Macedonian Orthodox Community Church St. Petka Incorporated v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand
[2008] HCATrans 223
[2008] HCATrans 223
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S107 of 2008
B e t w e e n -
MACEDONIAN ORTHODOX COMMUNITY CHURCH ST. PETKA INCORPORATED
Appellant
and
HIS EMINENCE PETAR THE DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOX DIOCESE OF AUSTRALIA AND NEW ZEALAND
First Respondent
VERY REVEREND FATHER MITKO METREV
Second Respondent
GUMMOW ACJ
KIRBY J
HAYNE J
HEYDON J
KIEFEL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 12 JUNE 2008, AT 10.01 AM
Copyright in the High Court of Australia
__________________
MR G.C. LINDSAY, SC: May it please the Court, I appear with MR G.O. BLAKE, SC for the appellant trustee. (instructed by McConnell Jaffray)
MR T.G.R. PARKER, SC: May it please the Court, I appear with my learned friend, MR R.E. STEELE, for the respondents. (instructed by Sachs Gerace Lawyers)
MR R.P.L. LANCASTER: May it please the Court, I appear with MR M.A. IZZO for the Attorney‑General for New South Wales who seeks leave to be heard as amicus. (instructed by Crown Solicitor - NSW)
GUMMOW ACJ: Is that application opposed?
MR LINDSAY: Not by us.
MR PARKER: No, your Honour.
GUMMOW ACJ: Yes, you have that leave, Mr Lancaster. We have your written submissions. Have you any idea of how long you would need for oral submissions?
MR LANCASTER: Approximately five or 10 minutes, if your Honour pleases.
GUMMOW ACJ: That is without questions.
MR LANCASTER: Perhaps that might be done at the end of the appellant’s submissions, if that is convenient to the Court?
GUMMOW ACJ: Yes, I think that is right. So we will hear first from you, Mr Lindsay, then from Mr Lancaster and we would expect that to be finished comfortably before lunchtime. In Mr Parker’s time he will deal with his application for special leave and you can respond to that in your reply.
MR LINDSAY: Yes, your Honour. There have been three or four documents that have been distributed to your Honours to which I will just draw attention now. There is a document described “The Appellant’s Structure of Oral Argument” which will provide the structure of what I propose to say. There is a separate document which is an extract of some legislation which was not included in the research bundle, regrettably, section 86 of the Civil Procedure Act primarily. Then there is a third document entitled “Schedule of Judgments Reproduced in Appeal Books” which just ties together what might otherwise appear to be the scrappy arrangement of the various judgments to which reference might be made, and I do not propose to take your Honours to that.
GUMMOW ACJ: Now, just at that stage, Mr Lindsay, so we can get ourselves on a clear footing, the judgment of Justice Palmer that went to the Court of Appeal appears at page 376. Is that right?
MR LINDSAY: Yes. That is the principal judgment. There were ‑ ‑ ‑
GUMMOW ACJ: No, the judgment that went to the Court of Appeal. You both want to drag us into a lifetime of experience of this litigation.
MR LINDSAY: No, I do not want to do that, but ‑ ‑ ‑
GUMMOW ACJ: The judgment that was appealed to the Court of Appeal is at 376, is it not?
MR LINDSAY: That is the substantive judgment that went, but his Honour also published reasons ‑ ‑ ‑
GUMMOW ACJ: Then there were some short supplementary reasons, were there not?
MR LINDSAY: That is right. So, in vernacular, they are judgments three and four.
GUMMOW ACJ: The order that was appealed is at 416?
MR LINDSAY: Correct.
GUMMOW ACJ: In the Court of Appeal the primary reasons are at 595 and there was a supplementary judgment, was there, on costs?
MR LINDSAY: Yes, there was, at 662. I think your Honours might also have had handed up to you what is described as the explanatory text to which reference is made in our submissions. I do not intend to take your Honours to that. Specifically it just provides the background to the research we did into the legislative history of the various sections.
GUMMOW ACJ: Before you get into the legislative history, is not the starting point what we have said often enough in this Court? We said it again in a case called Hillpalm 220 CLR 472 at 489, paragraph 47, and this may assist you really:
“It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.”
MR LINDSAY: Yes, that is certainly consistent with what we say, particularly about what the Court of Appeal describe as “propositions” in section 63 of their judgment. What I propose to do is to touch perhaps major questions that are dealt with in the written submissions for the purpose of opening up any questions that your Honours might have of me and I seek to start with a reference to Re Atkinson, which was the subject of a reference to the parties by the court last week.
GUMMOW ACJ: That is the Victorian decision?
MR LINDSAY: It is, of Justice Gillard. We have made some very brief submissions on that in our submissions in reply. The purpose of my dealing with it now is just to indicate to the Court the points that we invite the Court to draw from that reasoning. That is in Re Atkinson [1971] VR 612, at pages 615 to 616. In our submission, that reasoning substantially reflects the reasoning in Dallaway, as qualified by the Court of Appeal’s judgment in Evans, upon which we submit the case in many ways turns.
GUMMOW ACJ: It was decided before Dallaway.
MR LINDSAY: It was, but in broad terms as it appears to us and we submit that there is much commonality in the analysis that Justice Gillard had and what emerges in Dallaway, as I say, qualified by evidence.
KIRBY J: Here you are again going into what judges said instead of starting in the right place, which is what the statute says. I realise you are responding to a direction given by the Registrar drawing your attention to this case, but I just think we should start at the beginning, which is what Parliament has said.
MR LINDSAY: Well, we certainly do that and in our written submissions we draw attention to the breadth of section 63 and the fact that there is a broad discretion that is uncontrolled by particular ‑ ‑ ‑
GUMMOW ACJ: You will have to take us through the section, I think, Mr Lindsay. We do not read section 63 very often.
KIRBY J: You do not seem to have it there, Mr Lindsay. People just love what judges say and they do not like to go to the higher legitimacy of what Parliament speaking for the people says.
MR LINDSAY: It is difficult when looking in section 63 to divorce it wholly from its legal history. That would be our ‑ ‑ ‑
GUMMOW ACJ: What did subsections (5) and (7) say? They have been repealed, have they not?
MR LINDSAY: Yes, they were repealed in 1972. They were restrictions on the scope of the operation of the section, for example, in terms of powers of masters and monetary limits. They were imposed in 1925.
GUMMOW ACJ: The term “the Court” means the Supreme Court?
MR LINDSAY: It does.
GUMMOW ACJ: It is said against you, I think, in the Court of Appeal to some degree, section 63 does not contemplate an adversarial situation. Is there anything in the section’s text that suggests the contrary?
MR LINDSAY: The section is silent in those terms. My friends might point to considerations of notice which do appear in subsection (4) and also then in subsection (11).
GUMMOW ACJ: Subsection (11) gives a right of appeal, does it not?
MR LINDSAY: It does, and that was again introduced in 1925.
GUMMOW ACJ: Yes, so that has not always been there. It was not there in the 19th century.
MR LINDSAY: No, it was not.
GUMMOW ACJ: The right of appeal can be exercised, can it, as it was in this case I suppose, by one of the parties who has received notice under subsection (4).
MR LINDSAY: I believe that is the effect of it, yes.
GUMMOW ACJ: That is why we are here really.
MR LINDSAY: It is, yes, and that appears in, I think, from memory, what was Part 70 of the Supreme Court Rules that deals with appeal aspects.
HAYNE J: The notion of what is adversarial must be understood against an understanding, amongst others, of subsection (8). When a question is, who are the beneficiaries or what are their rights as between themselves, there is a question. If there is a question, presumably there are competing views. If there are competing views, it is not beyond the wit of imagination that persons concerned may take opposing views and the notion of adversarial is one whose meaning and application is not self‑evident.
MR LINDSAY: In our submission, that is correct. In order to understand those provisions after subsection (2) it is necessary just to step back a little bit and explore what happened. Section 63, at least in part, goes back to back to Lord St Leonards’ Act in 1859 and at the time that that was enacted, the substance of the provision was what we have described as the first limb of section 63(1) coupled with subsection (2). Now, when we speak of Lord St Leonards’ Act that is really what we are talking about.
GUMMOW ACJ: In other words, in the 19th century it did not have the words “or respecting the interpretation”?
MR LINDSAY: That is correct. In New South Wales that limited form of legislation was picked up in 1862 holus bolus, then in 1898 a consolidating legislation was passed as such and the text did not change. Then in 1924 ‑ ‑ ‑
GUMMOW ACJ: Just a minute. Also at the time of Lord St Leonards’ Act was nothing in there about appeals, was there?
MR LINDSAY: Correct.
GUMMOW ACJ: So these things were done in chambers?
MR LINDSAY: Correct, and I think there were questions raised as to whether or not there was or was not an appeal, but the better view was that there was not and an application for advice under this legislation was seen as an application for personal or private advice by the trustee and that permeated the thinking behind the legislation.
GUMMOW ACJ: The starting point of the need of this has to be a consideration of office of trustees a gratuitous one unless there is a special arrangement.
MR LINDSAY: Correct.
GUMMOW ACJ: There is a right of indemnity out of the trust assets but that would be lost if there has been a breach, I suppose, or a danger at least if there has been a breach. Hence the wisdom of a provision like this.
MR LINDSAY: Correct. Part of the motivating factor in the 19th century – and we see it in a number of different ways and at different times – was that the obligations of trustees were becoming more onerous and there was legislation passed to punish fraudulent trustees and Lord St Leonards expressly said that if that legislation was to be passed, and he did not oppose it, he wanted some mechanism to protect innocent trustees and Lord St Leonards’ Act emerges from a desire to protect innocent trustees by giving them a summary procedure enabling them to get judicial advice quickly and cheaply, more quickly and cheaply than compared with a suit for general administration.
One sees the UK Parliament moving towards that at various times on one view. It happened with Sir Samuel Romilly’s Act of 1812 and then we see that it came forth in the Charitable Trusts Act of 1853. Some of the language in that Act was picked up by Lord St Leonards who was a member of the commission that drew up that legislation and then Lord St Leonards’ Act comes in at 1859.
Now, what happened in 1924 was that Professor Peden sought to extend the operation of summary procedures. By the time we get to 1924 there was in New South Wales a procedure for directions to be given to trustees on an application for a partial administration order. That is the model that is adopted in Victoria, for example, now and it has also been in New South Wales in one form or another since 1900 and it currently appears in Part 68 of the Supreme Court Rules.
HAYNE J: You could also, under the 1883 Judicature Act type rules obtain, could you not, directions without an administration, order 55 rule 3, I think?
MR LINDSAY: Yes. In looking at the fate in England of Lord St Leonards’ Act, that was a decisive step, the enactment of ‑ ‑ ‑
GUMMOW ACJ: It was repealed. Lord St Leonards’ Act was repealed.
MR LINDSAY: It was repealed in 1893 because it was believed to be superfluous because the procedure on originating summonses with an application for a partial administration order, to which your Honour Justice Hayne has referred, was seen as far more efficient. So the Lord St Leonards’ Act ‑ ‑ ‑
GUMMOW ACJ: But in New South Wales at that time no Judicature Act, so it continued having its source.
MR LINDSAY: In New South Wales there were a couple of different experiments, but relevantly what happened was that in 1900 there was introduced the equivalent of the English partial administration procedure. That was picked up in the Common Law Procedure Act 1900, immediately picked up in the Equity Act, and it operated in tandem. In New South Wales, since 1900 there has been a regime in which one could go either route, but, as a matter of practice, parties are encouraged to go the section 63 route and we have endeavoured to point out some of the references in practice books that make that plain. They were seen as procedural alternatives.
Where Lord St Leonards’ Act took a particular turn in New South Wales was in 1924 when Professor Peden, as the Commissioner for Law Reform, was steering through Parliament the updating and consolidating legislation that became the Trustee Act 1925. He had two goes at getting the legislation through. The first one was in 1924 and then some of the opposition was put to one side and the Act was passed in 1925.
In the debates that took place in 1924 a couple of things became clear. First of all, what we describe as the first limb of section 63(1) was seen as simply a consolidation of what had gone before with Lord St Leonards’ Act, but the innovation to which Professor Peden was clearly committed was to extend the operation of the legislation by adding the second limb and that is when was added the phrase “or respecting the interpretation of the trust instrument”.
That extension of the legislation received some opposition within the profession which is explored in the Hansard debates and there were various restrictions put around that because the object of the second limb was to enable there to be a summary procedure, for example, about the construction of a will where the court proceeding summarily might come to an outcome that quieted the practical issue and that was, I think, what Professor Peden clearly had in mind, but the price that the law reformer paid to get that through Parliament was that there were provisions which nowadays find their way into subsections (8) through to (11), the right of appeal.
Your Honours will see, if you look at the historical material, the basic form of the new section 63 was settled, if you like, in 1924 but with one exception, and that is that the right of appeal for which provision is now made in subsection (11) was introduced in the second attempt to get the legislation through Parliament and there is not much in Hansard that tells us about that, but it does tell us expressly that that is the change. So that all of these provisions about notice have their genesis in the introduction of the second limb into the section. Now, in our submission, the area where this case falls is really the first limb of subsection ‑ ‑ ‑
GUMMOW ACJ: Sooner or later you will have to take us through the Court of Appeal decision and point to its errors.
MR LINDSAY: Yes, well, I am happy to do that. Would your Honours prefer me to say what I have to say about Atkinson at this stage?
GUMMOW ACJ: Yes.
MR LINDSAY: The propositions that we draw support from in Atkinson are these. First of all, it indicates that a trustee can protect itself by acting or refraining from acting in accordance with a direction of the court.
KIRBY J: Did you say that the statute in Victoria was relevantly the same?
MR LINDSAY: I confess that I have not gone back to the rules and found precisely what rules applied.
HAYNE J: It is Order 55 rule 3 modelled on the 1883 rules most conveniently found in white books up to, what is it, 1960 or 1963.
MR LINDSAY: That is the part that I have been referring to as the partial administration procedure. In New South Wales it is the equivalent of Supreme Court Rules Part 68. One potential difference between us is that we submit that when one is looking at section 63, one needs to look at it in the broader context and see that it is essentially a form of machinery that enables the court to move summarily to provide judicial advice. But we submit that the statements and principle in Atkinson are applicable equally in New South Wales.
The proposition that a trustee can protect itself appears at page 615 at lines 49 to 52. The second point that we derive from Atkinson is that on a Beddoe application a court to whom a trustee applies for directions, it informs itself in a summary way and we see that in the last line or so of page 615 and then over the top of the page, 616 down to about line 8. The third point we draw is that prima facie a trustee has a duty to uphold a trust and to protect trust property. That appears at page 616, lines 9 to 18.
The next point we draw out really is that the passage on page 616, lines 18 to 26 starting “But where there are competing claims” going down to the end of that paragraph, that passage reflects the same sort of tensions that one sees, for example, between Dallaway and Evans. We will be coming to that, but there is an element of tension there. That is reflected, we submit, in ‑ ‑ ‑
GUMMOW ACJ: That is for the judge to sort out on the day. It is not a question of jurisdiction.
MR LINDSAY: No, it is not, but it is acknowledging that there is a ‑ ‑ ‑
GUMMOW ACJ: That is why it goes to the judge, a Solomon-like figure who has to deal with it.
MR LINDSAY: Yes, and there is a discretion. It also underpins one of the differences between this case, that is, Atkinson, and our case, is that there they are dealing with a private trust where there are beneficiaries who might take up the running, and here we are dealing with a charitable trust which is by definition a purpose trust.
HAYNE J: The particular problem to which Justice Gillard was there referring was a problem about whether the trustee should itself begin proceedings. The issue here about defence of proceedings is perhaps different. Perhaps it is not.
MR LINDSAY: I think it may well be different, particularly when one gets to the consideration of the notion of adversarial or not, but Beddoe applications, as they are colloquially known, are applications that have been brought routinely whether a trustee is looking to be the plaintiff or to consider whether a defence should be maintained ‑ ‑ ‑
GUMMOW ACJ: We had better be taken to Beddoe at some stage, I think.
MR LINDSAY: Yes.
GUMMOW ACJ: It might be a case that is mentioned without fully understanding what it decided.
MR LINDSAY: Yes. The other point that I would make about this area of Justice Gillard’s judgment is that the availability of an indemnity from trust estate is referred to at page 616, lines 24 to 25, where there is a reference to “no trust estate” and also at lines 28 to 29 where there is a reference to indemnity from the estate.
The only other point that we would seek to make is that if one looks at the cases to which his Honour was referring, one sees cases that predate Lord St Leonard’s Act and come from a variety of different jurisdictions, none of them at least overtly seems to be a Lord St Leonard’s Act case itself, although Smith v Smith, which was referred to at page 615, might possibly be one, but it is not obvious from the reports. Those are the submissions that we would make about Atkinson. If I may go then to the question of the nature of the jurisdiction to give judicial advice - that, in the first sequence, takes us to Re Beddoe.
GUMMOW ACJ: What is the citation?
MR LINDSAY: Re Beddoe is [1893] 1 Ch 547. The Court of Appeal, we would submit, closed its eyes to the learning that is perhaps best expressed in cases like Dallaway because it misunderstood the legislative framework that applied in New South Wales and also the legislative framework that applied in England. One sees that at a critical point in the Court of Appeal’s judgment at volume 2, appeal book page 618 in paragraph 59.
This is in the leading judgment of Justice Ipp and here we see that his Honour tied his reasoning closely to what he perceived to be the text and operation of section 63 and he discounted the English cases by saying that “No legislation was relevant”. Legislation, in our submission, was relevant and his Honour seemed to think that Beddoe said something perhaps more than it did say. He refers to Beddoe as being “the origin of much English learning . . . and a long line of cases that have followed it”. In its true perspective, in our submission ‑ ‑ ‑
GUMMOW ACJ: Someone had better explain to us what Beddoe actually decided.
MR LINDSAY: That is right. I will take your Honours to Beddoe but, in our submission, really what Beddoe was doing was telling trustees that if they were going to get themselves involved in litigation, they should seek court approval or court sanction and trustees were being reminded that there was then a summary procedure available for that purpose. In our submission, Beddoe does not really go beyond that.
GUMMOW ACJ: Lord Justice Lindley at page 558.
MR LINDSAY: It may commence on the preceding page, about halfway down the page, 557.
GUMMOW ACJ: Yes. “But a trustee”.
MR LINDSAY: Yes.
GUMMOW ACJ: What he is saying is, counsel’s opinion may not be enough and may need to go to the court to ensure your position.
MR LINDSAY: It would have to go to the court. That is right. One sees, for example, at the bottom of page 557 there is a reference to “an originating summons” in the last three to five lines. What the Court of Appeal was saying was, “Look, under order 55 of the 1883 rules there is a summary procedure to which resort could be had fairly easily and if you don’t protect yourself by that mechanism, you may have an exposure, even if you get counsel’s advice”.
That really, in our submission, is relevantly all that Beddoe was doing, but what seems to have emerged, as a matter of practice, is that an application then for judicial advice was regarded or styled a better application, but it was not really adding anything beyond the fact that there was a warning to get this court sanction and there was a direction of the procedures available. There are some other passages, but they are to the same effect, at page 562 and page 564.
GUMMOW ACJ: Page 562?
MR LINDSAY: Page 562.
HEYDON J: Point 7?
MR LINDSAY: Yes, your Honour.
GUMMOW ACJ: Particularly at the bottom of 562 in Lord Justice Bowen.
MR LINDSAY: Yes. Then his Honour again repeats the point perhaps at 564 at about point 8.
GUMMOW ACJ: Granted all of that, there does seem to be some notion running through some of the cases also that a particular problem arises where there are going to be disputed issues of fact simply in sorting out whether or not to institute or defend. That is “adversarial” and somehow unadapted.
MR LINDSAY: Yes. In our submission, the critical feature about judicial advice or an application for it is that it does take as its essence the fact that it is an application of a personal and private nature by a trustee for the advice or direction of the court and in those circumstances, as we would submit section 63 should be read, the essentially private personal character of the application is not changed by the fact that other people might come along and participate. The reason why the latter subsections of section 63 were added was not, in our submission, a change in the nature of the application in those terms, but rather to accommodate the fact that a judge might decide in the context of section 63 to get to the substance of a construction question very quickly, the second limb of subsection (1), and have a real debate there.
GUMMOW ACJ: Judges do not necessarily like ex parte applications and this procedure permits them to see arguments to the other effect.
MR LINDSAY: That is right, but, in our submission, an application for judicial advice is still an application by a trustee for that personal advice, personal protection. The passage in the Court of Appeal’s judgment at paragraph 59 to which I draw attention probably needs to be read in conjunction with paragraph 107 at page 634 because it was at that point that Dallaway and not merely Beddoe was distinguished because of, we would submit, a misconception about the legislative framework.
HAYNE J: It depends upon where you draw the boundaries of the legal matrix. If the legal matrix includes the elements of trustees, the office of trustee being a gratuitous office; second, that the trustee may recover costs of suing or defending suit if but only if the proceedings have been properly instituted or defended, then provision for the gratuitous office holder to be given preliminary advice about whether suit or defence is authorised may be important elements of the legal matrix against which the particular procedural provisions of section 63 must be measured.
MR LINDSAY: Yes. The question of the character of trustees as gratuitous office holders was hotly debated during the 19th century and I have given your Honours reference to a book by Stebbings dealing with the history of it.
GUMMOW ACJ: Yes, a very interesting book.
MR LINDSAY: The effect of that is that the idea that trustees might be commercial trustees was initially abhorrent to the courts, and perhaps others and that changed over a period of time. Section 63 and the like is not restricted to not‑for‑profit trustees, but one does see the origins of section 63 in that approach to the office of trustee. But again, in our submission, whether one is looking at section 63 or what we would call the alternative of Supreme Court Rules, Part 68, the essential nature of what the court is called upon to do is much the same and that is reflected in Dallaway and Evans.
Beddoe was decided in the context of the 1883 rules, Order 55. By the time we get to Dallaway and Evans those rules had been recast in substantially the same terms, but it was the 1965 rules, Order 85, but essentially much the same. In our submission, the Court of Appeal fell into error because it so easily distinguished Dallaway.
GUMMOW ACJ: What is the substance of the Court of Appeal’s findings in saying the section has some limits to the jurisdiction the court receives and these were transgressed by Justice Palmer? Was it not saying that, but saying that within the permissible scope of his jurisdiction he made a House v The King error?
MR LINDSAY: In our submission, your Honour ‑ ‑ ‑
GUMMOW ACJ: You see a distinction.
MR LINDSAY: In our submission your Honour is quite correct to ask the question, but I am not sure that I can answer it precisely because on the one hand the Court of Appeal said there is jurisdiction to do these things, but on the other hand they said because there is an adversarial flavour about what is sought and because what is sought relates in some ways to past conduct, then it was wholly inappropriate to grant any relief. Now, they seem to be positioning their reasoning in terms of an exercise of discretion, but when one looks at the language they use and application of it, it seems to go really to some notion of jurisdiction.
One sees that in a couple of places - in the judgment of Justice Ipp, for example, at page 636 in paragraph 117 where the characterisation of the proceedings as adversarial is decisive against the provision of any advice. In our written submissions we submit that the concept of an adversarial characterisation is one really that is quite illusory, particularly in the context of the question whether proceedings should be defended by a trustee. But there is perhaps a more emphatic statement on the court’s perceived limitations of section 63 in the short, concurring judgment of Justice Giles at pages 602 and 603. At paragraph 3, his Honour ‑ ‑ ‑
GUMMOW ACJ: That seems to be talking in language of jurisdiction.
MR LINDSAY: Yes, it does.
GUMMOW ACJ: It is not appropriate to section 63.
HEYDON J: Foreign.
GUMMOW ACJ: Foreign, yes.
HEYDON J: Another passage that seems to talk in terms of jurisdiction is on 622, line 8 on the left‑hand side:
Section 63 does not empower advice –
Then the next paragraph says:
Section 63 does not empower advice ‑ ‑ ‑
MR LINDSAY: That is right. Then in the judgment of Justice Hodgson at the bottom of page 603 and the top of 604, one sees something in the nature of a sliding scale.
GUMMOW ACJ: Sorry, what page, Mr Lindsay?
MR LINDSAY: Page 603, paragraph 7, where his Honour contemplates that proceedings may acquire something in the nature of an adversarial character and at some point that becomes decisive. So the criteria to be applied are, we would submit, not clear.
HEYDON J: Paragraph 8 says:
the Court should decline to give judicial advice ‑ ‑ ‑
MR LINDSAY: Yes.
HEYDON J: That is different from saying “The court cannot give it”.
MR LINDSAY: Yes.
GUMMOW ACJ: So your submission is there are some indications to each effect to be found.
MR LINDSAY: Correct. In the light of Justice Heydon’s reference to page 622, I will draw to attention the propositions that are set out in paragraph 63, of which page 622 is part. Having analysed a few cases, New South Wales cases that deal with a private trust where there are individual beneficiaries, his Honour put forward a series of propositions which are said to govern a section 63 application. It is our submission that these propositions are a gloss on the section and they are not justified by the legislation and, in our submission, they are not of any assistance.
HAYNE J: Is the last dot point on page 622 consistent with what was actually decided in Beddoe?
MR LINDSAY: No, because the whole point being made by Beddoe was that you could come and protect your right to ‑ ‑ ‑
HAYNE J: I understand that, but was there not also a question in Beddoe about whether the judge who tried the action determined the issue of whether the trustee could recoup the costs out of trust assets. Was there not also some debate in Beddoe about that? Perhaps I am misreading it.
MR LINDSAY: No, my sense of the situation is probably your Honour is correct, but I do not have a passage clearly in my mind at the moment, but there certainly was debate about those general issues but I would have to go back and double check it. I am told your Honour is correct.
HAYNE J: I thought that an aspect of Beddoe was to the contrary of the last dot point. I may be wrong.
MR LINDSAY: Well, personally I would have to check it, but I am assured that your Honour is correct.
GUMMOW ACJ: Mr Blake will give you the page reference in Beddoe in a minute.
MR LINDSAY: He will. When we come to Dallaway’s Case it was a Beddoe application. It started life as a Beddoe application and ‑ ‑ ‑
GUMMOW ACJ: Now, you are taking us to these two English cases because one supports you and the other one does not and what has been said in English cases seems to have played a big effect in the reasoning of the Court of Appeal here.
MR LINDSAY: Dallaway’s Case, in our submission, supports us. There is a question about whether or not Evans does not. We submit that when one reads the two together there is in fact no material difference in principle. But in Evans, the Court of Appeal case, there certainly was a perception that they thought not every case in the exercise of its discretion should be decided as Dallaway was, but I will return to that. If I could take your Honours to Dallaway.
GUMMOW ACJ: This is important – once you get within jurisdiction and you are not foreign to jurisdiction – once you get within jurisdiction the relevance of one or other of these cases becomes marginal, does it not, because that will depend on how the particular court was struck by the particular application. I am not discouraging you from going ahead, but is that not right?
MR LINDSAY: Yes, that is, but there is some guidance that one may get in terms of how one exercises the discretion and we submit that is what you can get from Dallaway.
GUMMOW ACJ: Sir Robert Megarry was trying to do that in Dallaway, I suppose, because he said ordinarily these matters would be done in chambers but I – which is a practice the English still follow, but this is going to be adjourned into open court, so the reasons will be public.
MR LINDSAY: That is right, and we have set out in our written submissions - I will not repeat them for the sake of repeating – what we say are the ‑ ‑ ‑
GUMMOW ACJ: What is the citation?
MR LINDSAY: The citation is In reDallaway [1982] 1 WLR 756 and his Honour starts off at page 758F acknowledging that he was dealing with a Beddoe application and then what appears to him to be the uniqueness of this particular application was that there was a claim on all of the trust property and so he begins to deal with that on page 759G and following and then his reasoning continues over the next two pages.
GUMMOW ACJ: He fixes on the indemnity point particularly, 759.
MR LINDSAY: He fixes perhaps on two points. The starting point is that a trustee has an obligation to uphold the trust and protect the trust property. That is his starting point as appears at page 759, between G and H. Then over the page at page 760, starting at letter F and going on, we would submit he highlights the fact that judicial advice to a trustee is personal advice, not an extension of legislation the subject of that advice.
GUMMOW ACJ: What is the significance of this phrase “personal advice”?
MR LINDSAY: Where is that?
GUMMOW ACJ: You have been using it. What is the significance of it?
MR LINDSAY: The significance of it is this. We submit the true nature of an application for judicial advice under whatever procedure is that it is an application by a trustee for the guidance of the court so the trustee can act in a responsible manner and protect itself and its right of indemnity by acting in that responsible manner.
HEYDON J: Gives personal protection against the risk that in truth in law the rights are otherwise than as those advised.
MR LINDSAY: Correct. So it is an application to seek that personal protection. In a situation like that, if we are correct, the character of the application really is personal in that sense. When we are dealing with a question of whether or not a trustee should bring proceedings or defend proceedings, of necessity there is a consideration of some other claim. But, in our submission, the fact that there might be that other claimant – in this case the respondents – does not elevate them in the judicial advice proceedings to being on a par with a trustee. It is still a matter of the trustee seeking protection of the court by getting a ruling on where it should go.
So a difference between the appellant and the respondents in this case and a difference we have with the Court of Appeal in its reasoning is that the Court of Appeal, seeing that there were these broader proceedings in the submissions called the main proceedings, treats the respondents as if they are on all pars with the appellant in the judicial advice proceedings. In our submission, that is an error. But, having taken that step, the Court of Appeal then finds it easier to say, “Well, the proceedings are adversarial” and that is, in our submission, a misconstruction or misapprehension of what judicial advice proceedings are all about. In Dallaway, it was plain that Sir Robert Megarry ‑ ‑ ‑
GUMMOW ACJ: Yes, I took you off Dallaway.
HEYDON J: We have to bear firmly in mind, do we not – correct me if I am wrong, but Justice Palmer made orders favourable to your client so far as determination of the terms of the trust were concerned, but not so far as they were sued for breach of trust. Is that not so?
MR LINDSAY: Yes. Some of the earlier orders he made which are the subject of a cross‑appeal were orders made along the way to ‑ ‑ ‑
GUMMOW ACJ: There is no cross‑appeal - the application to cross‑appeal.
MR LINDSAY: Correct. Some of those orders were made in the course of giving directions for the preparation of opinion of counsel. When we get to the order that is under appeal, the one that is at pages 416, 417 his Honour was giving advice in relation to a dispute about the terms of the trust. So it may be as well to notice something about the order as well.
GUMMOW ACJ: Do you want to finish Dallaway first?
MR LINDSAY: It might be easier if I just notice this in passing. I assure your Honour I will get back to Dallaway. Sometimes the submissions proceed on an implicit assumption that the only aspect of Justice Palmer’s order was that aspect that authorised recourse to trust property. But they are really the two aspects of the orders he made and at 417 we see them reflected, for example, in paragraph 1, which is the routine Beddoe application about the defence of the proceedings, and paragraph 2, which deals with the recourse to trust property. There were those two aspects.
GUMMOW ACJ: Yes. While we are doing this can we look at the Court of Appeal order that is under repeal here, which I think is at page 641.
MR LINDSAY: What the Court of Appeal ‑ ‑ ‑
GUMMOW ACJ: Look at order 1 at 641.
In relation to the appeal against orders 2 to 8 –
Is that a reference back to page 417?
MR LINDSAY: I believe it to be so, yes.
GUMMOW ACJ: There is not an 8. It is 2 to 7, is it not? Is that a slip?
MR LINDSAY: Yes.
GUMMOW ACJ: Anyhow, just take it on board. If it is not a slip, let me know, but for the moment it looks like a slip for 2 to 7.
MR LINDSAY: Yes.
GUMMOW ACJ: Because 1 was not disturbed.
MR LINDSAY: It may well be that we do need to look at that more precisely, because another way of looking at it is that their Honours may have proceeded upon the assumption that paragraph 1 was the undertaking which was referred to at the bottom of 416.
GUMMOW ACJ: I see. All right.
MR LINDSAY: We will have a look.
GUMMOW ACJ: You prepared on the basis that 1 to 7 were set aside?
MR LINDSAY: We have.
GUMMOW ACJ: All right, thank you.
MR LINDSAY: But apart from anything else, the summons for judicial advice is dismissed, not some part of it. Support for the characterisation of the paragraph numbers is found in the orders as published at the end of the Court of Appeal’s judgment at pages 409 to 411 where they took the undertaking – sorry, that is Justice Palmer’s. I will look at that and lay it to rest.
GUMMOW ACJ: We will proceed on the basis that there was a slip and it should be 1 to 7, unless either you or Mr Parker tell us otherwise by the end of today.
MR LINDSAY: Thank you. I was dealing with Dallaway and the points that we would submit come from that. The next point I was going to make is that at page 761 letters D to G we would draw from that a view that neither a trustee nor a court is bound by a claim on trust property to surrender the property to a claimant without requiring the claim to be litigated. Part of what the respondents put against us is that the appellant, having received an adverse claim, can and should do nothing and we submit life is not that easy for a trustee and that is why one would ‑ ‑ ‑
GUMMOW ACJ: Say that again, Mr Lindsay.
MR LINDSAY: Underlying much of what the respondent advances is a proposition that the appellant, as a trustee, being the recipient of an adverse claim, should not defend the proceedings, cannot defend the proceedings and simply should do nothing, submit ‑ ‑ ‑
GUMMOW ACJ: Well, should retire from the trust.
MR LINDSAY: Yes. But, in any event, not contest ‑ ‑ ‑
GUMMOW ACJ: Approach the court for a new trustee, I suppose.
MR LINDSAY: What they are endeavouring to do is to force a change of trustees by the allegations of breach of trust.
GUMMOW ACJ: What do you say is at 761 which supports your criticism of that?
MR LINDSAY: At D to G where his Honour at about line F ‑ ‑ ‑
GUMMOW ACJ: His Lordship.
MR LINDSAY: His Lordship at about F asks the question, “Would it be right to allow the claimants”, et cetera. The next point that we draw to attention is one that ties in that point in Dallaway with what appears in the Court of Appeal’s judgment in Evans to which I ‑ ‑ ‑
HEYDON J: While we have Dallaway open, could I ask you to look at the last line on page 761, “material may emerge subsequently which will make it unreasonable for the bank to continue to defend”. Justice Palmer made an order – paragraph 6 on page 417 saying:
The foregoing orders are subject to, and may be revoked by, an order of the trial judge in the Main Proceedings, or by a subsequent order in these proceedings.
The Court of Appeal construed that as referring to, as it were, retroactive revocation as distinct from prospective. Do you submit that that is an erroneous construction of Justice Palmer’s order?
MR LINDSAY: I do not think any of us contend otherwise. Justice Palmer intended that his revocation order could, in the discretion of a subsequent judge, operate retrospectively or at any other time that the court may think appropriate.
HEYDON J: But he relied on what Sir Robert Megarry said in Re Dallaway on page 761 to 762 which was speaking of a prospective revocation only.
MR LINDSAY: That certainly is an indication in that direction, but if your Honour goes to letter H, he says:
In giving that direction, I propose to include a provision that, subject to any order made by the trial judge –
We do not actually have the precise order that Sir Robert Megarry made, but ‑ ‑ ‑
HEYDON J: No, but:
subject to any order made by the trial judge, the bank will be entitled to be indemnified out of the estate for all costs –
He then goes on to speak of:
material may emerge subsequently which will make it unreasonable for the bank to continue to defend –
not unreasonable to have started to defend.
MR LINDSAY: Yes. Your Honour will find an indication operating in his Lordship’s judgment in the same direction at the top of page 762, which is at letter A, where he uses the word “subsequent”.
HEYDON J: “Continued” and so on.
GUMMOW ACJ: That is how I would read Justice Palmer and if that is right, the criticism of him by the Court of Appeal was not soundly based.
HAYNE J: The notion that a trustee is acting in accordance with a judge’s order may find that action later impugned because a court subsequently says, “Though what you did was then authorised by order, we now say that order should not have been made”. You cannot interpret court orders in that fashion surely, can you, Mr Lindsay? It has to be until further order and that is all.
GUMMOW ACJ: Or, to put it another way, why would you want to do it that way?
HEYDON J: It would not give protection.
HAYNE J: The Lord giveth and the Lord taketh away, but.
MR LINDSAY: When we deal with the question of revocation, which is sort of one of the later points, in examining what the Court of Appeal said, there are questions of construction that arise. First of all, their Honours say there was no power to ‑ ‑ ‑
HEYDON J: Yes. Let us not worry about that, though.
MR LINDSAY: Yes.
HEYDON J: If the correct construction of Justice Palmer’s order is that it referred to only prospective revocation, the third error in the Court of Appeal’s reasoning is not an error at all. Do you embrace that construction of Justice Palmer’s order because it is in your favour? If you reject that construction, I for one do not consider myself bound to follow the consensus of the parties, but it means one is deprived of contradictory submissions on the point.
MR LINDSAY: Over a period of time we have taken the stance of accepting that what Justice Palmer intended was that an order could be made to the ‑ ‑ ‑
GUMMOW ACJ: That is right, Mr Lindsay, but you are on your feet now and you have to move with the flow. That is why you are here.
MR LINDSAY: We do not mind if we are given greater protection by it being confined to orders that are only operating prospectively or in the future and we are happy to embrace that, but the reality is that Justice Palmer did not, we think, probably intend it.
HEYDON J: We have to examine the words. We cannot cross‑examine Justice Palmer.
MR LINDSAY: No, we cannot.
GUMMOW ACJ: Just you, Mr Lindsay.
MR LINDSAY: Yes, well, I find it difficult enough to understand myself without trying to understand others, but, anyway, if I can return that perhaps a little bit later. We were dealing with Dallaway and its intersection with In Re Evans [1986] 1 WLR 101. The Court of Appeal in that case considered Dallaway in some detail and distinguished it on the facts. One sees that process taking place after a process of description on page 106 where ‑ ‑ ‑
GUMMOW ACJ: Mr Julian Jeffs was a very prominent Chancery practitioner who was the acting judge, was he not? What order did he make?
MR LINDSAY: I think he made an order ‑ ‑ ‑
GUMMOW ACJ: It is at page 102, is it not?
MR LINDSAY: Yes, similar to that made in Dallaway. The Court of Appeal said that he had paid too much attention to Dallaway and had not seen that it was distinguishable. The Court of Appeal began the process of distinguishing Dallaway at the bottom of page 106 where they say, in the last paragraph, that every case depends on its own facts and the discretions. We draw from that the positive, that there is actually support for the proposition that there is a discretion to be exercised. Then at the top of page 107, the court distinguished Dallaway and then what we would submit is the critical passage appears really at page 107 from about F to G.
HEYDON J: That says nothing about charitable trusts.
MR LINDSAY: Correct. But what it does do at letter G is it points to the position where there may not be a beneficiary who can take up the running and we would say in relation to a charitable trust, because of the nature of the trust, we have that situation. There is no individual named beneficiary with a property interest who can take up the running.
GUMMOW ACJ: The beneficiaries were all adult and sui juris.
MR LINDSAY: That is right.
GUMMOW ACJ: What was the claim of the other parties to entitlement of the estate?
HEYDON J: The six nephews and nieces absolutely entitled in equal shares as statutory next of kin.
MR LINDSAY: Yes, and then there was a claim that the whole property was held on trust and therefore was not available to the estate, because of dealings with ‑ ‑ ‑
GUMMOW ACJ: Were they attacking the will?
MR LINDSAY: I think they were trying to set up a constructive trust.
HAYNE J: Promises and assurances made to them by the deceased in his lifetime.
MR LINDSAY: That is right. So it is a contract to make a will, that sort of thing.
HAYNE J: It is page 104C.
MR LINDSAY: Thank you.
GUMMOW ACJ: Yes. Thank you. They are saying, in effect, anterior to giving effect to the will there is this trust.
MR LINDSAY: Yes. What the Court of Appeal was saying was in the context of a private trust where there are adult beneficiaries who could take up the running then they should do so, or that should be a material factor.
HAYNE J: Well, that the adult beneficiaries decide whether the whole of the estate is going to be hazarded in the litigation.
MR LINDSAY: Yes. This area of reasoning harks back to the sort of balancing exercise or the like that was done by Justice Gillard in ReAtkinson. We have traversed, I suspect, much of what we put in our structural argument about paragraph 4. If I may go to paragraph 5, in our submission part of the difficulty that the Court of Appeal got into was because it failed to appreciate the special character of a charitable trust for the advancement of religion. The Court of Appeal was greatly influenced by the form of the relief that was sought by the respondents in the main proceedings and in particular the fact that that relief included claims for declarations of breach of trust and an order for removal of the trustee for breach of trust. One sees that in the Court of Appeal’s reasons at 624.
KIRBY J: As a matter of principle, the power in the statute and the way the power in the statue is to be exercised does not draw distinction between particular trusts for the advancement of religion. Therefore, as a matter of principle it is difficult to gloss the statute because of the particular nature of the trust in this case.
MR LINDSAY: The glossing of the statute, in our submission, was what was done in those propositions in paragraph 63 where ‑ ‑ ‑
KIRBY J: I realise you say that, but I am just looking at your proposition that you are advancing now. Are you not yourself trying to – you say the Court of Appeal failed to appreciate the special character of a charitable trust for the advancement of religion. Well, the statute just does not draw that special character in its terms.
MR LINDSAY: No, there are perhaps two aspects to this topic. Section 63 taken in conjunction with a definition of “trust” in, I think, section 5, plainly applies to private trusts, charitable trusts and that is one aspect of it. In deciding what judicial advice, if any, to give one does need to have a look at what is the best interests of the trust. It is material in that context to be looking at the nature of the particular trust and the Court of Appeal was dealing with a charitable trust, not dealing with a private trust, but nevertheless it seems to have predicated its reasoning upon an assumption it was dealing with something that was a private trust and that is where it got into this whole area of adversarial character.
It is at that point that I am addressing my current submissions because the Court of Appeal, in our submission, was heavily influenced by the form of the relief that was sought and in the context of a charitable trust for the advancement of religion, in our submission, it just overlooks the basic point about trusts of that nature and that is that if the Court is going to exercise any jurisdiction at all in this charitable trust involving religion it is going to be in an area where there are likely to be allegations of breach of trust and there are likely to be applications for the removal of trustees simply because of the limitations that one sees in dealing with trusts of this nature.
In the main proceedings the substantive dispute is what are the terms of the trust? Justice Palmer recognised that from the outset and the clearest expression of it is in the second of his four judgments, and I will just give your Honours the reference, but that is at volume 1, appeal book 362 at paragraph 56.
HEYDON J: Page 362 has not got a paragraph 56 on it.
MR LINDSAY: I am distinguishing myself yet again. Page 365, paragraph 56.
HEYDON J: You were taking us to page 624 about five minutes ago. Is there something on that page we should look at?
MR LINDSAY: Page 624 we see the significance attributed by the Court of Appeal to the form of relief that is sought in the main proceedings. At paragraph 68 we see that Dallaway, for example, is distinguished because unlike in Dallaway in this case there is an allegation of breach of trust and the trustee’s position as trustee is under challenge. So much of what the Court of Appeal characterised as adversarial arose from the fact that there are these two features.
HEYDON J: So this overlooks then, do you submit, the fact that Justice Palmer’s orders were not in favour of your client insofar as their conduct in relation to breach of trust was concerned?
MR LINDSAY: We submit is material that the relief that his Honour gave was limited to the question of the terms of the trust.
KIEFEL J: One of the difficulties from the pleadings, is there not, is that the plaintiff’s claim for declarations assume the correctness of the allegations within this body of the statement of claim as to the terms of the trust, but no declaration is actually sought as to the terms of the trust before they proceed then to the declaration as to the breach of trust?
MR LINDSAY: Yes. I think that problem in terms of pleadings may have sorted itself out.
KIEFEL J: I was reading from version eight which I think is the one subject to the Court of Appeal’s orders.
MR LINDSAY: I am told they are still the same. There is a version nine, but I am told it is the same point. Your Honour is correct.
KIEFEL J: Could you just help me; the order that was made declaring the trust by Justice Hamilton declares the trust in terms to be held upon trust for the purposes of the Church.
GUMMOW ACJ: Where do we see that order of Justice Hamilton?
MR LINDSAY: I am not sure that the order as such is published in the appeal books, but then I am sure there is an indirect reference to it. His Honour’s determination which was made in 2003 is in the appeal books, the judgment at pages 71 through to 144. Those are reasons for judgment of his Honour published in 2003, but the actual order was not made until, I think, 2007.
GUMMOW ACJ: Anyhow, page 141 is enough, is it not, “the questions posed for my decision”?
MR LINDSAY: Yes.
KIEFEL J: But there is another order following, is there not, that the sixth defendant holds it. I think there is a following order.
MR LINDSAY: Perhaps the best way to deal with it is to deal with it precisely and find in the appeal books a reference to the actual order that his Honour made.
KIEFEL J: The second order that I have not noted – my associates note – which may have followed – I think the Attorney’s submissions set out the sequence of orders, the second of which is declare that in accordance with the terms of the trust and the events which have happened the trustee is bound to permit the sixth defendant to use the trust property as a site for a church. That was an additional order made at some point.
MR LINDSAY: Yes. I will have to find the precise order so I am not misleading you, but his Honour determined that the appellant was both trustee and entitled to use ‑ ‑ ‑
KIEFEL J: Entitled. That was the purpose of the second order.
MR LINDSAY: Yes.
KIEFEL J: But in both cases the terms of the trust, so far as it goes, are that the property is to be held as a site for the Church buildings and activities concerned with or ancillary to the encouragement practice and promotion of the Macedonian Orthodox Religion, full stop and, as I understand it, the pleadings in the plaintiff’s statement of claim seeks to take that effectively further at the two paragraphs identified by Justice Palmer, 7A and 22, by requiring the Macedonian Orthodox religion really to be defined for the purpose of the trust.
MR LINDSAY: That is right. One way I think that the distinction has been put in argument is that ‑ ‑ ‑
KIEFEL J: I am reading from version eight, which appears at pages 489 and following in the appeal books.
MR LINDSAY: That is right. One way the distinction, I think, has been put in argument is that his Honour determined the broad purpose of the trust ‑ ‑ ‑
KIEFEL J: But the terms are outstanding.
MR LINDSAY: But the terms are outstanding.
KIEFEL J: This does not find reflection in the Court of Appeal’s reasons that this was the outstanding aspect? Before any determination could be made about whether there was breach of duty, the terms of the trust had to be defined, did they not?
MR LINDSAY: I do not know that the Court of Appeal deals with it precisely that way, but what they do do ‑ ‑ ‑
KIEFEL J: What I am asking, I suppose, Mr Lindsay, is, does the Court of Appeal judgment recognise that these questions identified by Justice Palmer were pivotal to a determination of any further dispute between the parties as to the conduct of the trustees?
MR LINDSAY: I am not sure that one can say dogmatically that they do or they do not.
KIEFEL J: I could not see very much reference to it as being an important topic. Perhaps their Honours thought it was not.
MR LINDSAY: The reason I think there is some uncertainty in characterising what they did is that they got drawn into their concept of adversarial proceedings and then some of the terminology that they used became a little bit imprecise.
KIEFEL J: The focus was upon the breaches of trust and the contest about that without determining by what means that would be determined.
MR LINDSAY: Yes, and instead of focusing on the question of what were the terms of the trust, they focused on disputes about “the doctrines and tenets of the Church”, and I am reading at the moment from the judgment of Justice Ipp – page 625, at paragraph 74.
KIEFEL J: That goes to the question upon what trust it is held.
MR LINDSAY: Yes, and in paragraph 75 they sort of skirt around the issue again. Then they return to it.
KIEFEL J: The issue is not just whether there has been a breach according to the terms of the trust set up by the plaintiff, which his Honour is there referring to. I think the issue drawn between the parties as to what the Macedonian religion actually contemplates for the purposes of the trust is conveniently footnoted to the Attorney’s written submissions drawn from the pleadings, I think.
MR LINDSAY: Your Honour may be thinking about the appellant’s submissions where ‑ ‑ ‑
KIEFEL J: I am sorry if I have overlooked your submissions. I think it was footnote 3, page 4. It was footnote 3. There is issue drawn because the appellant here as the defendant in the proceedings puts forward other terms as accounting for the phrase “Macedonian Orthodox religion”.
MR LINDSAY: Yes, and a substantive question is, in many ways, what is the relevant church or canon law.
KIEFEL J: Yes.
MR LINDSAY: How does that interact, if at all, with the constitution of the Association as an unincorporated association? But what the Court of Appeal did – to return to your Honour’s question – in some ways is to recognise that knowledge of the true terms of the trust would be of benefit to the Association as trustee. One sees that at page 630, at paragraph 94, in the middle of the paragraph. Then one sees the same point again in paragraph 95. So the Court of Appeal agreed that knowledge of the terms of the trust would be important or pivotal and that it was beneficial, as they say, in general terms to the trust, but where they deviate from that path is the characterisation of the proceedings as adversarial and that raises everything; that trumps everything.
GUMMOW ACJ: Can you just go back to page 626, paragraph 77, the last sentence? How does that square with 622, where the phrase is “does not empower”, and 621? At page 621 it says it does empower and 622 says it does not empower and then 626 says this was within power.
MR LINDSAY: I think trying to understand a line of reasoning without embracing it, to the extent that those two passages are reconcilable, it is in their Honours notion of adversarial proceedings, which we submit is really illusory, but that is the way they tie it together, I think.
MR LINDSAY: I think that I have covered the points that we ‑ ‑ ‑
GUMMOW ACJ: Looking at the Court of Appeal decision as a decision based upon error in the exercise of discretion – in other words, a House v The King appeal - they are saying, are they, a necessary matter was left out of consideration, adversarial character. What else are they saying was left out and what are they saying was wrongfully put into consideration by the primary judge?
MR LINDSAY: The adversarial aspect is what is at the heart of what they say was what the judge got wrong and they say there was no balancing exercise done by his Honour because he did not weigh the adversarial aspects of the proceedings and we submit that that ‑ ‑ ‑
HAYNE J: Well, is that what is said at paragraph 96 on page 631 or is something more being said in that paragraph than what you have just identified?
MR LINDSAY: What they say about that topic is not only in paragraphs 95 and 96 but also in paragraph 98 where they ‑ ‑ ‑
HEYDON J: In 98 we move into a new era, allegedly, do we not? Up to 96 is - and did not consider adversarial questions - 97 onwards is did not balance advantages and disadvantages.
MR LINDSAY: Yes. Your Honour is no doubt correct at one level, but they tend to merge because their Honours’ view of what was adversarial spills over into weighing everything up. But your Honour is actually correct.
KIRBY J: Do you challenge that proposition from Justice Sheller’s reasons in Hartigan Nominees at paragraph 89, and also Justice Needham in Harrison v Mills at 86? They are both very experienced – Justice Needham is very experienced in this area.
MR LINDSAY: Undoubtedly.
HEYDON J: You can live with them, can you not?
MR LINDSAY: I can. There are two statements, for example, that are made in Justice Sheller’s extract. One is that judicial advice is essentially private advice by the court to the trustee, and we certainly embrace that directly, and the other deals with a contest between parties to a trust.
KIRBY J: What does the word “private” mean in that context given that it is given by a public office holder under a statute of the Parliament of the State in a court – how is it private? Was that on the point in Hartigan which was keeping certain matters secret?
MR LINDSAY: No, it gets back to what was the nature of judicial advice generally in terms of the protection – the personal protection – afforded to trustees who are given sanction of the court or directions as to how they should behave and if they act in accordance with what the court says that they are then protected. When one talks about essentially private advice, one is reflecting on that aspect of it all. Where Justice Sheller is referring to a contest between parties to a trust, that is a reference really to a private trust whereas here we have a situation where there is trustee, that is the appellant and ‑ ‑ ‑
KIRBY J: That might have been addressing the issue in Hartigan Nominees, which I dimly remember.
MR LINDSAY: Yes, well, Justice Heydon is correct, we can live with what is here, but of course, one needs to look at the nature of the trust and that is a point we make. I think I have dealt with each of the points that are to be made under the question of the nature of the jurisdiction to give advice. I come then to the question of the power to make orders revocable.
GUMMOW ACJ: What about this balancing exercise? That is the second error, is it not? I am not sure what it means, actually.
MR LINDSAY: Well, we say that if you look at the reasoning of Justice Palmer, and I was going to come to that at a slightly different stage, you will see that he actually did these things, he was aware that the main proceedings involved competing claims, and there were choices to be made in terms of what was expected the trustee might do, and his Honour did weigh up those aspects.
HEYDON J: He did so on pages 390 to 392, paragraphs 47 to 53. A submission was made that:
the Court must bear in mind the consequences to the trust estate of the success or failure –
and so on.
MR LINDSAY: Yes.
HEYDON J: Various other considerations are examined.
MR LINDSAY: One criticism we make of the Court of Appeal is that where they say his Honour did not do things, for example, a balancing exercise, they used the expression, “He did not expressly do something” - he did not expressly. We say if one looks at his reasons he did in substance do those things but the point of departure between the Court of Appeal and Justice Palmer has at its heart the Court of Appeal’s concept of adversarial proceedings.
GUMMOW ACJ: This balancing exercise is some sort of gloss. What is really being spoken of is what Sir Owen Dixon and Justices Evatt and McTiernan said in House v The King 55 CLR 505:
If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration –
et cetera.
MR LINDSAY: Yes.
GUMMOW ACJ: Now, it has been said that the judge did not take into account material considerations. You are disputing that.
MR LINDSAY: Well, our answer is we dispute that.
GUMMOW ACJ: The phrase “balancing exercise” is an expression that obscures what is needed by way of further analysis as to what the statute mandates and does not mandate.
MR LINDSAY: Yes, yes, that is right. If I may then return to the question of orders revocable? What the Court of Appeal says appears at page 634 where their Honours at paragraphs 108 through to 110 focus their attention on the relationship between section 63(1) and (2), and one sees that in paragraph 108 in the first line by the expression “in express terms”, then in the first line of 109 in the words “sets out the circumstances”, and then in the last three lines of paragraph 110. In our submission, as a matter of construction that is a misconstruction of ‑ ‑ ‑
GUMMOW ACJ: There is a confusion there too. If one goes back to paragraph 77 on page 626:
I would not decide that the giving of advice by Palmer J was beyond power.
Then we are told at 635, 112, it was beyond power.
MR LINDSAY: Yes. In our submission, section 63(1) as a matter of construction is not limited by subsection (2) because what subsection (2) really does is address the question of the protection, if any, that is afforded to a trustee who acts in accordance with an order made under subsection (1) and subsection (2) does not limit subsection (1). We also say, in terms of construction, that the Court of Appeal in coming to that view in terms of power did not have regard to the Civil Procedure Act section 86 which enables orders to be made on terms, or the provision of the Supreme Court Rules that require advice to be given in the form of a court order. That was the Supreme Court Rules, Part 70, rule 4, but it has now since I think the end of last year been transferred into the Uniform Civil Procedure Rules, where it appears in the same terms in rule 55.2.
So that as a matter of construction we submit that their Honours’ approach to section 63 is wrong. Then if we have a look at what Justice Palmer did, I think the relevant passage is at volume 1 appeal books at pages 396 and 397.
KIRBY J: Could we just talk about this from a point of view of a matter of principle, leave aside what you say is the gloss and so on. Is there anything in the fact that the parties are locked in a dispute and that the sooner they get that dispute to a judge who has the power to decide it, and that that is the correct way according to the English legal tradition that we have followed to resolve matters and it is generally, as experience in the courts teaches, the wisest way because it gets things to a head and you have appellate rights. In other words, is this a bit like that business of separating questions in the course of hearing because you hope against hope that this will solve the problem and is there some wisdom in what Justice Ipp is saying that better for you to gird your loins, go to court, fight the case, have it decided and not get distracted into this business of advice, which really is not suitable for this type of case. There is a power to do it, but it is not apt that it be used in this sort of case; I could understand that way of thinking as one who changed my mind over the years about the wisdom of separate questions as I saw how they just tended to lead to matters spinning out.
MR LINDSAY: The comments that your Honour has made perhaps need to be responded to at a couple of different levels. Certainly difficulties emerge from having separate questions. It does become, one suspects, almost hit and miss as to whether it is a good thing or a bad thing, but there are problems. Secondly, the desirability of having a final hearing to determine things is undoubted. But, thirdly, one of the problems in the problems here is that, in order to have that final hearing and to have a final hearing that is conducted fairly, it is necessary for the trustee, the appellant to have some recourse to trust property in the preparation of the case.
The case that is advanced by the respondents is that that simply cannot be done because all the property that the appellant has is the subject of a claim by the respondent saying that it is held on trust. So the appellant is in the position that it has at least the opinion of Justice Palmer that there is sufficient prospects for success on the defence to warrant the proceedings being contested, but it has to be able to fund the proceedings. What the respondents say is that the appellant cannot have resort to any trust property, and that is the dilemma that we have. So that if a final hearing has been fixed for later this year before Justice Young, but ‑ ‑ ‑
KIRBY J: I saw in the special leave transcript that that is – is that in September or certain things had to be done by September of this year?
HEYDON J: In November.
MR LINDSAY: Mid‑November is the hearing and there are certain things that have to be done in terms of discovery and preparation. The problem for the appellant is getting access to the funding in order to prepare for that hearing. That is the dilemma. So we cannot have a fair final hearing without there being some preparation for it. That is why there is an application for judicial advice that asks, broadly speaking, two questions.
One is, should the appellant defend these proceedings? Justice Palmer says, using the language of the cases, there are sufficient prospects to warrant that. The second question is, is the funding available in terms of resort to trust property? Justice Palmer says, yes, within limits and controlling that with orders of the court. The Court of Appeal washes its hands and does not displace Justice Palmer’s finding that there were sufficient prospects, but it just simply says, “Well, the whole proceedings have an adversarial flavour about it, therefore, we decline to give you any advice”.
That leaves the trustee in the worst of all worlds because it is not given the guidance of the court. The court could have said, for example, as in Atkinson, no, put an end it, but that was not what was done. So the trustee is in a position where, on the face of it, it has, my words, arguable case or is a case of sufficient prospects, but it has no way of funding it, which puts it in this dilemma.
GUMMOW ACJ: There is a further dimension to this, too, and it is the change in what one might say is the traditional role of the Attorney‑General by the New South Wales legislation in 1993, was it?
MR LINDSAY: Yes.
GUMMOW ACJ: What would the situation have been in times past where there was this sort of dispute about a charitable trust? What would the involvement in the pocket of the Attorney‑General have been?
MR LINDSAY: The Attorney‑General had more directly control over the proceedings because they could not be brought without his fiat and he could withdraw the fiat. Under section 6 of the Charitable Trusts Act, if he declines his fiat, that is not the end of matter and the matter can be dealt with by the court making an order authorising proceedings. After some consideration in an earlier case by Justice Hamilton, an order was made under section 6. So in terms of standing to bring the proceedings generally the respondents have the benefit of a section 6 order and that is where matters stand.
GUMMOW ACJ: Could that order have been conditioned at that stage, right at the beginning, by some costs stipulation affecting Mr Parker’s clients?
MR LINDSAY: Perhaps in retrospect it ought to have been but I do not know that it was. It was not. There was an order made subsequently for the provision of security for costs against the respondents – the plaintiffs in the main proceedings – but I do not think the order under section 6 was conditioned. No it was not.
GUMMOW ACJ: But to think as to what the future is, not in this case, but in other disputes of this type in the light of the New South Wales statute in charitable trust disputes.
MR LINDSAY: Perhaps there is a way to go for the proceedings to unfold, but it certainly raises at the very least at this stage this question and that is, when an order is made under section 6, closer attention probably needs to be given to the question of conditions.
GUMMOW ACJ: Thank you.
HAYNE J: What forms of condition should be on the table? In particular, should there be the possibility of a condition affecting whether or when resort may be had to the trust assets that are affected by the suit?
MR LINDSAY: That may possibly be one way of dealing with it. Another way of dealing with it may be to deal with security for costs. Another way of dealing with it might be to ‑ ‑ ‑
GUMMOW ACJ: Security by the moving party?
MR LINDSAY: Correct. Another way of dealing with it might be to make it quite plain that the order is revocable or only applies to the current state of pleadings. I think the view has been taken that the section 6 order having been made, it applied generally, so in the time since the order was made there have been several amendments of the statement of claim but there may be a number of ‑ ‑ ‑
HAYNE J: Well, query whether the section 6 order is in any event an interlocutory order subject to further consideration. That is a whole raft of issues not before us.
MR LINDSAY: Yes, correct.
GUMMOW ACJ: Yes, thank you, Mr Lindsay.
MR LINDSAY: In our submission, Justice Palmer was in substance correct in the approach that he took. We say the Court of Appeal acted on a wrong principle and we put the House v The King submission, but we say, in any event, Justice Palmer was correct and we have said in our written submissions the sequence of his Honour’s reasoning, to which I will take the Court now, if the Court would be assisted by that – his Honour identified the questions at page 386 he had to consider, in paragraph 35 and then really in paragraph 36 as well. Having stated those questions, and with discussion, at page 389 he recognised, at paragraphs 45 to 46, that there was an element of choice involved in terms of, one might say, balancing competing considerations.
At page 391 and over the page, 392, his Honour considered specifically the benefit to the trust in terms of the definition of the issues – the terms of the trust rather – and then at page 394, paragraph 62, he ventured into characterisation or statement of the development of the law in terms of general principle and notably, for example, at page 395, paragraph 62, the third dot point, he speaks about the strengths and merits of the claim against the trustee.
Then his Honour deals with the question really of the particular nature of the trust as a charitable trust as against the private trusts that were considered in the other cases. In our submission, his Honour in substance was correct and did not make the errors that were attributed to him. Unless there are particular questions, those are our submissions.
GUMMOW ACJ: Yes, thank you, Mr Lindsay. Yes, Mr Lancaster.
KIRBY J: Is it normal in a case like this, Mr Lancaster, where the problem is said to arise out of the uncertainty of how the statute operates for the Attorney‑General to be ordered to pay some parts of the costs, given that we are clarifying the law in this matter?
MR LANCASTER: Does your Honour mean costs of the appeal, of the appeal to this Court?
KIRBY J: I suppose this is where you are seeking to be to intervene as an amicus, so we have you in our presence now. I would not want to do anything that is out of line with the ordinary principles, but I have a dim recollection that where the Attorney‑General intervenes, that on a matter of general importance that sometimes orders are made against the Attorney‑General for costs in those proceedings, especially where we are dealing with a fund which is of a limited amount and a huge amount of legal costs are being built up and we are clarifying the law of the State in an important matter.
MR LANCASTER: Yes. Your Honour, for our part we would perhaps await on the application by one of the parties for an order to that effect, but we would say ‑ ‑ ‑
GUMMOW ACJ: At the moment you are only an amicus. You come here only as an amicus. Were you a party below?
MR LANCASTER: No.
GUMMOW ACJ: You were an amicus below, were you?
MR LANCASTER: Merely attended below.
HEYDON J: You were a party in the main proceedings, but not in these advice proceedings.
MR LANCASTER: The ninth defendant in the main proceedings. In the judicial advice proceedings, it was literally a watching brief. We attended in the Court of Appeal, but no leave was granted to do anything in the Court of Appeal.
KIRBY J: I would not want to do anything that discouraged amici appearances or the Attorney-General coming to help us, but it is a rather sad case where such a huge amount of costs is being run up.
MR LANCASTER: Yes, I certainly accept that, your Honour. In my submission, the ordinary basis on which an amicus would be heard would be that no costs are ordered against or by that amicus.
GUMMOW ACJ: Been placed on early warning for what might happen at the trial.
MR LANCASTER: Yes. Your Honours, I hope to address three matters briefly to supplement what we have put in writing. The first is to examine one aspect of the proposition that section 63 judicial advice is not appropriate in adversarial proceedings, and to attempt to answer the question where did this notion enthusiastically employed by the Court of Appeal come from in the English authorities? For that purpose could I take your Honours to the judgment of the Privy Council in Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER ‑ ‑ ‑
KIRBY J: This is not the same Marley of the Marley family in ‑ ‑ ‑
MR LANCASTER: It is Bob Marley, the reggae musician, your Honour, yes.
KIRBY J: I thought it might have been Marley in Charles Dickens’ A Christmas Carol.
MR LANCASTER: No, it is the modern version, your Honour.
KIRBY J: ‑ ‑ ‑ whose ghost wandered over the stage.
HAYNE J: It is the first time it has ever walked across a stage of a Bob Marley concert in years passed, but there we are.
KIRBY J: It is a different stage.
MR LANCASTER: Your Honours, there was a disputed question in that case arising from the way the executor intended to deal with the rights to Mr Marley’s music ‑ ‑ ‑
GUMMOW ACJ: He died intestate, did he not?
MR LANCASTER: That is right, I am sorry, your Honour. Letters of administration were granted and there was a question by the administrator brought to court. I wish only to draw attention to the second of the two propositions identified on page 201 of the report. At letter d, Lord Oliver identifies by way of introduction two general propositions we mentioned. The first I will not take your Honours to, but the second, which appears just after line g, is that:
the court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of the adversarial parties.
GUMMOW ACJ: Where are you reading from?
MR LANCASTER: From just after g, down to j. I invite your Honours to read that paragraph. That, of course, was in the context of that proceeding where Mr Marley’s many children and widow were disputing the way that the administrator intended to deal with the rights, and it was a hot dispute, a contest in anyone’s way of thinking. But it is that sentence just before line h that seems to be picked up by the Court of Appeal in this case, namely referring to:
the best interests of the trust –
but the purpose of the application, as the Privy Council indicated it, the purpose not being to determine rights, the purpose was to ascertain the best interests of the trust.
HAYNE J: It was a trustee’s application for approval of a proposed transaction.
MR LANCASTER: Yes. One of the questions central to it was whether a better deal could be done, colloquially speaking, in respect of the rights. But one of my purposes in taking your Honours to that is to make the submission that the Privy Council was not there establishing a dichotomy between ascertaining the best interests of the trust on the one hand and not determining adversarial rights on the other hand and yet the Court of Appeal below appear to have relied on Marley as, in effect, establishing the dichotomy and saying where a case can be characterised in the latter way, it is not appropriate for a section 63 procedure. Could I take your Honours to the Court of Appeal’s reasons at paragraph 113 which is appeal book 2, page 635.
GUMMOW ACJ: What was the upshot of the Privy Council appeal in Marley?
MR LANCASTER: The result was to send the matter back to the administrator, if that is what your Honour means. There was a member of the Florida Bar who Lord Oliver apparently viewed very sceptically in relation to his involvement in the negotiation of the original administrator’s contract.
GUMMOW ACJ: The phrase “Florida Bar” might be weighted.
MR LANCASTER: Your Honour, at 113 of the Court of Appeal’s reasons there is a reference to Marley’s Case at 201 and the other significant reference to Marley, in my submission, is back at appeal book page 630 in paragraph 90 where his Honour Justice Ipp refers to Marley as authority for the proposition that:
the court is not engaged “in determining the rights of adversarial parties.”
It follows, in my submission, that it may be that his Honour Justice Ipp derived this principle of section 63 being inappropriate in adversarial cases from that passage to which I took your Honours in Marley’ Case which his Honour Justice Ipp effectively took as establishing a dichotomy that it was not established.
KIRBY J: He may have been fortified by that, but Justice Ipp is a very experienced judge and I would think he would be looking at this as a matter of concept and principle and if you do that, can you say the concept and principle at stake here is that judicial advice is an intrusion from the normal process of our courts in resolving matters, it eats up costs and it does not usually have the same sharpening of the issues that you get in the trial of contested matters? It is not meant for that.
It is meant to be giving advice on the way that will help parties, but once they have themselves locked into litigation, better that they go and fight their litigation out and not be distracted by (a) the time‑consuming and cost‑consuming activity of advice and (b) the fact that the advice is often given at an interlocutory early stage and (c) that the advice may be given without the sharpening of the issues that litigation of the those issues produces. I do need your help on the point I asked Mr Lindsay because that is really the objection to parties going off on separated questions of law and I see a certain analogy here.
MR LANCASTER: None of the matters that your Honour put to me, with respect, are matters that I would submit are outside the proper scope of consideration when exercising the discretion under section 63, and there will be some cases in which those considerations lead to the very prompt conclusion that a properly constituted suit is the way to be resolved. On the other hand ‑ ‑ ‑
KIRBY J: You say they are just factors in the exercise of discretion in a particular case?
MR LANCASTER: Yes.
KIRBY J: But there is not an embargo on the fact that the parties are in litigation, and to introduce that is to not only gloss the language of the statute but to defeat the generality of the power that has been given by the statute for particular cases.
MR LANCASTER: Yes, but that is the essence of our submission, and to take a rather straightforward example of a dispute about the construction of a trust instrument, it may be that there are beneficiaries or other parties who are in hot dispute about the way a trust instrument should be construed. That may or may not turn on disputed questions of fact. If it did, it may be appropriate that there be a construction suit effectively to resolve that question. If it did not, the parties might come to court on a judicial advice application and effectively say to the judge hearing the application, “We agree the trust instrument itself is the four corners of the evidence that would be relevant to this point determinative on a judicial advice application”.
Section 63 has no statutory limitation that would prevent that disputed question being determined on a section 63 application. So it would depend on the circumstances of the judge exercising the advice power would take those matters into account, but there cannot either be a limitation on the power, a jurisdictional limit, as to adversarial cases on the one hand, and there cannot, in my submission, on the other be any approach to a section 63 application that says, where there is a hotly contested question, that will be a trumping or a special discretionary consideration that will defeat all others, which is ‑ ‑ ‑
HAYNE J: If it did, it would mean judicial advice could never be given on the issue whether a trustee should defend a proceeding that is instituted against it, because by hypothesis there is an adversary proceeding.
MR LANCASTER: Quite, and one could expect – I hesitate to use the words – a chilling effect arising from the reasons, particularly paragraph 117 of the ‑ ‑ ‑
GUMMOW ACJ: A disappearance of trustees. Trustees will resign.
HAYNE J: Instant resignation.
KIRBY J: In that circumstance, would your client have to take over and bear the costs? That might not be a bad solution.
MR LANCASTER: In a charities case, that will always be an option.
HAYNE J: Or the engagement of a professional trustee with the cost of the charitable object.
MR LANCASTER: Yes, with some understanding as to costs coming out of the estate or some other arrangement at the start of the enterprise. Your Honours would have seen in our written outline that we respectfully support the approach that his Honour Justice Austin has taken in the Metropolitan Local Aboriginal Land Council Case as ‑ ‑ ‑
GUMMOW ACJ: Is that reported? We have only an electronic citation of it.
MR LANCASTER: It is not reported, your Honours.
KIRBY J: An aspect of the case that came up here? We had a case concerning the Aboriginal Land Trust of New South Wales.
MR LANCASTER: I do not believe the issues relevant to this case were addressed.
KIRBY J: Maybe it is pending. I think special leave has been granted in that case.
MR LANCASTER: I am afraid I do not know, your Honour. The Supreme Court citation is (2003) NSWSC 104, in particular from paragraph 22 onwards. The question in that case was the very specific one of whether the MAAI, as the judgment refers to that body as, use of funds it had in its possession in defence of the claim which was alleged by the plaintiff to be subject to a trust was something that was permissible as a matter of authorisation through the judicial advice process. At paragraph 22 his Honour took account of the advice as to prospects that were tendered in that proceeding.
At paragraphs 24 to 26 his Honour noted the decision in Dallaway, it appears in aid of the proposition that an unsuccessful trustee resisting the plaintiff’s claim of that nature might, in any event, get his costs out of the trust estate even if there is, at the end of the day, no trust estate. Then at 34 to 35, the particular paragraphs upon which I rely, the contention that the plaintiff in the other proceedings is the proper owner of the funds is not necessarily a circumstance that would prevent judicial advice being given that the person presently in possession of the funds can use those funds in defence of the action.
Can I add another of his Honour Justice Austin’s judgments which I have not put in my submissions or on the list, but it is MTM v Cavalane (2000) 35 ACSR 440, in particular at 445, paragraph 17. His Honour there dealt with one of the burgeoning areas in section 63 in applications by responsible entities and said that in that paragraph the fact that it might be contentious is not a necessary barrier to section 63 advice being given, which we would respectfully adopt.
GUMMOW ACJ: What is this reference to responsible entity?
MR LANCASTER: They have from time to time been taken to be trustees for the purpose of the section 63 application.
HAYNE J: Entities under managed investment schemes and ‑ ‑ ‑
MR LANCASTER: Yes, trustee entities regulated funds under managed investment schemes. So, your Honours, the second point I would wish to address is the question of the advice as to prospects that was before Justice Palmer, but, as we see it, it was not before the Court of Appeal. It played a central and important, in our submission, role in his Honour Justice Palmer’s conclusion.
The Court of Appeal when they came to re‑exercise the discretion under section 63, which is addressed in a distinct part of the reasons for judgment in the Court of Appeal in paragraphs 115 to 124, did not, certainly in those paragraphs, expressly refer to the advice as to prospects. In our submission, something was evidently material to any re‑exercise of the discretion to consider whether or not it was a fruitless case as some of the authorities refer to it as, or whether the defence of the main proceedings had some substance.
HEYDON J: If this submission succeeded it would lead, would it, to an order referring the matter back to the Court of Appeal for reconsideration in the light of the advice?
MR LANCASTER: Yes, precisely. The other incidental point was precisely, your Honour Justice Heydon, that that advice is not in the materials before this court.
KIRBY J: Would one want to extend the agony?
MR LANCASTER: Well, there is a finding in terms of Justice Palmer’s that has not been disturbed that says that there are sufficient prospects of successfully defending the main proceedings to warrant advice being given. Now, that is as far as it goes.
KIRBY J: See people want to have their fights in litigation, but they have to realise it costs a lot of money and that they have these battles between each other and somebody has to pick up the tab in the end. There comes a time when there has to be a bit of commonsense. That is a reason for saying, well you leave it to trial judges. I mean, that is an argument in favour of the proposition you are putting as far as I am concerned. This business of going up and down appellate trees – it is a very expensive proposition. Somebody has to pay in the end. It does not come for nothing.
MR LANCASTER: I certainly adopt what your Honour says, certainly in the context of taking a course that will assure that at the end of the day, if there is an end of the day reached in this litigation, the assets of the charity as such as to permit it to be a functioning charity to serve the Macedonian Orthodox community in Rockdale. The depletion of those funds is a matter with which the Attorney has, at least over the last few years, been quick to attempt to point out to the Supreme Court of New South Wales.
Your Honours, the third and final matter I wish to address briefly is to answer the question what, if any, is the effect on the exercise of the
discretion under section 63 by reason of the fact that the subject matter of the case is a charitable trust? There seemed to us to be two or three distinct discretionary considerations which, while not changing the nature of the power, are unavoidable as important considerations in a charity’s case.
The first is, in my submission, it is in the interest of the charity that there is an adjudication on the merits of a disputed question about the terms of the trust and whether that is a precursor to a later debate about breach or not is really not to the point. The initial question of definition of the charity will permit it to function in real terms because, as your Honours would be aware from the materials, one of the primary questions is whether the Bishop is entitled to appoint the parish priest in Rockdale, or whether the Association has a role in that. A definition of the terms of the trust will have a practical, functional, important consequence for the charity.
The second aspect of it being a charity that is subject of the proceedings is that there may not otherwise be a contradictor to the contest about the terms of the trust if the association is not in a position to take the running of that question. Subject to the position of the Attorney‑General as an ultimate fallback position, the Court has before it a situation in which an association which is indeed restrained from using any of its funds in defence of the suit, unless authorised under this judicial advice, is the only obvious contradictor to the determination on the merits of the dispute.
The third aspect of the trust being a charity is to recognise that the plaintiff in the main proceedings stands in a different position with respect to the trust than, say, a competing beneficiary in a case about the distribution of assets under a private trust. The Bishop certainly has an interest – that could not be controverted – but it is a very different type of interest in the trust property than an ordinary equitable interest or an asserted right to take a distribution under a private trust. Unless there is anything arising, your Honour, those are my submissions.
GUMMOW ACJ: Thank you, Mr Lancaster. Yes, Mr Parker.
MR PARKER: I will start by trying to answer the question that Justice Gummow asked, which is, was this about power or was this a House v The King appeal? In our submission, it was quite clearly a House v The King appeal. It is true that, as has been pointed out, there are statements made at an earlier point in the judgment about whether certain steps are empowered or could be empowered, but the structure of the judgment is to discuss the principles that are applicable generally and those expressions are found in that general discussion of the law.
The Court of Appeal at that point was not seeking to actually apply those principles specifically to the facts of the case. The first thing that they did in their judgment, after they had discussed those principles, was to address the question, on page 625 under the heading “Did the Court have power to give the judicial advice?” So they looked at the question of whether the particular orders that were sought in the particular case were within power or perhaps, as might more correctly be expressed, within jurisdiction.
They noted something, which I should repeat, which is found at paragraph 77 and that is that we have never said to the Court of Appeal that these orders were beyond power. Our appeal was a House v The King appeal. It said these orders were made, the judge took into account irrelevant considerations, he failed to take into account relevant considerations, he made mistakes about relevant facts, which caused him to exercise the discretion wrongly and perhaps unnecessarily ‑ ‑ ‑
GUMMOW ACJ: Why then do we get page 635, paragraph 112?
MR PARKER: Can I just come back to that in a moment?
GUMMOW ACJ: Yes.
MR PARKER: Perhaps unnecessarily the court then records the finding to which Justice Gummow has referred, namely, “I would not decide that the giving of advice by Justice Palmer was beyond power”. Nobody had suggested it was, in that sense. Then what they did was that they set out three matters which they considered satisfied the House v The King criteria. The first of them starts at paragraph 78 and that was what has been called, as a tag, “the adversarial nature of the proceedings”. It is perhaps an unfortunate tag but I will come back to that in due course.
The conclusion is expressed on that at paragraph 96, that Justice Palmer had not addressed various matters that in the court’s view were “crucial to the discretion” and that his Honour has erred. That is a House v The King error. Then, at paragraph 97 through to paragraph 100, another House v The King error was identified at paragraph 100 and it was said that that omission also amounted to an error in the exercise of the discretion. The third error identified starts ‑ ‑ ‑
HEYDON J: It is not really a House v The King error, as Justice Gummow pointed out earlier. A House v The King error would be omitted to take into account a relevant matter. That is not casting ‑ ‑ ‑
MR PARKER: Probably in the extended sense. I do not know whether it is best classified as a failure to take into account relevant matters or a failure to deal properly with the facts. I am going to seek to support that in due course, that particular part of the Court of Appeal’s reasoning, but for present purposes it is enough to note that what the Court of Appeal thought it was doing here was identifying another House v The King error which would bring down Justice Palmer’s exercise of discretion. Then, the third one identified by the Court of Appeal starts at paragraph 101.
Your Honour Justice Gummow, the conclusion at paragraph 112 goes like this. What the Court of Appeal concluded was that there was no power to make an order revocable ab initio. That was undoubtedly a power question. But they then said that because his Honour had made that mistake, that had infected his approach to the discretion because what he had thought was, “Well, it is all right if I make this order, because we can always come back afterwards and then the trial judge can look at it again and if I should not have made the order, it can be reversed at that point and it will all be ab initio so we can go back and the party’s position can be set to rights”.
Now, there are a number of problems with that. The most fundamental is obviously, as we would submit, that section 63(2) simply does not permit one to make an order revocable ab initio in that way. That is what the Court of Appeal found. They, therefore, did not have to look at our alternative submissions which were that on the facts that would have been a totally inappropriate order to make because there was no comfort that this revocation actually provided in substance. I will develop that in due course.
So although they refer to power in that section, the ultimate holding is that because of the error in the construction of section 63, that is, the error in concluding that there is a power to make a revocable order, that is, an order revocable ab initio, there is a further House v The King error. That is the third one.
Now, there were two others that we had advanced which the Court of Appeal did not act on. The upshot of that is that if any one of those challenges can be sustained to Justice Palmer’s judgment then the judgment must go and the question then arises, what should be done about re‑exercising the discretion? With the greatest respect to Mr Lindsay, one of the things that his submissions are not very clear on is just exactly what the position would be on his argument were the Court to conclude that at least one of the House v The King errors identified by the Court of Appeal or put by us as open to be identified by the Court of Appeal, that if one of those errors is sustained, what happens then?
The Attorney‑General has submitted – and I will come back to this – that there is a finding about the suitability of these proceedings, that is, the suitability of the defence having regard to the opinion, and it is said that opinion was not challenged. Well, of course, it could not be because the opinion was not put before the Court of Appeal. So that one way or another ‑ ‑ ‑
GUMMOW ACJ: You are getting to your notice of contention, are you? You said there are two further grounds.
MR PARKER: Yes. They are in the notice of contention.
GUMMOW ACJ: That is your notice of contention, is it?
MR PARKER: Yes.
GUMMOW ACJ: Is what is put there, including the alleged error of the (2006) 66 NSWLR 112, was that put to the Court of Appeal in the present case?
MR PARKER: No. It was put on the basis that they had already decided the question and we formally put it on the basis that the if matter went further, which at that time we devoutly hoped it would not happen, that we would be ‑ ‑ ‑
GUMMOW ACJ: Were there written submissions to the Court of Appeal?
MR PARKER: Yes, there were.
HEYDON J: Do you submit really that Justice Palmer erred in following a binding decision of the Court of Appeal and that he should have said “I will not follow that decision because it is erroneous”?
MR PARKER: No.
HEYDON J: Because that is what you say in the last six lines of page 735.
MR PARKER: We have poorly expressed it. Obviously his Honour had to follow the Court of Appeal decision. All we were seeking to do was to say to them we made the formal submission to him and the Court of Appeal, but the Court of Appeal had been wrong in the earlier decision. So if the Court of Appeal’s decision was wrong in law, then his Honour was wrong in following it. That is the sense that we are trying to convey.
HEYDON J: I do not mean any offence to the Irish, but that is a very Irish submission.
MR PARKER: I do want to come back to the notice of contention and the cross‑appeal, but it is surely open to us to argue that the decision of the Court of Appeal in 2006 was wrong.
HEYDON J: If you had applied for special leave in time.
MR PARKER: We did not apply for special leave, no.
HEYDON J: No.
MR PARKER: I know that has been put against us as a reason why special leave would not be granted on the cross‑appeal.
KIRBY J: One would not want to stretch this litigation out any more than one has absolutely required to.
MR PARKER: Your Honour will not get any disagreement about that from me. But it is open to us on our notice of contention to argue that the Court of Appeal was wrong in 2006 and that is all we were seeking to convey. Now, can I come back to that because it is a point which we only ‑ ‑ ‑
GUMMOW ACJ: These written submissions that were given to the Court of Appeal, are they in Court?
MR PARKER: I do not know the answer to that.
GUMMOW ACJ: The Court of Appeal records should have come up here. You can look into it over lunchtime and we had better be supplied with them.
MR PARKER: Yes.
GUMMOW ACJ: Because the Court of Appeal does not deal with it in its reasons.
MR PARKER: No.
GUMMOW ACJ: What is the other notice of contention point that you say you have put to the Court of Appeal but which they did not deal with and you say they should have dealt with?
MR PARKER: The other point is that we wish to argue that the financial position of the Association was irrelevant to the exercise or the discretion and that is the argument which has been developed in our ‑ ‑ ‑
KIRBY J: Is it irrelevant, because the suggestion that Mr Lancaster has put to us is that if your contention of the construction of the statute upholding the Court of Appeal is right, then effectively you have had a manoeuvre by a sort of cutting them off at the pass and they do not get a chance to have their point of view put to the Court.
MR PARKER: Your Honour, I have now heard that been put at all sorts of appellate levels in a number of different courts away and it is simply not correct. There seems to be some idea, which is being fostered by our opponents, that what this was about was trying to find a way to cut them off at the knees and prevent them from defending the case.
KIRBY J: I have to say to you so that you will know that that idea has been planted in my mind, so you have got to try and get it out of my mind.
MR PARKER: And I will when I address the first point which I intend to address.
KIRBY J: It would not be the first time that has been done in litigation. It is often done by way of applications for security for costs. We used to get them every Monday in the Court of Appeal. They probably still come up there.
MR PARKER: Your Honour, all I can say is I am going to develop the argument on that and we have developed it in our written submission and it is in our notice of contention. Can I just say in answer to Justice Gummow that the notice of contention point which embraces whether the Court of Appeal was right or wrong in 2006 is actually wider and involves an attack on what Justice Palmer did as a matter of procedural fairness independently of the correctness of the 2006 decision.
GUMMOW ACJ: Was the procedural fairness point agitated in the Court of Appeal?
MR PARKER: Yes, it was.
HEYDON J: Can I just get one little typographical matter straight? If you look at page 735 you will see (a), (b), (c)(i), (ii), (iii), (iv). Should not actually the end of (iii) run straight into (iv):
(iii)the primary judge denied natural justice to the Respondents;
(iv)by following –
You see my point?
MR PARKER: No, (iv) should be (iii) and whatever the next indent is, capital A, and (v) should be capital B. I do apologise for that, your Honour.
HEYDON J: Subparagraph (iv) should be capital A?
MR PARKER: Subparagraph (iv) is a sub‑proposition of (iii), and so is (v).
HEYDON J: So there were two breaches of natural justice. One is “following the earlier decision” and the other is by “dealing with the application before the” defence had been filed?
MR PARKER: Yes, and that is the one which I have just mentioned to Justice Gummow. What I intended to do was to address the five issues thereby joined, but not in the same order the Court of Appeal has addressed them. I am going to deal first with the notice of contention point that the financial position of the association was irrelevant, then I will say something very briefly about the question of revocability ab initio. Then I want to deal with what I will use as a label ‑ ‑ ‑
GUMMOW ACJ: If on their proper construction the orders do not involve revocation ab initio your point disappears, does it not?
MR PARKER: Yes, but I do not think anyone disputes the facts, certainly Mr Lindsay does not, that that was what was intended.
GUMMOW ACJ: That does bind us.
MR PARKER: No.
GUMMOW ACJ: There was some movement, in any event. So the answer to my question is yes?
MR PARKER: Yes.
GUMMOW ACJ: All right.
MR PARKER: Then the third point is what I will call collectively for the moment the question of whether the proceedings were adversarial. The fourth point is the balancing exercise, and again if I can use that as a label, perhaps misleading. Then the fifth point is procedural fairness, and then there are the two sub‑points in that, was the Court of Appeal wrong, and was there otherwise a problem with the way in which Justice Palmer conducted the application? Before I embark on any of those, can I say something about the legislation?
GUMMOW ACJ: Yes.
MR PARKER: The first thing to draw attention to, in our submission, is that before any advice can be given there has to be identified a question respecting the management or administration of the trust property.
KIEFEL J: Or the interpretation of the trust?
MR PARKER: Or respecting the interpretation of the trust instrument. Yes. We will be saying that some of the orders which accompanied the principal order made by Justice Palmer were not orders of that sort at all. There was not actually, when one thinks about it, a question respecting the management or administration of the trust properly.
HAYNE J: Was not the question whether to defend the suit a question concerning the management or administration of the trust property?
MR PARKER: The short answer to that is yes, but there were other orders made by Justice Palmer. One of them was that they were to have their costs for the past – now I am anticipating what I am going to say, but we simply say what is the question that is answered by that order? An order that says you can have your costs for having defended the proceedings up until now.
HAYNE J: You say that is not about the management or administration of the trust property ‑ ‑ ‑
MR PARKER: No, because the costs have already ‑ ‑ ‑
HAYNE J: Whether the trustee may recoup itself out of the trust property for an expense that has been incurred and paid.
MR PARKER: The costs have already been incurred so there is no ‑ ‑ ‑
HAYNE J: No, I just want to understand it. You say that whether the trustee can recoup itself for an expense that has been incurred and paid is not a question about the management or administration of the trust property. Is that the proposition?
MR PARKER: In this particular context, yes, because of section 59 and section 63. The next point to make is that the section uses the word “advice” and as the Court of Appeal said and we would adopt, advice implies some sort of doubt as to what one is going to do in the future. Advice is given to tell someone what they should do in the future and that is something that arises from the statute, as we would see it. The third provision we want to draw attention to, which of course ‑ ‑ ‑
GUMMOW ACJ: We are back where we were at 10 o’clock really. It is inappropriate to read provisions conferring jurisdiction or granting powers by making implications or imposing limitations not found in the express words. You say these are in the express words.
MR PARKER: Well, that is why I am addressing it now because I understood the Court wanted to be taken to that. So the next thing that I should draw attention to is subsection (2); we all know what that means. The effect of it is that one has and the trustee has an absolute right under section 59, which otherwise would be contestable to obtain reimbursement because section 59(4) gives the right of reimbursement. The effect of section 63(2) is that if the order is made then there is a deemed – acting improperly in the execution of the trust and that then means that under section 59(4) there will be a right of recoupment.
GUMMOW ACJ: Well, wait a minute 59(4):
all expenses incurred in or about execution ‑ ‑ ‑
MR PARKER: Yes.
GUMMOW ACJ: Not improperly incurred, in or about the maladministration.
MR PARKER: No, but once the order is made under section 63 then subsection (2) deems it to have been properly incurred.
GUMMOW ACJ: That is right.
MR PARKER: So that an issue which would otherwise potentially exist under section 59(4) is taken away by subsection (2). The issue under section 59(4) is obviously an issue which may arise between the trustee and other concerned people. Usually the beneficiary will apply for costs. Here, if I can refer to us as the relators because I know that is not strictly what we are, but we are in effect representing the interests of the beneficiary in the main proceedings.
Now, the fact that subsection (2) has this conclusive effect is something else which arises out of the legislation and it is therefore perfectly legitimate for the Court of Appeal to draw conclusions from that as to the way in which this particular power under the section should be exercised. Subsection (3), as we have noted in our written submissions, creates provisions for the use of a written statement, so that one does not even have an affidavit. In connection with subsection (3) ‑ ‑ ‑
GUMMOW ACJ: One may not have an affidavit.
MR PARKER: One may not have an affidavit. Section 63(3) recognises the Rules of Court may be made in order to govern the way in which these sorts of proceedings are to go. Rules have been made and the rules, although not expressly saying so, seem to reflect a lot of the things that Mr Lindsay was saying earlier, namely, that one does not have a full adversarial procedure. One sees that again in subsection (4) where:
it shall not be necessary to serve notice of the application on any person ‑ ‑ ‑
GUMMOW ACJ: It may.
MR PARKER: It may, but it is not necessary to do so. If a person is served, that person participates not as a party. That has a consequence in terms of the rules, because that means all the panoply of adversarial entitlements that would ordinarily be available under the rules to a party are not available to an objector who is brought in in that way. That too is something that, in our submission, the Court may properly take into account in considering how to exercise the power under this section because what the statute contemplates, and supplemented by the rules and the practice which is now very longstanding, is that issues can be brought before the court in a way in which the other parties who may be brought there as objectors do not have full power to contest adversarily.
Another point to make about the provision is that when one analyses it closely, one sees that there are actually two ways in which a notice can be given to a party. Subsection (4) contemplates that notice may be served. Then in subsection (8), in particular types of question, notice is given and then that brings into play subsections (9) and (10) and those subsections allow for the court to give any order or directions – this is subsection (10) – as the circumstances require to determine an issue which thereby arises.
So that what (8), (9) and (10) do is that they create the ability for a matter which starts off as a judicial advice application, as it were, to become a more adversarial procedure and it gives the court power to have directions to secure that event. When one looks back at the history of this particular section and one looks at the parliamentary debates, which my friends have included in the bundle, one sees that the concern which was being reflected there was a concern about cost, and it was believed by the Parliament that, particularly in the case of smaller States, it would be highly desirable if there could be a quicker and more summary procedure for determining those sorts of questions.
Then one comes to subsection (11) and subsection (11) creates a binding effect, subject to appeal, and it creates it first on any person on whom notice of any application under this section is served – that is subsection (4) – or to whom notice is given in accordance with subsection (8). So what is clear is that if you ‑ ‑ ‑
GUMMOW ACJ: Subsections (8), (9) and (10) have no part to play in this particular matter.
MR PARKER: They do not. We were joined under subsection (4), but it is clear, under subsection (11), that we are nonetheless bound by the outcome and we are nonetheless given a right of appeal.
GUMMOW ACJ: Is there any particular provision in the Supreme Court Act that picks up 63(11) and channels the appeal to the Court of Appeal?
MR PARKER: Yes. There is a provision in the rules – and I am afraid I only have the Supreme Court Rules which have now been replaced by the Uniform Civil Procedure Rules – but under the Supreme Court Rules as they were, Part 70, Division 2 dealt with this and rule 6 provided for an appeal lying to the Court of Appeal.
KIRBY J: What Part was that, I am sorry?
MR PARKER: It was Part 70. Mr Lindsay is more up to date than I am. It is now Part 55 of the Uniform Civil Procedure Rules and the relevant rule conferring a right of appeal, which appears on glance to be in the same terms, is Part 55, rule 4.
GUMMOW ACJ: Part 55, rule 4.
MR PARKER: Yes. Of course, at the time that this happened – that is, before the Court of Appeal – the relevant rules were the Supreme Court Rules.
GUMMOW ACJ: It was the old system. Thank you.
MR PARKER: With that introduction, can I turn to the first of the points which we wish to argue, and we have addressed this in our written submission starting at paragraph 33 and, in essence, our argument is this. The concern of section 63 is with the management or administration of the trust property and, in our submission, it is therefore correct to say that the overriding consideration in any exercise of a power must be in the best interests of the trust estate. That is why the power is given. It is to enable the efficient ‑ ‑ ‑
GUMMOW ACJ: Not exclusively.
MR PARKER: What I was going to put, your Honour, was that ‑ ‑ ‑
GUMMOW ACJ: Could not be so. The history indicates the contrary.
MR PARKER: What I was going to put was that the need for reimbursement of a trustee who is acting gratuitously is a relevant factor to that overriding purpose because obviously, if one has a trustee who is acting gratuitously and cannot otherwise act, then that is in itself something that would be appropriately comprehended within a purpose of advancing the interests of the trust estate. I mean, there is no point in having it. The trust estate’s interests will not be advanced if all private trustees are going to – or unremunerated trustees immediately resign. But, as we would put it, ultimately you are still talking about the interests of the trust and that consideration which has been mentioned is relevant ‑ ‑ ‑
GUMMOW ACJ: “The trust” is an illusory expression, is it not? It is a purpose trust.
MR PARKER: It is, and that means in this context, as we would put it, the objects for which the property is developed. In a private trust it is just the financial aspects of the trust estate. Here we accept it is one.
HAYNE J: But the objects of the trust include its due administration. Its due administration includes the trustee acting properly. The trustee acting properly includes its defence of suits which it is proper to defend and its bringing of suits which it is proper to bring. So where are we heading, Mr Parker?
MR PARKER: Where we are heading is that whether the trustee has money or not of its own to defend the proceedings out of its own pocket is quite irrelevant to that question. The court looks at what is in the interests of the trust. If it is in the interests of the trust to defend the proceedings, the court says, “Defend them”. Section 63(2) and 59 then have the consequence for reimbursement. If the court says, “We have looked at it and we do not think it is in the interest of the trust for this to be defended”, then the court does not give the advice and says to the trustee, “We are not going to give you advice”. On either view, whether the trustee has money or not does not matter.
KIEFEL J: Do you see the interests of the trust as synonymous only with money.
MR PARKER: I do not think I am putting ‑ ‑ ‑
KIEFEL J: It is a purpose trust after all.
MR PARKER: But I am putting that the financial position of the trustee independently of the trust estate is irrelevant. I am not putting that the only thing the trust is concerned with is money in the case of this purpose trust, but what I am putting is one does not look – one does not ask oneself in that sort of inquiry does the trustee have money. One does not say, “Well, you are the permanent trustee. You have got lots and lots of money independently of this trust. Therefore, we will not give you the advice”. What one does is one says one just looks at the interest of the trust and if it is appropriate to defend it, it does not matter who the trustee is. It does not matter whether the trustee has lots of money. It does not matter whether the trustee has no other money apart from the assets.
We would put the converse. The application does not become a good application because the trustee says, “But I have not got any money otherwise to defend this”. It is an immaterial consideration. Now, we have put in paragraph 35 ‑ ‑ ‑
HEYDON J: If paragraph 35 is right, why is not the converse right?
MR PARKER: Because paragraph 35 identifies a possible exception which is consistent with the overall purpose of advancing the interests of the proper administration of the trust. What 35 is saying is saying this is a case where we would give you leave normally, but as it happens we do not need to do so because there are other people who can defend this trust anyway, who can defend the same issue.
HAYNE J: I think that underpinning that submission there is an elision of two radically separate ideas. First, the court does not tell the trustee what to do in these advices, does it? It advises the trustee about whether it would be proper to defend the suit, not whether it must defend. Is that right?
MR PARKER: No.
HAYNE J: That is the Court arrogates to itself the power of decision?
MR PARKER: It depends ultimately on what the question is. The question – now I know that the conventional form of an order is the trustee would be justified, but can I go back to the facts of this particular case. The trustee here wanted an order which would say you may defend these proceedings and get the indemnity under section 63(2)”. The whole purpose of this application was to get the indemnity as a result and to get a protection in the form of section 63(2).
Now, your Honour Justice Hayne, the question might be asked in the form “Is it open to us to defend these proceedings?” and this is at a later part of our submissions. We have put that logically when one approaches an application of this sort two considerations can arise. The first question is, is it even open to the trustee to defend the proceedings? The trustee may be proceeding on some misconception of law or there may be some provision in the trust instrument which says you are not allowed to defend litigation of this sort. So a question might arise at a threshold.
Once you get over the threshold then the question is, okay, the trustee can defend it, should the trustee defend it, having regard to the interests of the trust at the trust’s expense? Now, what this application was about was about getting an answer, positive answer to the second question. A positive answer to the first question would not have assisted. Stepping ahead, this is one of the complaints we make about what Justice Palmer did. Justice Palmer seems to have approached the so‑called balancing exercise on the basis that he said “I have just found that you have a prima facie case, it is open to defend the action and that is all I need to do. That is the only question I need to answer”.
Our point is that that is not the way this application was put. Certainly, one could ask that question. One could go to the Court and say, “Is it open to me to defend these proceedings, in the sense that I have a defence which is arguable and not hopeless?” The Court could answer that question and it could say “It is arguable, but whether you go and defend it is a matter for you. I’m not going saying anything about that”. If the Court did that, in this case that would not have been what the trustee wanted. They did not want an order that said “You’ve got a valid defence, but it’s up to you whether you actually run that defence, and you’ll have to take into account” ‑ ‑ ‑
GUMMOW ACJ: The order of the Court was the Association would be justified in defending. Mr Lindsay is as happy as Larry with that.
MR PARKER: He is, and what I was ‑ ‑ ‑
GUMMOW ACJ: So there is no issue about all this, is there?
MR PARKER: I am sorry. I was, I think, seeking at probably too great a length to respond to what ‑ ‑ ‑
GUMMOW ACJ: How are we going for time, Mr Parker? It is imperative we adjourn at 4.00 pm.
MR PARKER: I will just have to sit down no later than 3.30.
GUMMOW ACJ: Very well. We will sit again at 2. Have you finished point 1?
MR PARKER: I wanted to say something about Dallaway because that is where it comes into this part of the argument.
GUMMOW ACJ: All right. We will look at Dallaway and then we will adjourn.
MR PARKER: Yes, thank you, your Honour. In paragraph 37 of our written submission we have explained factually that Re Dallaway was quite a remote situation from the current situation. We have made the point in paragraph 38 that, really, the question in Dallaway was not really a question for advice as to what to do about defending. The trustee’s duty was clear. The problem in Dallaway was a different problem, which was the trustee may defend, may be justified in doing so, may have a perfectly good right of indemnity but will not have any assets to execute against. That was the issue. That was the problem. What his Lordship did in Re Dallaway was to solve that problem, not by the giving of advice but for – and your Honours will find this ‑ ‑ ‑
GUMMOW ACJ: Where does this expression “icy logic” come into the Vice Chancellor’s reasons?
KIRBY J: I like that idea. It is a very Nordic ‑ ‑ ‑
KIEFEL J: Page 759, paragraph H, second bottom line.
MR PARKER: Thank you, your Honour.
KIRBY J: Logic gets warped if it is in the warmer climes. In the northern icy climes it is pure.
MR PARKER: At page 761, paragraph H is the order which we complain about. It is described as a provision. Or we do not complain about it, we draw attention to it. His Lordship says:
I propose to include a provision that, subject to any order made by the trial judge, the bank will be entitled to be indemnified out of the estate for all costs for which it is liable, even if the defence or counterclaim, or both, are unsuccessful.
Now, that corresponding order was made by his Honour here. We say, what is the question which that order is an answer to or an advice upon? That order is nothing more and nothing less than an advance order as to the incidence of the costs in the proceedings between the parties.
HEYDON J: You say that ultra vires?
MR PARKER: Well, I am not sure ‑ ‑ ‑
HEYDON J: Beyond the power granted by section 63 if we are talking in New South Wales terms.
MR PARKER: Beyond 63, it is not beyond 93; 93 is the usual power to award costs, and we would accept that that power can be exercised in an advance way. What could happen is that a trustee faced with the icy logic could go along to court ‑ ‑ ‑
HEYDON J: You seem to keep shifting again between everyone agrees it is within power but then suddenly things are not within power.
MR PARKER: No, I am saying that the order is not within power under section 63. I am sorry, that provision is not within power under section 63.
GUMMOW ACJ: Is this a convenient time?
MR PARKER: Yes, thank you, your Honour.
GUMMOW ACJ: We will adjourn until 2.00 pm.
AT 12.55 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.01 PM:
GUMMOW ACJ: Yes, Mr Parker. What is the situation with written submissions? I think we had better be supplied with the written submissions if there were written submissions, both on your side and Mr Lindsay’s side, both to Justice Palmer and to the Court of Appeal.
MR PARKER: Some of the written submissions to Justice Palmer are in the book and, in fact, this specific matter, the matter your Honour asked me about was specifically referred to by Justice Palmer in the judgment.
GUMMOW ACJ: Well, any that are not in the book should be supplied within seven days.
MR PARKER: Yes, your Honour. Now, can I just seek to clarify my use of the term “jurisdiction and power” in answer to some of the questions that have been put to me. If one goes back to section 63, questions could arise about whether in a particular case the application that has been made is within the power of the court to deal with it at all. Can I give an example of that, drawn from an earlier stage of these proceedings? There must be a question respecting the management or administration of the trust property. At an earlier stage of these proceedings, advice was sought, and in fact granted in 2004, giving the Association access to property that had not been found to be held on trust.
The Court appreciates that Justice Hamilton found that some of the property had been held on trust did not answer the question so far as the other property was concerned. The first application that was made, which resulted in the 2004 orders, were orders that they might have their costs out of all of the property, were the trust found to be trust or not even found to be trust. His Honour corrected himself on that in 2005. That might be thought to be an illustration of an order that was beyond jurisdiction because the statutory precondition to its exercise is not there. I am talking about power in a different sense. The submission we make is that the ‑ ‑ ‑
KIRBY J: Can I just ask, there was a mention in I think it is the appellant’s written submissions that an inherent power would exist in the Supreme Court to give advice, quite apart from the Act. Is that accepted or not?
MR PARKER: Well, I do not think so. All I can say is that has never been put at any stage of the proceedings, it is not in the notice of appeal.
KIRBY J: But it is relevant, is it not, that this is a power that is reposed in a Supreme Court, a constitutional court with the broadest possible powers to do justice in the State?
MR PARKER: Well, your Honour, we would question whether section 63 having been brought in to specifically address the matter there is room for residual power.
KIRBY J: I realise that and I am merely saying it still is relevant to the construction of section 63 that the power is given to a body which is the Supreme Court of the State, which is a constitutional court.
MR PARKER: Yes, your Honour.
KIRBY J: That is a reason why in many cases this Court has said when you repose it in such a court you do not read it down because you can trust the judges of such courts to do justice in the particular case, according to the law.
MR PARKER: All right, well can I now put it at perhaps a lower level of difficulty with an order that might be made. In our submission, one has to identify in the statutory language the question; an application has to have a question. What the question is depends on what the application says, of course, but once the question is determined then that provides a limitation on what the court can properly do. So that if the question, for instance, to take another example from this case, at an earlier stage of these proceedings what was sought was leave to defend the proceedings as a whole, that is, to defend every issue in the proceedings.
Now, obviously, one of the issues in the proceedings is whether the other property is held on trust, that is, the same trust as this one. It could not possibly be right that the trust property could be deployed in advancing a defence which involves saying the non‑trust property is non‑trust property, it belongs to the appellants and it is their own personal property. So we would submit that in that situation it would not be proper for the Court to make an order granting leave to defend the whole of the proceedings. But that is a limitation which arises out of the nature of the question that is put.
When I was using the term “power” before lunch, that was what I was seeking to convey. What I was seeking to convey was that there are certain orders that Justice Palmer made which, having regard to the question that was before him, were not justified. Whether one calls that absence of jurisdiction or excess of power really does not matter, we simply say it is an error of law which requires correction and has been corrected.
Can I take the Court to his Honour’s orders. At page 417, order 2 nominates specific sums of money which it is said the Association should be entitled to have. Justice Hayne put to me before the adjournment, could there be a question under section 63 as to the right of indemnity, and there could be, and if the question raised by section 63 was as to the right of indemnity, it may be possible that one could make an order about the extent to which the indemnity applied or did not apply.
But our submission is that the question here was not about the right of indemnity, the question was about defending the proceedings, and if the question is about defending the proceedings, you do not look at the right of indemnity. Section 63(2) comes along if you get your advice and section 63(2) and section 59(4) then look after the right of indemnity and therefore, we would say, there was no occasion, given the question, for his Honour to make that order in order 2.
Now, to get back to the question that Justice Heydon was asking me, we never contended that order 1 was beyond power in that sense. We never said just because the trustee is defending a claim against it for breach of trust you cannot make order 1. We accepted that it was a matter for discretion and we put the various matters for discretion which we said weighed very heavily against it, and that was the ultimate conclusion by the Court of Appeal.
HEYDON J: On the subject of order 1, has any consensus been arrived at as to that problem this morning that Justice Gummow drew attention to, 2 to 8 or 1 to 3?
MR PARKER: For our part it is as Justice Gummow stated it. It is orders 1 to 7. I think before the adjournment I had effectively completed the argument about, given the question being, should we defend the proceedings, the irrelevance of asking, does the trustee have money or not have money? So that in essence is our submission and we draw attention to Dallaway and the other cases. I will not read the submission we put there because it is set out. But, in essence, what we say is that what happened in Dallaway and in the Metropolitan Case is that two streams of thought coalesced impermissibly.
GUMMOW ACJ: Two streams?
MR PARKER: Of thought, or two possible bases for an application coalesced inappropriately and got mixed up. One was judicial advice, the other was some form of advance exercise of the court’s power as to costs, called in England a pre‑emptive costs order, and we say that, although Re Dallaway in form began as a judicial advice application, when one looks at the orders that were made, they were, in substance, orders pre‑emptively exercising the court’s power as to costs and that, indeed, is the force of the order which I took the Court to before the adjournment.
His Lordship cannot be criticised too much for that, because, as we have pointed out in our submission, he was invited, in effect, to deal with the matter in advance in the course of that application, and we have given a reference to that. The only other point I would make under this heading, again coming back to the question, is that sometimes the question might not be, “Should I defend the proceedings?” The question might be, “Should I not defend the proceedings? Am I justified in not defending the proceedings and running the risk because I do not want to be sued by the beneficiaries for not having defended the proceedings?”
In that situation, if there is no money available for a trustee in the position facing icy logic, then it might be relevant to look at the trustee’s assets and it might be relevant to look at questions about whether other people can pay and the like. But that was not the question here. That was not the advice that was being sought here.
In Re Atkinson, which we rely on this regard, Justice Gillard contemplated that the advice that he would give would be advice that the trustee would not have to defend the proceedings unless it got an indemnity. He was contemplating giving that advice to protect the trustee from a beneficiary later coming along and saying, “You should have defended the proceedings because it was your duty as trustee to do so”. Now, no one is contending that that is the applicable situation here.
Can I now move to the second point, which is dealt with in our submissions starting at paragraph 46. It is the question of revocation. Can I first address the question of whether – or what Justice Palmer intended by the order ‑ ‑ ‑
HEYDON J: It is not what he intended. It is what it says.
MR PARKER: I am sorry, your Honour. May I take the Court to material which, in my submission, the Court can look at in determining what on its true construction the order means? It is at page 396 in volume 1 of the appeal book. I am sorry, your Honour, I need to withdraw that concession that I have just made. The question here is whether his Honour was right first in making the order and in interpreting the order. The question was, was he right to say, “It does not matter. I have made this order but it does not matter. It can be revoked later”, because that, as we put it and as the Court of Appeal found it, obviously was something that was influencing his Honour. He was thinking, “It does not matter if I make this order if I really should not have, because it can be all fixed up later on”. So, to that extent, what his Honour thought he was doing is relevant.
Now, what his Honour in fact did is what the court will declare. The order in fact could only be revoked a futuro, but what his Honour thought about it is relevant because it goes to the way in which he exercised the discretion and whether the Court of Appeal was right in identifying the House v The King error which it identified. In that regard, can I take the Court to page 396, paragraph 68, where his Honour drew a distinction between what he called “a pre-emptive costs order”? He says in the second line of that fourth paragraph:
A pre‑emptive costs order is one which prevents an inconsistent costs order being made later.
By the use of the term “inconsistent”, what his Honour means there is it is an order which would have a different effect as to the incidence of costs. Similarly, if the Court goes over to page 74, his Honour was dealing with the question of whether this matter could be dealt with by some form of undertaking. His Honour said in the first line:
If the Bishop succeeds in the trial of the Main Proceedings on the Schedule A Property Issue and believes that the facts, as they have emerged, could not reasonably have supported Mr Blake’s Opinions as to prospects, then the Bishop may make an application to the trial judge for the revocation of the orders –
So that is no the other situation that was being put to Mr Lindsay earlier where facts changed and you revoked a futuro because the facts on which the application was based are not right. What his Honour was contemplating here was the whole issue as to whether the order should ever have been made in the first place could be opened up, the reasons given by the Court of Appeal and for the Attorney‑General, which are given in our written submissions, that is not the effect of the order and the court cannot make an order that way. The order can only be made a futuro ‑ ‑ ‑
GUMMOW ACJ: It was beyond power?
MR PARKER: Well, I wonder whether strictly speaking the analysis is the order is made, the order is de futuro, but his Honour’s analysis of the order which underpinned the exercise of his discretion was wrong. So, in our submission, consistently with what both parties have accepted Justice Palmer’s intention was.
GUMMOW ACJ: Beyond power because of matters of construction that flow from 63(2) back into 63(1).
MR PARKER: Yes. Can I just make one other point under this heading which is made in our written submission. Of course, one has to appreciate that in this case and in Dallaway the proceedings are pending in the same court but that does not necessarily have to be the case at all. One could easily have a situation where the trustee makes application in one jurisdiction in relation to proceedings that are being conducted in another court or even in another jurisdiction and one asks oneself, how possibly, if the principal proceedings were, say, pending in the Federal Court, could an order be made reserving to the Federal Court liberty to revoke the order of the Supreme Court, ab initio. That just underlines, in our submission, the impossibility of revocation ab initio and, indeed, in our submission, it underlines the either impossibility or impropriety of making the order revocable at the instance of the trial court.
The third topic is what we have been using the tag “adversarial” for. It is not a tag we particularly embrace because of the imprecision associated with it. The first point to be made under this head is that it has been said in a number of cases that the court should not in granting judicial advice predetermine an issue which is the subject of litigation inter partes or maybe the subject of litigation inter partes.
Mr Lindsay was asked whether he challenged that principle and the answer was, as I understood him, that he does not, he thinks he can live with it. That principle cannot be challenged, in our submission, because it is firmly grounded in the text of section 63 in a way that I have sought to illustrate at an earlier point. It is part of a wider principle, in our submission, that as an ex parte procedure section 63 should not be used to determine any contested question of fact.
HEYDON J: That is inconsistent with what was drawn to Mr Lindsay’s attention. Mr Justice Sheller said it is generally inappropriate, so exceptionally it is appropriate.
MR PARKER: Yes, and I should be making clear that under this head I am accepting that there is power to make the order. I am just seeking to advance arguments for why the Court of Appeal was right in saying that his Honour had erred and they were right in not sustaining the order. So, we would say that it is a basic principle inherent in the statute that it is generally inappropriate for an order to be made which involves determining a contested issue, generally inappropriate because the procedure under the statute and in part recognised by the statute – see subsections (3) and (4) –is not suited to the fair and proper determination of contested issues.
HEYDON J: What about subsection (8)?
MR PARKER: Well, as I sought to indicate, subsection (8), (9) and (10) really represent a separate idea entirely, we are not dealing with them here.
HEYDON J: It is adversarial.
MR PARKER: Yes, but you have to look at the provision of subsection (10) which then allows the court to have all sorts of directions which might deal with that situation. So the court is given power under subsection (10) to make directions which are appropriate to the nature of the case. One might think that ‑ ‑ ‑
HEYDON J: It is given power under subsection (4) to make a direction about the adduction of evidence by affidavit.
MR PARKER: Yes.
HEYDON J: That is, or otherwise.
MR PARKER: Well, it recognises that the evidence may be given by affidavit.
HAYNE J: Do not (8) to (10) recognise that one species of the genus of opinion, advice or direction is the question, who are the beneficiaries?
MR PARKER: Yes.
HAYNE J: Another species is what are their rights as between themselves?
MR PARKER: Yes, and subsection (10) provides a mechanism for contested issues to be determined in that ‑ ‑ ‑
HAYNE J: Well, (8) to (10) are concerned with what happens when the trustee proposes to pay away the trust property.
MR PARKER: I accept that, your Honour, but what I am saying is that the procedure in subsections (8) to (10), which is not applicable here, is ‑ ‑ ‑
HAYNE J: No, I understand that because the trust property is not to be paid away, but what (8) to (10) do show, do they not, is that one encompasses the power of the Court to give an opinion, advice or direction on a question that may be a very lively question of dispute, who are the beneficiaries, what are their rights as between themselves?
MR PARKER: Yes, and, your Honour, I accept that that is elsewhere in the legislation, it is not just in subsections (8) to (10), and I apologise if I have gone off on a tangent. The point I was seeking to make is that the subsection (8) to (10) procedure has got an express power which allows the court to make directions which might be thought to mitigate the sorts of problems that might arise. Those powers were not engaged in the present case. When one comes back to the order ‑ ‑ ‑
KIRBY J: Could there not be circumstances where the parties, as it was put to us, agree that it will help their resolution of their matter, though they are in litigation, by tendering an issue and seeking judicial advice?
MR PARKER: Yes.
KIRBY J: So if that can be done, the criterion cannot be the fact that the parties are in litigation. Justice Austin may have expressed it more carefully in saying, the question is whether appropriate procedure for the termination of a question that affects the rights of third parties, one might say other than by their agreement.
MR PARKER: Yes. We do not have any difficulty with the fact that the court might decide either because the parties agree to procedures which will facilitate it, or even in an extreme case perhaps over the opposition of a party that it is going to determine a contested factual question. We accept that the court has power to do that. We are just saying that generally speaking a problem with it is that ‑ ‑ ‑
KIRBY J: Just flesh that out a little bit. Why generally speaking? What is there about the – apart from the things I put to Mr Lindsay earlier?
MR PARKER: Well, a court – and this is a constitutional court – generally proceeds by way of determining contested issues by hearing both sides and allowing both sides complete freedom in what material they will put before the court, what submissions they will make, and complete access to what the other side puts before the court. That is a basic element of the way courts in this country deal with contested issues usually.
Now, if one is not going to follow that procedure, that is something which, we say, makes it – or, rather, if those safeguards are not going to be available, it becomes generally unsuitable that contested issue should be determined that way. So there was a contested issue here because, as we have said in our written submission, and I will not take the Court to the references – I hope we have collected them in our paragraph – we had specifically raised a section 59(4) issue in this case. We had said spending money on defending these proceedings ‑ ‑ ‑
GUMMOW ACJ: Just refer back to what you said a minute ago. In Davison’s Case 90 CLR 353 at 368, the Court said:
In the administration of assets or of trusts the Court of Chancery made many orders involving no lis inter partes, no adjudication of rights and sometimes self-executing –
et cetera. So, nevertheless, he says these form part of “the exercise of judicial power as understood in the tradition of English law”.
MR PARKER: Thank you, your Honour.
GUMMOW ACJ: So the fact that there is a limited nature of forensic materials that can be applied does not necessarily militate against the construction for which your opponent urges.
MR PARKER: It is not an absolute bar, but we are not saying that it is.
HAYNE J: All it does is to cause the court to mould the procedures to the particular application accordingly, is it not?
MR PARKER: Yes, or if the procedures either have not been or are not prepared to be moulded because the other party will not agree to that, the court might dismiss the application.
HAYNE J: Maybe, but where does this take us? If there is no absolute rule, if the considerations you have mentioned are directed to the moulding of the procedures engaged or employed in a 63(1) application, where is the next step in the chain of argument that you are seeking to propound?
MR PARKER: The Court of Appeal found that his Honour should have taken that unsatisfactory aspect of determining rights in that way into account and that he had not properly done so. Now, it is quite clear that this was an extreme case of a disputed issue in the sense that there was actually an issue joined on pleadings to the effect that we were saying that there was no entitlement for indemnity for these particular costs and, therefore, the effect of the orders – and, in particular, order 2 which I took the Court to earlier – was to pre-determine that issue because we were saying that there was no entitlement out of the assets of the trust for the costs that had been incurred since 2004, among other things. Yet the order that was made by his Honour specifically said “Here is $78,000. You’re entitled to take that money. You are protected”.
So the Court had determined an issue – sorry, the advice determined an issue raised on pleadings between the parties, and it did so in circumstances where we had not been, and could not adequately be heard on that question. That is not a complete bar, but that is a powerful reason, in our submission, why one should not make such an order, and the Court of Appeal found that it was such a factor. As we would understand it, it cannot really be contested based on the authorities which are not being challenged here, that it is a relevant factor.
HAYNE J: The temporal point you make is, is it not, that because the costs have been incurred and paid, they could not be the subject of a section 63(1) application. Is that right?
MR PARKER: Could not properly be in the sense that I put earlier.
HAYNE J: Does it not follow inevitably, therefore, that the costs of the 63(1) application itself could never be recouped because they will have been outlaid or incurred before the application is determined?
MR PARKER: The cost of the 63(1) application would usually be dealt with in the section 63(1) proceedings themselves.
HAYNE J: Just so. Why, when the court is concerned with a 63(1) application about whether it is proper for trustees to defend proceedings that have been instituted, cannot the court deal with costs already incurred in defence of the proceeding that has been instituted and defended thus far? Why is that not a question respecting the administration of the trust property?
MR PARKER: My answer to that is that that is not the way the question was put. The question was put ‑ ‑ ‑
HAYNE J: Where do I find most conveniently the written form in which the question was put to Justice Palmer?
MR PARKER: Your Honour will not find it stated in terms of a question. Your Honour will only find a series of proposed orders which were changed over time. Your Honour will not find anywhere identified the question. Our submission is that the question as one determines it from the context was clear, namely, should we defend the proceedings? Now, there were other factual issues, not necessarily joined on pleadings between the parties that might potentially have been relevant and which were being determined by a procedure which we say was unsatisfactory. If we are wrong in saying that the trustee’s lack of funds or alleged lack of funds is irrelevant and it is relevant – and the problem was that that very question, the factual question of whether the trustee could run the case without funds ‑ ‑ ‑
GUMMOW ACJ: You say a trustee’s lack of funds. What do you mean - their own resources?
MR PARKER: What they were saying was, “We do not have any money apart from the money which is the subject of the claim. We cannot raise it from our supporters ‑ ‑ ‑
HAYNE J: “We are not going to hazard our own funds”. That is what they were saying, was it not? “We are not going to hazard our own personal assets”.
MR PARKER: I am not sure who “our own personal assets” are in that.
HAYNE J: Just so. Is that not the fundamental obscurity which you avoid by the proposition you have just advanced?
MR PARKER: I am not sure that I have understood that. May I come back to it if I get an opportunity? There were three things that were being said. One was there are no other assets apart from these assets which are subject to the claim. That was broadly not in dispute. Second was we have tried and failed to raise funds from our supporters. The third was our lawyers will not act unless they are paid in full or satisfactory arrangements or the like were made.
Now, those latter two propositions were propositions of fact and there was an issue about them. Because the case has been determined on Justice Palmer’s orders in this particular way, that issue was never properly investigated. We did not have the opportunity to actually investigate just exactly what other funds were available to them or the basis on which their lawyers were acting. Now, this is all against a background where there is a procedure available which would allow that to be dealt with in a proper adversarial way, namely, an application for an advanced costs order. They could have said, “We have this problem, we got this claim made against us. We do not have the money to defend the case. Please give us an advanced costs order under section 93”.
If they had done that they would have made an application to the trial court, not the court dispensing section 63 advice, and they would have said “These are the facts. Please give us an advanced costs order”. If they had done that, then the factual allegations which underpinned their application would have been clearly relevant and would have been opened up for consideration. Instead by making the application in this particular way they have avoided any adversarial scrutiny of the assertion which has been made constantly but without actually being found or proved in any proper sense at any point that there is no money and no ability to defend these proceedings except from assets of the trust.
GUMMOW ACJ: Well, it puts the cart before the horse, all this argument really. They were not obliged to fund anything out of their own pocket.
MR PARKER: Well, if it was properly in the interest of the trust that is so but the argument I have been is against the background that I am wrong in saying that their financial position is irrelevant. Our principal argument is that it is just not relevant whether they have money in their pocket or not, but if I am wrong about that then there is a factual issue which was not properly determined because of the particular procedure that was followed. This application was put forward on the basis that the central aspect of it was that there was no money. That was a factual assertion which was absolutely front and centre in this application all the way up and it is here again today because Re Dallaway is being put as the central reason why the Court of Appeal was wrong.
Anyway, I have indicated the two bases on which we seek to contest that. Another point which is relevant to determining the adversarial nature of the proceedings goes back to something that Justice Heydon said earlier. As Justice Palmer’s order have now been made, those orders are orders which deal only with defence of the proceedings on what has been termed for the Schedule A property issue.
KIEFEL J: Could I just ask you to clarify something. You refer to the adversarial nature of the proceedings. Are you referring to the application under the Trusts Act or are you referring to the proceedings in respect of which the order concerning costs was to be made?
MR PARKER: I should not use that word. I am saying that the issue tendered in the proceedings or the proceedings involved an issue which was ‑ ‑ ‑
KIEFEL J: The proceedings being the application under the Trusts Act?
MR PARKER: That is the application for judicial advice raised an issue which was the subject of an adversarial claim, namely the question about the costs and it also – potentially if we are wrong in our principal argument raised a factual issue.
KIEFEL J: So your argument does not have regard to the nature and the questions raised in the main proceedings – its focus is simply on the nature of the question raised by the application for advice.
MR PARKER: Well, one has to look at the main proceedings to appreciate the content ‑ ‑ ‑
KIEFEL J: Perhaps you could deal with it in your argument. It is just not plain to me where the two intersect in your argument. I get a little confused I think by what you are saying by reference to the proceedings.
MR PARKER: The argument is that the fact that something that a particular issue which comes up as a stepping stone to the giving of advice or is dealt with by the giving of advice in the judicial advice proceedings. The fact that such an issue is a contested factual issue is a factor which tends against the giving of such advice.
KIEFEL J: So you are saying that because the main proceedings are adversarial and that there are disputed facts that weighs against the giving of the advice?
MR PARKER: Yes.
KIEFEL J: What about what could be received by the outcome of the question in the proceedings? Is that relevant?
MR PARKER: If by that your Honour is putting to me what about the potential benefits to the trust estate that would be.
KIEFEL J: Well, I have not put it quite that way.
MR PARKER: I am sorry, your Honour.
KIEFEL J: Perhaps if you could just answer my question we will interpret it from that.
MR PARKER: I am sorry, your Honour, your Honour’s question was?
KIEFEL J: Do you say it is relevant or not what the question in the main proceedings may resolve?
MR PARKER: I think that would be potentially relevant.
KIEFEL J: Potentially relevant? It is a concession?
MR PARKER: Well, it depends a little bit on what your Honour means by the question that is going to be raised in the main proceedings.
KIEFEL J: Yes, I take your point. Well, perhaps if we limit it to the issue joined – if not stated in the orders themselves – the issue joined about what the Macedonian Orthodox religion involves and the purposes of the trust then to which it is referable.
MR PARKER: Yes, that is definitely a factor. I will be coming to that because I want to say something about the facts as far as that is concerned. We have set out on pages 13 and 14 of our written submissions factors in the history of these proceedings, which we say gave them this ‑ ‑ ‑
GUMMOW ACJ: Now, we are descending into the whispering jurisdiction, Mr Parker.
MR PARKER: I am sorry, your Honour.
GUMMOW ACJ: A standing reproach by some members of the Bar to other members of the Bar in this field.
MR PARKER: On pages 13 and 14 of our written submissions we have set out – starting in paragraph 57 – various factors which we say show or were relevant to characterising the nature of the application that was being made. One of those is the one dealt with in paragraph 57, namely the whole purpose of this application as we would put it was to get the indemnity. So it was an application to get an indemnity, not as we would put it, to clarify some sort of uncertainty as to how to administer the trust.
In paragraph 58 we raised the point that the proceedings commenced as an application to defend the whole of the proceedings, that is on all issues, many of which would clearly not involve any benefit to the trust and some involved were actually against the interests of the trust. It was only after two years of hard battling that the position was cut back and the orders that were made by his Honour in 2004 and 2005 go beyond what we would say is the proper scope of the judicial advice as could now be justified. The only justification now for judicial advice would be to say these proceedings are going to determine the terms of the trust. It is in the interests of the trust to determine the terms of the trust; therefore, we should be able to defend the proceedings. Now, that obviously would not extend to such things as getting access to property other than the trust property. It would not extend to defending on all issues.
His Honour was persuaded in 2004 and 2005 to make so‑called interim orders which gave them the ability to have access to the assets for those extraneous purposes. This 180‑page, I think, opinion addresses all the issues in the proceedings. It addresses all the defences.
GUMMOW ACJ: I may be wrong about this, but I understand your complaint is flowing from what you see is the operation of section 63(11) and particularly the phrase “shall be bound”.
MR PARKER: It is that in combination with subsection (2). It may be that (11) is not even necessary, but (11) really reinforces it.
GUMMOW ACJ: And what is bound is opinion, advice, direction or order, namely, orders 1 to 7, I imagine, at page 417.
MR PARKER: Yes.
GUMMOW ACJ: What in particular of those seven orders do you complain about? You cannot complain about No 1, do you? For the court to say the Association would be justified, what is wrong with that?
MR PARKER: Not for the future, no.
GUMMOW ACJ: You complain about 2, do you, because that is past costs?
MR PARKER: Yes.
GUMMOW ACJ: You say that is a pre‑emptive costs order.
MR PARKER: Yes.
GUMMOW ACJ: And what else is there in it? Then there is the revocation possibility in 6.
MR PARKER: We complain about the revocation as well. But I accept that order 1, on its own ‑ ‑ ‑
GUMMOW ACJ: But what the tenets are or are not, the adherence to the Macedonian Orthodox faith is not in play here in those orders. That may be thrashed out at the trial.
MR PARKER: No, that is not being determined. What is being determined is the question of whether they are entitled to take the costs of defending the proceedings out of the assets. It is the right of indemnity under section 59(4) that is in play.
GUMMOW ACJ: All I am trying to get to grips with is to what extent you are complaining that the terms of the judge’s order pre‑empt in any way the resolution of the issues presented in the suit that is going to be tried in November.
MR PARKER: The issue they pre‑empt is the indemnity issue, not the other issues, but they do pre‑empt the indemnity issue. I was making the point about the 2004 and 2005 orders, that they had gone beyond the proper scope of such orders.
HEYDON J: We are in matters of cross‑appeal territory with them, are we not?
MR PARKER: Yes, but this is relevant to explaining that we are characterising the nature of the proceedings because the important point is that the association now says, all we have is orders which deal with the Schedule A property issue, that is, the terms of the trust. That is all we are seeking. We are just a trustee trying to find out what the terms of the trust are. The problem with that is that that historically is not the way that these proceedings, that is, the judicial advice proceedings, have been conducted. One can see historically that they started off as a demand – not a demand but an attempt to get absolutely everything that was available on all bases and that they have gradually been pushed back to that and the point I was seeking to make is that the pushing back is not complete because they still oppose the revocation of the earlier orders. On their now position the earlier orders are too wide, but they still oppose and have successfully opposed revocation of the earlier orders.
Now, in our submission, when one comes to look at the nature of the proceedings, which is what we are talking about here, it was appropriate for the Court of Appeal to look at those sorts of questions and to ask itself, is it really right for the trustee to characterise this as simply a disinterested attempt by the trustee to find out what the terms of the trust are? All I am seeking to do is to point out that, as far as the history of the application is concerned, the conduct of the application and, indeed, aspects of the application even now, that is not a correct characterisation.
HAYNE J: Could I take you back to this question of the effect of subsection (11) and the related subject of the effect of the so‑called revocation paragraph of the order. Would you characterise the orders that were made under section 63 as interlocutory orders?
MR PARKER: I suppose it depends on for what purpose they would be characterised.
HAYNE J: For this purpose. If a section 63 order were couched in terms the trustee would be justified in defending the suit AVB number et cetera, subject to any further order the trustee may resort to the trust property to satisfy its costs of defending that proceeding up to but not past the point of discovery of documents. That, I would have thought, would fairly evidently be a form of interlocutory order, would it not?
MR PARKER: I think the first part of what your Honour put to me we would characterise as final because that contained an advice that said you would be justified. Certainly the latter part of what your Honour put to me would be characterised as interlocutory.
HAYNE J: Let it be assumed that it later emerged that the trustee in putting material before the court had not been frank, what consequence could follow from that fact? In particular, could it follow that the right of recoupment otherwise permitted by the order could be revoked and the trustee required to disgorge?
MR PARKER: My answer would be ‑ ‑ ‑
GUMMOW ACJ: Before you answer that you had better look at the closing words of section 63(2), had you not?
MR PARKER: Is your Honour putting to me whether it came within the proviso or not?
GUMMOW ACJ: If it comes within the proviso, you can unpick it, can you not?
MR PARKER: Yes. But the way it gets unpicked is this. You bring an action against the trustee and the trustee pleads the order under section 63 as a defence. That is what has been done in this case, the pleadings are not before the curt, but that is what has been done. So they have now pleaded in answer to our claim these very orders. Now, one might respond to that by seeking to demonstrate that the defence is no good because it presupposes that – or rather that one might seek to show that the proviso applied and if the proviso applied, the defence would be no good, and so the matter would be determined according to what the law would be and the deeming that otherwise would have an effect would not have an effect.
HAYNE J: But in what circumstance other than fraud, wilful concealment or misrepresentation would it be proper to revoke the order that is made?
MR PARKER: That is the problem.
HAYNE J: Exactly, and your answer is?
MR PARKER: I am sorry, with making it revocable. Given that the legislature has said it should cease to have effect if these particular things are shown, it is totally inappropriate to then allow it to be revoked on some other basis. One is going against what the legislature has put in the proviso and, as we understand it, that is one of the reasons why the Court of Appeal thought that this revocation order ab initio, or supposedly ab initio, was bad. For instance, suppose the trustee is merely negligent. We would see it as being quite inappropriate if the trustee were merely negligent to then be able to allow that to be a ground for revocation ab initio and depriving the trustee of protection because the Parliament has said, the protection is absolute except for these particular circumstances which do not include negligence.
So if the trustee had been merely negligent and we were to turn up and sue them under section 59(4) and they were to plead the order as a defence, it would be no use to us to say, but you were negligent. We would say that is the problem. The attempt to make this order irrevocable ab initio was in fact trespassing into something that the legislature had already dealt with.
GUMMOW ACJ: Which ground are you up to now, Mr Parker?
MR PARKER: Four.
GUMMOW ACJ: Have you reached notice of contention territory yet?
MR PARKER: No.
HEYDON J: You have been doing adversarial. The next one is balancing exercises.
MR PARKER: Yes. This is to meet the suggestion that again we will just ignore all the adversarial things that I have been relying on and just focus the orders as they now are, namely, defend the Schedule A property issue. We say that that opens the door to a proper exercise of power in favour of granting the necessary advice, but it does not determine that before the court can grant the advice.
KIEFEL J: But, are you saying the terms of that cause difficulty in practical terms in the proceedings themselves, that they are raised as a justification.
MR PARKER: I am sorry. Which grounds?
KIEFEL J: Are you saying that the terms of order 1 are inappropriate? Are you saying that they have the potential to cause real practical difficulties and should be withdrawn? I was not sure what you were saying before about how they were raised in defence against you.
MR PARKER: What I am trying to say is that the orders in order 1 should not have been made – and orders 1 and 2, all the orders, should not have been made because they have the effect of predetermining issues.
KIEFEL J: If they were going to be made, assuming for the moment their correctness, do you say that they should be withdrawn so that they do not refer to a wide justification for the proceedings, but limit the advice to the appropriateness of drawing funds from the property to meet the costs of litigation limited to these issues? Something like that?
MR PARKER: No.
KIEFEL J: So you are not challenging the terms?
MR PARKER: Of order 1? I am not challenging them in that sense. I am going to be, perhaps, critical of them in what follows.
KIEFEL J: But you would not want them changed?
MR PARKER: No. We are not asking to have this matter go back. If it does go back, then presumably everything will be to play for. As we would see it, for reasons I put earlier, either Justice Palmer’s judgment survives unscathed, in which case the Court of Appeal was wrong and the appeal should be dismissed with costs and the orders stand, or his Honour was wrong and then someone somewhere is going to have to re‑exercise the discretion subject to whether that is a sensible thing now to do having regard to the state of the proceeding et cetera. I will come to that in a moment. But we never put on a notice of contention or some sort of cross‑appeal that said the orders should be in a slightly different form.
Now, the balancing exercise point is this. Let us accept that a trustee facing a claim which raises questions of the terms of the trust might wish to defend those proceedings or might be justified in defending those proceedings in the interests of clarifying what those terms are because that will assist the future execution of the trust.
So to say does not answer the question that is posed because there still has to be an evaluation, having regard to the particular circumstances of the case as to whether that is the appropriate way to go and whether that justifies the cost which will result. The great concern we have about these orders is that if the trustee were really interested in identifying some particularly difficult issue about the terms of the construction of the trust, then there are other ways to determine it than in this incidental way through these other proceedings, or it may be possible to determine it on some sort of Part 31 basis, that is, some sort of preliminary issue rather than embarking on a full trial. Now, that may or may not be appropriate in the circumstances, but it is something that ought to be considered.
HAYNE J: Why?
MR PARKER: Because the Court ‑ ‑ ‑
HAYNE J: It is your action. You bring the action. An essential element in that action is that the trust is on terms that you say it is on.
MR PARKER: But the court here is considering a different question. The court here is considering “What can we do in the best interests of the trust estate?”
HAYNE J: It is concerned immediately with whether the trustee is justified in defending the suit instituted by your side of the record.
MR PARKER: Yes, and the justification – whether the trustee is justified involved looking at practical matters such as will these proceedings actually determine that issue? What is the issue? Is the issue worth determining? How much will it cost to determine the issue? Can I give an example arising out of this case? One of the issues that is raised is that we complain that the bishop and priest who have been appointed have been kept out of doing any bishoply or priestly work at this Church for now 11 years.
What the Association has done is that it got rid of the priest, shut him out, the priest who the bishop appointed, and they just appointed their own priests. These gentlemen were defrocked, or may have been defrocked, but they appointed people who had not been approved by the bishop. Now, we say that is a breach of trust and we also say that, to the extent they have paid money to these gentlemen by way of stipend, that is a breach of trust.
KIEFEL J: But you say that is a breach of trust referable to how you define what is according to the Macedonian Orthodox religion. It is all a question of definition. You both have different glossaries and different dictionaries of terms. Your whole case is predicated, is it not, upon all the other issues about breaches of trust and what should or should not be done being determined by whether it is done according to the constitution of the plaintiff and other rulings and edicts or the constitution as put forward by the defendant. Is that not the key issue in the whole proceeding? If it is not, how are you going to – what is the purpose of the proceedings that your clients have brought?
MR PARKER: Well, obviously a necessary issue in the proceedings in determining whether there is a breach of trust is to determine whether particular conduct is or is not in accordance with the terms of the trust.
KIEFEL J: That is to be determined by?
MR PARKER: But that is not the same thing as making some sort of exhaustive determination of what the terms of the trust actually are. Can I illustrate that with an example? I referred to the situation with the priest. Now, what we have pleaded in our pleading is that the bishop has the exclusive right to appoint the priest. That goes too far because we really only need to show that the bishop needs to be consulted, that the bishop must approve the priest; it need not necessarily be exclusive. But there is an issue tendered, apparently on the pleadings, as to whether the bishop must approve the priest.
On the face of it, one would think that is an issue which would be useful to be determined in the interest of the trust because the trusts are perpetual. The problem is with the way that Justice Palmer dealt with this, that there was no exposition of just exactly what the issue was because we simply pleaded that there was a breach of trust – this was a term of the trust and there was a breach and we were met by their denial.
Now, we do not know and did not know at the time of these proceedings just exactly what the issue was that was being tendered for determination. What was their defence really? Perhaps if we had had the opinion we might have had some idea, but we did not. The problem with what Justice Palmer did was that he delivered this judgment in two parts. He started off by saying “I have decided as a matter of principle to give this advice” but he did that before anyone had actually specified what these issues actually were and how much they were going to cost to resolve. This was a complaint we made about – we said it was another House v The King error because ‑ ‑ ‑
HEYDON J: Can I just interrupt. Justice Ipp says that Justice Palmer failed properly to balance the factors. In this type of case where it is a House v The King type of challenge, what the relevant factors are depends very much on what counsel said the relevant factors were for the judges’ consideration. The form of the judges’ judgment, which was eight days after the argument, as I understand it, is to say “Mr Parker’s submissions say this, Mr Parker’s attack was that, Mr Blake submitted something else”. Now, is what you are now submitting to us something that you submitted to Justice Palmer?
MR PARKER: Yes, and it is at ‑ ‑ ‑
HEYDON J: So are you saying that he failed to set out and deal with this submission in this judgment. Which is the offending part of Justice Palmer’s reasons for judgment?
MR PARKER: If your Honour goes to the judgment of 23 November and can I ask your Honour to go to page 399, and at paragraph 78 he states the question as being whether the:
Opinions demonstrate sufficient prospects of success on the Schedule A Property Issue to warrant the Association defending that issue –
Then in 79 he says he cannot say anything about Mr Blake’s opinions. That is a problem for reasons that I will come to. Then in paragraph 80 he says:
In a judicial advice application in which the trustee asks whether it is justified in prosecuting or defending litigation, all the Court does is to reach a view as to whether the Opinion of Counsel satisfies it that there are sufficient prospects of success to warrant the trustee in proceeding with the litigation. Counsel’s Opinion must address the facts necessary to support the legal conclusions reached . . . Whether, in the light of Counsel’s Opinion, there are “sufficient” prospects of success calls for another judgment, founded upon such consideration as:
- the nature of the case and the issues raised;
- the amounts involved, including likely costs
- whether the likely costs to be incurred by the trustee are proportionate to the issues and that significance of the case;
- the consequences of the litigation -
and so forth. We agree with all of that, but the point is that at this point the issue had not been defined and he had not ‑ ‑ ‑
HEYDON J: You have to deal with paragraph 81:
I have considered the factors referred to above.
MR PARKER: Yes, I see that, your Honour.
HEYDON J: Well, is that true or untrue?
MR PARKER: I do not know because I have not seen the opinion, your Honour.
HEYDON J: Well, if a judge sets out what you say are the relevant factors and says he has considered the relevant factors, unless there is a challenge to the sufficiency of the reasons, is that not the end of that?
MR PARKER: No it is not, your Honour, because at the time he set out those factors in paragraph 80 he did not know what the case was going to cost, he did not know what the issues were. How could he determine ‑ ‑ ‑
GUMMOW ACJ: No one is ever going to know what a case is going to cost, Mr Parker.
MR PARKER: I am sorry. But what happened afterwards is he was given an estimate, but the point is he was given the estimate after he had already made up his mind to go ahead.
GUMMOW ACJ: He knew they were very great though and he said that.
MR PARKER: Yes, but it is not enough to say they are very great because you have to then engage in some sort of weighing exercise. You cannot deal with it otherwise than by weighing the thing, weighing the issues against each other.
GUMMOW ACJ: I hear what you say about that, Mr Parker. It is five past three.
MR PARKER: Yes, your Honour. The next issue is a question of procedural fairness, which has some link with this ‑ ‑ ‑
GUMMOW ACJ: We are now in notice of contention area.
MR PARKER: Yes, your Honour. We are not yet in cross‑appeal territory. What Justice Heydon put to me illustrates, in our submission, part of the problem with the procedure that was followed. If the ultimate question depended – as it appears that it did – on this balancing exercise and the question was to be determined entirely by reference to the opinion, then what was happening was his Honour was deciding the case by reference to material which we could not see, which only one party had seen.
Now, there is a decision of Re Permanent where Justice Young reviewed the authorities and it is referred to in the judgment of the Court of Appeal from 2006 where his Honour says these proceedings are not a full adversarial proceeding, that is the judicial advice proceedings are not, but the objecting party, if one is brought along, should have as reasonable an opportunity as possible to put its submissions before the court.
We therefore say that if the determinative factor was going to be the opinion then it would have been appropriate for the court to provide us with access to at least part of it to understand what the issues were and to make some submission on that.
HEYDON J: But really to say to the other side - either you let them have a look at the opinion or you must go away because they will not decide the case unless they have examined the opinion.
MR PARKER: That is effectively what Justice Hodgson suggested in his judgment. Now, the way the Court of Appeal majority addressed that was to say the opinion is still privileged and there is no waiver. So there is no entitlement as a matter of natural justice, and therefore, no waiver. They said the decision does not determine your rights, it only affects your rights.
We put that that is not a proper basis for saying that there is no entitlement to natural justice. We do not say, as has been put against us, that we had a right to participate in this application as a full party with a full right to contest evidence and cross‑examine witnesses and those sorts of things. But what we do say is we should have been given a reasonable opportunity to say something sensible to his Honour about these – apparently if we get to this point – decisive questions of just exactly what the issues were, what the prospects were on those issues and what the cost was likely to be.
What we were saying was that we should be put in the position at least that the mother was put in in the wardship proceedings which are the subject of In Re K which is on our list. In wardship proceedings, where there is a report about the child, the issue in Re K [1965] AC was whether the mother had the right to see the medical report about the child, who was the ward. The House of Lords did not say she had an absolute right, and for that purpose the appeal failed. But that did not mean that the court did not have a discretion, if it chose, to provide that material to her counsel or, indeed, in a proper case, to her.
KIRBY J: Re Kay’s Settlement. Is this it? [1939] 1 Ch 329?
HEYDON J: I think you mean Official Solicitor to the Supreme Court v K [1965] AC 201.
MR PARKER: Thank you, your Honour. I am sorry. That is the case I meant. Now, can I just give the Court references to page 219, C to D and E; page 234, B to C and page 238B and 239G. Can I also invite the Court to cross out paragraph 77 of my written submissions, which I do not seek to support? The relevant passage in the Court of Appeal’s judgment which we attack is at page 702. It is the last two sentences on the page.
HEYDON J: I am sorry.
MR PARKER: I am sorry, page 712, line 50. The Court of Appeal there draws a distinction and they say this application:
does not, of itself, determine any rights, although, as explained, it has the potential to affect the rights –
We say that is not a relevant distinction in the field of natural justice. The other argument on procedural fairness is this. If we could not see the opinion, then what his Honour could have done is he could have delayed giving the advice until the defence had been filed, because at least when the defence was filed we would have been able to see openly what the issues were that were being propounded by way of defence to this aspect of our claim.
GUMMOW ACJ: Has any defence ever been filed?
MR PARKER: There was one filed in 2002, but at this point the pleading had migrated a bit.
GUMMOW ACJ: It has morphed into version 8 at that stage.
MR PARKER: Yes, but the defence that had been filed and was on the record in that sense would be found at page 61.
HEYDON J: It is immaterial to the present debate, but a later defence has in fact been filed, it was just after the Court of Appeal’s decision.
MR PARKER: That is right, and the footnote which sets out the issues, footnote 4 in the appellant’s submissions, is based on that defence and we have pointed out that it should not be used because it does not reflect the state of the record as it was before the Court of Appeal. The state of the record before the Court of Appeal was the defence at page 61.
KIEFEL J: But the defence at page 61 contains reference to the asserted basis upon which the defendant’s say the trust was held, and that is according to the constitution of the members of that parish or church.
MR PARKER: The terms are dealt with at paragraph 22, which is at the bottom of page 66 and the beginning of page 67. But the reason that I am labouring this point about determining what the issues really are is that we were genuinely in doubt about that question and part of the problem is this. Can we step back for a minute. This is an Episcopal church. Justice Hamilton has found it is an Episcopal church. If it be the fact that, as we understand is actually not in dispute on a factual – I am not sure about that – if it be the fact that the priest appointed by the bishop has been excluded and somebody who is not appointed by the bishop has been brought in, how could that ever be justifiable under the terms of a trust for religious purposes?
GUMMOW ACJ: Do not try and draw us into that sort of question, Mr Parker.
MR PARKER: I do not want the Court to be drawn into it, I am just drawing attention that this dispute existed. But Justice Heydon asked me, well, did I say that what the judge had said was wrong in saying he had carefully considered the opinion and, of course, I did not want to say lightly that Justice Palmer had got it wrong in that regard or that he had looked at it carefully. But there is a real question about it because we cannot see, for the life of us, what the defence is on that aspect of it, especially as they put on evidence themselves, which we drew to Justice Palmer’s attention, which said that they did have to have the bishop’s approval to appoint a priest, and that evidence is found from their own expert at page 451 between lines 20 and 25 of the appeal book.
So, it was those sorts of considerations which led us to say that if this was all going to depend upon a close analysis of what the terms of the trust were said to be, what the difference between the parties were, how much it was going to cost to sort it out, there should have been some better way to allow us to make some meaningful contribution to the court’s deliberations on that when the court’s deliberations were going to be at least relevant to something that affected our rights, namely, the conduct of the main proceedings.
We are not at all seeking to suppose that Justice Palmer did not do the job that he set out to do, but we all know that it is one thing for a court to be addressed on an issue ex parte and another to have the benefit of an opposing point of view, and we all know that very often the existence of an opposing point of view can shed light on things and can raise questions which otherwise would be passed over and would not be agitated.
The famous words of Justice Megarry on that about unalterable decisions suffering a change and the like come into play. That was what was wrong with this procedure and it was doubly wrong because his Honour in November 2006 says, “I’m going to give you the order”, and then only later does he actually get the statement of facts which says, “This is how much we think it is going to cost and this is what we think the issue is”.
It is not referred to by the Court of Appeal in quite this way, and they refer to some other factors as well, but we would put that as the central factor which supports the Court of Appeal’s conclusion on balancing exercise and if we are wrong about that, we submit that it supports what we say as a fallback, which the Court of Appeal did not have to consider, about procedural fairness. Now, on the cross‑appeal ‑ ‑ ‑
GUMMOW ACJ: On the application of the cross‑appeal. Why should you get special leave, bearing in mind what the Court of Appeal said on these points at page 637, paragraph 125 and following?
MR PARKER: There was no evidence before the Court of Appeal that the orders had been acted on in any relevant sense. We ask, what does that mean? These are orders which the other side had asked for on the express basis that they would be revocable ab initio, so that they would be at risk ‑ ‑ ‑
GUMMOW ACJ: No. This is an application for special leave. What is the relevant point of principle that you would seek to agitate which shows that the Court of Appeal did not apply appropriate principle or misunderstood it in the question of whether it should grant leave to reagitate these matters so long after the event?
MR PARKER: We do not put that it raises any separate issue. We put it on the alternative basis that it is intimately bound up with the issues which have been debated on the appeal itself. If the Court does not accept that, then there is no basis for intervention, but if the Court does accept that it is intimately bound up with it, then we put that. Can I also just make it clear, because we have not said this in our written submission, there is a statement made apparently in support of the failure to revoke as part of the recounting of the relevant facts at paragraph 103 on page 633, between lines 10 and 20, where it says:
The day before the hearing, Bishop Petar and Father Mitrev took the view that their appeal was incompetent and invited this Court to dismiss the appeal –
That is not correct as a matter of fact. What actually happened is the appeal was called on and then a statement was made by Mr Blake then appearing for the Association that the orders would be revocable ab initio and that they accepted that they would be at risk, and on that basis we accepted that the orders which we had been contending were final were interlocutory and we invited the court to dismiss the appeal on that basis. So that what has happened is that the Association has actually come to court and said, “This is a revocable order, we’ll be at risk”, and then when we came along and sought to revoke it they said, “You can’t revoke it because we’ve acted on it”.
The other point raised by the notice of the application for leave to cross‑appeal is the correctness of the Court of Appeal’s judgment on the natural justice point. It may be put against us that we could have appealed at an earlier stage. We simply say that we were of the view that we did not necessarily have to win on that issue to determine it. We have now been brought here and we have raised it on our notice of contention and in those circumstances the Court ought to deal with it. If the issue had been dealt with – we might not even have been a party to the 2006 proceedings. We are entitled to challenge the decision on the notice of contention. We seek to do it.
In this case, we say, having been brought here and having raised that challenge, if the challenge is successful, it would be proper for the Court because the Court can do it and is, in effect, seized with the matter to also remove the costs orders and the like that were made against us a result of our failure to succeed in 2006. We submit that it was not an unreasonable position for us to take, that although we said that the position was wrong, we did not want to seek special leave at that point. One of the reasons we did not want to seek special leave, of course, is that we want to get on with this case. We formed the view, for better or for worse, that the best thing to do was try to go back ‑ ‑ ‑
GUMMOW ACJ: We cannot enter into your processes of why you did or did not seek special leave, Mr Parker.
MR PARKER: Fortunately for your Honour. Can I now just address the question of what happens if the Court finds that there is some error by Justice Palmer. That means that his judgment cannot stand. It means that the matter would have to go back to someone.
HEYDON J: If he has committed an error, then the Court of Appeal was right in so finding and we have a Court of Appeal re‑exercise the discretion and you said this morning that Mr Lindsay does not seem to have put submissions about that. So does it not just stand there?
MR PARKER: Thank you, your Honour. Yes.
HEYDON J: If there were some error in the Court of Appeal’s re‑exercise of discretion, then it might go back to the Court of Appeal unless we further re‑exercised it ourselves.
MR PARKER: Yes. Can I put this against the possibility, which I do not perceive to be something that has been said, that it is going to be argued that there was something wrong with what the Court of Appeal did. We would put that, having regard to circumstances of this case, it should not be send back to first instance to be redetermined ‑ ‑ ‑
HEYDON J: I’m sorry, I cannot hear you.
MR PARKER: It should not be sent back if the Court of Appeal was wrong in their exercise of the discretion. One of the reasons it should not be sent back is because of the considerations which Justice Kirby has already referred to. There is very limited utility in sending this matter back. One of the reasons for that is that the order that has been obtained only applies to part of the costs of the defence of the proceedings. So that on any view, even if it were to uphold Justice Palmer’s order, the Association is going to have find other money to defend the other issues in the proceedings. We have been told in the earlier estimate that the total cost of defending the proceedings is $400,000.
So the Court could find itself in the position of sending this back, re‑exercise of discretion, and at the end of the day, the Association is still going to be faced with the shortage of money which it complains that it has, or at least the alleged shortage of money that it complains about. So that is one reason why there would be no utility in sending this matter back.
The other is that the question of access to funds was exhaustively debated in the injunction proceedings that some of your Honours know about. One of the very things that was capable of being dealt with in those proceedings, and I think to some extent actually was, was the Association’s financial position and the like.
There is now an injunction in place and an injunction which has been made by the Court of Appeal and which has then survived an earlier special leave application and that is another reason why it would be unsatisfactory, if there was a view that the Court of Appeal had done it wrong and it needed to be done again, for this matter to go back. As I say, we would just put that there is no utility, particularly as it seems that the Association’s position has changed when it started these proceedings, that is, the advice proceedings. The Association was saying, “We need this order to protect ourselves”.
When these proceedings were begun, that is, the advice proceedings were done, there was no injunction in place. If the Association was confident of its position, it could have just helped itself to the money on pain of having to pay the money back in the event it was found to be wrong at the end of the case. The Association did not want to do that. They said, “No, it’s not enough that we can help ourselves to the money, we want absolute protection”. That is why they commenced the proceedings. They wanted the absolute protection so there was no possibility of any comeback, but that position has changed because the Association itself has been promoting the view that the order made would be revocable ab initio.
If the Association’s position now is that it is prepared to take the risk on that, we recognise that is wrong in law but it indicates what the Association’s mentality is. If the Association’s mentality is “We are prepared to take the risk”, then there is no utility in sending this matter back again.
GUMMOW ACJ: So, what should the order then be on this hypothesis? Our order, what should our order be?
MR PARKER: The appeal should be dismissed on the basis that, even if there an arguable error in what the Court of Appeal has done, there is no utility in taking the proceedings any further. Can I just draw attention also to the fact that we have asked for a specific order, if the appeal is dismissed, that the costs of this appeal should not fall on the trust assets. We recognise that that means that our costs of this appeal will not fall on the trust assets but those are my instructions. Our primary position is that none of the costs of the parties of this exercise should fall on the trust assets.
GUMMOW ACJ: If the appeal is successful?
MR PARKER: If the appeal is successful, then we will be ordered to pay the costs.
GUMMOW ACJ: Thank you. Yes, Mr Lindsay.
MR LINDSAY: Before lunch Justice Kiefel asked me where one would find the terms of the declarations made by Justice Hamilton. In the appeal book they are set out at volume 1, page 181. They are there described as proposed orders but they were later picked up by two lots of reasons for judgement to which I will make reference and then we have copies which we will make available to the Court.
His Honour made the orders on 7 February 2007 and he delivered reasons for judgment, which have the citation [2007] NSWSC 70 and the relevant paragraph is paragraph 14. That refers back in turn to a set of reasons that he published on 26 November 2003 and those reasons are published as [2003] NSWSC 1089 and the relevant paragraph is paragraph 3. That will take you back by incorporation by reference to page 181 of the appeal books, but we will have those available.
GUMMOW ACJ: They can be supplied at the same time as the ‑ ‑ ‑
MR LINDSAY: They are, your Honour.
GUMMOW ACJ: They are here, are they?
MR LINDSAY: When the Court rises, I will give them to your Honours’ associates.
GUMMOW ACJ: Is there any opposition to that, Mr Parker?
MR PARKER: No, your Honour.
GUMMOW ACJ: Very well.
MR LINDSAY: There has been some discussion about past costs in the context of order 2(a) at volume 1 appeal book 417 and that is reference to a period defined as a period for 9 July 2004 to 9 February 2007. That is a period after the commencement of the judicial advice proceedings. So one needs to have a very qualified view of the word “past” in the expression “past costs”. A summons was filed ‑ ‑ ‑
KIEFEL J: Do you mean they were meant to be costs within the judicial advice proceedings themselves?
MR LINDSAY: No, they were costs that were incurred in relation to the main proceedings referable to the Schedule A issue, but they were incurred during the course of the time it took for the judicial advice proceedings to unfold. The summons, we know from volume 1, appeal book page 2, was filed on 16 April 2004. We accept that it would be open to the Court to construe order 6 at volume 1, appeal book 417 as authorising only a revocation as to the future, not retrospectively.
Some of my friend’s submissions tended to refer to the expression “advice” as if that were the only expression in section 63(1). I draw attention to the fact that the statutory expression is “opinion advice or direction”. In our submission, there is no warrant for any grant of special leave in relation to any of the questions with the costs along the way. Those costs were referable to a period when the judicial advice, opinion, was sought by the court and to the conduct of the proceedings in that context and the Court of Appeal, in our submission, was quite right not to reopen those questions.
My friend has put the question of privilege or waiver principally as a notice of contention argument. It is an argument that seems to straddle his submissions, both on notice of contention and on special leave to cross‑appeal, but the undeniable fact, in our submission, is that there was no application for special leave to appeal within the time limited and the respondents allowed the proceedings, including the proceedings before Justice Palmer, to continue on the basis that that was so.
Ultimately, when, in our submission, it comes time to consider what to do, assuming there is some House v The King type order, it would be our submission that it is not insignificant that the Court of Appeal has not displaced Justice Palmer’s findings of “sufficient prospects” which appear and have been referred to at volume 1, appeal book pages 399 to 400 at paragraphs 79 to 82.
Our primary submission is the Court of Appeal did err in each and every respect, if I can put it that way, and that Justice Palmer did not so Justice Palmer’s orders can and should stand. If the Court were of the view that the Court of Appeal were in error and Justice Palmer was in error to some extent, a question that would fall for consideration is whether orders should be made now. The only problem with the Court proceeding to make orders now would be if the Court formed the view that there was an entitlement in the respondents to see Mr Blake’s opinions, and that presumably could only be accommodated by the proceedings being returned to the Court of Appeal, but otherwise, in our submission, it is a matter for the Court as to whether it feels it could deal with it.
GUMMOW ACJ: What do you say as to Mr Parker’s submission that order 2 at page 417, when read with section 63(11), is a misuse of the statutory power because it pre-empts the later exercise of the cross power, at least as to the 78,000?
MR LINDSAY: Well, in our submission, that has no substance because this is – the question whether or not the Association be entitled to have recourse to the property is a question within the first limb of section 63(1), and any advice or direction given in that respect is subject to the operation of subsection (2) and the proviso. So that what Mr Parker is, in essence, saying here, as he says in a number of different areas of debate, is that the jurisdiction under section 63 to provide judicial advice ought, in all respects, to be assimilated with inter partes adversarial proceedings where the respondents have rights of parties.
In our submission, that approach, if it were adopted, would actually defeat the object of section 63, the core of which is the idea that a trustee may seek protection. That is a constant theme in the differences between us.
GUMMOW ACJ: Am I right in thinking that the phrase “shall be bound” in subsection (11) conjures up principles of estoppel or res judicata, to be precise?
MR LINDSAY: Justice Palmer says not and we adopt his position.
GUMMOW ACJ: Where does he say that?
MR LINDSAY: It is in his judgment, I think, of November 2006. There is a passage there at 396 and 397. He says it in paragraph 69 principally. At the core of even this debate is the question, what is the nature of judicial advice? The difference between us is we say judicial advice is and has the character, whether it is under the court’s general equitable jurisdiction or its under Part 68 or its under section 63, we say, in essence, it is advice that is sometimes described as private or personal advice, but it is advice given to a trustee to protect, whereas, my friend at each step along the way says, really, it is adversarial in the sense that a party in the position of the respondents should be treated as if it were a party, whereas, in fact, on any view of section 63, an objector is not entitled to the rights of the party. But that is the difference.
GUMMOW ACJ: Is there anything more you want to say on the special leave application?
MR LINDSAY: No, your Honour.
GUMMOW ACJ: Is there anything in reply on the special leave application, Mr Parker?
MR PARKER: No, your Honour.
GUMMOW ACJ: When we referred to written submissions, we are conscious that there have been many applications and no doubt many written submissions, but we are talking about the written submissions that led up to Justice Palmer’s judgment at page 373 of the appeal book – namely, the judgment under appeal. Then there was a supplementary judgment, was there not?
MR LINDSAY: Yes.
GUMMOW ACJ: Which produced the order at 415, 416. Likewise, written submissions that relate to the Court of Appeal judgments that are presently under appeal here and which are not already in the appeal book.
MR LINDSAY: Yes, that is understood.
GUMMOW ACJ: They will be supplied within seven days.
MR LINDSAY: Yes.
GUMMOW ACJ: Thank you. We will consider our decision in this matter. Yes, Mr Parker.
MR PARKER: Would it assist if we were to identify in those submissions where the notice of contention points were taken?
GUMMOW ACJ: Yes, it would. Thank you. We will consider our decision in this matter. The Court will now adjourn to 9.30 am tomorrow in Sydney.
AT 3.38 PM THE MATTER WAS ADJOURNED
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