Macedonian Orthodox Community Church St Petka Incorporated v Metropolitan Petar - [2013] NSWCA 223

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Macedonian Orthodox Community Church St Petka Incorporated v Metropolitan Petar [2013] NSWCA 223
Hearing dates: 20, 21, 22, 23 and 27 May 2013
Decision date: 18 July 2013
Before: Beazley P at [1]
Macfarlan JA at [2]
Emmett JA at [235]
Decision:
(1) Grant leave to the appellants to appeal.
(2) Direct that within seven days of the date of this judgment, the appellants file and serve a Notice of Appeal in the form appearing under Tab 6 of the Appeal Papers.
(3) Grant leave to Metropolitan Petar (otherwise known as Bishop Petar) and to Father Mitrev to appeal and cross-appeal.
(4) Direct that within seven days of the date of this judgment, Bishop Petar and Father Mitrev file and serve Notices of Appeal and Cross-Appeal in the forms provided to the Court on 27 May 2013.
(5) Dismiss the Association's appeal except to the extent that it challenged Brereton J's refusal to grant relief under s 85 of the Trustee Act.
(6) Set aside Brereton J's order refusing relief to the Association under s 85 of the Trustee Act.
(7) Order under s 85 of the Trustee Act that the Association be relieved from personal liability for its breaches of trust constituted by its payment of emoluments to Fathers Dzeparovski and Despotoski.
(8) Allow the appeals of the Council Member appellants against order (1) made by Brereton J on 21 December 2012 in relation to the liability of the Council Members other than Mr Minovski as accessories to the Association's breaches of trust.
(9) Set aside order (1) made on 21 December 2012.
(10) Enter judgment for the Council Member defendants on Bishop Petar and Father Mitrev's claim that they are liable to account as accessories in relation to the Association's breaches of trust.
(11) Otherwise dismiss the Council Member appellants' appeal.
(12) Dismiss the Bishop and Father Mitrev's appeal and cross-appeal.
(13) Direct that the parties file, in accordance with the following timetable, submissions concerning the costs orders made at first instance that should be set aside, the orders that should be made in respect of costs incurred at first instance and the costs orders that should be made concerning the applications for leave to appeal and cross-appeal and the appeals and cross-appeal:
(a) The appellants to file and serve their submissions within seven days of the date of this judgment;
(b) The respondents (including the Attorney-General) to file and serve their submissions within a further seven days; and
(c) The appellants to file any submissions in reply within a further seven days.
(14) Direct that none of the submissions so ordered exceed 10 pages in length and that the issue of what further orders should be made be determined by the Court on the basis of the written submissions directed to be filed.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
EQUITY - trusts and trustees - unincorporated association formed to purchase a site for a Macedonian Orthodox Church - association later incorporated under the Associations Incorporation Act 1984 - further property acquired by the association both before and after incorporation - whether the trust applicable to the church site and other property was one to permit it to be used by the association for a church and the promotion of the Macedonian Orthodox Religion - whether trust varied after its creation - whether trust extinguished on incorporation of the association - whether association breached trust by excluding bishop and his appointed priest, by itself appointing priests, by limiting membership of association and by other conduct - whether members of the association's council accessorially liable for the association's breaches of trust in paying emoluments to priests it appointed - whether association should be excused from breaches of trust under s 85 Trustee Act 1925
ASSOCIATIONS AND CLUBS - Associations Incorporation Act 1984 - unincorporated association trustee of property - whether trust extinguished on incorporation of the association
Legislation Cited: Associations Incorporation Act 1984
Interpretation Act 1987
Supreme Court Act 1970
Trustee Act 1925
Cases Cited: Attorney General v Clapham [1855] 43 ER 638
Attorney General v Mathieson [1907] 2 Ch 383
Attorney General for NSW v The Perpetual Trustee Company Limited [1940] HCA 12; 63 CLR 209
Bacon v Pianta [1966] HCA 44; 114 CLR 634
Barnes v Addy (1874) LR 9 Ch App 244
Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; 132 CLR 373
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89
Grimaldi v Chameleon Mining NL (No 2) [2012] 200 FCR 296
Kytherian Association of Queensland v Sklavos [1958] HCA 47; 101 CLR 56
Marriner v Australian Super Developments Pty Ltd [2012] VSCA 171
Radmanovich v Nedeljkovic [2001] NSWSC 492; 52 NSWLR 641
US Surgical Corporation v Hospital Products [1983] 2 NSWLR 157
Category: Principal judgment
Parties: Macedonian Orthodox Community Church St Petka Incorporated (First Appellant)
Lambe Mitreski (Second Appellant)
Pero Damcevski (Third Appellant)
Boris Minovski (Fourth Appellant)
Eftim Eftimov (Fifth Appellant)
Mile Marcevski (Sixth Appellant)
Naum Despotoski (Seventh Appellant)
His Eminence, Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand (First Respondent)
Very Reverend Father Mitko Mitrev (Second Respondent)
Attorney-General for the State of NSW (Third Respondent)
Representation: Counsel:
B W Walker SC/G E S Ng (Appellants)
T G Parker SC/L Livingston (First and Second Respondents)
M Izzo/T Prince (Third Respondent)
Solicitors:
McConnell Jaffray Lawyers (Appellants)
Sachs Gerace Lawyers (First and Second Respondents)
Crown Solicitor's Office (Third Respondent)

File Number(s): CA 2007/265573; 2012/101767
Decision under appeal

Jurisdiction:

9111

Citation:

Metropolitan Petar v Mitreski [2003] NSWSC 262 - 4 April 2003
Metropolitan Petar v Mitreski [2005] NSWSC 330 - 31 March 2005
Metropolitan Petar v Mitreski [2009] NSWSC 106 - 4 March 2009
Metropolitan Petar v Mitreski [2012] NSWSC 16 - 3 February 2012
Metropolitan Petar v Mitreski [2012] NSWSC 167 -5 March 2012
Metropolitan Petar v Mitreski [2012] NSWSC 1610 - 21 December 2012

Before:

Hamilton J - 4 April 2003 and 31 March 2005
Young CJ in Eq - 4 March 2009
Brereton J - 3 February 2012; 5 March and 21 December 2012

File Number(s):

SC 1997/3369; 1997/25609

Judgment

BEAZLEY JA: I agree with Macfarlan JA.

MACFARLAN JA:

TABLE OF CONTENTS
Summary of case and conclusions
[3]
The issues on appeal
[6]
Conclusions
[14]
Factual circumstances
[15]
The Macedonian Orthodox Church
[15]
The 1974 MOC Constitution
[16]
The steps to establish a parish church at Rockdale
[19]
The St Petka by-laws
[25]
Deed of Trust of 8 March 1977
[34]
The St Petka Constitution
[37]
Other events prior to incorporation
[39]
Incorporation of the Association
[47]
1994 MOC Constitution
[50]
The 1996 Diocesan statute
[58]
The disputes that arose
[61]
Hamilton J's judgment of 4 April 2003
[74]
Young CJ in Eq's judgment of 4 March 2009
[81]
Brereton J's decision of 3 February 2012
[97]
Brereton J's judgment of 5 March 2012
[113]
Brereton J's judgment of 21 December 2012
[115]
The first issue on appeal: the trust or trusts applicable prior to the Association's incorporation
[119]
Whether the trust conferred a right on the Association to use the trust property for the stated purpose
[123]
The Peetz declaration registered in August 1978
[132]
The balance of the Schedule A property
[137]
The Non-schedule A property
[142]
Property acquired after incorporation
[144]
Second issue on appeal: whether the trust was extinguished on incorporation
[147]
The Associations Incorporation Act 1984
[149]
The transitional provision
[153]
The form of Schedule 2 at the time of incorporation
[155]
The 1992 form of Schedule 2
[171]
Third issue on appeal: whether the trust was breached
[174]
Alleged breach (a): exclusion of the Bishop from St Petka
[183]
Alleged breaches (b) and (c): exclusion of the bishop appointed priest
[185]
Alleged breach (e): employing priests not appointed by the bishop
[191]
Alleged breach (h): taking steps in relation to the church building and contents without the bishop's approval
[192]
Alleged breach (i): membership of the Association
[194]
Conclusion on breaches
[199]
Fourth issue on appeal: injunctive relief
[200]
Fifth issue on appeal: accessorial liability for breaches of trust
[202]
Knowledge of transgression of Church law
[216]
Conclusion on accessorial liability
[222]
Sixth issue on appeal: whether the association should have been excused for any breaches of trust
[226]
Seventh issue on appeal: costs
[230]
Orders to be made on appeal
[233]

SUMMARY OF CASE AND CONCLUSIONS

This judgment relates to decisions of Hamilton J, Young CJ in Eq and Brereton J concerning the Macedonian Orthodox Church St Petka at 65 Railway Street Rockdale. The applicants for leave to appeal (to whom I shall refer as "the appellants") comprise the Macedonian Orthodox Community Church St Petka Incorporated ("the Association"), five members of the Council of the Association ("the Council Member appellants") and Father Dzeparovski whom the Association purported to appoint as priest of the St Petka parish. The appellants were defendants in the court below.

The respondents in this Court comprise the Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand, Father Mitrev whom the Bishop appointed as priest of the St Petka parish and the Attorney-General of New South Wales in his role as protector of charities. References in this judgment to the respondents or defendants are not intended to include the Attorney-General. The Bishop and Father Mitrev were the plaintiffs in the court below.

In essence, the dispute is as to who has the right to control the affairs of the St Petka Church, whether it is, on the one hand, the Bishop and his appointed priest, representing the hierarchy of the Macedonian Orthodox Church based in Skopje in Macedonia, or whether, on the other hand, it is those who are presently in charge of the Association and claim to represent the interests of the members of the St Petka parish. Central to the dispute is the question of whether the Association is entitled to act in relation to the St Petka church in accordance with its own Constitution irrespective of the laws governing the Macedonian Orthodox Church generally.

The issues on appeal

The proceedings have been brought before this Court by way of applications for leave to appeal and cross-appeal. Contrary to the previous position, none of the parties now assert that the orders made by Brereton J, which take into account the earlier decisions of Hamilton J and Young CJ in Eq, are not final orders involving property rights exceeding $100,000 in value (see s 101(2)(r) of the Supreme Court Act 1970). They do not therefore now assert that leave is required. Nevertheless, as there are some limited matters remaining for Brereton J's determination, as the proceedings in this Court are, in form, applications for leave to appeal and cross-appeal, and as grants of leave are in any event appropriate, leave to appeal and cross-appeal should be granted. The proceedings presently before the Court for determination may nevertheless be dealt with as appeals because the hearing in this Court included argument on the merits of the appeals and cross-appeal that would lie if leave were granted.

The first issue on appeal concerns the terms of the trust or trusts applicable to the property at 65 Railway Street ("the Church Site") and other property held by the Association.

The second issue is whether the trust applicable to the relevant property was extinguished by the Association's incorporation in 1992 under the Associations Incorporation Act 1984.

The third issue is whether the Association has committed any, and if so what, breaches of trust.

The fourth issue concerns the injunctive relief that should be given in respect of any actual or threatened breaches of trust.

The fifth issue is whether the appellant Council Members other than Mr Minovski have accessorial liability for any breaches of trust of the Association in paying emoluments to the priests it appointed.

The sixth issue is whether the Association should have been excused pursuant to s 85 of the Trustee Act for those breaches of trust.

The seventh issue is whether the costs orders made by Brereton J should be set aside.

Conclusions

My conclusions in relation to these issues are as follows:

(1) Hamilton J correctly found that the trust is one "to permit the trust property to be used by The Macedonian Orthodox Church St Petka Rockdale as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion". Further, it was correctly found at first instance that this trust is applicable to both the so-called schedule A and non-schedule A property and to other property acquired by the Association after its incorporation.

(2) The trust was not extinguished by the Association's incorporation in 1992.

(3) It was correctly found at first instance that the Association breached the trust by excluding the Bishop and the priest he appointed, by employing priests not appointed by the Bishop, by taking steps in relation to the Church building and contents without the Bishop's approval and by limiting the Association's membership.

(4) The challenge to the injunctive relief granted at first instance fails.

(5) None of the appellant Council Members have accessorial liability for the Association's breaches of trust in paying emoluments to the priests it appointed.

(6) The Association should be excused for those breaches of trust.

(7) One of the two challenged costs orders made by Brereton J should be set aside. The other should not.

FACTUAL CIRCUMSTANCES

The Macedonian Orthodox Church

The Macedonian Orthodox Church ("the MOC") is a self-governing church with its seat in Skopje in Macedonia. At its head is the Archbishop of Ohrid and Macedonia who acts in conjunction with the Holy Archbishopric Synod. It is organised into various dioceses situated throughout the world. Each is headed by a diocesan bishop, and is divided into parishes under the spiritual leadership of a parish priest. On 29 October 1974 the MOC adopted a written Constitution ("the 1974 Constitution") which was operative until a replacement constitution was adopted on 1 November 1994 ("the 1994 Constitution").

The 1974 MOC Constitution

Article 9 of the 1974 MOC Constitution described the church hierarchy as including, in descending order, the Archbishop and the Synod based in Skopje, the diocesan bishop and the parish priest. Article 13 stated that the MOC is Episcopal, meaning, according to the Macquarie Dictionary, that the Church is "based on an order of bishops exercising pastoral authority and discipline".

Article 23 provided that every Orthodox Christian was a member of the parish in whose territory he (or she) resided and Articles 166 and 167 provided that for each parish church there was to be a Church Council consisting of the parish priest and all Orthodox Christians belonging to the parish church. Article 164 provided for the parish priest to be appointed by the bishop responsible for the parish and Article 168 provided for a Church Assembly consisting of all Orthodox Christians within the territory of the Church to elect a Church Committee to hold office for four years. Article 169 provided that the Church Committee was to be concerned "with the execution of the regular business associated with the life of the parish church and the Church Council".

Under the heading "The Church Councils of the Macedonian Orthodox Church Abroad", Article 172 provided as follows:

"The organization and work of the Macedonian Church Councils abroad are administered by separate laws (statutes), which in concordance with the Parish Bishop, are determined by the Assemblies of the Church Councils. The laws (Statutes) hereinbefore referred to must be in harmony with Article 19 and the other corresponding regulations in this Constitution and applicable laws of the corresponding country. The laws of the Macedonian Church Councils abroad come into effect after ratification by the Archbishopric Synod of the Macedonian Orthodox Church".

The steps to establish a parish church at Rockdale

In 1976 an Initiative Committee, comprised of persons of the Macedonian Orthodox faith, identified the property at 65 Railway Street Rockdale as a site suitable for the establishment of a new parish church.

By a letter from its President, Mr Grbevski, dated 9 November 1976, the Initiative Committee sought the blessing of the MOC Synod in Skopje for the establishment of a Macedonian Orthodox Church at the Rockdale property. This letter stated that the Initiative Committee had resolved that the church "is to be managed only in accordance with the directions ie the Constitution of our Macedonian Orthodox Church with a seat in Skopje, R Macedonia".

A report by the Initiative Committee, given on 20 November 1976 to a meeting of interested persons, about the proposal to establish a church at the property stated:

"The new Church will accept the Church Statute [a reference to the Constitution] of the Macedonian Orthodox Church in Skopje and will apply it in its integrity because this Statute is accepted and implemented by all Macedonian churches in Macedonia and overseas, with exception of some churches in Australia which do not want to accept it. The Church will be managed by a Committee elected in a democratic way, on a general assembly by all the Macedonians from Sydney present at the assembly.

Every Macedonian has the right to vote. Every Macedonian has the right to elect and to be elected. There will not be such a thing as the so called 'Foundation Members' like it is the case with some other Churches, and who elect themselves over and over in order to command the Church and the Macedonian believers".

The report also stated that the MOC and Holy Synod in Skopje should be asked to send "an honest, educated and family oriented priest" to the church.

As recorded in a later document known as the Souvenir Booklet, the meeting resolved to form an unincorporated association (to which I also refer as "the Association") to purchase the Rockdale property, adopt by-laws and elect a management committee. Some donations were received at the meeting and thereafter.

Following exchange of contracts on 23 December 1976 for the purchase of the property, the draft by-laws were, on 15 February 1977, sent to the Holy Synod for approval. In the meantime, the Australian diocesan deputy bishop indicated that the new parish organisation should be known as the "Macedonian Orthodox Church Community St Petka Rockdale".

The St Petka by-laws

Article 4 of the form of by-laws sent to Skopje on 15 February 1977 provided as follows:

"The Macedonian Orthodox Church "St Petka" is an integral part of the Macedonian Orthodox Church in Macedonia, and it is under its Canonical Jurisdiction and it is governed by the Holy Bishops Synod of the Macedonian Orthodox Church and the Metropolitan respectively".

Article 9 excluded from membership of the Church persons whose conduct was inimical to the principles of the Church. Thereafter Article 12 provided that "[o]nly honest persons of the Orthodox faith whose parents are Orthodox Christians are accepted as members of the Church".

Articles 17 and 19 provided for there to be an Assembly and a Church Managing Committee, with the Assembly to elect the latter.

Articles 43, 44 and 48 included the following:

"Article 43

The parish Priest is [the] Elder of the Church as well as in charge of the Parish Church. He is appointed as a Parish Priest by the Diocesan Metropolitan i.e. by the Macedonian Archepiscopacy. He is responsible for all activities of the Church before the Diocesan Metropolitan, the Diocesan Ruling Committee and the membership Assembly.

Article 44

Concerning the canonical duties, the Priest as Elder of the Church is under direct supervision of the Diocesan Metropolitan and the Holy Synod of the Macedonian Orthodox Church, respectively. For any breaches he shall be judged by the Australian Diocesan Church Court or the Archbishopry in Macedonia - Skopje.

...

Article 48

The Church Management has no right to dismiss the Parish Priest or to appoint another Parish Priest, without approval by the Holy Synod of the MOC or the Diocesan Metropolitan.

... "

Article 63 stated that the by-laws were passed at a membership assembly and were to be approved by the Holy Synod in Macedonia.

With some changes, the by-laws were approved by the Holy Synod on 10 May 1977. To some extent, apparent differences in the language of the two versions arise out of translation differences.

Relevant provisions of the approved version were as follows:

"Article 4

The church-community 'St Petka' with all its assets real and personal belongs exclusively to the members meeting/general meeting/assembly, that is the members of the church community. The same cannot for any reasons be appropriated by a group of people, a company or an institution.

...

Article 5

The Macedonian orthodox church community 'St Petka' in Rockdale is an integral part of the Macedonian orthodox church in Skopje, Macedonia. It is under its canonic jurisdiction and the same is governed by the authorised diocesan bishop, that is the Holy Bishops' Synod of the Macedonian orthodox church.

...

Article 9

Regular members of the church are orthodox Macedonians of orthodox parents and faith, who voluntarily want to become members and the same have the right to elect and be elected.

The regular members in the church community are accepted on the basis of a written application, signed by two witnesses - members of this church community who guarantee for the applicant.

...

Article 21

The meeting/general meeting/assembly is comprised of all members of the church community, who have fulfilled the membership obligations to the church community.

...

Article 28

The meeting/general meeting/assembly elects a church administration of 13 to 35 members. By virtue of his position the parish priest is a member of the administration.

...

Article 46

The parish priest is an elder of the church, as well as guardian of the parish of the church. He is appointed as a parish priest by the Diocesan Bishop, that is by the Holy bishops' synod. He is responsible to the Diocesan Bishop, the Diocesan Administrative Committee and the Holy bishops' synod for all activities in the church.

...

Article 63

For that which is not provided for or explained in these by-laws, explanation is to be sought in The Constitution of the Macedonian Orthodox church".

Following the portion of it quoted above, Article 28 provided that, after their election to the "church administration", members were to take an oath, inter alia, to abide by the MOC Constitution and the St Petka by-laws.

The Holy Synod's decision to accept the by-laws, as recorded in a letter from its President of 21 May 1977, was as follows:

"The newly formed Macedonian Church Community 'St Petka' - Rockdale - Sydney, to be accepted under the spiritual jurisdiction of the Holy Macedonian Orthodox Church - The Macedonian Archdiocese in Skopje.

We approve of the committee of Rockdale as a managing committee of the Church 'St Petka' who will deal and follow [sic] the By-laws of the Church constructed in accordance with the spirit of the Constitution of the Macedonian Orthodox Church, its legal and Canonical norms and regulations and being accepted as such by the Holy Synod.

... "

Deed of Trust of 8 March 1977

By Deed dated 8 March 1977 five members of the Initiating Committee, described as the founder members of the Association, appointed Mr John Peetz, solicitor for the Association, as trustee of the property at 65 Railway Street. Relevant parts of the recitals to and operative parts of the Deed were as follows:

"WHEREAS

A. The appointors are the founder members of a religious group to be organised and known as 'The Macedonian Orthodox Church St Petka Rockdale N.S.W. Australia (hereinafter called 'the proposed beneficiary').

B. It is intended that certain real estate premises and property more particularly described in the schedule below (hereinafter called 'the trust property') be purchased for use by the proposed beneficiary.

C. Certain delays are anticipated in the organisation of the proposed beneficiary.

D. The appointors have requested the trustee to acquire the trust property on behalf of the proposed beneficiary.

E. The trustee has agreed to accept such appointment and to acquire and hold the trust property upon the trusts and subject to the provisions hereinafter contained.

NOW THIS DEED WITNESSETH

1. The trustee shall acquire the trust property and stand possessed of the trust property upon trust to permit the trust property to be used by the proposed beneficiary as a site for a Church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion.

...

10. The trustee shall, in addition to powers conferred by statute have the following specific powers to properly perform his obligations hereunder:

(a) to borrow moneys, secured or unsecured;

(b) to mortgage, lease, transfer, sub-let or otherwise deal with the trust property;

(c) to receive gifts.

11. The trustee shall have the right to resign by delivering the appointors 7 days notice of resignation in writing or 7 days notice in writing to the proposed beneficiary after the formation of the proposed beneficiary, by delivering such notice of resignation to the Secretary or Chairman of the proposed beneficiary.

12. The trustee may, with the approval of the management committee of the proposed beneficiary or other governing body of the proposed beneficiary, by deed executed by the trustee or trustees wholly or partially revoke, alter or vary or add to any of the provisions of this Deed.

13. Upon the formation of the proposed beneficiary the management committee or other governing body of the proposed beneficiary shall:

(a) by resolution appoint at least 2 and up to 4 further trustees and in default of such appointment, the original trustee, JOHN SERGIUS PEETZ, shall have power to appoint such further trustee or trustees by a document in writing signed by him;

(b) have the power at any time by resolution to remove any trustee or trustees or appoint new trustees up to a total of 5 trustees".

The Schedule to the Deed contained a description of the property at 65 Railway Street Rockdale.

The Association's purchase of this property was completed by its conveyance on 5 April 1977 to Mr Peetz as trustee.

The St Petka Constitution

By letter of 7 April 1977, Mr Peetz advised the Association that "[t]he Constitution has been drawn as well as the Trust Deed and we note you hold copies of both documents".

On 28 October 1977, the members of the Association adopted a written Constitution, the relevant provisions of which were as follows:

"1. NAME:

The name of the organisation shall be the Macedonian Orthodox Church St Petka Rockdale N.S.W. Australia (hereinafter called 'the Church').

...

3. OBJECTS:

The objects of the Church are as follows:

A. Generally, to encourage, practice and promote the Macedonian Christian Orthodox Religion and the activities concerned with or ancillary to the said Religion, and more particularly to

B. Remain an integral part of the Macedonian Orthodox Church of Macedonia in Yugoslavia and wherever reasonably possible abide by the Canons of that Church.

C. To educate members of the Church in the spirit of Orthodox Christianity.

D. To maintain the glorious tradition of the Macedonian Orthodox Church in Macedonia Yugoslavia.

...

J. To acquire by gift, bequest, purchase, lease or otherwise howsoever and to hold any real or personal property whatsoever which may be necessary or useful or incidental to the objects herein contained.

...

L. To property invest and deal with the moneys raised by the Church.

...

8. MEMBERSHIP:

Membership of the Church shall be divided into three categories classified and distinguished as follows:

A. MEMBERS OF THE CHURCH - shall be Macedonian or persons born of Macedonian parents or having a Macedonian mother or father or direct descendants of such persons who are adherents to the teachings of the Christian Orthodox Denomination and shall be of the age of 18 years or over. Other persons who are adherents to the teachings of the Christian Orthodox Denomination shall be entitled to take part in the religious rites, ceremonies and services of the Church but only members of the Church shall be entitled to hold office, vote at meetings and otherwise take part in the control of the affairs of the Church. Members of the Church are to be of the highest moral character with unquestionable dedication and devotion to the principles of the Church.

B. ASSOCIATE MEMBERS OF THE CHURCH

...

C. CONTRIBUTORY MEMBERS OF THE CHURCH - shall be persons of any nationality or religion or institutions based in Australia or based in a foreign country who have contributed money or material value to the Church.

i) Application for membership to the Church shall be made in writing signed by the applicant and shall be in such form and contain such requirements as to the Executive Council from time to time prescribes.

ii) As soon as practicable after the receipt of an application for membership it shall be considered by the Executive Council who shall thereupon determine upon the admission or rejection of the applicant. In no case shall the council be required to give any reason for the rejection of an applicant.

iii) A register of members shall be kept showing in respect of each member, his name, address and the date of commencement of membership.

...

13. MANAGEMENT: EXECUTIVE COUNCIL:

1. There shall be a controlling Council known as the 'Executive Council' (hereinafter called 'the council') comprising five members of the Church.

[There then follows provisions relating to the election of members of the Executive Council by members of the Church]

...

16. DUTIES AND POWERS OF THE COUNCIL:

1. The business and operations of the Church shall be managed and controlled by the Council, and for that purpose the Council, except as hereinafter provided, shall have and may exercise the powers of the Church as if they had been expressly conferred on the Council at a general meeting of the Church.

...

24. PRIEST:

1. The Church shall duly appoint a Priest who, upon appointment, shall automatically become an additional member of the Council. The Priest shall be absolutely and exclusively responsible for the administering of the religious rites of the Church.

2. The salary of the Priest will be approved by the Council in accordance with the budget of the Church and such salary guaranteed to the Priest whilstever his position in the Church remains.

25. TRUSTEES:

1. The Church shall appoint up to ten trustees at a properly constituted general meeting.

2. All real estate property of whatsoever kind belonging to the Church and, any other property that may be so designated from time to time by the Church, shall be vested in the Trustees and they shall have the custody of all deed and documents of title relating to the said property of the Church and shall be responsible for safe custody of the same and shall deal with the dispose [sic] of all the said property of the Church whether real or personal for the time being vested in them in accordance with proper directions received from the Council provided that such directions are not in violation of the trusts upon which the property is held

...

27 AMENDMENT OF CONSTITUTION:

This Constitution may be amended by resolution passed by a two thirds majority of members at any annual general meeting at which notice of the proposed amendments have been given or at a special general meeting convened for such purpose".

Other events prior to incorporation

At the time that members of the Association adopted the Constitution, they appointed 10 persons as trustees to hold the property of the Church, as contemplated by Clause 25 of the Constitution.

On 2 June 1977 the Association advised the Bishop of the Australian Diocese of the terms and conditions that would be applicable to the engagement of the priest to be chosen by the Bishop.

Father Ivanovski, the priest appointed by the Bishop, arrived at St Petka on 20 November 1977 and the Church was consecrated by the Archbishop and Bishop in February 1978.

On 16 August 1978 an undated Declaration signed by Mr Peetz, not in the form of a deed, was registered at the office of the Registrar General. The Declaration recited that by Deed of Trust of 8 March 1977, Mr Peetz acquired the property at 65 Railway Street Rockdale "on trust for the Macedonian Orthodox Church St Petka Rockdale in N.S.W. Australia" and purported to vest the property in the 10 persons appointed by the Association as trustees "as trustee for the Macedonian Orthodox Church St Petka Rockdale N.S.W. Australia".

On 15 August 1978 two of the 10 trustees executed a Declaration of Trust, in the form of deed, relevantly in the following terms:

"WHEREAS:

A. The Trustees of the Macedonian Orthodox Church St Petka Rockdale N.S.W. Australia (hereinafter called the "Church Trust") have decided to purchase a real estate property at number 7 to 10 Firth Street, Arncliffe, more particularly described in the Schedule of land below (hereinafter called 'the property').

B. The Church trust has obtained from the Federal Government of Australia a grant of funds in the nature of a gift to acquire the property.

C. For the sake of convenience of conveyancing the Trustees, have been appointed and are acting as purchasers of the legal estate of the property for the Church Trust.

WITNESSETH:

THE TRUSTEES HEREBY DECLARE:

1. That the funds provided for the purchase of the property have all been provided by the Church Trust.

2. That they will hold the property in absolute trust for the Church Trust.

3. That upon request by the Church Trust they will transfer the legal estate to the Church Trust in accordance with its constitution and will co-operate and sign all documents necessary to effect such transfer or other legitimate authorised and approved dealing with the property.

4. That in the meantime they will act in accordance with the Constitution of the Macedonian Orthodox Church St Petka Rockdale N.S.W. Australia, its rules and regulations.

... "

This Arncliffe property was transferred by the two trustees to the Association's 10 trustees on 26 March 1979.

In 1981 a property at 66 Railway Street Rockdale was acquired by the 10 trustees as "Trustees of the Macedonian Orthodox Church St Petka". This property was subsequently amalgamated with 65 Railway Street, with the result that both properties became known as 65 Railway Street (hereafter referred to as the "Church Site").

In 1985, for investment purposes, the trustees became the registered holder of shares giving a right to occupy unit 2 in a building known as 64 Railway Street Rockdale, and in 1991 they acquired shares giving rights to occupy units 1 and 5 in the same building. Shares conferring a right to occupy units 4, 6 and 7 were acquired by the Association after its incorporation.

Incorporation of the Association

Following approval at a members meeting on 10 February 1992, the Association applied on 19 March 1992 for incorporation under the Associations Incorporation Act 1984 ("the 1984 Act"). The accounts attached to the application recorded receipts by the Association for the year ended 30 June 1991 of donations in excess of $150,000 and, for the previous year, in excess of $140,000. Certificates were issued under Schedule 2 Clause 6(2) of the 1984 Act confirming that the Association was the organisation which had been incorporated. This led to the vesting in the incorporated Association of the property previously held by the trustees for the Association.

On 28 September 1992 the incorporated Association adopted a new constitution. This was in most respects in the same form as that of the unincorporated Association (see [38] above and Hamilton J's decision [2003] NSWSC 362 at [38]), although many of the paragraph numbers changed. For example Articles 13, 16 and 24 became Articles 18, 21 and 29 respectively.

One change of present relevance was to Article 12 concerning membership. The new provisions corresponding to the former Article 12C(i) and (ii) were as follows:

"8. Membership:

...

(1) Application for membership to the Church shall be made in writing signed by the applicant and shall be in such form and contain such requirements as the Executive Council from time to time prescribes.

(2) As soon as practicable after the receipt of an application for membership it shall be considered by the Executive Council who shall thereupon determine upon the admission or rejection of the applicant. In no case shall the Council be required to give any reason for the rejection of an applicant."

1994 MOC Constitution

In 1994 the Macedonian Orthodox Church based in Skopje adopted a new Constitution. There were two versions, or at least two translations, in evidence. They do not appear to differ in substance. The following references are to the version under tab 69 in the appeal papers.

Articles 9 and 10 stated that the head of the MOC is the Archbishop of Ohrid and Macedonia and the MOC is episcopal in character and internally organised into dioceses consisting of a number of parishes.

Article 21 described the Holy Synod of the MOC as the highest authority of the MOC, for "all church-spiritual and canonical issues".

Article 71 was in the following terms:

"The Eparchial Bishop [that is the diocesan Bishop], as a spiritual Head, stands at the forefront of the Eparchy, (a territorial unit comprised of a certain number of parishes, organized in Bishop's regencies, as well as the monasteries that are within that territory).

The Eparchial Bishop represents the Eparchy and manages the entire church and spiritual life and order of the Eparchy. The Eparchial Bishop discharges his church-hierarchal authority independently, in collaboration with the clergy and the clerical monkhood, on all questions of dogma, religious teaching and liturgy, and on the church-management matters in terms of the material and financial work, together with the clergy and clerical monkhood and the Orthodox people of its Eparchy, represented in the Eparchial bodies and organs"

Under the heading "PARISH", the following relevant provisions appeared:

"Article 104

The parish is a church community of clergymen and believers of the Orthodox Christian faith, residing within a specified territory, under the spiritual leadership of a parish priest, that is, a parson.

There may be more parishes within a single populated locality, and more localities may form a single parish.

...

Article 106

Every Orthodox Christian belongs as a member to the parish for the region in which he lives and has all the rights and obligations in the Church that belong to him according to this Constitution.

Article 107

The members of the parish have an obligation to confess, practice, support, strengthen and spread the faith of the Orthodox Church, to act in such a way that all believers live in accordance with the teachings of the Orthodox faith, to attend the Holy services; to accept the Holy Mysteries; to perform the deeds of Christian mercy/charity/compassion; to sustain and help the Church and its servants."

Under the heading "PARSON" the following relevant provisions appeared:

"Article 113

At the forefront of every parish there is a parson - a parish priest, who is a spiritual elder in his parish, and in the administrative order is a manager of the parish administration and an executive organ of the Church-community Council and Church Committee (Supervisorship).

The parson is temporary or permanent. He, by way of a selection process following applications based on an advertised vacancy, is appointed by the Eparchial Bishop.

Decisions about a parish priest who is not a citizens [sic] of the Republic of Macedonia (for his appointment to a parish), are made by the Holy Synod, upon recommendation by the Eparchial Bishop.

...

Article 116

The Bishop can only displace the permanent parson from the parish only upon his own request or his agreement, or by an order of the appropriate Church court.

The Bishop may displace the temporary parish priest according to the needs of the service.

...

Article 118

Every parish priests performs his parish duties and conducts his affairs independently, and in relation to his work he is under the supervision of the elder of the church, the bishop's regent and under chief supervision and management of the eparchial bishop".

Under the heading "CHURCH COMMUNITY AND CHURCH COMMUNITY COUNCIL" the following relevant Articles appeared:

"Article 121

Every parish church with its region represents a Church Community.

If there are two or more parishes next to one church (temple), all of them together represent one Church Community.

The Church Community is represented by the parish priests and all of the orthodox Christians who belong to the parish church.

...

Article 122

In every Church Community there is a members' Church Assembly, which is made up of all adult orthodox Christians from the region of the parish church (the parish), who fulfil the religious, moral and material obligations towards the Church and its institutions.

Article 123

The members of the church community who have become adults and have fulfilled the criteria from article 107 of this Constitution, gain a right to vote or be voted into the Church-community Council.

The right to vote and be voted is lost by those persons: [5 categories were then listed.] "

Under the heading "EPARCHIES OF THE [MOC] OUTSIDE OF THE TERRITORY OF THE REPUBLIC OF MACEDONIA", the following relevant articles appeared:

"Article 188

The eparchies of the Macedonian Orthodox Church outside the territory of the Republic of Macedonia are under canonical and spiritual jurisdiction of the Macedonian Orthodox Church in the Republic of Macedonia.

Article 189

At the forefront of each Eparchy outside of the territory of the Republic of Macedonia stands an Eparchial Bishop as its Head.

Article 190

The highest church-governing body of the eparchies outside of the territory of the Republic of Macedonia is the Eparchial Assembly.

The Eparchial Bishop is President of the Eparchial Assembly, while a Vice President is elected from the laypersons.

The composition of the Eparchial Assembly, as well as the organization of the eparchial bodies and organs of the eparchies of the Macedonian Orthodox Church outside of the territory of the Republic of Macedonia are regulated by a separate statute, which in accordance with the provisions of this Constitution, is confirmed by the Eparchial Assembly, after a prior opinion by the Holy Synod of the Macedonian Orthodox Church, in plenary composition, and is approved by the Archiepiscopal Church-people's Assembly.

The statute of the Eparchy of the Macedonian Orthodox Church must be in accordance with the Orthodox canons and reconciled with this Constitution and the valid laws of the relevant state.

...

Article 193

The organization and operation of the Church Communities outside of the territory of Macedonia is regulated with separate Rules, which are passed in accordance with the Holy Canons and the Constitution of the Macedonian Orthodox Church, and the Statute of the Eparchy, which in agreement with the Eparchial Bishop are proposed by the Church Committees at the general meetings of the Church Communities.

The Rules of the Macedonian Orthodox Church Communities outside of the territory of Macedonia, after exhaustive review by the Holy Synod of the Macedonian Orthodox Church, are approved by the Archiepiscopal Church-people's Assembly

...

Article 195

The parish priest at the Macedonian Orthodox Church Community outside of the territory of Macedonia, by virtue of his status, is an elder of the parish church and as such is a fully entitled member of the Church Community and Management. He is appointed and discharged by the Eparchial Bishop.

...

Selection of the parish priests for the eparchies outside of the territory of the Republic of Macedonia is performed in agreement with the Holy Synod and the Church Community.

... "

The 1996 Diocesan statute

In February 1996 the Holy Synod approved a "Statute of the Macedonian Orthodox Diocese of Australia and New Zealand". Its validity was in dispute in the proceedings at first instance but is not challenged on appeal.

In Articles 1 and 2 the statute referred to the Diocese as being "a constituent part of the Mother-Macedonian Orthodox Church ... whose seat is in Skopje" and that "[i]ts spiritual teachings and government is found in the Constitution of the MOC, more particularly in Articles 10 & 11".

Other relevant provisions were as follows:

"Article 12

In relation to the liturgy and questions of religious dogma, the Diocesan Bishop shall exercise his church-diocesan authority independently, in co-operation with the clergy and monastic orders and religious instructors. Questions relating to the liturgy, Church-administrative and financial matters shall be exercised together with the Diocesan Administrative Council and other bodies and agencies of the Diocese

...

Article 67

Each church community has a Church Community Elected Assembly which is comprised of all adult orthodox christian Macedonians who are of Macedonian descent and are under the jurisdiction of the parish church (the parish) who meet the spiritual, moral and material obligations of the church and its institutions.

Article 68

Members of the church communities, who have attained the age of maturity and have met the conditions of Article 107 of the Constitution of the Macedonian Orthodox Church and Articles 67, 69 and 75 of this Statute may elect and be elected to the church council, save for honorary members of the church community council (Article 29 of the Statute).

Article 69

Any orthodox faithful believer may be a congregant and a member of the Macedonian Orthodox Church Community. Those believers who are not Macedonian or of Macedonian descent may be honorary members.

...

Article 70

The Church Council of the Macedonian Orthodox Church Community of the Macedonian Orthodox Diocese of Australia and New Zealand is elected at the church council assembly. Every second year one half of the members of the Council whose term has expired are elected.

Article 72

The Administrative Council is the executive body of the Church Council. It is comprised of:

1. President - lay person;

2. Two (2) Deputy Presidents;

3. Secretary;

4. Assistant Secretary;

5. Treasurer; and

6. Assistant Treasurer.

The Parish priest is an ex officio member of the Administrative Council. He may participate in the work of the Church Council and is one the signatories for documents and matters of finance (Article 195 Rule 2 of the Constitution of the Macedonian Orthodox Church).

...

Article 74

Each Macedonian Orthodox Church is a constituent and indivisible part of the Macedonian Orthodox Church and through the competent Diocesan Bishop is within the canonic and spiritual jurisdiction of the mother Macedonian Orthodox Church...

The Church Council does not have the right to dismiss its priest and appoint another without the knowledge and authorisation of the competent Diocesan Bishop of the Holy Episcopal Synod of the Macedonian Orthodox Church.

Article 75

The Parish is an association of members of the orthodox faith which is under the spiritual leadership of the parish priest. One area may have more than one parish and several areas may constitute one parish.

...

Article 78

Every orthodox Macedonian who resides within the area of a parish may belong to that parish and has all the rights and obligations pursuant to this Statute and the Regulations of the Church Community.

...

Article 86

The parish Council is a body which assists the priest and the Bishop in christian education, christian charities and in presenting spiritual life, morals and spiritual development as well as the financial status of the parish. The Council works under the direction of the priest.

...

Article 88

Rights and Obligations of the Council:

(a) elects 5-7 members of the Church Committee;

(b) controls the activities of the Church Committee;

...

(g) is concerned for the livelihood of the parish priest and the clerical assistants of the Alter and maintaining the prosperity and upkeep of the church and parish buildings in accordance with the directions and decrees of superior church organs and bodies;

...

Article 90

The Church Committee is responsible for the carrying out of ordinary/regular aspects of the life of the parish church and the parish.

The Church Committee is comprised of the following members:

(a) parish priest - elder of the church, the Parish Council and the spiritual leader of the Church Community ie all parish priests of larger parishes and church communities;

(b) from 5-7 committee members, who are elected by the Parish Council from its number.

The members of the Church Committee have a term of four (4) years."

The disputes that arose

In April 1996 Bishop Petar, who had been appointed as Bishop of Australia in the previous November, appointed Father Mitrev as parish priest of St Petka.

At the annual assembly meeting of the incorporated Association on 7 October 1996, 18 persons were elected to membership of a Committee of the Association. The Committee Members (including three of the five Council Member defendants in the proceedings; Messrs Mitreski, Damcevski and Eftimov) took an oath as contemplated by the Association's by-laws (see Article 28 referred to in [31] above). The oaths were recorded in separate documents but appear to have been all in the same terms, all including a promise as follows:

"I will honor the Holy Canons of the Orthodox Church, The Constitution of The Macedonian Orthodox Church, The Statute of the Macedonian Orthodox Diocese of Australia and New Zealand, the by-law of the Macedonian Orthodox Church Community 'St Petka' Rockdale as well as all other Legal Policies and Regulations of the Church.

I will carry out my duties conscientiously, responsibly and honestly. I will keep the official secrets of the Church. I will represent and protect the interests of the Church".

On 14 April 1997 a "Special General Meeting" of the Association elected a new Executive Council comprising the five individuals, Messrs Mitreski, Damcevski, Minovski, Eftimov and Marcevski, who are the Council Member defendants in the proceedings and respondents in this Court. They continue to comprise the Council. In a letter to the parish priest and Association Committee of 17 April 1997, the Bishop described this meeting as irregular and asserted that "an illegal Church Committee" was elected.

The Bishop and the priest on the one hand and the Executive Council members on the other thereafter engaged in bitter disputes. These led to the exclusion by the Council of the Bishop and the priest from St Petka and the appointment by the Council, without the Bishop's consent, of Father Dzeparovski, and subsequently Father Despotski in his stead, as a replacement priest for Father Mitrev whose appointment it purported to terminate. In turn, the Diocesan Church Court defrocked Fathers Dzeparovski and Despotoski for accepting these appointments.

In an attempt to regain control of St Petka, the Bishop and Father Mitrev commenced the present proceedings by Summons filed on 28 July 1997, with a Statement of Claim of 189 pages being filed on 24 November 1997. Hamilton J heard a number of interlocutory applications and the Statement of Claim was amended on many occasions, the last iteration of it being the 10th version filed on 27 May 2009.

In the second half of 2002 a hearing for the determination of certain separate questions took place before Hamilton J. In essence, the questions asked whether 65 Railway Street Rockdale and other property held by the Association was vested in any, and if so what, trust and whether any such trust was a valid charitable trust.

By judgment of 4 April 2003 (Metropolitan Petar v Mitreski [2003] NSWSC 262), Hamilton J found that 65 Railway Street and certain other property was held on a valid charitable trust "to permit the trust property to be used by [t]he Macedonian Orthodox Church St Petka Rockdale as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion" (at [102]).

On 24 September 2007 this Court considered an application by the Bishop and Father Mitrev for leave to appeal against Hamilton J's decision ([2007] NSWCA 263). The Court took the view that no appeal should proceed until there had been a final judgment in the proceedings and it stood the application for leave to appeal over until that occurred.

On 16 April 2004 the Association filed a Summons seeking judicial advice under s 63(1) of the Trustee Act 1925 relating to the Association's defence of the proceedings and payment of its legal costs. Palmer J gave preliminary advice on 7 May 2004 ([2004] NSWSC 388) and an appeal against his decision was dismissed by this Court on 8 December 2004. He gave further advice on 10 June 2005 ([2005] NSWSC 558; 63 NSWLR 441) and on 23 November 2006 ([2006] NSWSC 1247). This Court allowed an appeal from these further orders of Palmer J ([2007] NSWCA 150) but that decision was reversed on appeal by the High Court ([2008] HCA 42; 237 CLR 66).

After a lengthy hearing at the end of 2008, on 4 March 2009, Young CJ in Eq answered a question posed for his consideration as to what were the terms of the charitable trust insofar as they were relevant to a variety of alleged breaches of trust by the Association, including exclusion of the Bishop and Father Mitrev from St Petka and the appointment of a priest not approved by the Bishop ([2009] NSWSC 106).

Following this judgment, a large number of applications by supporters of Father Mitrev for membership of the Association were lodged with it. They were rejected upon the ground that they did not meet the requirement stated on the printed membership application form that applicants be proposed and seconded by existing members. The form presumably reflected a requirement for membership prescribed by the Executive Council under clause 8 of the Association's Constitution (see [49] above).

On 10 September 2009, this Court dismissed an application by the present respondents for leave to appeal against the decision of Young CJ in Eq on the same basis as stated in its decision of 24 September 2007, that any appeal should await the final disposition of the proceedings at first instance.

After another lengthy hearing, Brereton J held, by judgment of 3 February 2012 ([2012] NSWSC 16), that the Bishop and Father Mitrev were entitled to declarations that additional property held by the Association was held on trust, and that the Association was in breach of trust in various respects, including by its exclusion from St Petka of the Bishop and Father Mitrev. His Honour also made orders concerning moneys paid to Fathers Dzeparovski and Despotoski from the Association's funds and in relation to the Association's application to be excused under s 85 of the Trustee Act for its breaches of trust. Brereton J dealt with the alleged accessorial liability of the Council Member defendants, and questions of costs, in a judgment of 21 December 2012 ([2012] NSWSC 1610).

HAMILTON J'S JUDGMENT OF 4 APRIL 2003

Hamilton J concluded that the trust of the property at 65 Railway Street declared by the Deed of 8 March 1977 (see [34] above) was not a gift to the then unincorporated Association. He did not consider that the use in the Deed of the words "Proposed beneficiary" in relation to the Association required the contrary conclusion. His Honour continued:

"87 ... In my view, the intention of the settlors to be derived from the use of the expression in the particular context of the deed of trust is that there was a gift to a trustee for a purpose. The purpose was to permit the use of the property for a church of the Macedonian Orthodox Religion by a specified entity, namely, the parish organisation denoted by the defined expression 'the proposed beneficiary'. It was not a gift for religious purposes of the Macedonian Orthodox Religion or the MOC in general terms, but a gift to a trustee to permit the use of the property by the specified entity for a specified purpose, ie, its use as a church for the worship of the Macedonian Orthodox Religion, and ancillary purposes. What the unincorporated association received under the terms of the gift was a nomination as the entity to use the land for the specified purpose. But in my view it was not the intention of the settlors by the deed of trust to confer any beneficial interest on that unincorporated association or its members.

...

91 The principle that the parish organisation should be governed on a democratic basis was embodied in the by-laws which were the only existing form of constitution at the time of the execution of the deed of trust. It took the form of provision for openness of membership to all relevant believers on a basis of equality and for election of the committee by democratic vote of the members. (Indeed, those provisions have continued to be embodied in all constitutional documents which have, or may have, applied since that time to the parish organisation.) I infer that the principle was in the forefront of the minds of the settlors at the time of the execution of the deed of trust. It is my view that, if it were necessary, it should be incorporated into the terms of the trust as declared by me in the manner laid down by Young CJ in Eq in the Serbian Church case [Radmanovich v Nedeljkovic (2001) 52 NSWLR 641] at [202]. However, that in my view is unnecessary. This is because that principle is in any event incorporated in the terms of the trust as they appear from the deed of trust itself. The incorporation is effected by the specification of the parish organisation as the body which under this trust is to be permitted to use the property for the purposes of a church of the Macedonian Orthodox Religion and ancillary purposes. Although it had perhaps not taken final form, that body was organised with rules which embodied the contemplated democratic principle by providing for openness of membership and democratic election of the governing body. It is therefore my view, whether one approaches the situation with or without the evidence of surrounding circumstances, the terms of the trust were simply as specified in the deed of trust ... ".

Hamilton J found that the trust was a valid charitable trust (Judgment [92]). This is not challenged on appeal.

His Honour expressed the following views concerning the other property held by the Association's trustees (listed, with 65 Railway Street in Schedule A to the judgment):

"93 So far as properties other than the first property are concerned, it is my view that, as they were acquired, they became subject to a trust on the same terms as the purpose stated above in respect of the first property. The only one of the properties in respect of which there is a separate declaration of trust is the Arncliffe property. There, in my view, the 'Church Trust' referred to in the Arncliffe declaration of trust upon which that property was to be held was the trust as declared in the deed of trust and set out above. In relation to the other properties, all parties have proceeded on the basis, in the absence of any separate declarations of trust, that they became subject to the same trust upon acquisition. The only ones in relation to which there can be any difficulty arising from this are the second unit and the third unit, where the legal title upon acquisition was vested, not in separate trustees, but in the Macedonian Orthodox Church St Petka, which must be taken to have been at the time the unincorporated association. However, in my view, despite some awkwardness arising from the trustee and the proposed beneficiary being identical in those cases, the second unit and the third unit became subject to the same trust as the other properties. The trust was to permit the use by itself (or itself to use) the properties for the purpose of the original trust. It could be argued that the result would be different if those units were the only properties held on the trust. However, where there is a body of property, of which they were only a small part, held upon the same trust, in my view the trust should be regarded as being identical in respect of each property. I do not see in the evidence any indication that the second unit and the third unit were to be held on different terms. Everything in the evidence points to the intention that the whole body of property should be held on the same trust".

Hamilton J held that the effect of the incorporation of the Association on its property was to be considered by reference to amendments made in 1992 to the Associations Incorporation Act 1984. These came into force after the Association's incorporation but, on his Honour's view, had a retrospective operation (Judgment [96]). His Honour continued:

"... What is vested under the 1992 clause 2 is 'the assets' of the unincorporated association. The operation of the provision in cases where the unincorporated association held, not the whole estate or title, but a limited interest only in property, is to vest only the limited interest in the incorporated association. Anything more than the limited interest could not fall within the denotation of "the assets" which were vested. I have already held that the unincorporated association had no equitable estate or interest as beneficiary in the trust property. It had only a right (which may or may not be a right of property, I do not need to analyse that at this stage) to be the entity to use the property for the charitable purpose which was the object of the trust. The legislative purpose of clause 2(2) is to confirm the preservation of trusts, not to destroy them or indicate their destruction. The charitable trust continues to subsist and to bind the property".

His Honour took the view that, if he were wrong about the retrospective operation of the 1992 amendments, the same result nevertheless followed from the application of the unamended Act, because even on that basis "all that was intended by the Parliament to be vested in the incorporated Association was the limited interest of the unincorporated Association" (Judgment [97] and [99]). His Honour did not find it necessary to resort to the presumption in favour of the preservation of vested legal and equitable interests in order to resolve the issue (Judgment [98]).

His Honour's conclusion in relation to the pre-incorporation trust was expressed as follows:

"102 ...The property referred to in Schedule A [that at 65 Railway Street] was prior to the transfer of the legal titles to the sixth defendant held upon trust to permit the trust property to be used by The Macedonian Orthodox Church St Petka Rockdale as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion. I am unable on the evidence to answer the question as to other property".

In referring to the further steps that would be necessary to be taken in the proceedings, his Honour observed:

"104 As [the] charitable trust is undoubtedly a charitable trust for conducting a church for the worship of the religion of the MOC, that church must be conducted in accordance with the tenets of the MOC. On the other hand, whether or not the incorporated association is to remain the legal owner, it remains under the terms of the trust the body which is to conduct the church and associated activities upon the relevant properties".

YOUNG CJ IN EQ'S JUDGMENT OF 4 MARCH 2009

Young CJ in Eq described the question for his determination as follows:

"3 The question is,

What are the terms of the Declared Trust or the Church Trust in so far as material for the following alleged breaches of trust:-

(a) preventing the Diocesan Bishop from conducting services in the Church Building;

(b) preventing a priest appointed by the Diocesan Bishop as parish priest of the St Petka Parish from conducting religious services in the Church Building;

(c) preventing a priest licensed by the Diocesan Bishop to conduct religious services in the Church Building from doing so;

(d) excluding the priest appointed by the Diocesan Bishop as parish priest of the St Petka Parish from the executive committee of the body responsible for the administration of the St Petka Parish;

(e) employing a priest not appointed by the Diocesan Bishop to act as the parish priest of the St Petka Parish;

(f) employing a priest under valid ecclesiastical discipline in accordance with Church Law to act as the parish priest of the St Petka Parish;

(g) requiring or permitting a priest to conduct religious services upon the Church Land when:

(i) that priest has not been authorised by the Diocesan Bishop to do so; or

(ii) that priest is under valid ecclesiastical discipline in accordance with Church Law.

(h) any or all of:

(i) closing the Church Building;

(ii) removing the Holy Objects from the Church Building;

(iii) installing Holy Objects;

(iv) reinstalling Holy Objects;

(v) carrying out of building works in and upon the Church Building without the authority and blessing of the Diocesan Bishop.

(i) refusing or failing to accept applications for membership from believers in the doctrines of the Macedonian Orthodox Church who have satisfied the criteria for eligibility specified in the Constitution, the Diocesan Statute and the By-Laws;

(j) failing to remit to the Diocesan Bishop the contribution from the income of the parish as specified in the Diocesan Statute.

(k) are any such terms fundamental terms?

4 The order noted that, 'The Church Trust for this purpose is the trust for using 65 Railway Street, Rockdale as a site of a church of the Macedonian Orthodox Religion and for other purposes concerned with or ancillary to the encouragement practice and promotion of that Religion.'

5 The term 'Declared Trust' refers to the terms of the Trust declared by Hamilton J in an earlier set of preliminary questions to which reference will be made hereafter.

6 The 'Diocesan Statute' means the constitution adopted at a meeting in Geelong in 1996 and thereafter purportedly ratified by the central church authority in Macedonia".

His Honour referred to expert evidence given by Father John Erickson of the American Orthodox Church concerning the law of the Orthodox Church generally and said:

"117 Unless I note otherwise, I have accepted what Professor Erickson has said. However, as noted below one must be careful to realize that what he says are "principles of ecclesiology" are, in reality, no more than how modern clergy are taught leads to best results [sic]. It does not form part of church law in any real sense".

His Honour then referred to a submission by the defendants (the appellants in this Court) that the MOC is a "Conciliar Church" meaning that whilst the MOC was governed by a constitutional hierarchy which made the ultimate decisions, the entities in the hierarchy were "limited by the constitutions of the various bodies of the church only to adopt what the various local bodies would accept" (Judgment [121]) and continued:

"130 The clue is that this conciliarity is a matter of ecclesiology, not of church law and order. That is, the Orthodox Church has a policy and expects bishops and other leaders to exploit the gifts of all members of the church to strengthen the church. However, there is no compulsion for any leader to put conciliarity in place.

...

139 Even if I accept that the church is 'conciliar', that does not justify the Parish Council of St Petka from assuming powers that are not granted to them by the constitutional documents and by laws of the church".

Next, his Honour noted that the parties accepted that the doctrine of economy applies to the Church, this being a doctrine that "if it is not possible to comply with the law of the church, then it is lawful to do the best one can in the circumstances" (Judgment [160] - [163]).

As to the role of the Bishop, his Honour said the following:

"182 The whole of the material before the Court goes in one direction and that is that possibly subject to some limited exceptions, in the Orthodox Church the bishop has the care of all things pertaining to the church in his diocese.

183 Those exceptions are all in the field where a constitutionally valid provision of the church recognises that the bishop shares his authority or permits a body of clerics or laypersons to perform certain functions.

184 Accordingly, generally speaking, unless I am satisfied that some valid 'law' of the church excludes the bishop from doing what he considers appropriate, his view should prevail".

His Honour's conclusions in respect of the breaches of continuing relevance were as follows.

Alleged breach (a) - exclusion of the Bishop from St Petka

His Honour's conclusions in relation to this breach were as follows:

"375 I must say that after considering the defendants' submissions, the position they seem to be taking in the ultimate is that they acknowledge that it is part of the law of the Macedonian Orthodox Church that, as a matter of general principle, one must not prevent the Diocesan Bishop from conducting services in the Church Building.

376 As noted above, the expert witness [Father Erickson] accepted the rule to be a fundamental one of ecclesiastical principle (Transcript: p 81). The defendants cavil that an ecclesiastical principle is not the same as a binding fundamental rule. This cavil is considered in sub-question (k).

377 Whilst the defendants accept the general rule, they say that the rule is not absolute and, in particular, there is an exception where a bishop breaches the law of the church he forfeits his rights.

378 There are some basal problems with this view.

379 The first is that the 1994 Constitution and other rules of the church provide procedures for considering charges against bishops who are in breach of the laws of the church. No charge has been made against the bishop.

380 The defendants focus on the abstraction of the surplice fees by the priest appointed by the bishop and the matter of the visa to which I have already referred. As is apparent from what I have already said, neither of these matters, even if it were appropriate for the defendants to be judges in their own cause has been made out".

Alleged breaches (b) and (c) - exclusion of the Bishop-appointed priest from St Petka

His Honour's conclusions in relation to the alleged breach (b) were as follows:

"382 There is little doubt that it is a basic law of the church that a diocesan bishop has the exclusive right to appoint and remove a parish priest of a parish within his diocese.

383 Professor Erickson (see para 14.1) acknowledges this general rule. However, he says that there are some exceptions to this general rule.

...

385 Whether or not there are exceptions to the bishop's powers, the vital question is whether any such exception is relevant in the instant case.

386 Again, the defendants seem to be saying that because of some fault of the bishop, he has forfeited his rights and that under the doctrine of economy, the defendants are forced to act to ensure that the church has a priest.

387 For the reasons set out earlier, I cannot find that this situation comes within the doctrine of economy. There is no other basis for the defendants to appoint a priest. If they have appointed a priest without the bishop's consent, then there would be a breach".

The reference to the inapplicability of the doctrine of economy by his Honour reflects his earlier conclusion (at [170]) that the doctrine is limited to circumstances where because of lack of time or resources, no alternative course is open. His Honour's conclusions in relation to alleged breach (c) were to the same effect (Judgment [388] - [395]). In addition, his Honour expressed the view that the concept of conciliarity is a principle of ecclesiology only and does not give rise to legally enforceable rights, "let alone make a bishop forfeit his rights" (Judgment [394]).

Alleged breaches (e), (f) and (g) - employing priests not appointed by the Bishop

As to alleged breach (e), his Honour concluded:

"422 Professor Erickson accepts the general rule is of the Bishop's full and exclusive authority. The defendants have not pointed to a convincing exception to this rule. The plaintiffs' case that the Bishop's authority must prevail must be upheld".

In relation to the alleged breach (f), his Honour noted the defendants' apparent agreement that knowing employment of a priest under valid ecclesiastical discipline would be a fundamental breach of the trust (Judgment [425]). The ecclesiastical discipline to which he referred was the defrocking of Father Despotoski by the Diocesan Church Court (see [64] above). The validity of any decision to discipline was not however before his Honour for determination.

His Honour found that alleged breach (g) would be a breach of trust, for the reasons given in relation to (b) and (f) (Judgment [432]).

Alleged breach (h) - taking steps in relation to the Church building and contents without the Bishop's approval

His Honour's conclusions in relation to these alleged breaches were as follows:

"433 These allegations are matters for the dispensation or faculty powers of the bishop.

434 The plaintiffs rely upon Articles 71 and 77 of the 1994 Constitution and Articles 13(3), (5), (6) and (19) of the Statute as authority for this rule.

435 The basal rule follows from the Bishop's authority over a church building that he controls what may be put inside the building...

436 Even though there may be some situations where the Bishop's authority may be shared with others, there is no evidence that those in charge of a parish can exercise the Bishop's authority even though they may consider the Bishop to be in bad standing."

Alleged breach (i) - Association membership

His Honour's conclusions in relation to this alleged breach were as follows:

"445 The plaintiffs say that all believers who live within the St Petka Parish and who satisfy the eligibility criteria specified by or under the Church Constitution are entitled to participate in the parish assembly of the St Petka Parish: statement of claim [22.11]. For this rule, the plaintiffs rely upon Articles 106 and 107 of the 1994 Constitution, and Articles 65, 66, 67, 68, 69 and 78 of the Statute.

...

452 Professor Erickson says that Articles 65-69 and 78 of the Diocesan Statute indicate who may be regarded as a member of the community and participate in the parish assembly. He identified as the most important Article 67 which says 'Each church community has a Church Community Elected Assembly which is comprised of all adult Orthodox Christian Macedonians who are of Macedonian descent and are under the jurisdiction of the parish church (the parish) who meet the spiritual, moral and material obligations of the church and its institutions'.

...

454 Professor Erickson agrees that this claimed breach is one of church law, but agrees with the defendants that it is not a 'fundamental provision of Church Law' (Affidavit, [20.4]). He posits that the criteria for participation in parish assemblies given in the documents 'are strictly a matter of positive ecclesiastical law' (Affidavit, [20.5])."

Which breaches are fundamental to the trust

His Honour's discussion of this question included the following:

"485 In Radmanovich, I noted that in a religious trust not every provision of the rules or every matter of doctrine will necessarily be a term of the trust, breach of which will give rise to an action: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 668.

486 A principle has developed in the case law that a church trust embodies only those parts of ecclesiastical doctrine which are 'fundamental' or 'essential'. It should be noted that a rule being a fundamental principle of church law will not automatically make it a term of the trust: for example, it must affect property.

...

493 My conclusion is that it is too difficult and of little use to find where the line is to be drawn in every case, however excluding the Bishop from the church is certainly a breach of a 'fundamental' rule of church law which goes to the heart of the trust.

494 This is because it goes to the heart of an hierarchial church, even one which has provided for involvement of the laity to a significant degree that the basis leadership of the bishop [sic] is excluded.

495 The doctrine of Apostolic Succession as accepted by the MOC heavily relies on the tradition from one set of bishops to the next of the faith of the Apostles. The direction of the church by a person whose orthodoxy is pure and accepted is vital to the framework of the whole church.

496 Thus I have no difficulty in finding that the alleged breaches (a), (b) and (h) and their associated breaches are fundamental.

497 There may be some doubt as to alleged breaches set out in (d)(i) and (j) are fundamental, but this is of little moment as these matters will be subsumed in the more serious matters."

Answer to the question

His Honour restated and answered the question for determination as follows:

"498 The question is:

What are the terms of the Declared Trust or the Church Trust in so far as material for the following alleged breaches of trust?

499 The question should be answered by saying that the terms of the relevant trust do not justify the exclusion of the bishop from the parish Church of St Petka nor the employment of any priest not authorised by the bishop nor the closing, alteration, addition to the Church building or its ornaments without the Bishop's approval."

BRERETON J'S DECISION OF 3 FEBRUARY 2012

In referring to Hamilton J's decision of 4 April 2003, his Honour made the following general observations concerning the issues in the proceedings before him:

"34 In this case, the Court is asked to enforce the terms of a charitable trust for religious purposes. This Court does not regulate the practice of religions, nor enforce church law. However, it enforces trusts, and in particular the application of trust property in accordance with the terms of the trust. Where property is given on trust for the purposes of a particular church, there may be a breach of trust if it is applied to a purpose inconsistent with the law of that church. Use of trust property for purposes other than worshipping in accordance with the doctrine for the maintenance and furtherance of which the trust was settled is a breach of trust [ Craigdallie v Aikman (1820) 2 Bligh 529, 545 [4 ER 435, 441]; General Assembly of Free Church of Scotland v Lord Overtoun [1904] AC 515, 613-7; Wylde v Attorney-General (NSW) ex rel Ashelford (1948) 78 CLR 224 , 271, "the Red Book Case "]. In the context of a charitable trust for the purposes of a religion, where it is alleged that trust property is being used in breach of trust in the sense of preaching doctrines inconsistent with those intended by the settlor, the court's role is simply to determine what was the original purpose of the trust and whether it is being observed [Free Church of Scotland, 613 (Lord Halsbury), 644-5 (Lord Davey); Wylde v Attorney-General, 263 (Latham CJ)]. According to Dixon J, albeit in dissent, before the Court finds that the manner of conduct of a religious service amounts to a breach of trust, it must be satisfied that the forms of worship depart so completely from those of the faith for which the property is held that the use of the building for the purpose is in truth the diversion of the property to another object [Wylde v Attorney-General, 295]. Similarly, in Attorney-General v Gould (1860) 28 Beav 485, Lord Romilly said (at 495) that the question was whether the use of the building for the purpose of open communication was 'such a perversion of the objects and trusts for which it was established, that is, whether it is a violation of those trusts which this Court will interfere to prevent.'"

His Honour then addressed the remaining issues in the proceedings as follows:

Whether the non-Schedule A property was held on trust

The first issue for his Honour's determination was whether the property his Honour described as the Holy Objects, Ancillary Property, Church Donations and Other Funds of the Association acquired prior to incorporation ("the Other Pre-incorporation Property") was held on the same trust as Hamilton J held applied to the Schedule A property (see [76] above). His Honour concluded as follows.

"48 It follows, in my view, from the purpose for which they were made, and their source in the use of trust property, that the Church Donations were trust income. It also follows that, insofar as the Other Pre-incorporation Property was acquired with or comprised of funds sourced in Church Donations, it too represented and constituted trust property. Insofar as such property was acquired with or comprised of funds derived from income generated by the Child Care Centre and the Investment Properties, it was acquired with income generated by trust property, and likewise upon acquisition became trust property. No other sources for the acquisition of the Other Pre-incorporation Property have been identified or are apparent. So far as the evidence reveals, the Other Pre-incorporation Property was acquired for the same purposes as, and as a result of ownership or use of, the Schedule A property; it was therefore held on the same trusts as the Schedule A property.

Article 104 of the 1994 MOC Constitution describes the parish as "a church community of clergymen and believers of the Orthodox Christian faith". Articles 121, 122 and 123 (see [56] above) make it clear that the local Church Community comprises, subject to limited exceptions, all persons of the Macedonian Orthodox faith living in the parish and that all these persons have a right to vote in the elections of their Community representatives. The 1974 MOC Constitution was to the same effect (see [17] above). These provisions are also reflected in Articles 67 to 70 of the Diocesan Statute (see [60] above) which is given authority in the Australian and New Zealand Diocese by Article 193 of the 1994 MOC Constitution. They can thus be regarded as principles of general application within the MOC.

The appellants submitted that there was no evidence to support Brereton J's finding that the trust contemplated that the membership of the user of the trust funds would be the equivalent of the parish assembly. However the finding was justified by the terms of the trust when considered against the background of the then current MOC Constitution (its 1994 successor being in relevantly similar terms) and of the Diocesan Statute. These documents contemplated that the day to day affairs of the parish church would be administered by the Church Community or, to use another expression for the same concept, the parish assembly. Thus the user of the church property was to be the Church Community. As the trust identified the user as the unincorporated Association, it can be inferred, in the absence of any indication to the contrary, that the latter was intended to constitute the Church Community (or parish assembly) for the St Petka Parish.

The effect of Article 8(1) of the Association's Constitution (see [49] above) is that the Executive Council of the Association may, as it has done, limit those who become members of the Association so as to exclude persons who would be entitled under the laws of the MOC to be members of the Church Community and to vote in elections of their representatives. As Brereton J held, this is a breach of trust (at [98]) because it is a departure from fundamental aspects of the Church's laws which entitle adherents to the faith to be involved in the conduct of MOC churches in their local communities.

The appellants further submit that a conflict with the Diocesan Statute could not constitute a fundamental departure from Church laws because the trust relates to the use of the St Petka site for the propagation of the Macedonian Orthodox Religion generally. The relevant provisions of Church law are thus said to be those that have universal force throughout the MOC and not merely those applicable to a single diocese (written submissions of 18 March 2013, [33]). I do not consider that any such sharp line can be drawn. The question remains in relation to any particular departure from Church law whether that Church law is fundamental in the relevant sense. Simply identifying it as one that is applicable to St Petka because it is the Diocesan Statute rather than the MOC Constitution does not in my view answer that question. For instance in relation to this alleged breach the relevant provisions of the Diocesan Statute conform to the corresponding provisions in the MOC Constitution applicable throughout Macedonia. Both may be considered in determining whether the relevant laws are fundamental.

Conclusion on breaches

For the reasons I have given, I do not consider that the appellants have established that either Young CJ in Eq or Brereton J erred in his findings concerning breach.

FOURTH ISSUE ON APPEAL: INJUNCTIVE RELIEF

The appellants' Further Amended Draft Notice of Appeal complains of the mandatory and prohibitory orders made by Brereton J in relation to membership of the Association ([25] and [26]). The complaints appear to be founded upon the appellants' contentions that the terms of the trust incorporate the Association's Constitution and that that Constitution has primacy over other Church laws or that only church laws with universal operation can form terms of the trust. As I have earlier rejected those contentions, the appellants' challenges to these orders must fail. So long as the Association asserts its right to use the trust property for the charitable purpose, it needs to conform to fundamental aspects of MOC law, including as to membership of organisations which conduct local MOC churches. Brereton J's orders were appropriate to ensure that this conformity was achieved.

The appellants' submission that the Executive Council's rejection of the subject membership applications was mandated by the 1984 Act which had the effect of requiring the Association to abide by its Constitution cannot be sustained as the requirement for membership that led to the rejection of the applications was of the Executive Council's own making. It is not imposed by the Constitution.

FIFTH ISSUE ON APPEAL: ACCESSORIAL LIABILITY FOR BREACHES OF TRUST

The plaintiffs claimed that the Council Member defendants had accessorial liability in respect of the Association's payment of emoluments to the two priests it appointed. They claimed this on the basis that the Council Members knowingly, in the sense of dishonestly, procured the Association, as trustee, to commit the breaches of trust constituted by the payment of the emoluments. They contended that this claim was maintainable even if the trustee did not act dishonestly and that the second limb of the principle stated by Lord Selborne LC in Barnes v Addy (1874) LR 9 Ch App 244 at 251 - 2 imposing liability where third parties "assist with knowledge in a dishonest and fraudulent design on the part of the trustees" was not exhaustive.

In Farah Constructions v Say-Dee [2007] HCA 22; 230 CLR 89, the High Court confirmed that in this context liability only arises where a third party acts dishonestly in relation to the breach of trust or fiduciary duty (at [179] and [186]).

In his judgment of 21 December 2012, Brereton J accepted as incorrect the reasoning that led him to find in his judgment of 3 February 2012 that the Council Member defendants acted dishonestly and were therefore accessorily liable in respect of the payments made by the Association to the two priests appointed by it. Although his Honour did not state that this revised view was applicable also to his finding in the earlier judgment that the Association was not entitled to be excused under s 85 of the Trustee Act because it acted dishonestly, it clearly was because the Association acted solely through the Council Members and it could not have been dishonest unless the Council Members were.

In the later judgment, Brereton J accepted, contrary to the basis upon which he had proceeded in the earlier judgment, that the Council Members did not take an oath in respect of their periods of office commencing on 14 April 1997 ([14]), these being the periods when the Association appointed Fathers Dzeparovski and Despotoski. However, he took the view that the fact that Council Members, other than Mr Minovski, had taken oaths in the past demonstrated that they "must have known" that the Association "would be governed by Church law as well as by its secular Constitution" (at [15]). In particular, he concluded that, "they understood that the Bishop's approval was essential for the effective appointment of a priest" ([20]). He then held that the Council Members who had previously sworn oaths knew that by appointing priests without the approval of the Bishop the Association was breaching Church law and thereby transgressing ordinary standards of honest behaviour (at [21] and [22]).

For the following reasons, I do not accept the soundness of this reasoning.

The primary judge accepted in his first judgment that the Council Members "believed that the Association was not a trustee ... and that the Association's Constitution, not any trust, was the paramount authority" ([141]). He did not depart from this in his later judgment. In my view, these conclusions negate the proposition that by knowingly breaching Church law the Council Members knowingly participated in dishonest breaches of trust by the Association.

In my view a finding of dishonesty against the Council Members could not be made without a finding that they knew, or reasonable persons in their position would have known, that the Association was not entitled to deal with the St Petka Church and property as it thought appropriate in accordance with its Constitution (see Farah v Say-Dee at [177]). As this Court in US Surgical Corporation v Hospital Products [1983] 2 NSWLR 157 at 253 - 4 (reversed on other grounds: (1984) 156 CLR 41) understood the judgment of Stephen J in Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; 132 CLR 373, there must be knowledge of the circumstances which imposed the fiduciary duty (or, in this case, trust) "and, in addition, the recognition that those facts did bear that character".

In fact, the primary judge made a contrary finding in concluding that the Council Members believed that the Association's Constitution was the "paramount authority" and that there was no relevant trust binding it. His Honour expressly stated that the latter belief was both honest and reasonable and it is implicit in his findings that he considered the former belief to be of the same character. Knowing participation in a breach of trust must at least involve some awareness that there is a restriction upon the trustees' liberty to deal with the trust property as if it were their own. On his Honour's findings there was no such awareness here.

The effect of his Honour's conclusions was that the Council Members honestly and reasonably believed, first, that the Association was entitled to deal with the property in any manner authorised by its Constitution and, secondly, that the property was dealt with in such a manner. The fact that they may also have believed that such dealings constituted breaches of Macedonian Orthodox Church law is of no present consequence when they honestly and reasonably believed (although erroneously) that the Association's Constitution prevailed over Church law and that Church law did not impose any binding restriction (for example, by way of trust) on use of the property. Whilst in some circumstances "a person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest by those standards" (Farah Constructions v Say-Dee at [173]), the finding that the Council Members' beliefs were reasonable negates a conclusion that they acted dishonestly even though they did not realise it.

Brereton J found that notwithstanding that the Association's Constitution authorised them to do as they did, the Committee Members, other than Mr Minovski, acted dishonestly for the purposes of accessorial liability because they knew that the Association was an integral part of the MOC and that the appointment of priests without the Bishop's approval contravened Church law (Judgment [22]).

I do not agree with this finding as this dishonesty (if it is assumed to be that) was not relevant dishonesty because it did not, according to the Committee Members' beliefs, impact on the trust property. According to their beliefs, the property was not subject to a trust and the Association was free to deal with it in accordance with its Constitution. Whether or not those Committee Members acted dishonestly in the discharge of their duties as such, they could not be said to have knowingly participated in a dishonest breach of trust.

For the same reason the dishonesty found by his Honour was not relevant dishonesty for the purpose of the Association's application for relief under s 85 of the Trustee Act (see s 85(2) quoted in [108] above). To preclude that relief, any dishonesty must have been in connection with the breaches of trust in relation to which relief is sought.

I do not consider the oaths taken by four of the five Council Members contradict my conclusions. By the oaths (see [62] above), the Council Members pledged allegiance not only to the Constitution of the MOC but also to the "Statute of the Macedonian Orthodox Church Community 'St Petka' Rockdale". The oaths did not themselves identify which had greater authority and were therefore not inconsistent with the Council Members' views that the local Constitution prevailed.

Nor were the terms of the local Constitution, at least to lay people, obviously inconsistent with a belief that the Association was entitled to appoint a parish priest who would be able to administer the sacraments in the local church as Article 29 stated that the Association was to appoint the parish priest who would be "absolutely and exclusively responsible for the administering of the religious rites of the Church" (see [38] and [48] above).

Knowledge of transgression of Church law

In light of these conclusions it is unnecessary to express a final conclusion on the appellants' challenge to the primary judge's finding that the Council Members, other than Mr Minovski, knew that Church law was transgressed by the Association appointing priests who were not approved by the Bishop to perform sacraments at the St Petka Church.

The respondents' written submissions of 16 April 2013 annexed a Schedule identifying the evidence that they said supported that finding. That Schedule referred to evidence that at least some of the Council Members were not interested in the contents of Church law and that seemingly all of them were aware that the Bishop asserted that the Association was not entitled to appoint priests without his approval. This did not prove that the Council Members knew of breaches of Church law when the consistent position of those of them who gave evidence was that in their mind the Association's actions were rendered proper by it acting in accordance with its Constitution, which they regarded as the source of relevant rules governing the St Petka Church.

The closest that this evidence came to supporting the finding was Mr Marcevski's acceptance in cross-examination of the following proposition:

"Your belief, as I understand your evidence, was that the law of the church was relevant and governing as to the administering of the sacraments and the practice of religion by a priest inside the walls of the church but beyond that the association's constitution was governing?"

However the impact of this acceptance was diminished by Mr Marcevski's apparent assertion in his next answer of a belief that the Association's Constitution prevailed in respect of the appointment of the priest.

Furthermore, there are difficulties in supporting the finding when it does not appear that it was put in cross-examination of the Council Members who gave evidence that they were aware, or at least believed or suspected, that sacraments administered by the priests appointed by the Association were not valid for religious purposes. The appellants asserted that if this issue had been raised, they would have tendered before Brereton J the evidence of Father Erickson, given before Young CJ in Eq, that sacraments so administered would be "valid but illicit".

In light of my conclusions on other issues on appeal and because this Court does not have before it the transcript of all of the oral evidence and his Honour's decision on this point would in any event seem to have been at least in part based upon demeanour, I do not express a final view as to the efficacy of the challenge to the finding.

Conclusion on accessorial liability

For these reasons, I consider that the appeal in relation to the finding of accessorial liability succeeds and that the judgment entered at first instance against the Council Members other than Mr Minovski must be set aside.

In these circumstances it is unnecessary to deal with the appellants' contention that the relevance of the oaths on the broader basis identified by his Honour in his later judgment was not part of the respondents' case before him.

In conclusion on this topic, I note that the parties made detailed submissions on appeal on the issue referred to above of whether the primary judge was correct in finding that a person could have accessorial liability even if the trustee did not act knowingly in committing the breaches of trust. The appellants submitted that the decision in Farah v Say-Dee denied the possibility of liability on this basis and confined the possible bases of liability in this area to those stated in the two limbs of Lord Selborne LC's statement of principle in Barnes v Addy. The respondents submitted that this was not the effect of Farah v Say-Dee and asserted that the broader basis of liability had been recognised in a number of decisions including those of the Victorian Court of Appeal in Marriner v Australian Super Developments Pty Ltd [2012] VSCA 171 and of the Full Court of the Federal Court in Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; 200 FCR 296.

It is unnecessary and inappropriate for the Court in this case to enter into this debate, as resolution of the issue would not affect the outcome of the present case, there no longer being a finding of dishonesty against the alleged accessories. In any event, it is difficult to see how the issue arises in the present case as the trustee here, the Association, acted solely through the Council Members. Accordingly, if they acted dishonestly, so it would seem, did the Association, with the result that the second limb of the principles in Barnes v Addy is relevant and it is unnecessary to consider whether the principles stated in the two limbs are exhaustive. I note that Brereton J in fact made a finding that the Association acted dishonestly when his Honour considered its application under s 85 of the Trustee Act.

SIXTH ISSUE ON APPEAL: WHETHER THE ASSOCIATION SHOULD HAVE BEEN EXCUSED FOR ANY BREACHES OF TRUST

The primary judge's finding of dishonesty was central to his finding in relation to s 85 of the Trustee Act. As, for the reasons given above, it cannot be sustained, his Honour's exercise of discretion under that section is vitiated and this Court must re-exercise the discretion, which I now proceed to do.

In my view, a number of unchallenged findings made by his Honour point strongly to the appropriateness of the Association being excused under s 85 for its breaches of trust in paying emoluments to the two priests it appointed, these being the only breaches that Brereton J considered in relation to s 85.

First are the findings, expressed or implied, that the Council Members honestly and reasonably believed that the Association was not a trustee, that its Constitution was the "paramount authority" in relation to the way in which the Association's property was able to be dealt with and that the Association's actions were effected in conformity with its Constitution. Second is the primary judge's finding that the Council Members were volunteers - "amateurs who were endeavouring to serve their community" (Judgment of 3 February 2012, [142]). Third is the fact that the employment of the priests, for what was no doubt modest remuneration "generated revenue for the trust, which swelled its coffers but rapidly dried up when Fr Despotoski ceased to minister at St Petka in mid-2003" (ibid at [142]. Fourth is the implicit finding that, whilst they occupied their positions, the priests fulfilled the religious needs of a large number of adherents to the Macedonian Orthodox faith.

These factors render an order under s 85 of the Trustee Act appropriate.

SEVENTH ISSUE ON APPEAL: COSTS

The appellants' challenged Brereton J's decision to order the Association (jointly and severally with the Council Member appellants other than Mr Minovski) to pay the other parties' costs of the proceedings before Hamilton J. They submitted that Brereton J failed to apply the principle that, absent special circumstances, costs follow the event and that, they were successful before Hamilton J because, although their primary case that the Schedule A property was not the subject of a trust was unsuccessful, their alternative submission that, under the trust, the property "belonged to the local church" was successful.

For the reasons given above ([133] - [136] and [140] - [141]), I do not agree that this alternative submission was successful or that, if it had been, the relevant finding would have been correct. As a result, I do not consider that the appellants should be regarded as the successful parties on the issues litigated before Hamilton J. The result is that their challenge to the costs order identified above must fail.

The appellants' second challenge to the costs orders made below is to the order that the Council Members other than Mr Minovski bear 25 per cent of the costs of the Bishop and Father Mitrev of the proceedings at first instance that were not the subject of any specific costs order. Brereton J made this order upon the basis that those Council Members were liable as accessories. As I have found that they were not so liable, the consequential costs order must be set aside.

ORDERS TO BE MADE ON APPEAL

As there were a variety of possible outcomes of the appeals and cross-appeal the parties did not make submissions at the appeal hearing concerning costs. They should be given the opportunity to do so now, taking into consideration the Court's conclusions stated in this judgment.

I propose the orders set out below. In so far as these orders include directions for the filing of Notices of Appeal and Cross-Appeal, they should not be taken as implicitly ruling, contrary to submissions that were made, that the filing party was entitled to advance all the grounds contained in those Notices.

(1) Grant leave to the appellants to appeal.

(2) Direct that within seven days of the date of this judgment, the appellants file and serve a Notice of Appeal in the form appearing under Tab 6 of the Appeal Papers.

(3) Grant leave to Metropolitan Petar (otherwise known as Bishop Petar) and to Father Mitrev to appeal and cross-appeal.

(4) Direct that within seven days of the date of this judgment, Bishop Petar and Father Mitrev file and serve Notices of Appeal and Cross-Appeal in the forms provided to the Court on 27 May 2013.

(5) Dismiss the Association's appeal except to the extent that it challenged Brereton J's refusal to grant relief under s 85 of the Trustee Act.

(6) Set aside Brereton J's order refusing relief to the Association under s 85 of the Trustee Act.

(7) Order under s 85 of the Trustee Act that the Association be relieved from personal liability for its breaches of trust constituted by its payment of emoluments to Fathers Dzeparovski and Despotoski.

(8) Allow the appeals of the Council Member appellants against order (1) made by Brereton J on 21 December 2012 in relation to the liability of the Council Members other than Mr Minovski as accessories to the Association's breaches of trust.

(9) Set aside order (1) made on 21 December 2012.

(10) Enter judgment for the Council Member defendants on Bishop Petar and Father Mitrev's claim that they are liable to account as accessories in relation to the Association's breaches of trust.

(11) Otherwise dismiss the Council Member appellants' appeal.

(12) Dismiss the Bishop and Father Mitrev's appeal and cross-appeal.

(13) Direct that the parties file, in accordance with the following timetable, submissions concerning the costs orders made at first instance that should be set aside, the orders that should be made in respect of costs incurred at first instance and the costs orders that should be made concerning the applications for leave to appeal and cross-appeal and the appeals and cross-appeal:

(a) The appellants to file and serve their submissions within seven days of the date of this judgment;

(b) The respondents (including the Attorney-General) to file and serve their submissions within a further seven days; and

(14) Direct that none of the submissions so ordered exceed 10 pages in length and that the issue of what further orders should be made be determined by the Court on the basis of the written submissions directed to be filed.

EMMETT JA: These proceedings are concerned with the affairs of the Macedonian Orthodox Church St Petka in Rockdale. With the benefit of hindsight, it is easy to be critical of the way in which the proceedings have been managed in the past. However, the proceedings constitute a further example of the difficulties that can be encountered when issues in a proceeding are dealt with at different times by different judges. The proceedings presently before the Court of Appeal arise out of a single proceeding in which three different judges have played a part.

The Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand and Father Mitrev, whom the Bishop appointed as priest of the St Petka parish, commenced a proceeding in the Equity Division of the Court against the Macedonian Orthodox Community Church St Petka Incorporated (the Association), five members of the Council of the Association (the Council Members) and Father Dzeparovski, whom the Association purported to appoint as priest of the St Petka parish. Five judgments of the three judges who dealt with the proceeding at first instance are subject to an appeal, cross-appeal and applications for leave to appeal. The primary issue is whether the Association, and the Council Members, are subject to the authority of the Bishop in relation to the governance of the Parish.

I have had the advantage of reading in draft form the proposed reasons of Macfarlan JA outlining in appropriate depth and detail the factual background to the disputes that are the subject of the proceedings. His Honour adumbrates seven issues that have been the subject of argument before the Court of Appeal. I respectfully agree with each of his Honour's conclusions in relation to each of the issues and the reasons for those conclusions. I also agree with the orders proposed by Macfarlan JA.

**********

Decision last updated: 18 July 2013

Medium Neutral Citation:	Macedonian Orthodox Community Church St Petka Incorporated v Metropolitan Petar [2013] NSWCA 223
Hearing dates:	20, 21, 22, 23 and 27 May 2013
Decision date:	18 July 2013
Before:	Beazley P at [1] Macfarlan JA at [2] Emmett JA at [235]
Decision:	(1) Grant leave to the appellants to appeal. (2) Direct that within seven days of the date of this judgment, the appellants file and serve a Notice of Appeal in the form appearing under Tab 6 of the Appeal Papers. (3) Grant leave to Metropolitan Petar (otherwise known as Bishop Petar) and to Father Mitrev to appeal and cross-appeal. (4) Direct that within seven days of the date of this judgment, Bishop Petar and Father Mitrev file and serve Notices of Appeal and Cross-Appeal in the forms provided to the Court on 27 May 2013. (5) Dismiss the Association's appeal except to the extent that it challenged Brereton J's refusal to grant relief under s 85 of the Trustee Act. (6) Set aside Brereton J's order refusing relief to the Association under s 85 of the Trustee Act. (7) Order under s 85 of the Trustee Act that the Association be relieved from personal liability for its breaches of trust constituted by its payment of emoluments to Fathers Dzeparovski and Despotoski. (8) Allow the appeals of the Council Member appellants against order (1) made by Brereton J on 21 December 2012 in relation to the liability of the Council Members other than Mr Minovski as accessories to the Association's breaches of trust. (9) Set aside order (1) made on 21 December 2012. (10) Enter judgment for the Council Member defendants on Bishop Petar and Father Mitrev's claim that they are liable to account as accessories in relation to the Association's breaches of trust. (11) Otherwise dismiss the Council Member appellants' appeal. (12) Dismiss the Bishop and Father Mitrev's appeal and cross-appeal. (13) Direct that the parties file, in accordance with the following timetable, submissions concerning the costs orders made at first instance that should be set aside, the orders that should be made in respect of costs incurred at first instance and the costs orders that should be made concerning the applications for leave to appeal and cross-appeal and the appeals and cross-appeal: (a) The appellants to file and serve their submissions within seven days of the date of this judgment; (b) The respondents (including the Attorney-General) to file and serve their submissions within a further seven days; and (c) The appellants to file any submissions in reply within a further seven days. (14) Direct that none of the submissions so ordered exceed 10 pages in length and that the issue of what further orders should be made be determined by the Court on the basis of the written submissions directed to be filed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	EQUITY - trusts and trustees - unincorporated association formed to purchase a site for a Macedonian Orthodox Church - association later incorporated under the Associations Incorporation Act 1984 - further property acquired by the association both before and after incorporation - whether the trust applicable to the church site and other property was one to permit it to be used by the association for a church and the promotion of the Macedonian Orthodox Religion - whether trust varied after its creation - whether trust extinguished on incorporation of the association - whether association breached trust by excluding bishop and his appointed priest, by itself appointing priests, by limiting membership of association and by other conduct - whether members of the association's council accessorially liable for the association's breaches of trust in paying emoluments to priests it appointed - whether association should be excused from breaches of trust under s 85 Trustee Act 1925 ASSOCIATIONS AND CLUBS - Associations Incorporation Act 1984 - unincorporated association trustee of property - whether trust extinguished on incorporation of the association
Legislation Cited:	Associations Incorporation Act 1984 Interpretation Act 1987 Supreme Court Act 1970 Trustee Act 1925
Cases Cited:	Attorney General v Clapham [1855] 43 ER 638 Attorney General v Mathieson [1907] 2 Ch 383 Attorney General for NSW v The Perpetual Trustee Company Limited [1940] HCA 12; 63 CLR 209 Bacon v Pianta [1966] HCA 44; 114 CLR 634 Barnes v Addy (1874) LR 9 Ch App 244 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; 132 CLR 373 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 Grimaldi v Chameleon Mining NL (No 2) [2012] 200 FCR 296 Kytherian Association of Queensland v Sklavos [1958] HCA 47; 101 CLR 56 Marriner v Australian Super Developments Pty Ltd [2012] VSCA 171 Radmanovich v Nedeljkovic [2001] NSWSC 492; 52 NSWLR 641 US Surgical Corporation v Hospital Products [1983] 2 NSWLR 157
Category:	Principal judgment
Parties:	Macedonian Orthodox Community Church St Petka Incorporated (First Appellant) Lambe Mitreski (Second Appellant) Pero Damcevski (Third Appellant) Boris Minovski (Fourth Appellant) Eftim Eftimov (Fifth Appellant) Mile Marcevski (Sixth Appellant) Naum Despotoski (Seventh Appellant) His Eminence, Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand (First Respondent) Very Reverend Father Mitko Mitrev (Second Respondent) Attorney-General for the State of NSW (Third Respondent)
Representation:	Counsel: B W Walker SC/G E S Ng (Appellants) T G Parker SC/L Livingston (First and Second Respondents) M Izzo/T Prince (Third Respondent) Solicitors: McConnell Jaffray Lawyers (Appellants) Sachs Gerace Lawyers (First and Second Respondents) Crown Solicitor's Office (Third Respondent)
File Number(s):	CA 2007/265573; 2012/101767
Decision under appeal	Jurisdiction: 9111 Citation: Metropolitan Petar v Mitreski [2003] NSWSC 262 - 4 April 2003 Metropolitan Petar v Mitreski [2005] NSWSC 330 - 31 March 2005 Metropolitan Petar v Mitreski [2009] NSWSC 106 - 4 March 2009 Metropolitan Petar v Mitreski [2012] NSWSC 16 - 3 February 2012 Metropolitan Petar v Mitreski [2012] NSWSC 167 -5 March 2012 Metropolitan Petar v Mitreski [2012] NSWSC 1610 - 21 December 2012 Before: Hamilton J - 4 April 2003 and 31 March 2005 Young CJ in Eq - 4 March 2009 Brereton J - 3 February 2012; 5 March and 21 December 2012 File Number(s): SC 1997/3369; 1997/25609

TABLE OF CONTENTS
Summary of case and conclusions	[3]
The issues on appeal	[6]
Conclusions	[14]
Factual circumstances	[15]
The Macedonian Orthodox Church	[15]
The 1974 MOC Constitution	[16]
The steps to establish a parish church at Rockdale	[19]
The St Petka by-laws	[25]
Deed of Trust of 8 March 1977	[34]
The St Petka Constitution	[37]
Other events prior to incorporation	[39]
Incorporation of the Association	[47]
1994 MOC Constitution	[50]
The 1996 Diocesan statute	[58]
The disputes that arose	[61]
Hamilton J's judgment of 4 April 2003	[74]
Young CJ in Eq's judgment of 4 March 2009	[81]
Brereton J's decision of 3 February 2012	[97]
Brereton J's judgment of 5 March 2012	[113]
Brereton J's judgment of 21 December 2012	[115]
The first issue on appeal: the trust or trusts applicable prior to the Association's incorporation	[119]
Whether the trust conferred a right on the Association to use the trust property for the stated purpose	[123]
The Peetz declaration registered in August 1978	[132]
The balance of the Schedule A property	[137]
The Non-schedule A property	[142]
Property acquired after incorporation	[144]
Second issue on appeal: whether the trust was extinguished on incorporation	[147]
The Associations Incorporation Act 1984	[149]
The transitional provision	[153]
The form of Schedule 2 at the time of incorporation	[155]
The 1992 form of Schedule 2	[171]
Third issue on appeal: whether the trust was breached	[174]
Alleged breach (a): exclusion of the Bishop from St Petka	[183]
Alleged breaches (b) and (c): exclusion of the bishop appointed priest	[185]
Alleged breach (e): employing priests not appointed by the bishop	[191]
Alleged breach (h): taking steps in relation to the church building and contents without the bishop's approval	[192]
Alleged breach (i): membership of the Association	[194]
Conclusion on breaches	[199]
Fourth issue on appeal: injunctive relief	[200]
Fifth issue on appeal: accessorial liability for breaches of trust	[202]
Knowledge of transgression of Church law	[216]
Conclusion on accessorial liability	[222]
Sixth issue on appeal: whether the association should have been excused for any breaches of trust	[226]
Seventh issue on appeal: costs	[230]
Orders to be made on appeal	[233]