Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic

[2017] NSWCA 28

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic [2017] NSWCA 28

Hearing dates:

1 – 2 September 2016

Decision date:

07 March 2017

Before:

Ward JA at [1];
Gleeson JA at [2];
Payne JA at [16].

Decision:

(1) Leave to file an amended notice of appeal is refused;

 

(2) Appeal dismissed;

 

(3) Within 14 days of the publication of this judgment the respondents to file and serve any submissions (of no more than 20 pages) they wish to make on the question of costs or indemnification of any party from the trust property;

 

(4) Within 21 days of the publication of this judgment the appellants to file and serve any submissions (of no more than 20 pages) they wish to make on the question of costs or indemnification of any party from the trust property;

 (5) Within 28 days of the publication of this judgment the respondents to file and serve any submissions (of no more than 10 pages) in reply they wish to make on the question of costs or indemnification of any party from the trust property.

Catchwords:

APPEAL – charitable trust without a trust instrument –application of property under a cy-près scheme under s 9 of the Charitable Trusts Act 1993 (NSW) –whether the primary judge erred in his application of s 9

PRACTICE AND PROCEDURE – leave sought to file amended notice of appeal on day one of the hearing –whether this would give rise to unfairness of the kind in Coulton v Holcombe (1986) 162 CLR 1

Legislation Cited:

Charitable Trusts Act 1957 (NZ)
Charitable Trusts Act 1993 (NSW) s 9
Charitable Trusts Bill 1993 (NSW)
Charities Act 1960 (UK) s 13
Charities Act 2011 (UK) s 62
Civil Procedure Act 2005 (NSW) s 64
Uniform Civil Procedure Rules 2005 (NSW), rr 51.18(2), 51.36(2)

Cases Cited:

A-G ex rel Elisha v Holy Apostolic Church (1989) 37 NSWLR 293
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41
AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Attorney General for NSW v Fulham [2002] NSWSC 629
Attorney-General (NSW) v Grant (1976) 135 CLR 587
Bishop Irinej Dobrijevic & Anor v Free Serbian Orthodox Church, Diocese for Australia & New Zealand Property Trust & Ors [2015] NSWSC 637
Bishop Irinej Dobrijevic & Anor v Free Serbian Orthodox Church, Diocese for Australia & New Zealand Property Trust & Ors (No. 2) [2015] NSWSC 1976
Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500; [2012] HCA 32
Coulton v Holcombe (1986) 162 CLR 1
Craigdallie v Aikman (No. 2) (1820) 2 Bli 529, 4 ER 435
Craigie v Marshall (1850) 12 D 523
Federal Commissioner of Taxation v Consolidated Media Holding Ltd (2012) 250 CLR 503; [2012] HCA 55
General Assembly of Free Scotland v Lord Overtoun [1904] AC 515
Hamod v State of New South Wales [2011] NSWCA 375
Harington v Sendall [1903] 1 Ch 921
House v The King (1936) 55 CLR 499
Lewis v Heffer [1978] 1 WLR 1061
Long v Bishop of Cape Town (1863) 1 Moo PC (NS) 411
Macqueen v Frackelton (1909) 8 CLR 673
Metwally v University of Wollongong (1985) 60 ALR 68
Moderator of the General Assembly of the Free Church of Scotland v Interim Moderator of the Congregation of Strath Free Church of Scotland (Continuing) (No. 3) (2011) SLT 1213; [2011] CSIH 52
Norbis v Norbis (1986) 161 CLR 513
Radmanovich v Nedeljkovic (2001) 52 NSWLR 641; [2001] NSWSC 492
Re Lepton’s Charity [1972] Ch 276
RSL Veterans’ Retirement Villages Ltd v NSW Minister for Lands [2006] NSWSC 1161
Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40
Sullivan v Stefanidi [2009] NSWCA 313
Taylor v Princess Margaret Hospital for Children Foundation Inc (2012) 42 WAR 259; [2012] WASC 83
The Serbian Eastern Orthodox Diocese for the United States of America and Canada v Milivojevich 426 US 696 (1976).
Varsani v Jesani [1999] Ch 219
Water Board v Moustakas (1998) 180 CLR 491; [1998] HCA 12
Watson v Jones 80 US 679 (1871)
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; [2003] HCA 48
White v Williams [2010] EWHC 940 (Ch); [2010] PTSR 1575
Zheng v Cai (2009) 239 CLR 446; [2009] HCA 52

Texts Cited:

Church and State in Yugoslavia since 1945 (S Alexander, 1979, Cambridge University Press)
Justice McPherson “The Church as Consensual Compact, Trust and Corporation” (2000) 74 ALJ 159
Report of the Committee on the Law and Practice relating to Charitable Trusts (1952) (the Nathan Report) (UK)
Report on Charitable Trusts 1965 (Vic)
Serbs in Australia Volume 1 (Fr T Kazich, ed., 1989, Monastery Press)
Serbs in Australia Volume 2 (Fr T Kazich, ed., 1992, Monastery Press)

Category:

Principal judgment

Parties:

Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust (First Appellant)
Branko Rupar (Second Appellant)
Ratomir Nesic (Third Appellant)
Ilija Cubrilo (Fourth Appellant)
Petar Mandic (Fifth Appellant)

  Bishop Irinej Dobrijevic (First Respondent)
Serbian Orthodox Church in Australia and New Zealand Properties Ltd (Second Respondent)
Attorney General for the State of New South Wales (Third Respondent)

Representation:

Counsel:
G O Blake SC with W A D Edwards (Appellants)
S Glacken QC with P Herzfeld (First and Second Respondents)
N L Sharp with A M Hochroth (Third Respondent)

  Solicitors:
Hunt & Hunt (Appellants)
Nicholas G Pappas & Company (First and Second Respondents)
Crown Solicitor’s Office (Third Respondent)

File Number(s):

2016/14472

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2015] NSWSC 637; [2015] NSWSC 1976

Date of Decision:

29 May 2015

Before:

White J

File Number(s):

2011/247393

headnote

[This headnote should not be read as part of the judgment]

The Free Serbian Orthodox Church for Australia and New Zealand (“the Free ANZ Diocese”) was formed in 1964 after a split with the Serbian Orthodox Church.

In the 1980s, the Free ANZ Diocese established a charitable trust without a trust instrument for the purposes of constructing and operating a monastery property in Wallaroo, NSW.

In 2010, most of the members of the Free ANZ Diocese reconciled with the Serbian Orthodox Church, forming the Metropolitanate of Australia and New Zealand of the Serbian Orthodox Church (“the SOC-ANZ Metropolitanate”). The remaining members of the Free ANZ Diocese have since appointed a bishop of the Old Calendar Orthodox Church of Greece – Holy Synod in Resistance (“OCOCG–HSIR”) as the bishop of the Free ANZ Diocese.

Disputes arose about the control and operation of the monastery property. In 2011, the head of the SOC-ANZ Metropolitanate, Bishop Irinej Dobrijevic, commenced proceedings in the Supreme Court against members of the Free ANZ Diocese and the registered proprietor of the monastery property. These proceedings raised issues relating to the continuing existence of the Free ANZ Diocese, the permissibility of certain actions taken by the directors of the Property Trust Company, and the future control and use of the monastery property. The Attorney General, as protector of charitable trusts, played an active role in the proceedings both before the primary judge and on appeal. The primary judge found that the Free ANZ Diocese continued to exist as a functioning Orthodox church. His Honour also found that the directors of the Property Trust Company had acted in breach of trust in excluding Bishop Irinej from the governance of the trust. These issues were not the subject of the appeal.

The appeal was concerned with whether the primary judge had properly applied s 9 of the Charitable Trusts Act 1993 (NSW). Relevantly, the primary judge found that under s 9 the original purposes of the trust had ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust. The primary judge also adopted (with some modifications) a s 9 scheme jointly proposed by Bishop Irinej and the Attorney General, applying the property for the purposes of the SOC-ANZ Metropolitanate.

The critical starting point of the appellants’ case was that the primary judge had failed properly to identify the original purposes of the trust. This, however, was not a ground of appeal and was not an issue litigated before the primary judge.

The issues raised on the appellants’ notice of appeal were

1)    whether the primary judge erred in determining the spirit of the trust;

2)    whether the primary judge erred in finding that original purposes of the trust, wholly or in part, have since they were laid down, ceased to provide a suitable and effective method of using the trust property; and

3) whether the primary judge erred in making an order under s 9 of the Charitable Trusts Act.

Held:

Application for leave to amend the notice of appeal

1.    Leave to file an amended notice of appeal should be refused. The amended notice of appeal would give rise to unfairness to the respondents: at [1] (per Ward JA; [14] (per Gleeson JA) and at [167] – [168] (per Payne JA)

AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 applied.

Coulton v Holcombe (1986) 162 CLR 1 applied.

Held (per Payne JA, Ward and Gleeson JJA agreeing):

Section 9 of the Charitable Trust Act

2. Section 9 of the Charitable Trusts Act must be read as a whole in the statutory context in which it appears and by reference to the objects that the legislation is intended to secure: at [193].

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 applied.

3. The requirements of s 9 involve a threshold lower than the general law cy-près requirement of impossibility or impracticality. The test is whether the original purposes of the trust have ceased to provide a suitable and effective method of using the property, in whole or in part, having regard to the “spirit of the trust”. The spirit of the trust is a broader conception than the original purposes of the trust: at [197].

Original purposes of the trust

4.    The primary judge adopted the submissions of the appellant below about the original purposes of the trust. No ground of appeal was addressed to that finding: at [102], [220].

5. Where there is no written trust document, regard must be had to a wide range of documentary and oral evidence as to intentions at the time. A value judgment is required to ascertain the basic intention underlining the trust: at [216].

6. The original purposes of the trust must be determined at the time of creation of the trust. The primary judge was entitled to have regard to later events, however, as it is appropriate to look to the usage of trust property where there is no trust instrument: at [232].

Radmanovich v Nedeljkovic (2001) 52 NSWLR 641; [2001] NSWSC 492 applied.

7. The Constitution of the Free ANZ Diocese was not to be treated as a written prescription of the trust. To the extent it evidenced the fundamental or essential principles of the Diocese, it was evidence of the purposes of the trust in the same way as other evidence of the founders’ intention: at [234].

Spirit of the trust

8. There was an abundance of evidence that it was intended that the monastery would be a piece of Serbian soil in Australia, that is, the monastery and the church that used it, would be a Serbian church. No error has been shown in the primary judge’s finding: at [270].

9. There was compelling evidence supporting the primary judge’s conclusion that reunification with the Serbian Orthodox Church was part of the spirit of the trust: at [280].

10. The evidence in this case did not establish that a difference between the congregational or presbyterian structure adopted by the Free ANZ Diocese and the hierarchical structure of the Serbian Orthodox Church was considered a matter of ecclesiology or theology by the Free ANZ Diocese. The church Constitution was capable of being changed through practice, as it represented a consensual compact. It had been so changed in the appointment of bishops to the Free ANZ Diocese: at [117], [232], [284], [359].

Justice McPherson “The Church as Consensual Compact, Trust and Corporation” (2000) 74 ALJ 159 at 167-169 considered.

Whether the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust

11. Section 9 does not remove the requirement that, where the jurisdiction is engaged, the property be applied as near to the original purposes of the trust as would be effective and suitable, having regard to the spirit of the trust: at [315].

12. The primary judge found that the character of the Free ANZ Diocese now, as compared to the time of settling of the trust, was different. The vast majority of Serbian Orthodox adherents in Australia could enjoy the monastery at the time of creation of the trust. Now, given the divisions which his Honour found were matters of church politics and not faith, only a small minority of Serbian Orthodox adherents in Australia could enjoy the monastery: at [318].

13. The original trust purposes did not remain a suitable and effective method of using the trust property simply because it was possible for the monastery to be used by the remaining members of the Free ANZ Diocese. The test in s 9 is not the same as the general law test of impossibility or impracticability: at [327].

14. No error has been shown in the primary judge’s finding that that the Free ANZ Diocese’s affiliation with the OCOCG-HSIR was inconsistent with the Serbian character of the church and made the likelihood of reconciliation with the Serbian Orthodox Church much less likely, contrary to the spirit of the trust: at [332].

Application of the trust property cy-près

15.    There was no error in the primary judge’s findings that the original split between the Serbian Orthodox Church and the Free ANZ Diocese, in this case, was a division on a “matter of church politics” and not a matter of faith: [360]

16. The primary judge did not err in concluding that the property the subject of a s 9 cy-près scheme be applied as near as possible to the original trust purposes: at [364].

Judgment

1. WARD JA: I agree, for the reasons given by Payne JA, that leave to file the proposed amended notice of appeal should be refused and that the appeal should be dismissed. I also agree with the observations made by Gleeson JA. The orders proposed by Payne JA should be made.

2. GLEESON JA: I have had the advantage of reading the detailed and comprehensive reasons for judgment of Payne JA. I agree that leave to file an amended notice of appeal should be refused for the reasons given by his Honour. On that issue, I would add the following brief observations.

3. The hearing below occupied well over five weeks. Having failed, relevantly, on the questions of whether an order should be made for a cy-près scheme under s 9 of the Charitable Trusts Act 1993 (NSW) and as to the terms of the proposed scheme to be ordered by the Court, the appellants sought to recast their case on appeal ignoring the way in which they had conducted their case at trial.

4. Unsurprisingly, the respondents took objection to the new case which was first raised in the appellants’ written submissions dated 12 April 2016. In a footnote, the appellants foreshadowed that leave to amend the notice of appeal would be sought “so as to better reflect the issues which the appellants still press” being a reference to grounds 1-7 only. However, the appellants took no step in this regard until after the respondents had served their submissions dated 20 May 2016 and 14 June 2016 respectively. Over a month later, on 21 July 2016, the appellants served a proposed amended notice of appeal which purported to “better reflect the issues which the appellants will still press”. The respondents promptly objected to the amended notice of appeal. The appellants took no steps to obtain leave to file such document in advance of the hearing of the appeal which was fixed for two days commencing 1 September 2016. Indeed, the appellants indicated on 30 August 2016 that they intended to proceed on the existing notice of appeal (grounds 1-7 only).

5. Notwithstanding that history, the appellants belatedly sought leave to file an amended notice of appeal during the course of the first day of the hearing of the appeal.

6. The appellants’ delay in seeking leave to file an amended notice of appeal was left wholly unexplained. That the respondents would be prejudiced if the very late amendment was permitted is not in doubt and the prejudice is not of a type that could be cured by a costs order, even if case management considerations were put aside.

7. Nor was it suggested by the appellants that the new points could not possibly have been met by further evidence at the trial. As the High Court remarked in Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; [2003] HCA 48 at [51]:

Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination.

8. The appellants’ failure to explain the delay is a factor weighing heavily against a grant of leave to file an amended notice of appeal.

9. There is a related difficulty with the proposed amendment. As Payne JA explains, the amended notice of appeal did not comply with the requirements of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) in relation to the contents of a notice of appeal: r 51.18(2). In addition, the appellants did not comply with the requirements of the Rules in relation to the contents of written submissions. UCPR r 51.36(2) provides:

51.36 Content of written submissions

(cf SCR Part 51, rules 46 and 46A)

(1) …

(2)   Submissions raising any challenges to findings of fact must include a statement in narrative form (not exceeding 2 pages) at the end of the submission setting out only the following:

(a)    the findings challenged and supporting references to the judgment of the court below,

(b)   the findings contended for and supporting references to the transcript and other evidence in the court below.

On any view, the document provided by the appellants during the hearing of the appeal headed “Schedule of facts (UCPR, r 51.18(2))” did not comply with either r 51.18(2), or r 51.36(2).

10. As a general proposition, non-compliance with the Rules might be overcome by a grant of leave to file an amended document addressing the deficiencies in the document(s) which have been filed. No such application was made by the appellants in the present case. Accordingly, the amendment application is to be determined by reference to the amended notice of appeal in respect of which a grant of leave was sought.

11. That the proposed amended notice of appeal and the appellants’ written submissions did not comply with the relevant Rules (rr 51.18(2) and 51.36(2)) provides an additional reason for refusing the belated amendment sought by the appellants.

12. The High Court has repeatedly emphasised that a party is bound by the conduct of his or her case. In Metwally v University of Wollongong (1985) 60 ALR 68, the Court said (at 71):

It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.

13. Here, the appellants did not point to any exceptional circumstances. The present case is not one in which “all the facts had been established beyond controversy or where the point is one of construction or of law” such that an appellate court may find it expedient and in the interests of justice to entertain the point: Water Board v Moustakas (1998) 180 CLR 491 at 497; [1998] HCA 12.

13. Looking as one must “to the actual conduct of the proceedings” (Water Board v Moustakas at 497), the reasons of Payne JA demonstrate that the appellants sought to raise a case not advanced at trial. If such a case had been run at trial, it can be accepted that the respondents (or at least the first and second respondents) would have cross-examined relevant witnesses and most likely sought to lead additional evidence, including expert evidence. There is no injustice to the appellants in refusing leave to file an amended notice of appeal because the primary judge considered the case that the appellants ran at trial: Whisprun Pty Ltd v Dixon at [53]. This Court should not consider this new case on appeal. To do so would involve an injustice to the respondents.

14. As to the disposition of the notice of appeal, I agree with the orders proposed by Payne JA for the reasons given by his Honour.

15. PAYNE JA: The present appeal raises for consideration the proper application of s 9 of the Charitable Trusts Act1993 (NSW), which was introduced in 1993, in the context of a charitable trust established for the purposes of constructing and operating a monastery property located near Canberra.

16. Section 9 provides, relevantly, that:

9 Extension of the occasions for applying trust property cy pres

(1)    The circumstances in which the original purposes of a charitable trust can be altered to allow the trust property or any part of it to be applied cy pres include circumstances in which the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property, having regard to the spirit of the trust.

18. The dispute at the heart of these proceedings concerns a trust, the principal asset of which is a Serbian Orthodox monastery at Wallaroo in New South Wales. In navigating the lengthy history to this matter, it is helpful at the outset to understand the principal actors in this appeal. I have, where appropriate, given abbreviated names to certain organisations to avoid confusion and do so without intending any disrespect.

19. The first appellant is the Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust, the registered proprietor of the land on which the monastery stands (“the Property Trust Company”). The second to fifth appellants, Messers Rupar, Nesic, Cubrilo and Mandic, are directors of the Property Trust Company.

20. The individual appellants are members of the Free Serbian Orthodox Church for Australia and New Zealand (“the Free ANZ Diocese”), a diocese that formed in 1964 after a split with the Serbian Orthodox Church. In 1984, the diocese changed its name to the Free Serbian Orthodox Church – Diocese for Australia and New Zealand (“the FSOC-ANZ”), to reflect the formation at about that time of an international Free Serbian Orthodox Church. In 1991, the Diocese changed its name again to the Serbian Orthodox New Gracanica Metropolitanate – Diocese for Australia and New Zealand (“the NGM-ANZ Diocese”), as a show of goodwill while the Serbian Orthodox Church and the Free Serbian Orthodox Churches took steps towards reconciling. After 2010, for reasons I will explain in detail later, and after the migration of the vast bulk of the then members of the church back to the Serbian Orthodox Church as a result of a largely successful reconciliation between the two churches, the Diocese returned to using the name the “Free ANZ Diocese”. Except where the context requires reference to names other than the Free ANZ Diocese, this is the description I will use in these reasons to describe this church.

21. The first respondent, Bishop Irinej Dobrijevic, is a bishop of the Serbian Orthodox Church and head of the Metropolitanate of Australia and New Zealand of the Serbian Orthodox Church (“the SOC-ANZ Metropolitanate”). The membership of the SOC-ANZ Metropolitanate comprises the Australian and New Zealand members of the Serbian Orthodox Church together with all of those members of the Free ANZ Diocese who rejoined the Serbian Orthodox Church after the international reconciliation between the two churches. The second respondent is a company established in 2008 to hold newly acquired property for the Serbian Orthodox Church in Australia.

22. The Attorney General, as protector of charitable trusts, played an active role in the proceedings before the primary judge and in this appeal.

23. The issues before the primary judge were far more extensive than those on appeal. Before the primary judge it was asserted that the Free Serbian Orthodox Church Diocese for Australia and New Zealand had ceased to exist, by reason of the reconciliation vote with the Serbian Orthodox Church. The primary judge ruled that vote to have been invalid. Further, his Honour rejected an application by the Serbian Orthodox Church for the property to be applied cy-près at general law. No cross-appeal was brought from those findings.

24. In a long and careful decision which addressed the myriad of issues presented to him by the parties, the primary judge concluded, however, that under s 9 of the Charitable Trusts Act the original purposes of the trust had ceased to provide a suitable and effective method of using the trust property having regard to the spirit of the trust: [2015] NSWSC 637. Accordingly, his Honour ordered that a s 9 scheme be devised.

25. In a separate lengthy and careful judgment, the primary judge considered the competing s 9 schemes presented to him and ultimately, with some modifications, adopted the scheme propounded by the Attorney General: [2015] NSWSC 1976. That scheme, which I will explain in greater detail below, applied the monastery for the purposes of the SOC-ANZ Metropolitanate and established an advisory committee, comprising five lay persons, two nominated by each of the SOC-ANZ Metropolitanate and the Free ANZ Diocese with a neutral chair, to determine applications for the use of the trust property more generally.

26. The appellants filed a lengthy notice of appeal. They subsequently filed written submissions which did not address in any coherent way the issues raised in that notice of appeal. Despite having that matter pointed out to them by the respondents months before the appeal hearing, it was only after lunch on the first day of a two day appeal that the appellants sought to file an amended notice of appeal. For the reasons which follow I would refuse leave to file the amended notice of appeal. The proposed amendments raised fundamentally different questions to those in the notice of appeal and, equally importantly, raised a different case to that conducted by the appellants before the primary judge.

27. In relation to the issues the primary judge was asked by the parties to address, the appellants have not demonstrated error on the part of the primary judge.

28. For the reasons that follow I would dismiss the appeal.

RELEVANT FACTS

The Serbian Orthodox Church

29. The Serbian Orthodox Church, established in 1219, is a hierarchical church. The bishop has authority for all spiritual and administrative matters of the diocese. A priest, who acts as the bishop’s delegate when conducting a liturgy, will elevate the name of the bishop in the course of the liturgy.

30. A significant number of Serbs who were members of the Serbian Orthodox Church emigrated to Australia after World War II. As there was no organised diocese for them, they came under the American-Canadian Diocese of the Serbian Orthodox Church, which was then headed by Bishop Dionisije of Illinois. In 1952, the Holy Assembly in Belgrade, the highest body in the Serbian Orthodox Church, decided to recall under its jurisdiction all Serbs living in the diaspora in countries where there was no organised diocese. Serbian Orthodox Church denominated church-school communities in Australia were brought under the jurisdiction of the Patriarchate in Belgrade.

31. In 1964, the Holy Assembly removed Bishop Dionisije from his position after he labelled the Holy Assembly as “communistic”. Bishop Dionisije declared the American-Canadian Diocese autonomous from the Serbian Orthodox Church. There was litigation in the United States about the ownership of Serbian Orthodox Church assets, ultimately resolved by the US Supreme Court against Bishop Dionisije: The Serbian Eastern Orthodox Diocese for the United States of America and Canada v Milivojevich 426 US 696 (1976).

32. The majority of the Orthodox Serbs in Australia aligned with Bishop Dionisje, although some continued to accept the authority of the Patriarchate in Belgrade.

The Free ANZ Diocese

33. In October 1964, Bishop Dionisije held the First Assembly (or Sabor) of the Free ANZ Diocese. Bishop Dionisije became the first bishop of the Free ANZ Diocese.

34. A Diocesan Council was elected and a draft constitution considered and adopted. Resolutions passed by the Assembly included:

2. We condemn the indoctrination of Communist principles and practice and we call on all Serbs to do everything in their power to defend the Holy Orthodox Faith, freedom, justice and democracy.

3. We do not recognise the imposed Communist dictatorship in enslaved Yugoslavia particularly that inflicted on the Serbian people and we reject any cooperation or contact with representatives of Communist Yugoslavia abroad.

4. We confirm and maintain that in the Communist world including our old enslaved homeland there is no personal, economic, political nor religious freedom. We therefore condemn the enslavement and oppression of our Serbian Orthodox Church in Yugoslavia inflicted by the dictatorial criminal communist regime instituted by Tito.

5. We acknowledge and accept the decision brought down by the Tenth Sabor of the Serbian Orthodox Diocese of A-C held in August and November of 1963 in the Serbian Orthodox Monastery of St. Sava, Libertyville, Illinois. We also recognise their Head, His Grace Bishop Dionisije as a legitimate bishop. The charges laid against him we believe to be false and tendentious whilst the verdict and subsequent dismissal we find illegal and unfounded bearing in mind that it was instigated by the Titoist regime contrary to Church canons and against the interests of unity in the Serbian Orthodox Church and its holy mission with the Serbian people.

6. Our church life in Australia we are organising within the framework of the Free Serbian Orthodox Church-Diocese for Australia and New Zealand which is in unity with the Serbian Orthodox A-C Diocese having the one constitution, however passing our own decision within our respective dioceses. With the formation of the Diocese in Australia in light of the constitution adopted at the Tenth Sabor in America, we are not separating spiritually or nationally from our Holy Serbian Orthodox Church and our Serbian people. We still remain in dogmatic, spiritual and national unity with her and only chose not to accept her decrees and decisions as they are dictated by the godless Communist authorities. Even today we partake in her tribulations praying to God. (italics added)

35. On 31 October 1964, the Free ANZ Diocese adopted its Constitution. This Constitution did not make the bishop a “monarch”. Instead, he was responsible to the Diocesan Council, and in the event of disagreement, the dispute would be resolved by the National Assembly. The laity had a majority representation on both the Council and the Assembly. The method for appointing the bishop was set out in Article 9:

The Bishop of the Free Serbian Orthodox Diocese for Australia and New Zealand shall be nominated the [sic] Diocesan Council and the Diocesan Ecclesiastical Court, elected by a secret ballot of the Diocesan Church National Assembly, and consecrated by Orthodox Bishops having apostolic succession.

Candidates for Bishops must fulfil canonical and legal requirements provided for the position of Bishop in the Orthodox Church. They must have the required theological education; Theological Academy, Theological Faculty or university education with prior theological education. They must show by their diligent church work, faithfulness to church and people and by their exemplary life, as well as by their ability to merit the position of Bishop.

In case of vacancy or widowhood of the Diocese, the Diocesan Council shall convoke within six months at the most a Church National Assembly in extraordinary session. The Diocesan Council shall within three weeks before the Assembly propose to the Church National Assembly two or three candidates for Bishop who fulfil the necessary requirements as set forth in the previous subsection of this article.

36. Article 156 was also of some importance in this case:

All real estate and personal property of Serbian Monasteries, if they are founded, are supervised by the monastery’s administration under the direct control of the Diocesan Bishop

37. In 1964, the Holy Synod of the Serbian Orthodox Church published a decree that those who had left the Serbian Orthodox Church had excluded themselves from the community of the Serbian Orthodox Church. Thereafter, they were treated as schismatic.

38. In 1976, immediately following completion of the litigation in the United States Supreme Court, the Free ANZ Diocese Constitution was amended. Relevantly, Article two provided:

This Free Serbian Orthodox Diocese is governed on the basis of:

(1)   The Holy Scripture and Holy Tradition according to the teaching of the Holy Orthodox Church.

(2)   Canons of the Ecumenical Councils and by them recognised Canons of the Apostles, Regional Councils and Holy Fathers.

(3) Ordinances, by-laws and general rulings of the competent Church authorities as stipulated by this Constitution.

39. Article four of the 1976 Constitution provided:

This Free Orthodox Diocese is not subject to, or under the authority or patronage of any higher ecclesiastical or hierarchical authority. This Diocese is free to independently regulate its own spiritual and secular affairs as well as to affiliate or disaffiliate with any group or hierarchical entity, in accordance with the resolution by its own Diocesan Church National Assembly.

40. Article 22 provided, relevantly:

…

The Diocesan Bishop is at the same time the supreme supervisor of the Monastery when this is provided and erected. The Bishop appoints Abbots and carries canonic supervision as well as having the higher spiritual managing power over the Monastery.

41. The primary judge found, which findings were not challenged, that the 1976 Constitution (only slightly modified in 1988) continued to apply to the Free ANZ Diocese at all relevant times and that the method prescribed by the Constitution for the appointment of bishops and the resolution of disputes between the bishop and the laity was not followed in important respects on numerous occasions relevant to the issues before him.

42. His Honour summarised the effects of his findings about the history of the organisations at [45] thus:

Thus after 1964 there was in Australia both a Free Serbian Orthodox Church that did not recognise the authority of the Holy Assembly of Bishops in Belgrade but which nonetheless regarded itself in spiritual terms as an organic part of the Serbian Orthodox Church as it was before 1943, and a Serbian Orthodox Church that remained under the authority of the Holy Assembly of Bishops in Belgrade. From 1973 two bishops headed the Serbian Orthodox faithful in Australia and New Zealand: one administering the FSOC-ANZ Diocese, and one administering the ANZ Diocese of the Serbian Orthodox Church. The first plaintiff, Bishop Irinej, deposed that a central tenet of the Serbian Orthodox Church is the supremacy of the bishop in the territory of his diocese and that according to canon law there can be only one diocese for any given territory overseen by one bishop.

Appeals for a monastery

43. In June 1972, the Free ANZ Diocese began to explore ways in which it might buy a parcel of land upon which to build a monastery, a home for the aged and a home for abandoned children.

44. In January 1979, Bishop Petar (the administrative assistant to the Bishop) wrote to the Free ANZ Diocese church-school congregations urging the need for the building of a monastery in Australia. The following month, the Council, representatives of the congregations and a number of national organisations approved the collection of funds through the “St Sava Monastery (Missionary) Fund”.

45. In November 1979, Bishop Petar published an appeal for the raising of funds. Five thousand copies of the appeal were sent out.

46. The terms of that appeal provided, relevantly:

The history of the Serbian people teaches us what Serbian monasteries did over the centuries in preserving the holy heritage of our forefathers. They were places of spiritual and nationalist activity for freedom-loving Serbs. They were the defenders of Orthodoxy, St. Savaism and holy Serbian traditions. They were the seats of Bishops, monks who became consecrated saints, educators, teachers, schools, spiritual and nationalist literature as well as homes for the aged and helpless. All nationalist, spiritual and welfare work was in the hands of the Serbian people through its holy church which centred around these monasteries. The idea of building a free Serbian monastery in this country is not outdated even in this 20th century of spiritual aimlessness. On the contrary, this idea is our nationalist and spiritual necessity, moreover it is the historical calling of our hearts and souls. Finding ourselves in this free and democratic country of Australia through no fault of our own which we have accepted, we have built our churches and halls and this is where we are raising our children. In this time of historical development of our Diocese, it has become imperative to have a Serbian monastery … We hope that the Serbian spirit of church-building, the spirit of our forefathers once again shines upon us and so leave a monument in this fine and friendly country, Australia … We will have a place where we can come, rest and quench our spiritual thirst. We will be happy on this small piece of ‘Serbian soil’ which we have through our own efforts and love secured.

47. On 24 November 1980, the Wallaroo Road property was purchased. On 31 December 1981, the property was transferred to the Property Trust Company for nominal consideration.

48. Moneys were initially raised from 1980 to 1981 for the purposes of buying the land, building the monastery, and to repay the debt incurred in both of those processes. Donations continued to be received during the 1980s. The primary judge found, at [80], that:

[t]hose donations were made for the purposes of the monastery of the FSOC-ANZ Diocese and facilities associated with it, as the FSOC-ANZ Diocese was constituted from time to time.

49. Building work on the monastery commenced in 1982. The buildings that were on the site on its acquisition were described as the monastery even before the construction of the monastery church. Thus, in Serbs in Australia Volume 1 (Fr T Kazich, ed., 1989, Monastery Press), a book received in evidence for the truth of its contents and relied upon by both parties, it was reported that the Seventh Sabor for the diocese was held for the first time in the new monastery at the end of 1982. At that time voluntary workers were “putting up the roof of the monastery flats”. In his report to the Sabor Bishop Petar stated:

For two years now we have our Free Monastery … it requires much work and sacrifice in order that that which is not completed be completed. We need to build the monastery church which will be the pride and joy of all Serbs in the free world, particularly those in Australia … so let each one of us do his work, let us be good Orthodox Serbs who respect God’s laws as they are unchangeable and eternal.

50. On 27 January 1990, the monastery was consecrated.

51. During this period there was a change to the structure of the wider Free Serbian Orthodox Church. By 1984 there were three dioceses calling themselves the Free Serbian Orthodox Church: one in America and Canada, one in Australia and New Zealand, and one in Western Europe including Britain.

50. On 14 August 1984, an extraordinary Sabor was held in Illinois attended by delegates from each of the dioceses, including Australia. The bishops and the delegates of the three dioceses unanimously proclaimed the formation of the Free Serbian Orthodox Church and accepted a constitution for that church. That constitution provided for the church to have a more hierarchical structure with less lay involvement.

51. In November 1984, Bishop Petar died. The Free ANZ Diocese had become a “spiritual widow”. Metropolitan Irinej took on the role of administrator of the Diocese himself and appointed Archimandrite Sava as his deputy. This course was consistent with the powers conferred on the Hierarchical Synod under the 1984 Constitution of the Free Serbian Orthodox Church, but not the 1976 Constitution of the Free ANZ Diocese.

52. In December 1988, the Ninth Church National Assembly of the Free ANZ Diocese was held, where amendments to the Constitution of the Diocese were proposed and considered. The primary judge found that

The amendments were needed to bring the Free ANZ Diocese within the Free Serbian Orthodox Church hierarchy in a way that was consistent with the 1984 constitution of the Free Orthodox Church, or at least less inconsistent with the 1976 constitution.

55. The relevant amendments constituted:

1. changes to the first and fourth articles of the Constitution;

2. changes to the coat of arms;

3. an amendment to provide for the Diocesan Council to choose delegates to represent the Diocese at an assembly of the three dioceses of the Free Serbian Orthodox Church;

4. adoption of an additional church language; and

5. election by each church-school congregation of their delegates to attend the assembly meetings.

56. Regarding the changes to the articles of the Constitution, a new Article one was introduced in the following terms:

Art. 1

The Free Serbian Orthodox Church – Diocese for Australia and New Zealand is a religious community of Orthodox Serbs joined in Serbian Orthodox Church-school Congregations.

She is an integral part of THE FREE SERBIAN ORTHODOX CHURCH and enjoys all the ensuing benefits.

She professes her religious creed and delivers her Divine worship publicly and independently governs and regulates religious and church affairs.

Members of the Free Serbian Orthodox Church – Diocese for Australia and New Zealand believe in One Holy, Ecumenical and Apostolic Church and worship Holy Orthodoxy handed down to them from St Sava and their ancestors.

57. Article four was amended, so that the first sentence of the 1976 version of article four was removed, as shown by the strikethrough below:

Art 4

This Free Orthodox Diocese is not subject to, or under the authority or patronage of any higher ecclesiastical or hierarchical authority. This Diocese is free to independently regulate its own spiritual and secular affairs as well as to affiliate or disaffiliate with any group or hierarchical entity, in accordance with the resolution by its own Diocesan Church National Assembly.

Reconciliation Proposal

58. In 1990, the Patriarch of the Serbian Orthodox Church announced his goal of achieving reconciliation in the Serbian diaspora. A Reconciliation Proposal was agreed upon in 1991, however, the Holy Assembly did not agree to the whole proposal. Instead, the Holy Assembly resolved to form a Joint Commission to consider future administrative relations between the Serbian Orthodox Church and the Free Serbian Orthodox Church, which was to be renamed the New Gracanica Metropolitanate.

59. In June 1991, Metropolitan Irinej, Bishop Vasilje and Bishop Damaskin held an extraordinary Sabor, where the Free ANZ Diocese Assembly passed a resolution to “show goodwill at this difficult time of reconciliation” to change its name to the Serbian Orthodox New Gracanica Metropolitanate– Diocese for Australia and New Zealand (“NGM-ANZ Diocese”). It was also decided at this Sabor that any decision of the Joint Commission would only be implemented once confirmed by the NGM-ANZ Diocese.

60. On 15 February 1992, Patriarch Pavle, Metropolitan Irinej, Bishop Vasilje and nine bishops of the Serbian Orthodox Church concelebrated a liturgy of reconciliation in the Cathedral at Belgrade, whereupon the clerics and rites performed in the Free Serbian Orthodox Church dioceses were confirmed and the entire New Gracanica Metropolitanate were welcomed into the fold of the “now one Serbian Orthodox Church”.

61. The primary judge found, at [321], that:

The reconciliation and concelebration of the liturgy brought [the Free ANZ Diocese] into spiritual communion with the Serbian Orthodox Church, but spiritual communion did not connote a surrender of its status as an independent and autonomous church.

62. In January 1993, the Diocesan Plenum of the NGM-ANZ Diocese held a meeting and passed a vote of no confidence in Bishop Vasilje. On 20 May 1994, the Holy Assembly of Bishops in Belgrade appointed Archimandrite Sava (juric) as bishop of what was called the vacant diocese for Australia and New Zealand of the New Gracanica Metropolitanate. Some members of the Church National Assembly expressed concern that they had not been involved in choosing the new Bishop. However, with Mr Nesic’s (the third appellant) and Metropolitan Irinej’s support, Bishop Sava faced no further opposition.

63. The latter appointments were not in accordance with the Constitution of the Free ANZ Diocese but the primary judge found (and there is no challenge to this finding on this appeal) that the Free ANZ Diocese accepted the appointments and there was thus a variation of the consensual compact which governed the operation of the Free ANZ Diocese.

Discord in the NGM-ANZ Diocese

64. Conflict between the clergy of the NGM-ANZ Diocese and certain lay members began to emerge in late 2004. On 24 December 2004, a Plenum meeting was held, but was discontinued by the then Bishop on the ground that former members (Mr Nesic and Mr Toma Banjanin) were present but refused to leave. The National Assembly, held the following day, elected a new council to the exclusion of Mr Nesic and Father Saracevic.

65. In September 2005, the Annual General Meeting of the Property Trust Company voted for Mr Nesic to chair the meeting, rather than the Bishop. The tension was predicated, in part, by the Company’s call for the Bishop (or the Diocese) to pay rent and expenses for the Bishop’s residence on the monastery property.

66. In 2006, Bishop Irinej Dobrijevicwas elected by the Holy Assembly in Belgrade as Bishop of the Serbian Orthodox Church with responsibility for the ANZ Diocese and Bishop-Administrator of the NGM-ANZ Diocese (as noted above the latter appointment was not in accordance with the 1976 Constitution but the primary judge found it was nonetheless valid by reason of alteration of the consensual compact governing the operation of the Free ANZ Diocese). Bishop Irinej Dobrijevicattempted to complete the unification of the two dioceses, but was resisted by some members of the laity of the NGM-ANZ Diocese, including the present appellants.

67. In December 2006, Bishop Irinej advised all parish administrators and others that he intended to hold the next National Assembly in Sydney, thus moving the administrative centre of the Diocese from the monastery to Sydney. This proposed move, and the Bishop himself, were heavily criticised in a paper prepared by Mr Nesic and Mr Banjanin which was published online. The Bishop demanded that the text be withdrawn and an apology issued. The Bishop said that the men had excommunicated themselves and rendered themselves subject to disciplinary punishment. The Bishop also wrote to all the organisations in the NGM-ANZ Diocese, saying that members who were excommunicated could not participate in meetings. This extended to meetings of the Property Trust Company.

68. On 15 September 2007, the Property Trust Company passed a special resolution to change its constitution. The changes resulted in the Board no longer requiring a balance of lay and clergy members, paving the way for a greater representation of lay members. They also saw the Bishop’s active role on the Board removed; he was to be an “honorary president” only.

69. Father Saracevic had been a priest in the Blacktown parish before having a falling out with his parishioners and had been without a parish since 2005. In late 2007, he took a position with the Old Calendar Orthodox Church of Greece – Holy Synod in Resistance (“OCOCG–HSIR”). He was subsequently defrocked by Bishop Irinej. Father Sarcevic was not notified of the charges, the penalty was not imposed by the Ecclesiastical Court and there was no hearing.

70. The conflict escalated when, in October 2007, Bishop Irinej announced that the 15th National Church Assembly would be held in Sydney.

71. On 1 December 2007, Mr Mandic and Mr Kaladjudjevic, members of the Diocesan Council, along with four others, said to be writing with the support of 10 congregations and four Serbian organisations, sent an invitation to “legally elected delegates” and “faithful people” to attend an Assembly at the monastery.

72. On or about 10 December 2007, Bishop Irinej caused a warning to be published regarding the “illegal call” for the meeting at the monastery. The notice also stated that Mr Mandic and Mr Kaladjudjevic had been excluded from financial membership in any church-school parish. At the same time, the Bishop convened a meeting of the Diocesan Council without inviting Mr Mandic or Mr Kaladjudjevic. The primary judge found that the Bishop did not have authority to exclude these members, nor did the Council have authority to ratify his decision.

73. On 20 December 2007, the Bishop and the Ecclesiastical Court both published an announcement that any delegates who took part in the monastery meeting would be stripped of their financial membership in the community and referred to the Ecclesiastical Court for discipline. The Ecclesiastical Court excommunicated Mr Nesic from the Orthodox Church on the basis that he still had not apologised to the Bishop for his online publication. The Ecclesiastical Court said he was stripped of all rights to sacraments and church rights. Mr Nesic did not receive prior notice that proceedings had been brought against him, nor did he have the opportunity to defend himself.

74. A meeting that described itself as an Extended Plenum took place at the monastery on 29 December 2007, notwithstanding the Bishop’s warnings. Mr Nesic was elected to chair the meeting. The meeting was not a meeting of the Church National Assembly. Those attending the meeting issued a media release that conveyed greetings to Patriarch Pavle of the Serbian Orthodox Church, but also advised that the meeting had passed a vote of no confidence in the administrator, Bishop Irinej. The meeting stated that those present did not recognise the validity of a “so-called meeting” held on the same day in Sydney and would not acknowledge decisions that might be made at that meeting.

75. On 6 February 2008, Bishop Irinej wrote a letter to all parish administratiors and committees of church-school communities of the NGM-ANZ Diocese condemning what he called the illegal and graceless meeting. He said that no such meeting could be held without the Bishop’s authority and that those who had called the meeting had placed themselves outside the protection of the Church. Bishop Irinej stated that various individuals either had been stripped of their rights to financial membership or would be stripped of those rights if they did not repent and apologise.

76. Between 2007 and 2008, Bishop Irinej was also in conflict with four NGM-ANZ Diocese church-school congregations. During this period Bishop Irinej excommunicated numerous people, removed them from their office in the congregation and appointed trustees in their place. Meanwhile, the Property Trust Company continued to reject the Bishop’s authority and sought to exclude him from the monastery property.

77. In 2008, these divisions in the NGM-ANZ Diocese spilled over to the monastery. Prior to March 2008, the Bishop and clergy and the individual members of the Diocese generally had unfettered access to the monastery property. On 22 March 2008, the directors of the Property Trust Company resolved to change the locks and keys to buildings on the monastery grounds and further resolved that all access to the property would be a matter for the directors of the Property Trust Company. On or shortly after 22 March 2008 the locks were changed. This was done without the directors consulting Bishop Irinej.

78. On 27 March 2008, Bishop Irinej issued a notice addressed “To Whom it May Concern” stating that the monastery fell under the direct jurisdiction of the Bishop. He referred to Article 22 of the 1976 Constitution.

79. Following the issue of Bishop Irinej’s decree of 27 March 2008, members of the Diocese, acting with the Bishop’s approval, changed the locks again. In April 2008, Mr Nesic (as chairman of directors of the Property Trust Company) called the police when he found that the monastery church had been locked and that members of the Property Trust Company could not enter. On a number of occasions in 2008 and up to 2010, the locks were changed by one group and then changed again by another.

80. The primary judge found that Bishop Irinej was entitled to supervise the monastery under the 1976 Constitution and the appellants acted in breach of trust in acting to prevent him from doing so. No challenge was made to those findings.

Meetings of 3 and 4 September 2010

81. Work on a new constitution had resumed after the appointment of Bishop Irinej and a joint legislative committee consisting of representatives of both the NGM-ANZ Diocese and the Serbian Orthodox Church-ANZ Diocese had prepared a draft of a new constitution for a unified diocese and given it to Bishop Irinej. Messrs Nesic, Banjanin and others complained that the draft did not represent the views of the members of the NGM-ANZ Diocese.

82. On 4 September 2010, assemblies of both the Serbian Orthodox Church-ANZ Diocese and the NGM-ANZ Diocese were held in the presence of each other in Melbourne. Both passed resolutions to adopt the unified constitution, which were approved by the Holy Assembly on 23 May 2011. The primary judge found that those resolutions were invalid and did not have the effect that the Free ANZ Diocese ceased to exist as a separate association. No cross appeal was brought from these findings.

Post September 2010

83. Since the meeting on 4 September 2010, the Free ANZ Diocese has been functioning entirely separately from the SOC-ANZ Metropolitanate. As the Free ANZ Diocese did not have a bishop, it was unable to convene many of its administrative bodies (which require the bishop to be a member).

84. On 15 November 2010, the Property Trust Company wrote to Bishop Ambrose granting him approval as Bishop of the OCOCG-HSIR, Diocese for Australia, to conduct divine liturgy in the church of the monastery and to hold the first Annual General Meeting of the Australian Diocese of the Old Calendar Orthodox Church of Greece on the premises of the monastery. On 19 November 2010, the OCOCG-HSIR conducted a service at the monastery. This, of course, was without the approval of Bishop Irinej.

85. On 22 March 2011, Mr Nesic as chairman of directors of the Property Trust Company wrote to Bishop Ambrose. He advised that the board of the Property Trust Company recognised and acknowledged his Grace as administrator of the Old Calendar Greek Orthodox Diocese for Australia and had resolved to request his Grace to consider “receiving” the congregation of the Free Serbian Orthodox Church Monastery St Sava New Kalenic under his direct spiritual jurisdiction and the spiritual jurisdiction of the Holy Synod of the Old Calendar Orthodox Church of Greece until such time as the Property Trust Company deemed otherwise. The resolution of the Property Trust Company, as advised to Bishop Ambrose, included that the Property Trust Company would not be bound by any decisions of the Old Calendar Greek Orthodox Diocese for Australia or the Holy Synod of the Old Calendar Orthodox Church of Greece, apart from those spiritual decisions to which it consented. The resolution also included the appointment of Father Saracevic as rector and spiritual overseer of the monastery.

86. Bishop Ambrose replied on 28 March 2011 and advised that the Holy Synod of the OCOCG–HSIR had unanimously accepted the request and had decided that:

… Until the Property Trust shall deem otherwise, the monastery of St Sava, New Kalenic shall be regarded as spiritually dependent on the Old Calendar Greek Orthodox Diocese of Australia, and is recognised as a constituent part of the said Diocese, and further that the Property Trust shall not be obliged to accept any decisions of the said Diocese or the Holy Synod of the Old Calendar Orthodox Church of Greece with which it is not in agreement. The very reverend Prota Dragun Saracevic is appointed Rector and spiritual overseer ad interim of the said Monastery and its congregation.

87. Bishop Ambrose did not give evidence to explain how this term by which the Property Trust Company could decide not to accept decisions of the Old Calendar Orthodox Diocese of Australia with which it disagreed was consistent with principles of Orthodoxy. Nor (as the primary judge found) did the Property Trust Company, as distinct from the Free ANZ Diocese, have any right under Article 4 of the 1976 Constitution to affiliate with another religious group. No appeal was brought from that finding.

88. On 11 July 2011, a new company limited by guarantee was incorporated that was called “Free Serbian Orthodox Church – Diocese for Australia and New Zealand”. Its directors were Messrs Nesic, Cubrilo and Vucicevic and Father Saracevic. Mr Nesic gave evidence (which the primary judge found to be implausible) to the effect that the incorporation of a new company with a similar name was done through the Property Trust Company’s auditors and he was not familiar with it.

89. On 30 September 2012, Mr Nesic, writing as the chairman of directors of the “Free Serbian Orthodox Church Diocese for Australia and New Zealand” (that is, the newly incorporated company) wrote to Bishop Ambrose purportedly confirming that the “Free ANZ Diocese” confirmed its affiliation with, and accepted the refuge provided by, the OCOCG-HSIR. Thus the directors of the new company took it on themselves to represent the Free ANZ Diocese. They were numerically a small part of that religious association, as it had formerly been constituted.

90. Mr Nesic stated in his letter of 30 September 2012 that the affiliation with the OCOCG–HSIR did not require the “Free ANZ Diocese” to transfer any of its church property to the OCOCG-HSIR, nor to change its liturgy or the way in which it practised its faith. He wrote that:

The Free ANZ Diocese wishes to remain an independent Orthodox denomination recognising and acknowledging his Grace Right Reverend Bishop Ambrose, Bishop of Methoni as administrator of the Free ANZ Diocese for the time being.

91. The 1976 Constitution of the Free ANZ Diocese (renamed NGM-ANZ Diocese in June 1991) did not make provision for the appointment of an administrator, a point the second to fifth appellants made against the respondents in the court below. Nonetheless, Bishop Ambrose was purportedly appointed as administrator of the “Free ANZ Diocese” by the directors of the new company. Mr Nesic also advised that:

… the Free ANZ Diocese separated itself from, and formally rejected the authority of Bishop Irinej Dobrijevic on 29 December 2007 and now seeks the assistance of the HSIR to locate a suitable candidate for Bishop of the Free ANZ Diocese whom [sic] can be presented to and accepted by the Free ANZ Diocese Church National Assembly.

The installation of a Bishop will be integral to the future of the Free ANZ Diocese and will particularly assist the Property Trust in defending proceedings No. 2011/247393 commenced in the Equity Division of the Supreme Court of New South Wales against the Property Trust and its directors on 1 August 2011 by Bishop Irinej Dobrijevic and the Serbian Orthodox Church in Australia and New Zealand Properties Limited. (italics added)

92. Thus an avowed purpose of the directors of the Property Trust Company engaging a bishop from the OCOCG-HSIR, was to assist the Property Trust Company in defending the present proceedings.

93. On 5 November 2012, Father Saracevic (who was associated with the appellants), purportedly acting on behalf of the Diocesan Council, convened a joint meeting of the Diocesan Council and the Ecclesiastical Court of the Free ANZ Diocese to be held on 17 November 2012 to consider the proceedings before the primary judge. The notice was apparently sent by Father Saracevic to 11 individuals. The primary judge found that there was no evidence that those individuals were members of the Diocesan Council or the Ecclesiastical Court. The appellants (defendants before the primary judge) accepted that in 2012 there were no continuing members of the Diocesan Council or the Ecclesiastical Court.

94. The primary judge found that the appellants did not reject the authority of Bishop Irinej Dobrijevic over the monastery on the grounds of differences of faith or doctrine and that the division was about church politics. No ground of appeal squarely challenged this finding.

95. The primary judge found that whilst in many respects Bishop Irinej exceeded the authority that he had as Bishop-Administrator of the NGM-ANZ Diocese and failed to provide procedural fairness to individuals who were purportedly excommunicated or deprived of rights as members of church-school congregations, none of the examples cited by the appellants’ expert witness, Archbishop Chrysostomos, supported the view that claims of administrative injustice were matters of “faith and righteousness” that “… could reasonably constitute grounds – according to the letter of the canons and the spirit of the Church’s super-canonical historical witness – for a walling-off from the Serbian Orthodox Church in terms consistent with the 1976 constitution”.

THE DECISION OF THE PRIMARY JUDGE

96. The following findings by the primary judge are those most important to the issues on appeal.

97. It should be appreciated at the outset that the primary judge dealt with a much broader case than the one presented on appeal. In particular, his Honour needed to determine important questions such as the effect of the 2010 resolutions and whether the NGM-ANZ Diocese had ceased to exist as a separate association. His Honour found that the NGM-ANZ Diocese did continue to exist and no cross-appeal was brought from that conclusion. In addition, his Honour was asked to determine whether the present appellants had engaged in breaches of trust regarding the trust property. He found that they had. No appeal was brought from those findings.

98. In reaching these decisions, the primary judge made many findings of fact about disputed issues which informed his analysis of the s 9 question. No appeal was brought about those findings of primary fact and, as will become apparent, the appellants did not comply with Uniform Civil Procedure Rules 2005 (NSW) r 51.18(2), leading to considerable confusion about what case it was that they sought to make. The appellants’ procedural failures made the resolution of this appeal much more difficult than it should have been.

99. After reciting the principal matters of fact and dealing with the issues which are not the subject of this appeal, the primary judge turned specifically to the question posed by s 9 of the Charitable Trusts Act at [458] of his reasons.

100. It is telling, in the light of the case sought to be conducted by the appellants in their proposed amended notice of appeal (dealt with below) that the primary judge dealt with the original purposes of the trust at an earlier part of the judgment, [81] and [82]. He did so because, as the voluminous trial record discloses, the appellants made no submission that the original purposes of the trust included the establishment of a church with a congregational or presbyterian structure. When specifically dealing with s 9 in their lengthy written closing submissions the appellants struck through all submissions about the original purposes of the charitable trust. To the extent that the primary judge was required to consider the struck out material, no submission was advanced by the appellants that the original purposes of the trust included the establishment of a monastery for a church with a congregational or presbyterian structure.

101. The appellants’ opening oral submissions before the primary judge addressed the topic of the original purposes in the following terms:

There is a difference between the parties as to the purposes of the charitable trust. The contention of the plaintiffs is the religious purposes of the Free ANZ Diocese. I think, your Honour, that would be perhaps the most general form of charitable trust type of the diocese.

The defendants’ contention is a more particular charitable trust for the building and operation of a Monastery of the Free ANZ Diocese, a diocesan centre of the Free ANZ Diocese, a youth hostel and home for the aged. (italics added)

Maybe not much turns on this, your Honour, both parties agree that the religious purposes of the trust were for the Free Serbian Orthodox Diocese; but we would say in the circumstances it is a particular charitable trust rather than a general one, and it really is based upon the importance of the fund and use of moneys from the fund to purchase land.

…

There are those who [wish to adhere to the original principles], and we would contend that in those circumstances, one couldn’t deprive or vary the trust to deprive them of the chance to advance those religious purposes.

102. The italicised words in this submission are important. At [82] of his reasons, the primary judge agreed with the appellants as to what were the original purposes of the trust, finding that “the property was acquired by the Free ANZ Diocese…for the purpose of building and conducting a monastery, a monastery church, and related facilities for the purposes of the Free ANZ Diocese.” That finding adopted almost verbatim the submission made by the present appellants about the original purposes of the trust. That finding by the primary judge involved a rejection of the competing original trust purposes advanced by the present respondents.

103. On appeal, the appellants belatedly sought to advance a different case about the original purposes of the trust, based on an asserted ecclesiological difference between the Free ANZ Diocese’s congregational structure, and the hierarchical structure of the Serbian Orthodox Church.

104. The argument that the original purposes of the charitable trust included that the monastery property only be used in a way consistent with an alleged fundamental matter of faith - the congregational or presbyterian nature of the Free ANZ Diocese - was not put to the primary judge. While it is true that the appellants commenced their final submissions before the primary judge by reference to an alleged ecclesiological difference between the Free ANZ Diocese and the Serbian Orthodox Church, this submission was addressed to the separate claim, dismissed by the primary judge, that that property should be applied cy-près at general law to the SOC-ANZ Metropolitanate and not the content of the original purposes of the trust.

The original purposes of the trust

105. As there was no trust instrument for the monastery property trust, the identification of the trust purpose depended on what the intentions were of those who contributed to the acquisition of the land and construction of the monastery and related facilities. The primary judge found:

[81] There being no trust instrument, the identification of the trust purpose depends on what the intentions were of those who contributed to the acquisition of the land and construction of the monastery and related facilities. Regard may also be had to the use to which the property was put from which the contributors’ intentions can be deduced (Radmanovich v Nedeljkovic (2001) 52 NSWLR 641; [2001] NSWSC 492 at [149]-[151]).

[82] The property was acquired by the Free ANZ Diocese and is now held by the Property Trust Company upon a trust for the purpose of building and conducting a monastery, a monastery church, and related facilities for the purposes of the Free ANZ Diocese. It was not acquired for the purposes of the Free ANZ Diocese generally, but for the more specific purpose of building the monastery buildings, including the church, conducting a monastery on the site and conducting church services in the church that was to be built. The monastery as a whole, including the church, was to be used for the purposes of the Free ANZ Diocese. It would be a breach of trust if the monastery were sold in order that the proceeds could be used for the purposes of the Diocese, but there is no suggestion that that is contemplated.

106. The primary judge returned to this topic at [129]‑[131] and [140]:

[129] At para [82] above I have held that the monastery is held on trust for the purpose of building the monastery buildings, including the church, conducting a monastery on the site and conducting church services in the church that was to be built. The monastery and church were to be used for the purposes of the Free ANZ Diocese.

[130] This means that the monastery property, and in particular the church constructed on it, must be used only in a way which is consistent with the fundamental or essential doctrines and principles of the Free ANZ Diocese. (Craigdallie v Aikman (1813) 1 Dow 1 at 15-17; 3 ER 601 at 606; Craigdallie v Aikman (No. 2) (1820) 2 Bli 529 at 541-544; 4 ER 435 at 439-441; Attorney-General v Pearson (1817) 3 Mer 353 at 400-402; 36 ER 135 at 150; Milligan v Mitchell (1837) 3 My & Cr 72 at 83; 40 ER 852 at 856; Attorney-General v Gould (1860) 28 Beav 485 at 495, 501; 54 ER 452 at 456, 458-459; General Assembly of Free Church of Scotland v Lord Overtoun [1904] AC 515; Wylde v Attorney-General (NSW); ex rel Ashelford (1948) 78 CLR 224 at 275, 294-5, 309; Radmanovich v Nedeljkovic at [155]-[164]; Mr Justice McPherson “The Church as Consensual Compact, Trust and Corporation” (2000) 74 ALJ 159 at 167-169).

[131] The plaintiffs submitted that while the Diocesan Constitution, in any of its versions, was a foundation document recording the basis upon which the members of the diocese had associated, it was not a trust instrument prescribing the terms of the trust. Counsel for the plaintiffs submitted that the constitution afforded evidence of the purposes of the trust to be afforded by the founders’ intentions, but was not to be treated as though it were a written prescription of the trust and to the extent to which the document governed use of the trust property not every provision would be binding, it being necessary to distinguish between what is essential and what is not essential. Counsel for the defendants submitted that church constitutions and rules ordinarily form terms of the trusts upon which the church’s property is held, citing Daugars v Rivaz (1860) 28 Beav 233 at 250; 54 ER 355 at 362. Nothing in Daugars v Rivaz, either in the page cited or otherwise, bears on this question. I accept the plaintiffs’ submissions that the terms of the constitution of the Free ANZ Diocese is not to be treated as a “written prescription of the trust”. However, to the extent the constitution evidences the essential or fundamental principles or doctrines of the Free ANZ Diocese, it is evidence of the purposes of the trust in the same way as other evidence of the founders’ intentions.

107. His Honour made clear findings about the limits of the consensual compact between the members of the unincorporated associations in the context of the leading cases about church property and trusts:

[138] There are limits on the extent to which amendments to the contract or consensual compact that bound the members of the unincorporated association that formed the Free ANZ Diocese could affect the trusts on which church property is held. Once the purposes of a charitable trust are laid down (whether by express declaration or by evidence of the founders’ purposes) the trust property must be applied for those purposes unless a power to vary the purposes is inherent in the statement of purposes, either expressly or by implication. In Radmanovich v Nedeljkovic Young CJ in Eq said (at [152]):

However, unless there is provision in the trusts as laid down by the founders' intention for development in the sense of development within a living church or amendment or change by resolution of a particular majority or a unanimous resolution, then it is not open to the members for the time being even over a long period of time to change the trusts. Accordingly, if one finds that the founders' intention was to have a church which was completely free from any control by the Pope, yet otherwise accepted the doctrine and tenets of the Church of Rome, there might well be a valid charitable trust to that end but even if there had been evidence of 30 to 50 years recent practice whereby the hierarchy in Rome in fact appointed priests and otherwise controlled the Church that would not be enough to displace the original trust. These principles are deduced from cases such as Craigdallie v Aikman (1813) 1 Dow 1, 16; 3 ER 601, 606 (subsequent proceedings (1820) 2 Bligh 529; 4 ER 435); Foley v Wontner (1820) 2 Jac & W 245; 37 ER 621

[139] In General Assembly of Free Church of Scotland v Lord Overtoun the House of Lords held that where property was held on trust for the maintenance and support of the Free Church of Scotland, it could not be applied for the purposes of a new church arising out of a union between the Free Church of Scotland and the United Presbyterian Church where the union involved a departure from essential or fundamental doctrines of the Free Church at the time the trusts arose. In Attorney-General (NSW) v Grant (1976) 135 CLR 587 Gibbs J (with whom Mason, Stephen and Jacobs JJ agreed) observed (at 602) that in General Assembly of Free Church of Scotland v Lord Overtoun, Lord Davey had accepted that there could be a qualification to that principle if the doctrines of the church included a power to vary even fundamental doctrines or principles. In deciding that the Presbyterian Church of Australia in New South Wales had power to enter into a union with the Methodist Church of Australasia and the Congregational Union of Australia that would mean that the property of the Presbyterian Church would be held for the purposes of the new Uniting Church, Gibbs J said (at 603):

It is clear in the light of the decision in General Assembly of Free Church of Scotland v Lord Overtoun that if the basis on which the members of the Presbyterian Church of Australia are associated contains a power to enter into union with other churches, and for that purpose to alter or modify the doctrines of the church, including fundamental doctrines, and the Presbyterian Church of Australia in pursuance of that power does alter or modify its doctrines and enter into a union, existing trusts in favour of the Presbyterian Church of Australia will enure in favour of the new united church. On the other hand, a mere power to enter into union will not in itself give power to effect an alteration of fundamental doctrine.

[140] It follows in my view that even if the contract or consensual compact between members of the unincorporated association that was the Free ANZ Diocese were varied from the terms expressed in its constitution by the adoption of practices that were inconsistent with the constitution over a number of years without formal amendment, nonetheless, such a variation would not affect the trusts on which the monastery property is held if the variation were of a fundamental or essential doctrine or principle. I have found that the trust purpose was that the monastery be used for the purposes of the Free ANZ Diocese as it was constituted from time to time (at para [80]). But even a formal variation of the constitution, or its abrogation, that departs from a fundamental or essential aspect of doctrine or principle will be ineffective to vary the terms of the trust, unless the basis of association of the members of the voluntary association that made up the Free ANZ Diocese included such a power. The 1976 constitution contained no such power.

108. There was no issue at the trial about this matter and no challenge to this finding by the appellants in the original notice of appeal. As will become apparent, a challenge to the primary judge’s findings about the original purposes of the trust became the centrepiece of the appellants’ challenge to the decision of the primary judge in the proposed amended notice of appeal.

109. Regarding the “fundamental” doctrines of the Free ANZ Diocese, the primary judge addressed and only addressed the doctrines asserted by the appellants at the trial to be “fundamental”. It is for that reason that his Honour in various places stated what the “fundamental” or “essential” doctrines of the Free Serbian Orthodox Church were not.

110. In A-G ex rel Elisha v Holy Apostolic Church (1989) 37 NSWLR 293 Young J summarised the discussion of Miller J in the US decision of Watson v Jones 80 US 679 (1871):

In Watson’s case, Miller J indicated that the government of churches could usually fall into three types, viz:

(a) Hierarchical;

(b) Presbyterian; or

(c) Congregational.

111. By hierarchical, Miller J meant a church which has superior clergy and in which the government of the church is committed to those superior clergy. Ordinarily a church which has bishops will fall into this class and this will be so notwithstanding that some governmental powers are given to clergy of inferior rank or to laity. The presbyterian model is where there is a succession of committees at national, regional and local level, so that the decision of the local congregation may, in appropriate cases, be overturned by that of a general assembly. With a congregational model, the local congregation is the body which makes or unmakes the rules.

112. The primary judge considered the nature of the Free ANZ Diocese at [62]:

Counsel for the first to fifth defendants submitted that the FSOC-ANZ Diocese could be characterised as a congregational, rather than a hierarchical, church. I think it would be more accurate to describe its governance as a form of presbyterianism where ultimate authority is vested in a council made up substantially of representatives of the congregations. But notwithstanding Article 2, the governance of the Free ANZ Diocese was not in accordance with Holy Tradition or holy canons according to the teaching of the Orthodox Church. This disconformity was later to play a significant role in disputes that emerged from at least 2007 when the first plaintiff, Bishop Irinej, attempted to bring the affairs of the Free ANZ Diocese wholly within his authority. It poses a particular problem in identifying what doctrines or principles of the Free ANZ Diocese should be regarded as fundamental. Was independence from the Serbian Orthodox Church and the ability to affiliate with and disaffiliate from other churches fundamental? Was the model of governance whereby the Bishop was subjected to the authority of the Diocesan Council and the Church National Assembly fundamental, or was adherence to the Holy Tradition as applied in Orthodox churches more important? Was it any part of the principles of the Free ANZ Diocese that it seek to become united with the Serbian Orthodox Church when the political climate changed?

113. The primary judge answered each of these questions, although not in a way specifically related to the original purposes of the trust, because he was not asked to do so. He did address these questions when considering the spirit of the trust, which is the way the parties chose to fight the issues before him.

114. Shortly put, in relation to the spirit of the trust, the primary judge found that independence from the Serbian Orthodox Church was not fundamental. The model of governance whereby the Bishop was subjected to the authority of the Diocesan Council and the Church National Assembly was not fundamental and the principles of the Free ANZ Diocese were based upon a desire to reunite with the Serbian Orthodox Church when communism fell in Serbia.

316. This finding was not a simple application of a “size” test by the primary judge. What his Honour did was to contrast the character of the trust, being a body which had provided access to a monastery which was “a little piece of Serbia” to the vast majority of Serbian Orthodox adherents in Australia, with the body now which provided access to only a small minority of Serbian Orthodox adherents in Australia.

317. His Honour made a clear finding when addressing the general law cy-près doctrine that the change in character he identified was irrelevant. He found in favour of the appellants that the monastery could not be held on trust for the purposes of congregations who had joined the SOC-ANZ Metropolitanate, citing Grant. That is, the fact that only a rump of Serbian Orthodox adherents now had access to the monastery did not make it impossible or impracticable to carry out the original purposes of the trust. The appellants, in effect, seek to elevate this question as determinative of the s 9 question his Honour was asked to address.

318. That was not the task which was set by s 9 of the Charitable Trusts Act. In addressing that question it was relevant for his Honour to consider the changed character of the trust having regard to the spirit of the trust.

319. The appellants’ submissions on the character issue assumed that as two churches were involved the differences between the Free ANZ Diocese and the SOC-ANZ Metroplitanante were necessarily matters of faith. I agree that if the differences between the Free ANZ Diocese and the SOC-ANZ Metroplitanante had been matters of faith, his Honour should have taken those differences in faith into account for the purposes of s 9: General Assembly of Free Scotland v Lord Overtoun. However the primary judge concluded, correctly in my view, that the differences between the Free ANZ Diocese and the SOC-ANZ Metroplitanante were not matters of faith. The detailed history of the organisations recited by his Honour which I have summarised in these reasons makes clear that the split in the Serbian Orthodox Church was one based on perception of control of the Serbian Orthodox Church by the (then) communist authorities in Belgrade and not on matters of faith. The submission that there was “no evidence” to support this conclusion is not possible to maintain. The appellants’ reliance on an alleged inconsistency with the decision of the US Supreme Court in Milivojevich is both legally irrelevant and factually incorrect.

320. As I have found, the alleged difference in faith, which was that the Free ANZ Diocese was an ”independent presbyterian church”, was correctly rejected by the primary judge. The claim that the Free ANZ Diocese was forever to be independent of the Serbian Orthodox Church was at the forefront of the appellants’ case before the primary judge and rejected by him. The alleged presbyterian character of the Free ANZ Diocese as a central tenet of faith was at the forefront of this appeal. As I have found, however, the primary judge correctly rejected the submission that the presbyterian aspects of the 1976 Constitution were matters of faith.

321. In relation to the primary judge’s findings about the changed character of the trust this is important. His Honour’s conclusion at [500], was that to apply the monastery property now to the purposes of the appellants would be contrary to the spirit of the trust as the leaders of the Free ANZ Diocese (and the appellants in relation to the trust) had acted contrary to the terms of the Free ANZ Diocese’s Constitution and in breach of trust. Those breaches of trust included failing to heed the directions of Bishop Irinej, who was entitled to give those directions by reason of his appointment which was in accordance with the changed consensual compact. It is part of the central conclusion of the primary judge concerning the change in character of the Free ANZ Diocese that its leaders did not adhere to the 1976 Constitution and had acted in breach of trust in numerous respects regarding the management of the monastery property.

322. The appellants’ submission that the primary judge erred in taking this matter into account as it involved only “the actions of past leaders of the Free ANZ Diocese who acted contrary to the constitution” should be rejected. Factually, the breaches of trust were committed by some people who remained involved with the trust at the time of the trial before the primary judge. More fundamentally, so far as the character issue is concerned, the breaches of trust were relevant in that the directions of the properly appointed Bishop, with the constitutional authority to give those directions, were not followed. This was a significant change in the character of the trust, relevant to determining the question posed by s 9.

323. It is no answer that the Property Trust Company purportedly appointed Bishop Ambrose to the role he now plays. As the primary judge found, the Property Trust Company had no power to do so under the 1976 Constitution. Whatever else may be said about the appointment of Bishop Ambrose, the steps taken by the appellants to effect that appointment are a cogent demonstration that the presbyterian aspects of the 1976 Constitution were not matters of faith for the Free ANZ Diocese. If they were, the fact that the 1976 Constitution was completely ignored by the appellants in the appointment of Bishop Ambrose was inexplicable.

324. There was no error, let alone a House v The King error, demonstrated in the primary judge’s conclusion on this issue. The appellants’ submissions on the character issue are, in essence, that because the monastery “remained available to nurture the spiritual life of the members of the Free ANZ Diocese”, the original trust purposes must therefore have remained a suitable and effective method of using the trust property. The proposition elevates the test in s 9 to the general law test of impossibility or impracticability. The appellants’ submission is inconsistent with the intention of the legislature that s 9 provide a more expansive operation of the cy-près doctrine.

325. Grounds 1(a), 1(b), 2(c) and 2(d) of the notice of appeal should be rejected.

Grounds 3(b) and 3(c) - the original purposes, wholly or in part, have since they were laid down ceased to provide a suitable and effective method of using the trust property having regard to the Free ANZ Dioceses’ affiliation with the OCOCG-HSIR

329. The appellants’ submissions were to the effect that because the original trust purposes included “the principles of freedom of religious association of the Free ANZ Diocese and that a diocese would not be administered by a bishop of a particular ethnicity”, the continued use of the trust property by the Free ANZ Diocese with Bishop Ambrose as its bishop necessarily continued effectively to serve those purposes. There are two principal difficulties with this submission.

330. First, as I have found, the appellants’ complaints about the primary judge’s findings about the original trust purposes are outside the grounds of appeal and were not raised in the proceedings below.

331. Secondly, the appellants have not addressed the statutory test. The appellants’ submission amounts to the proposition that affiliation of the Free ANZ Diocese with the OCOCG-HSIR and the ethnicity of Bishop Ambrose do not demonstrate the “inappropriateness” of the original trust purposes. The appellants’ submission ignores the critical elements of the primary judge’s findings about the spirit of the trust, namely that the Free ANZ Diocese had a Serbian character and its members shared the fervent hope that the church would reunify once communism fell.

332. I have set out those findings at [117] above. On the evidence before the primary judge, which I have summarised at [273]‑[280], those conclusions were compelling. There was no error, let alone a House v The King error demonstrated in the primary judge’s findings that the Free ANZ Diocese’s affiliations with the OCOCG-HSIR were completely inconsistent with critical elements of the spirit of the trust, namely that the Free ANZ Diocese have a Serbian character and it was fervently hoped that the church would reunify once communism fell. The primary judge found that affiliation with the OCOCG-HSIR was inconsistent with the former and made the latter much less likely. No error has been shown in those findings nor in his Honour taking them into account in making the broad evaluative assessment that s 9 of the Charitable Trusts Act requires.

333. The appellants’ remaining submissions on this issue seek to approbate and reprobate about the role of Bishop Ambrose in relation to the Free ANZ Diocese. It will be recalled that the Property Trust Company (outside any powers granted to it) engaged Bishop Ambrose to lead the Free ANZ Diocese at least in part to better defend the proceedings before the primary judge. In many respects the appellants succeeded before the primary judge on issues which are not the subject of this appeal. In that endeavour they were no doubt assisted by the fact that the Free ANZ Diocese had a bishop who enjoyed apostolic succession (as the primary judge found Bishop Ambrose had).

334. The primary judge found, and there was no appeal from this finding, that the OCOCG-HSIR rejects, and treats as heresy, the fundamental basis upon which members of the Free ANZ Diocese associated, which is, belief in the “One Holy, Ecumenical and Apostolic Church”, which is drawn from article 1 of the 1976 Constitution.

335. In circumstances where Bishop Ambrose had been appointed to lead the Free ANZ Diocese the appellants’ complaint that the Free ANZ Diocese was allegedly “not under the spiritual jurisdiction of the OCOCG” is of little moment. The primary judge was entitled to conclude that the appointment by the Property Trust Company of a bishop to lead the Free ANZ Diocese who viewed the fundamental basis upon which that church associated as heresy as making reunification with the broader Serbian Orthodox Church much more difficult and thus inconsistent in material respects with the spirit of the trust.

336. The appellants’ complaints about the primary judge’s findings concerning the old Julian Calendar should be rejected. There was nothing illogical in a finding that the affiliation with the OCOCG-HSIR was likely to be counterproductive to reunification in the Serbian Orthodox Church until the issue of the use of the new calendar was resolved by a Greater Orthodox Council in the future.

337. So far as the appellants’ complaints about the primary judge’s findings about ecumenism were concerned, they should be rejected. It will be recalled that the primary judge found that opposition to ecumenism was not part of the spirit of the trust at the time of its creation, nor a principle of the Free ANZ Diocese at that time.

338. No error was shown in these findings. Nor was any error, let alone a House v The King error established in relation to the broad evaluative judgment his Honour made under s 9 taking account of these matters.

339. As a fall back submission the appellants submitted that the Free ANZ Diocese’s alignment with the OCOCG-HSIR and Bishop Ambrose was nonetheless in accord with the spirit of the trust. This is said to be based on the propositions that:

(a)    the Free ANZ Diocese is nonetheless of Serbian character; and

(b)    the OCOCG-HSIR and Bishop Ambrose could not frustrate any decision by the Free ANZ Diocese Church National Assembly to seek reunification with the SOC.

340. These submissions should be rejected. Contrary to the appellants’ submission, there was evidence that since the alignment of the Free ANZ Diocese with the OCOCG-HSIR and Bishop Ambrose, the character of the Free ANZ Diocese as Serbian has been significantly compromised. The primary judge made findings about the relationship between the Free ANZ Diocese and the OCOCG-HSIR. Those findings were unchallenged. The effect of those findings was that this association was not in accordance with the spirit of the trust, as the OCOCG-HSIR did not have a distinctly ethnic and nationalist Serbian focus. No error has been shown in that conclusion.

341. The mere fact that the OCOCG-HSIR and Bishop Ambrose “could not frustrate” a decision of the Free ANZ Diocese Church National Assembly to reunify with the Serbian Orthodox Church is not to the point. The evidence clearly demonstrated that any reconciliation was highly unlikely to occur while the close association of the Free ANZ Diocese with the OCOCG-HSIR and Bishop Ambrose continued. So much was stated by the Free ANZ Diocese in the resolutions passed at the Church National Assembly on 29 November 2012 (dealt with at [132] above).

342. Grounds 3(b) and 3(c) of the notice of appeal should be rejected.

Ground 7(c) - general contention that the primary judge should have found the Free ANZ Diocese to be a suitable and effective use of the trust property

343. The appellants said virtually nothing in support of this ground either in writing or orally.

344. The appellants accepted that the cy-près order made under s 9 should itself represent a “suitable and effective” use of the property, having regard to the spirit of the trust. However, the appellants contended that even if the primary judge was correct to conclude that the original trust purposes have ceased to provide a suitable and effective method of using the trust property, the property should be applied cy-près for the purposes of the Free ANZ Diocese.

345. In my view, as the primary judge correctly concluded that the s 9 jurisdiction was engaged, it was not an error to fail to conclude that an order should be made under s 9 in favour of the Free ANZ Diocese.

APPLICATION OF THE TRUST PROPERTY CY-PRÈS

The appellants’ submissions

346. The appellants submitted that even if they failed at stage 3, it did not automatically follow that the purposes of the trust should be altered in favour of the SOC-ANZ Metropolitanate.

347. The appellants submitted that the primary judge erred in two ways in how he determined to apply the trust property cy-près.

348. First, it was submitted the primary judge failed to adopt the correct approach. The approach he adopted is found in [509] of the judgment:

That is to say, a cy-près scheme should provide a suitable and effective method for using the trust property having regard to the spirit of the trust, but, subject to that requirement, it should adhere as closely as possible to the particular manner in which the settlors of the trust sought to achieve their general charitable intention.

349. The appellants submitted that the introductory clause of s 9 showed that the section was intended to extend the grounds upon which the Court’s jurisdiction to apply property cy-près is engaged. There is nothing in the text which says that it applies to how the original purposes are to be altered – i.e., there is nothing in the text that requires that property the subject of a cy-près scheme be applied as near as possible to the original purposes.

350. The appellants submitted that this is also reflected in the history of the equivalent sections in other jurisdictions. Both the UK provision found in the Charities Act (UK) and the South Australian provision in the Trustee Act (SA) made specific amendments to require that a court take into account the spirit of the trust when determining how to apply the property cy-près. It is telling, the appellants submit, that no such provision exists in the NSW legislation.

351. Secondly, the appellants submitted that the primary judge’s discretionary or evaluative judgment miscarried. This submission was based on the primary judge’s finding that there was no relevant difference in faith between the Free ANZ Diocese and the Serbian Orthodox Church. His Honour found at [510]:

But it was not an issue of religious principle for the Free ANZ Diocese when the trust was established. No question arises as to which group is more closely aligned to the opinion of the Free ANZ Diocese on the issue of ecumenism at the time the trust was established because it does not appear that this was an issue that troubled the Free ANZ Diocese at that time.

352. The appellants submitted that the evidence supported a finding that there was a difference in faith as the primary judge ignored evidence that:

1. the governance of the church was an ecclesiological principle, and relevant to faith. The appellants referred to the evidence of Bishop Irinej at [Black1 411];

2. differing views about ecumenism existed between orthodox churches.

353. The appellants ultimately submitted that:

[H]is Honour should have found that the appropriate evaluative judgment was to apply [the property] for the purposes of the Free Diocese with appropriate changes to an administrative scheme, to give effect to whatever parts of the spirit were not in conflict with the purposes.

The respondents’ submissions

354. The respondents submitted that it was appropriate for the primary judge to regard the church Constitution as capable of being changed through practice, as it represented a consensual compact. The respondents emphasised that the appellants did not challenge this finding, yet, on appeal attempted to argue that selective parts of the Constitution are the instrument of trust. The respondents took issue with this, and additionally, the appellants’ failure to distinguish which of the trust articles go to the original purposes of the trust and which go to the underlying intention (or spirit) of the trust.

355. The respondents argued that the appellants were seeking to insert their own touchstone as to what is judged essential or not. They drew examples from within the Constitution where the “essential” Articles referred to by the appellants are countered by other Articles. Mr Glacken QC contrasted the ecclesiological principle of governance with how the Constitution “defines unequivocally” the character of the church as Serbian. It was submitted that the appellants were attempting to rank the importance of the different constitutional provisions, an exercise that the primary judge was not asked to undertake.

356. The respondents submitted that once the Court found that the original purposes no longer provide a suitable method of using trust property, the Court was required to apply the property cy-près. However, it was submitted, the Court may select between potential schemes or “rival candidates” for the new and altered purposes, provided they are within the ambit of the basic intention of the trust.

Consideration of the primary judge’s determination to apply to trust property cy-près

357. The appellants’ submissions on the cy-près question focus on the proposition that where there has been a split in a religious organisation, the court’s task is to determine who are the “true adherents” to the organisation’s foundational principles and apply the property for the purposes of that group.

358. This submission required the appellants, in turn, to submit that the primary judge erred in his findings that there was no difference in faith between the Free ANZ Diocese and the SOC-ANZ Metropolitanate, and similarly that the original division between the Serbian Orthodox Church and the Free ANZ Diocese was simply a matter of church politics.

359. There is a fundamental difficulty with this submission. Merely because, as is undoubtedly correct at a level of generality, a difference between a congregational and a hierarchical structure could be a matter of ecclesiology or theology does not address the issue in this case. The evidence in this case did not establish that a difference between the congregational structure adopted in the 1976 Constitution and the hierarchical structure of the Serbian Orthodox Church was considered a matter of ecclesiology or theology by the Free ANZ Diocese.

360. There was no error in the primary judge’s findings that the original split between the Serbian Orthodox Church and the Free ANZ Diocese, in this case, was a division on a “matter of church politics”.

361. The primary judge made detailed findings about the origin of the split. It is not suggested that any of those findings were made in error. Those findings amply support the primary judge’s ultimate conclusion. As a consequence of that division, the Free ANZ Diocese in 1964 (and again in 1976) adopted a structure which involved administrative independence from the Serbian Orthodox Church. It did so, on the primary judge’s findings, in response to events which had consequences for control of Church assets in America, not because of any religious opposition to the concept of a hierarchical church.

357. If, as the appellants submitted, this congregational or presbyterian structure of the Free ANZ Diocese was a fundamental matter of ecclesiology or theology, it is inconceivable that this structure would have been routinely ignored by the Free ANZ Diocese in the appointment and supervision of bishops, as the unchallenged findings of the primary judge demonstrate it was. The primary judge made detailed, unchallenged, findings on this topic. Ironically, given his central role in this case, the appointment of Bishop Ambrose was also effected by the Property Trust Company ignoring completely the congregational or presbyterian terms of the 1976 Constitution. The primary judge was entitled to conclude on the evidence that the division was on a “matter of church politics”. No error has been shown.

358. This being so, the primary judge was correct to conclude that for the monastery to be applied for the purposes of the SOC-ANZ Metropolitanate would not be inconsistent with the spirit of the trust.

359. As I have found at paragraph [315] above, the primary judge did not err in concluding that the property the subject of a s 9 cy-près scheme be applied as near as possible to the original trust purposes. The appellants’ complaint to the contrary should be rejected.

360. Finally, the appellants’ submissions that the orders of the primary judge amounted to a “misuse of the power” conferred by s 9 of the Charitable Trusts Act should be rejected. There is no unfairness in concluding that the changes in character of the Free ANZ Diocese have resulted in the original trust purposes ceasing to provide a suitable and effective use of the trust property, having regard to the spirit of the trust. That is so because the changes in character are primarily a result of the Free ANZ Diocese and those who control it rejecting key elements of the spirit of the trust – the Serbian character of the Free ANZ Diocese and the desire to reunify with the Serbian Orthodox Church when communism fell.

361. The fact that certain members of the Free ANZ Diocese became members of the SOC-ANZ Metropolitanate does not mean that it is not appropriate to apply the property for the purposes of the SOC-ANZ Metropolitanate. Section 9 does not require impossibility.

362. None of the matters raised by the appellants was a fair criticism of the primary judge’s reasons. The primary judge found that applying the monastery property for the purposes of the SOC-ANZ Metrolpolitanate was the most suitable and effective application of the property, having regard to the spirit of the trust. No error has been demonstrated in his Honour’s approach.

363. The primary judge’s findings reflect the distinctly Serbian character of the trust, the fervent desire of the Free ANZ Diocese at the time of settling the trust to reunify with the Serbian Orthodox Church when communism fell and the fact that there was no fundamental or doctrinal dispute between the Free ANZ Diocese and the SOC-ANZ Metropolitanate.

CONCLUSION AND ORDERS

369. In a careful and lengthy judgment the primary judge addressed each of the relevant issues that the parties presented to him. The appellants have not demonstrated any error in his Honour’s reasons. Each of the grounds of appeal should be dismissed.

370. The Attorney General sought to be heard on costs once the Court’s reasons were published, both as to the costs of the appeal and as to whether there ought to be an order permitting an indemnification from the trust funds.

371. The Attorney General and the other parties should have that opportunity, and I propose that the Court should consider the question of costs and indemnification on the papers.

372. For the above reasons, the orders I propose are:

1. Leave to file an amended notice of appeal is refused;

2. Appeal dismissed;

3. Within 14 days of the publication of this judgment the respondents to file and serve any submissions (of no more than 20 pages) they wish to make on the question of costs or indemnification of any party from the trust property;

4. Within 21 days of the publication of this judgment the appellants to file and serve any submissions (of no more than 20 pages) they wish to make on the question of costs or indemnification of any party from the trust property;

5. Within 28 days of the publication of this judgment the respondents to file and serve any submissions in reply (of no more than 10 pages) they wish to make on the question of costs or indemnification of any party from the trust property.

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Amendments

07 March 2017 - Typographical corrections to [125], [202] and [212].

Decision last updated: 07 March 2017