending body or persons (including parishioners) willing to make the advance to such parish, parochial district, provisional district or other organisation or corporation that the Diocese of Bathurst accepts responsibility therefore, provided however that where the advance to be made exceeds the prescribed sum the Bishop is neither authorised nor empowered to certify as aforesaid unless and until Synod or Bishop-in-Council has by resolution approved such advance.

23. Clauses 3, 4 and 5 of the Finance Ordinance provide:

3   The Certificate of the Bishop given under the last preceding clause hereof shall in favour of the bank or lending body or persons (including parishioners) be conclusive evidence that the provisions of this Ordinance have been duly complied with.

4   In the event of the Trust reporting to the Synod or Bishop-in-Council any case of default in pursuance of Clause 1(c) hereof the Synod or Bishop-in-Council shall take such action by ordinance or otherwise to cause the same to be rectified as it may think fit.

5   That in the event that the Diocese shall, by reason of default of a parish parochial district, provisional district, or other organisation or corporation in respect of which such approval is given, pay or be called upon to pay any principal interest or other moneys to a bank or other lending body or persons (including parishioners) the same shall be paid out of the “Diocese of Bathurst Synod Management Fund” and thereupon such payments may be refunded and recouped to the Diocese by levies on all of the parishes of the Diocese in such proportions and at such times and in such manner as the Synod or the Bishop-in-Council thereof may determine.

24. To put it mildly, the Diocesan banking enterprise did not fare well.

25. ADF proceeded to borrow some $40 million from the Bank, which it on-lent to various Diocesan bodies and enterprises. A significant part of the money was lent to two start-up schools (each operated by a Diocesan body corporate) known respectively as Macquarie Anglican Grammar School (or MAGS) and Orange Anglican Grammar School (or OAGS). From 9 May 2008 to 16 December 2011, in some 19 transactions, ADF advanced $28,095,529.00 to OAGS and MAGS.

26. In most but not all instances where ADF lent to the schools, the Bishop provided a letter either in the following form, or in a form which includes contents materially indistinguishable from it:

The [Macquarie Anglican Grammar School in the Diocese or Orange Anglican Grammar School Council in the Diocese – as the case may be] requires a loan facility totalling $[Amount] to be guaranteed by the Diocese of Bathurst.

Pursuant to clause 2 of the Bathurst Anglican Finance Ordinance, I now certify that the Diocese of Bathurst accepts responsibility for an advance by your fund by way of a loan.

It is understood that such advance or so much thereof as shall for the time being remain owing and interest thereon at the usual rate charged by your fund and any account fees shall be payable to your fund in accordance with the terms of the loan.

I shall refer to this form of instrument as a Certificate.

27. Over the period during which ADF lent money to the schools, each of the following persons were at some time a member of the ADF Board: Bishop Hurford (who was also President of APT and of both schools), Mr Bruce Henderson (who was also a member of BIC, a member of APT and chairman of MAGS council), Mrs Marilyn Robey, Mr Adrian Scarra (who was Diocesan treasurer, a member of BIC, a member of APT and a member of the council of both schools), Mr Maxwell Ingersole (who was also a member of BIC and APT), the Reverend Canon Carla Archer (who was also a member of BIC and APT), Mr Graham Leatherland (who was also a member of BIC and APT), the Venerable Robert Howell (who was a member of BIC and APT – he passed away on 13 August 2012), the Right Reverend Peter Danaher (who was also a member of APT and of the council of both schools), Mrs Mary Wainwright – nee Cleasby (who was also a member of APT), Bishop John Stead (who was also a member of BIC and APT), and Mr Tony Card (who was also a member of APT).

28. Operating costs and deficits incurred by the schools were funded with borrowings. Enrolments did not meet expectations. There were staffing problems. The schools were overladen with debt, could not sustain themselves, and were incapable of repaying the borrowed monies. ADF had internal lending guidelines which were not heeded by its Board. Such was the parlous position of the schools that some of the loans were described as emergency loans. On various occasions, Board members were placed in a position of having to approve loans at short notice without appropriate documentation. It is fair to say that the majority of the Board members simply did not have the capability to discharge the task with which they were burdened. Independent reports obtained by the Board made it clear that without a significant injection of equity and a reduction in the loan burden, the schools could not survive. Even though there was no injection of equity, the Board ploughed ahead in lending moneys to the schools, motivated by their belief in the overarching mission of the Church in general and the Diocese in particular to spread Christianity in the Anglican tradition. With one or two exceptions, the mind of the Board was unanimous.

29. Inevitably, ADF defaulted in its obligations to the Bank. On 30 September 2013, it notified the Bank that the commercial bills which matured that day should not be rolled-over.

30. On 1 October 2013, the Court appointed Barry Fredric Kogan and Joseph David Hayes to be receivers to ADF (the Receivers) on an interim basis. At the same time, the Court entered judgment against ADF in favour of the Bank for $36,063,742.57 (plus costs). The Receivers’ appointment was made final on 15 October 2013.

31. On 23 October 2013, the Court appointed receivers to MAGS and OAGS. The schools’ assets, consisting of real estate and businesses, were sold to the Sydney Anglican Schools Corporation. In the case of MAGS, $7.1 million was paid for its land and $160,000.00 for its business. In the case of OAGS, $3.59 million was paid for its land and $150,000.00 for its business component. After adjustments for long service leave and the like, both MAGS and OAGS were left owing money back to the buyer.

32. As at 19 February 2014, the following persons were members of BIC, and, unless otherwise stated, still hold office:

●   The Right Reverend Ian Stanley Palmer, who succeeded Bishop Hurford as Bishop of the Diocese on 30 November 2012;

●   Mrs Ellen Sharp – resigned 29 August 2014;

●   The Venerable Francis (Frank) Hetherington;

●   The Very Reverend Anne Wentzel;

●   Sir Robert Woods;

●   The Reverend Canon Craig Moody – resigned 7 September 2014;

●   The Reverend Canon Patricia Margaret Finlay;

●   The Reverend Canon Grahame Yager;

●   The Reverend Brett Watterson;

●   The Reverend James Hodson – there is a question as to whether Reverend Hodson vacated office in July 2013 or in February 2014;

●   The Reverend Gary Neville;

●   The Reverend Dr Maxwell Wood – resigned 25 May 2014;

●   The Reverend Leigh Gardiner – resigned 15 January 2015;

●   Mrs Marilyn Baker – resigned 23 February 2015;

●   Mr Graham Leatherland;

●   Mrs Coral McFarland – resigned 26 February 2015;

●   Mr Raymond (Ray) Norman;

●   Mrs Janet Price;

●   Mrs Suzanne (Sue) West; and

●   Mrs Leigh Haywood (Edwards).

33. Unless the context otherwise indicates, references below to old BIC may be taken to mean BIC as it was constituted on 24 April 2008, and references to BIC or new BIC may be taken to mean BIC as it was constituted on 19 February 2014.

34. On 19 February 2014, the Receivers, on behalf of ADF, called on APT to undertake the duties imposed by the Finance Ordinance and report the defaults of MAGS and OAGS to BIC. On the same day, the Receivers wrote to BIC recording that MAGS and OAGS had defaulted, and demanding that BIC take all necessary steps in accordance with its obligations under the Certificates and cl 32 of the ADF Ordinance to rectify the defaults and make up ADF’s deficiency in funds. The Receivers demanded that BIC issue ordinances for the sale of Diocesan assets, the proceeds of such sales to be paid to ADF in reduction of the amount owing to it by the schools.

35. On 24 February 2014, the Bank wrote to each member of BIC recording that ADF had defaulted and that the Bank had obtained judgment against ADF, and asserting that the facilities provided to ADF were secured by the Letter of Comfort. The Bank demanded that BIC take all necessary steps in accordance with its obligations under the Letter of Comfort and cl 32 of the ADF Ordinance to make good the shortfall suffered by the Bank in respect to the amounts advanced under the facilities. The Bank demanded that BIC issue ordinances for the sale of Diocesan assets.

36. ADF’s principal creditors are the Bank and APT. ADF recovered some monies lent to other Diocesan enterprises, including a fund known as the Synod Management Fund. As a consequence of the sale of the schools, ADF recovered some of the money it lent to MAGS and OAGS. It made distributions to the Bank and to APT. As at 14 April 2015, ADF had a deficiency on creditors’ claims of $25,363,074.92.

37. The collapse of ADF prompted the commencement of three actions in this Court. They were heard together.

38. In the first action (the Board Case), ADF (controlled by the Receivers) sued the individual members of its Board for compensation, alleging that in committing ADF to the loans to the schools, they had acted in contravention of statutory duties under ss 180(1) and 181(1) of the Corporations Act 2001 (Cth) (the Corporations Act) to exercise their powers and discharge their duties with the requisite degree of care and diligence in good faith in the best interests of ADF and for proper purposes. Each Board member sought orders pursuant to s 1317S of the Corporations Act, relieving him or her from liability. As well, they cross-claimed against the Bank alleging that it would be unconscionable conduct on its part to participate in or receive a distribution through ADF via recovery by ADF from the Board when, they say, the Bank was a knowing and full participant in the decisions by the Board to advance money to the schools.

39. After 34 days of hearing, the Board Case was settled with a verdict in favour of ADF for $11.3 million, and the dismissal of all cross-claims. The result is that the total ADF deficiency has been reduced to $14,063,074.92. Some of the settlement amount will no doubt find its way to the Bank and APT.

40. In the second action (the Bank Case), the Bank sues BIC as, in effect, the ‘management committee’ of the Diocese, seeking, amongst others, a declaration that BIC has a binding legal obligation to ensure that the sum of $14,063,074.92 is paid to ADF from real and personal property comprising church trust property held on behalf of the Diocese to enable ADF to meet its financial commitments to the Bank. It relies on the Letter of Comfort as a binding contract in its own right and on the certification in it under cl 2 of the Finance Ordinance as imposing on BIC such an obligation in its favour. It seeks ancillary orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod to pay the said sum. The Bank also seeks a declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency in funds owing by ADF to the Bank from real and personal property comprising parochial (or parish) church trust property held on behalf of the Diocese, together with ancillary orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod to pay the said sum. The Bank’s Summons also contains prayers for damages and further or other relief.

41. In the third action (the ADF Case), ADF sues BIC as, in effect, the ‘management committee’ of the Diocese, seeking a declaration that by reason of cl 32 of the ADF Ordinance, BIC has a binding legal obligation to promote an ordinance to levy the deficiency of funds in ADF of $14,063,074.92. It also seeks a declaration that cl 2 of the Finance Ordinance together with the Certificates issued under it creates a binding legal obligation on BIC to repay $11,050,762, being the total amount of the loans to the schools outstanding and allegedly covered by those Certificates, from real and personal property comprising church trust property held on behalf of the Diocese. It seeks orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy jointly and severally all Diocesan organisations subject to the control of Synod, to discharge the asserted obligations. It seeks orders intended to have the effect of requiring BIC to promote an ordinance or ordinances to levy Diocesan organisations subject to the control of Synod and which hold parochial property, to pay the said sum. Its Summons includes prayers for damages and further or other relief. Plainly, it cannot obtain, and does not seek, double recovery.

Relevant legislation and ordinances

42. Various statutory enactments and ordinances are pertinent to the issues in this case. For ease of reference, I have attempted to divide them respectively (recognising both that the categories are not clearly defined and also that there is overlap) into those which concern the constitutional operation and administration of the Church in general, those which concern church trust property, those which concern finance, and those which relate to relevant Diocesan enterprises or corporations.

43. I will use the term ‘Church rules’ as a general description for legislation, provisions of Constitutions and ordinances which apply to the Diocese.

Constitutional and administrative

44. In April 1866, at a General Conference in Sydney of Bishops and Clerical and Lay representatives of the Church in New South Wales, certain articles and provisions were agreed to and accepted as Constitutions for the management and good governance of the Church in this State. It was recognised that such agreement could not, as regards the management of the property of the Church, be carried into effect without the aid of legislation. This was achieved by the Church of England Property Management Act 1866 (Act 30 Victoria) (NSW), assented to on 4 October 1866, ss 1 and 2 of which provided:

1.   The several articles and provisions contained in the said Constitutions and any rules and ordinances to be made under or by virtue or in pursuance thereof are and shall for all purposes relating to the property of the said United Church of England and Ireland within the Colony of New South Wales be binding upon the members of the said Church. And all persons now or at any time hereafter holding any real or personal estate in trust for or in any way on behalf or for the use of the said Church except in so far as such real or personal estate may be the subject of any express trust and then so far as such express trust shall not extend shall hold the said real and personal estate subject to the said rules and shall be bound thereby as fully in all respects as if the said rules were contained in a deed of conveyance and trust of the said real and personal estate.

2.   Provided always that no rule or ordinance to be made under or by virtue or in pursuance of the said Constitutions shall be in contravention of any law or statute in force for the time being in this Colony.

45. The 1866 Act was repealed by the (now named) Anglican Church of Australia Constitutions Act 1902 (NSW) (the 1902 Act), ss 4, 5, 6 and 7 of which provide as follows:

4    Constitutions to be binding

The several articles and provisions of the constitutions contained in the Schedule to this Act, and any ordinances and rules to be made under or by virtue or in pursuance thereof, are and shall be for all purposes connected with or in any way relating to the property of the Church of England within the State of New South Wales binding upon the members of the said Church.

5    Church property to be held subject to constitutions

All persons now or at any time afterwards holding any real or personal estate in trust for or in any way on behalf or for the use of the Anglican Church of England, except in so far as the real or personal estate may be the subject of any express trust, and then so far as such express trust shall not extend, and except lands, the management of which may be already specially provided for by ordinance of Synod or by Act of Parliament, shall hold the said real and personal estate subject to the provisions of the constitutions and of any ordinances or rules made thereunder, and shall be bound by them as fully in all respects as if the constitutions, ordinances, and rules were contained in a deed of conveyance and trust of the real and personal estate.

6    No ordinance or rule to be in contravention of law

No ordinance or rule to be made under or by virtue or in pursuance of the said constitutions shall be in contravention of any law or statute in force for the time being in this State.

7   Not to affect other Church Acts

This Act shall not repeal or in any way cut down or abridge the provisions of the Church of England Trust Property Incorporation Act 1881, the Sydney Bishopric and Church Property Act 1887, the Church of England Property Act of 1889 or the Church Acts Repealing Act of 1897.

46. The then Constitutions for the management and good governance of the Church within New South Wales were contained in the Schedule to the 1902 Act. Articles 3, 6 and 29 of those Constitutions were in the following terms:

3   Power of Synod generally

The Synod of each Diocese may make ordinances upon and in respect of all matters and things concerning the order and good government of the Church of England and the regulation of its affairs within the Diocese, including the management and disposal of all Church property, moneys, and revenues (not diverting any specifically appropriated, or the subject of any specific trust, nor interfering with any vested rights), except in accordance with the provisions of any Act of Parliament, and for the election or appointment of churchwardens and trustees of churches, burial grounds, church lands, and parsonages. And all ordinances of the Synod shall be binding upon the Bishop and his successors, and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holding any office in the said Church within the Diocese.

…

6    Mode of voting and quorum

At the first meeting of a Synod in any Diocese the presence of not less than one-fourth of the members of each order shall be necessary to constitute a quorum. And every rule or ordinance of a Synod shall be made by a majority of the clergy and representative members present and voting collectively: Provided that in any Synod if any eight members of one order shall so desire the votes shall be taken by orders and, if a vote be taken by orders, a majority of members of each order present and voting shall be required: Provided that no such rule or ordinance shall take effect or have any validity unless within one month after the passing of the same the Bishop shall signify his assent thereto in writing: Provided also that any such rule or ordinance to which the Bishop shall not assent may be the subject of reference to and determination by any Provincial Synod composed of the representatives of the Diocesan Synods of the State of New South Wales.

…

29    Amendments

These articles and provisions may be amended by an ordinance passed by the Provincial Synod of the Church in the Province of New South Wales and adopted by the Synod of each Diocese in that Province if the amendment is ratified by, or made in accordance with, a canon of the General Synod of the Church.

47. In 1955, steps were taken by General Synod, with the cooperation of dioceses in New South Wales and other States, to have a National Constitution. In New South Wales, this was implemented by way of the Anglican Church of Australia Constitution Act 1961 (NSW) (the 1961 Act), ss 2, 3, 4 and 5, of which provide as follows:

2 Constitution, canons and rules to be binding for Church property purposes

The several articles and provisions of the Constitution contained in the Schedule to this Act (hereinafter called the Constitution) and any canons and rules to be made under or by virtue or in pursuance thereof are and as provided in the Constitution shall be for all purposes connected with or in any way relating to the property of the Church of England in Australia binding on the Bishops, clergy and laity being members of the Church of England in Australia in the several Dioceses of the Church of England within the State of New South Wales.

3    Effect of canons and rules

Any canon or rule made under or by virtue or in pursuance of the said Constitution which contravenes any law or statute in force for the time being in the said State shall to the extent of such contravention be incapable of having any force or effect.

4 Church of England Constitutions Act Amendment Act 1902 – operation restricted

Any provision of the Church of England Constitutions Act Amendment Act of 1902 which is inconsistent with the provisions of this Act and the Constitution shall to the extent of such inconsistency be inoperative in the several Dioceses of the Church of England within the said State: Provided that this section shall not prejudice or affect the previous operation of the said Act, or any proceeding matter or thing lawfully done or suffered under the said Act before this Act comes into operation.

5   Church Trust Property

The Church of England Trust Property Act 1917, as amended, shall continue to apply to Church Trust Property within the meaning of the Act, and in the said Act all references to the Church of England shall include the Church of England in Australia.

48. The effect of the 1961 Act was not to repeal the 1902 Act, but to render inoperative any provision of the earlier Act which was inconsistent with the later one. Article 47 of the National Constitution provided, relevantly, that the constitution of each diocese would, subject to the National Constitution, continue until altered in accordance therewith. Article 51 of the National Constitution provides that diocesan synods can continue to make ordinances for the order and good government of the Church within the diocese ‘in accordance with the powers in that behalf conferred upon it by the constitution of such diocese’. Article 71(1) provides that every consensual compact and every enactment in force in the dioceses, insofar as they are not inconsistent with the Constitution, continue in force in the diocese until altered under the Constitution or under the constitution of a diocese.

49. In 1998, the Diocese, acting pursuant to Art 29 of the National Constitution, by way of an ordinance described as the General Synod Canons Adoption Ordinance 1998, adopted a new Constitution for New South Wales. The presently relevant articles of the New South Wales Constitution are:

Power of Synod Generally

2.    (1)   The Synod of each Diocese may make ordinances upon and in

respect of all matters and things concerning the order and good government of the Anglican Church of Australia and the regulation of its affairs within the Diocese, subject only to the Anglican Church of Australia Constitution Act 1961 and any other Act in force in this State.

(2)   All ordinances of the Synod shall be binding upon the Bishop and the Bishop's successors and all other members of the Church within the Diocese, but only so far as the same may concern their respective rights, duties, and liabilities as holders of any office in the Church within the Diocese.

Specific Powers

3.   …

(2)   The Synod of each Diocese may call upon any person holding property belonging to or held in trust for the Church in the Diocese or any part thereof, or in which the Church or any part thereof is in any manner interested, to render a full account of all such property, and of the manner in which the same and every part thereof is applied and disposed of.

...

Rules for conduct of business

4.   (1)   The Synod of each Diocese may make rules for –

(a)   the conduct of all business coming before it;

(b)   trying the validity of the election of any representative;

(c)   supplying any vacancy in the Synod which may be occasioned by death, resignation or any other cause; and

(d)   determining for what reason any representative shall be disqualified from sitting and voting in the synod.

(2)   The Synod of each Diocese may make rules for –

(a)   subject to clause 1(2), altering the periods within which and the manner in which subsequent Synods shall be convened;

(b)   the mode of electing representative members;

(c)   regulating the number of the clergy and representative members to be respectively summoned to any future Synod; and

(d)   as to the manner in which such regulation shall be effected, and as to the number necessary to constitute a quorum.

(3)   The rules in force when this clause takes effect shall continue to apply until varied pursuant to this clause.

5.Notwithstanding anything in clause 4 or any rule made thereunder –

(a)   every ordinance, rule or resolution of a Synod shall be made by a majority of the clergy and other members present and voting collectively, provided that a synod may determine that a special majority be required for any particular matter or class of matter before it;

(b)   if any eight members of one order shall so desire, votes on any ordinance, rule or resolution shall be taken by orders and on such vote a majority of members of each order present and voting shall be required;

(c)   no ordinance shall take effect or have any validity unless within one month after the passing of the same the Bishop shall signify assent thereto in writing provided that any ordinance to which the Bishop shall not assent may be referred by resolution of the Synod, to the Provincial Synod and if the Provincial Synod shall assent to the ordinance, the ordinance shall take effect on the Provincial Synod giving its assent;

(d)   the Bishop of the Diocese, or in the absence of the bishop a commissary appointed by such Bishop in writing or, in the absence of the Bishop and of such commissary, a person selected by the Synod shall be present of the Synod, and may adjourn, prorogue, and dissolve the same with the concurrence of the Synod; and

(e)   it shall not be lawful for the president to vote on any question or matter arising in the Synod.

50. The primary ordinance regulating the administration of the Diocese is the Administration Ordinance. It is a comprehensive instrument providing, amongst others, for the appointment and removal of various Diocesan officials and officers (including a Registrar of the Diocese), representation at Synod, and the formation and authority of BIC.

51. The introductory section of the Administration Ordinance is headed ‘Fundamental Declarations and Ruling Principles’ and provides as follows:

FUNDAMENTAL DECLARATIONS AND RULING PRINCIPLES

1   This Diocese holds and approves the Fundamental Declarations and the Ruling Principles contained in the Constitution of the Anglican Church of Australia and reprinted in Schedule A of this Ordinance to be the basis upon which the church in this Diocese is built and maintained.

2    The purpose and ministry of the Anglican Church in this Diocese is, by the grace of God, to proclaim the Gospel of Christ and administer His sacraments to His Church and by our lives witness to the love of God for all people. The Church in this Diocese exists to encourage and equip its members in these tasks in the communities in which they live and work.

3    By baptism each member of the Church is called to ministry according to his or her gifts. Within our Anglican tradition we recognise that some are called to the threefold order of Ordained Ministry as Bishop, Priest or Deacon. All Christian people lay and ordained are called and equipped by God for the building up of the body of Christ.

4   Good order in Church administration is part of the ministry of this Diocese. In the administration of its affairs the people of the Diocese express their thanks to God for his gifts both spiritual and temporal, model themselves as a community upon the life and teaching of Christ and exercise the fruits and gifts of the Holy Spirit with faith and generosity.

5   The rules ordering the administration of the Church in this Diocese having become unwieldy, in some cases outdated and in others unworkable, this Diocese has resolved at this time to consider afresh all matters relating to the administration of the Diocese.

52. Clause 103, entitled ‘Definitions’, contains, amongst others, the following definitions:

Bishop: The Bishop of Bathurst or in the event of the Bishop of Bathurst being absent from the State of New South Wales or of a vacancy in that office the person next entitled to administer the Diocese of Bathurst during the absence or vacancy in accordance with this Ordinance.

Bishop in Council: The Council constituted by section 400 of this Ordinance.

Corporate Trustees OR The Anglican Property Trust: The Anglican Property Trust Diocese of Bathurst

Communicant Member of the Anglican Church of Australia OR Communicant Member: A person who has

(i)    been baptised; and

(ii)   been confirmed or received into the Church according to the rites and ceremonies of the Anglican Church of Australia; and

(iii)   is over the age of 18 years; and

(iv)   has made at least three communions in an Anglican Church during the previous twelve calendar months

Diocese: Diocese of Bathurst

Parish: A geographical area the boundaries of which are determined and registered by Bishop-in-Council and which contains at least one licensed or consecrated church.

53. Clause 200 of the Administrative Ordinance provides that the Bishop of Bathurst is the chief pastor of the Diocese.

54. Chapter 4 of the Administrative Ordinance, which includes cll 400 – 423, concerns BIC.

55. Clause 400 provides that:

There shall be a Council formed in accordance with this Ordinance to be the advisors to the Bishop. This Council together with the Bishop is hereafter referred to as "Bishop-in-Council".

56. Clause 401 provides that BIC shall consist of:

(a)   The Bishop,

(b)   Any Assistant Bishop,

(c)   The Diocesan Archdeacon,

(d)   The Dean,

(e)   The Regional Ministry Co-ordinators,

(f)   The Chancellor,

(g)   The Registrar,

(h)   The Diocesan Treasurer and

(i)   12 other members of whom 4 shall be clergy and 8 lay persons.

57. Clause 410 provides that the primary duty of BIC is to provide advice to the Bishop in the exercise of his responsibilities in the administration of the Diocese and to act as the Standing Committee of Synod.

58. Clauses 411(a) and (h) provide:

411   Bishop-in-Council has the following specific duties;

(a)    To administer such funds as may from time to time be placed under its control by Ordinances of the Synod or otherwise and to submit to Synod a report upon such financial matters together with the report of the auditors.

…

(h)   To discharge all duties specifically assigned to it from time to time by the Synod of the Diocese under Ordinances or resolutions and generally during the recess of Synod to guide and control the temporal affairs of the Diocese consistently with the constitutions of the Anglican Church of Australia and the Ordinances of Synod.

…

59. Clause 412 provides that BIC may, during the recess of Synod, exercise in the place of Synod all or any of the powers and functions, and do and make all or any of the things referred to in various sections 11, 12, 13, 14, 15, 16, 19, 23, 25, 26, 26A, 27, 27A, 32, 32A, 32B or 37 of the Anglican Church Trust Property Act 1917 (NSW) (the Trust Property Act) as amended, sections 3, 5, 6, 7, 10 and 11 of the Anglican Church (Bodies Corporate) Act 1938 and subject to Art 7(2) of the 1902 Constitutions, Arts 2(1) and 3(2).

60. Clause 419 provides that the Registrar is responsible for, and shall have in his or her custody, all deeds, oaths and declarations and other official documents relating to church trust property, licensed clergy and other Diocesan officers, and generally all other matters committed to the management of BIC.

61. Clause 420 provides that the Bishop shall chair each meeting of BIC provided that the Bishop, whether present or absent from the meeting, may request a member of BIC to chair the meeting for the whole or part of its course.

62. The Administration Ordinance contains provisions which reflect the nature and functions of Parishes, including that the Parishioners have the right to participate in the choice of person who is to be the Parish Priest, that in each Parish there must be an Annual Parish Meeting at which only persons who are communicant members of the Anglican Church of Australia are permitted to participate, and which must receive a financial report and an audited statement of accounts and consider general business.

63. The Administration Ordinance contains provisions dealing with Church buildings and grounds. Clause 600 provides:

(1)    All grounds and buildings of the Diocese of Bathurst or of a Parish or organisation of the Diocese are generally owned at law by the Anglican Church Property Trust Diocese of Bathurst on trust for the purposes of the Anglican Church of Australia in this Diocese

(2)   Such trust may be for Diocesan, Parish or other use as recited in the relevant declaration of trust.

64. Clause 597(1) provides that funds of a Parish shall be held on trust for the purposes of the Anglican Church of Australia in that Parish and for such other Diocesan and missionary purposes as may be specified by Ordinance.

65. The Accounts and Reporting (Organisations and Corporations) Ordinance 2004 lays down accounting and reporting requirements for organisations and corporations and for any parish which BIC directs shall comply with the Ordinance. It applies to diocesan organisations and funds and corporations constituted under the Bodies Corporate Act, and requires the members of each organisation and corporation to lay before each ordinary session of Synod audited financial statements in accordance with Australian accounting standards. The members of each organisation and corporation are required to send to BIC a copy of such documents at least four months before the end of the financial year. Clause 8 empowers BIC to call upon any organisation or corporation to furnish additional information on its assets, liabilities, income and expenditure, as BIC may require.

Church property

66. The Church of England Trust Property Incorporation Act 1881 (44 Victoria) (NSW) provided for the vesting of property of the Church in corporate trustees, of which APT is one.

67. There appears to have been some doubt as to the efficacy of the creation of APT. By s 5 of the Trust Property Act, the 1881 Act was repealed.

68. The Trust Property Act declares that APT, along with a number of other bodies, had been duly constituted under the 1881 Act and provides that, notwithstanding the repeal of the 1881 Act, APT remains so constituted. It provides that a Bishop of a diocese shall ex officio be a member of the corporate body so constituted.

69. The preamble to the Trust Property Act includes the following:

WHEREAS the Acts relating to property held upon any trust for or for the use,

benefit, or purposes of the Church of England in dioceses within New South Wales, and the Acts conferring powers upon the synods of the dioceses with reference to the said property are numerous, ambiguous, and discursive, and it is therefore expedient to consolidate and amend the same

70. Section 4 of the Trust Property Act defines:

Church trust property to include all or any part of any real and personal property which may for the time being be subject to any trust whether by dedication, consecration, trust instrument, or otherwise, for or for the use, benefit, or purposes of the Church of England in any diocese, and each such diocese is referred to as the diocese for which the church trust property in question is held.

596. The 17 December Certificate, in terms, only cancelled the 2 September 2009 Certificate and not the 11 December 2008 or 19 March 2008 Certificates which covered OAGS loan 5022 (Tranche 1) and OAGS loan 5017 (for $2,800,000).

597. I reject the submission that Bishop Hurford did not have authority to bind BIC and that each Certificate binds only the members of BIC at the time it was given. I have dealt earlier with the meaning to be attributed to the word Diocese in the Letter of Comfort and cl 2 of the Finance Ordinance.

598. The underlying rationale for the giving of a cl 2 Certificate is evident from the preamble to the Finance Ordinance. It is a part (and clearly a critical part) of the ‘method of financing the activities of the Anglican Church within the Diocese of Bathurst without the necessity of executing formal securities’. The suggestion that responsibility under a cl 2 Certificate rests solely upon those members of BIC who held office at the time the Certificate was given is inimical to the idea of it constituting security. Given the regular rotation of the membership of BIC, such a Certificate would in most, if not all, cases be ineffective or worthless.

599. I reject BIC’s submission that the 17 December Certificate was ineffective because there was no recommendation by APT or approval of loans matching $2,000,000.

600. Clause 2 of the Finance Ordinance gives the Bishop authority to give a Certificate where APT has recommended approval of the advance up to the prescribed sum ($20,000). Where the advance exceeds the prescribed sum, a resolution, relevantly, by BIC authorising the Certificate is required. Where this happens, no recommendation by APT is required. The absence of a recommendation by APT is thus irrelevant because the advance covered by the 17 December Certificate exceeded the prescribed sum, and BIC by its resolution of 16 December 2009 approved the advance by increasing the total borrowings to $13,662,500.

Conclusivity

604. I reject BIC’s submission that ADF does not have the benefit of conclusivity given to a cl 2 Certificate by cl 3 of the Finance Ordinance.

605. In this context, it is necessary to consider ADF’s position under the Finance Ordinance and the ADF Ordinance, in particular its right to enforce provisions in them for its benefit.

606. Clause 3 of the Finance Ordinance is an important part of the protection given to ADF as a lending body. It operates where the internal authorising provisions of the Finance Ordinance have not been complied with. It is an important protection for a lending body or persons (including parishioners) who have advanced their money in circumstances where they may not be privy to the intromissions of BIC. It is not needed where there has been compliance.

607. As I have earlier said, the authority of the Bishop to give the Certificate is conferred by the Ordinance itself having regard to the intended operation of cl 3. In any event, Bishop Hurford had actual authority conferred by resolution to issue the 17 December Certificate.

608. There is no fraud or manifest error in this case. Far from it. The submission that the 17 December Certificate was not prepared by a properly qualified official with due care and proper investigation was not developed, for good reason. Only Bishop Hurford could have given it. He acted under no misapprehension. He acted in good faith and for proper purposes. From his evidence it is clear that were he in a position to influence events, he would honour it now.

609. The 17 December Certificate is effective because it is conclusive evidence that the provisions of the Finance Ordinance have been complied with.

Conclusions and Relief

610. I have found that the Letter of Comfort and each of the Certificates relied upon by ADF gives rise to obligations legally binding on BIC. In my opinion, declarations in appropriate terms should be made.

611. The specific obligations upon BIC which flow from my findings include:

1. the obligation reflected in cl 4 of the Finance Ordinance to cause ADF’s default to the Bank to be rectified;

2. the obligation reflected in cl 5 of the Finance Ordinance to ensure that the principal interest, and other monies owing to the Bank are paid out of the Diocese of Bathurst Synod Management Fund; and

3. the obligation reflected in cl 32 of the ADF Ordinance to make up the deficiency in ADF’s funds by promoting an ordinance to levy the necessary funds from the parishes.

612. In addition to its other grounds of resistance, BIC put a submission that orders for specific performance or mandatory injunctive relief should be refused because of the impossibility of supervision by the Court. I see no difficulty in the grant of either form of relief to reflect these obligations. The ultimate effect of any appropriate orders is no more than payment. I see no difficulty in the Court supervising the settling of the terms of an appropriate ordinance if BIC finds itself incapable of doing it, or is unwilling to do it. In addition, Uniform Civil Procedure Rules 2005 (NSW) Pt 40, r 40.8(a) provides that if a judgment requires a person to do an act and the person does not do the act, the Court may direct that the act be done by a person appointed by the Court. It is premature to consider whether there should be further or other orders, including orders requiring compliance with any ordinance properly passed or for damages or other appropriate relief if the Court’s orders are not complied with.

613. The Bank’s and ADF’s various claims have been ‘brought to judgment’. On one view, various different remedies are available, as illustrated by the fact that if the Bank is paid out, ADF’s deficiency will be pro tanto reduced, and if ADF’s deficiency is otherwise made up and funds consequently flow to the Bank, the Bank’s debt will be reduced, possibly even eliminated. It may be that in accordance with established principle, the Bank and ADF are put to an election to choose which remedy to pursue: United Australia Limited v Barclays Bank Limited [1941] AC 1 at 30 [H.L.].

614. Either way, the terms of appropriate orders will require to be settled.

615. In the first instance, I propose to stand the proceedings over to a date in the new year to enable the parties to consider these reasons and the appropriate form of orders, to consider whether they wish to be heard further on the making of an order under s 6(1) of the Charitable Trusts Act, and to draw to my attention any issues which they consider have not been, but still require to be, dealt with.

Decision last updated: 10 December 2015