Macedonian Orthodox Community Church v His Eminence Petar The Diocesan Bishop & Anor

[2008] HCATrans 136

[2008] HCATrans 136

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S362 of 2007

B e t w e e n -

MACEDONIAN ORTHODOX COMMUNITY CHURCH ST. PETKA INCORPORATED

Applicant

and

HIS EMINENCE PETAR THE DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOX DIOCESE OF AUSTRALIA AND NEW ZEALAND

First Respondent

THE VERY REVEREND FATHER MITKO MITREV

Second Respondent

Application for special leave to appeal

HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 MARCH 2008, AT 2.58 PM

Copyright in the High Court of Australia

MR G.C. LINDSAY, SC:   May it please the Court, I appear with MR G.O. BLAKE, SC for the applicant.  (instructed by McConnell Jaffray)

MR T.G.R. PARKER, SC:   May it please the Court, I appear with my learned friend, MR R.E. STEELE, for the respondent.  (instructed by Sachs Gerace Lawyers)

HEYDON J:   Yes, Mr Parker, I believe this is the first time that section 63 of the Trustee Act has been considered in this Court or any equivalent provision.  Whether or not ultimately the Court of Appeal was correct, it is a case of some considerable interest and some importance to determine what the scope of section 63 is, particularly in an area where charitable trusts are concerned.  Why should not special leave be granted for that reason?

MR PARKER:   Well, we would say that, first of all, it is important to identify the particular question because the Court of Appeal decided this case by identifying three appealable errors on Justice Palmer’s part, and we had argued a fourth.  Might I hand up to the Court a diagram which illustrates that point?  Your Honours will see at the top that, of course, what happened was the Court of Appeal having identified error have re-exercised the discretion.  It is not suggested, as we understand it, that there is any attack on the Court of Appeal’s re-exercise of the discretion.  What is sought is just to restore Justice Palmer’s order.  It is not suggested that the matter would need to go back to Justice Palmer or back to the Court of Appeal.

That means that the applicant has to show that all of the attacks or possible attacks on Justice Palmer’s judgment should have been repelled, and we have identified in pink three of the four main arguments, and then below that your Honours will see that in the case of some of the arguments there were sub-arguments, only part of which the Court of Appeal relied upon.  So that if this matter were to come up then it would be necessary to look at all of those arguments, including the ones that were not dealt with by the Court of Appeal.

HEYDON J:   Let me just get this structure.  Re-exercise of discretion by Court of Appeal leads down to appealable error by Justice Palmer?

MR PARKER:   Yes.

HEYDON J:   Then we have four boxes for Justice Palmer, of which three are pink?

MR PARKER:   Yes.

HEYDON J:   Are you saying that the first box summarises an error by Justice Palmer as seen by the Court of Appeal?

MR PARKER:   Yes.

HEYDON J:   And similarly the others?

MR PARKER:   Yes.  So if I can just outline it briefly?  First of all, the Court of Appeal said that his Honour had failed to take into account the contested and adversarial nature of this particular application.  That was itself an error which justified looking at his decision again.  Second, the Court of Appeal found that his Honour should have engaged in a proper balancing exercise for the purpose of determining on the facts of this particular case whether it was appropriate that an order be made.

Now, just pausing there, we had argued three matters going to that.  The Court of Appeal simply found that there were matters which should have been taken into account that should not have been.  But we would also argue that in the way that he conducted the application Justice Palmer denied us natural justice.  The Court of Appeal did not need to deal with that, but if we came up to deal with it in this case the Court would need to address that argument.

HEYDON J:   Well, that would be a notice of contention point.

MR PARKER:   It would be, yes.  Similarly, we also argued that the majority decision at an earlier stage of the proceedings that we should not have been given the opinion was wrong, and again it was not necessary to deal with that because of the way the Court of Appeal addressed this particular issue.

Moving to the third pink box, what Justice Palmer did was that he comforted himself with making this order by making an order that it should be subject to revocation by the trial judge in the main proceedings.  Now, the Court of Appeal found that that was an error and it had infected his Honour’s approach to the matter.

The Court of Appeal found that on the basis that section 63 simply did not permit for such irrevocable order to be made.  We had also argued that the decision which had been relied upon by Justice Palmer, an English decision called Re Dallaway, was wrong in any event.  The Court of Appeal did not need to deal with that.

We had further argued that it was quite inappropriate to make such an order in the present case because in effect there would not be anything other than an illusory opportunity to obtain revocation, and the reason for that is twofold.  First, we would never be in a position to find out the information on which they had moved to get the orders in the first place so as to provide a ground for saying that the orders ought to be set aside.  Second, even if we did, the money would all be gone and we would never get it back anyway, so that revoking the order would be worthless.

HEYDON J:   Just going back one stage though.  Normally to say that a decision of Vice-Chancellor Megarry is wrong is something that interests appellate courts.  It is not a common thing to say.

MR PARKER:   It was a decision on a concession by counsel.

HEYDON J:   But a statement of the law by Vice‑Chancellor Megarry on a concession or not is not usually described blithely or briskly as wrong.

MR PARKER:   Well, I am not being flippant in saying that.  There was an issue there, which is an interesting question about whether Justice Megarry was wrong in what he did in that particular case, and as I have indicated what he did was not, as we would read the report, the subject of full argument or contested argument, and we would say when looked at in a full and contested way, what his Lordship did in that case was not justified, and the result may be justified because no party complained about it.

Then can I just move to the fourth box?  It was said that this was in some way unfair to the applicant that it should be put in the position of having to defend the proceedings without reference to these moneys.  Now, that involved a number of errors.  One was that it involved bringing into the proceedings a contested issue of fact, namely, what their financial resources actually were, which was completely ill-suited to the section 63 procedure because as your Honours know the section 63 procedure involves just putting a statement of facts before the Court and the other party does not get a chance to look into that.

The other reason was irrelevant.  It is because the Privy Council had said quite clearly in Marley’s Case that the only issue that one looks to in an application of this sort is whether it is in the interests of the trust to defend the proceedings.  If it is, if the court orders the money, or grants the leave; if it is not, the Court does not, and it is a distraction, an irrelevant distraction, to ask whether it is fair or not fair to a particular litigant in the case.

Now, we simply say that when one sees the architecture of the case in that way and the way the arguments were dealt with, one needs to be precise about exactly what points are presented as being the special leave points.  One of the special leave points which is presented is said to be on the revocability of orders point.  It is said that the Court of Appeal was wrong in saying that section 63 did not permit revocation.

Now, we have set out in our argument why we say that does not have sufficient prospects of success to justify the grant of special leave.  Section 63, to allow revocation would, in effect, allow one to make an order under section 63 which had the seeds of its own destruction.  Section 63 has an immediate effect when an order is made under it; that is, it entitles the person who has the benefit of that order to go out and do the act which is in question knowing that subject to questions of fraudulent or misleading the court that person cannot be held accountable even if it turns out that that is later a breach of trust.

Now, to allow that order to be made revocable so that an order can be made at a later stage revoking the order and depriving the applicant of that protection ‑ ‑ ‑

HEYDON J:   Well, that is making retrospective revocation.

MR PARKER:   Yes.

HEYDON J:   You can have revocation for the future but security for the past.

MR PARKER:   Well, it was put that the revocation was retrospective, and rather surprisingly it was the applicant’s side of the record that was contending for this.  They were saying to Justice Palmer, please make it revocable, please make it revocable, obviously to try to encourage his Honour towards the thought that perhaps making this order which was such a bizarre order – and I will come back to that in a moment – but to make this order was okay because if there was something wrong that it could be undone later.

Now, the Court of Appeal squashed that and said, section 63 just does not leave any place for that, and whatever the position may be in England as far as Re Dallaway is concerned it is not the position here.  Now, we simply submit that there is just nothing put in the argument against us which would persuade the Court that there is any real prospect of that being overturned.  If that is not overturned, then that is going to stand as an appealable error by Justice Palmer, which will mean that the result will remain the same.

Now, your Honour put to me that this is the first time an application of this sort has come up here, and it is, but this is the first occasion that we can say, bar one – well, we can see, bar one – in the reports where a trustee has ever said to a court, “Please let me defend an allegation of breach of trust out of the trust assets”.

HEYDON J:   Just correct me on one thing.  It would also be very rare, would it not, certainly very rare for trustees to appeal, perhaps it is not so rare for people who are not the trustee to appeal as you do, to the Court of Appeal?

MR PARKER:   Yes.  Well, it is rare, I suppose, there have been a few appellate matters in England where these matters have gone up one level.  There has been some consideration at Court of Appeal level of this matter.  As your Honours have seen, there has been consideration of it at Privy Council level in Marley.  But, your Honours, it has not been proposed in this case that Marley says anything that is wrong.  Marley does lay down some very important principles in this area, one of which I have already mentioned, namely, the only thing that one looks to is the interests of the trust.

So we simply ask, putting the section 63 argument to one side, what exactly is the issue which would justify the grant of special leave, bring this matter up to the Court - and I must mention this, that the main proceedings have now been fixed for hearing tentatively in June.  Now, if the Court grants special leave we will no doubt face an application that that hearing be vacated, and so we face the problem – can I go back a step?

These proceedings were commenced in 2004.  It has taken a very long time to get to this point, and part of getting to this point has involved pushing this application back and back and back.  The application as now presented is confined to the schedule A property.  It took over two years to get to that point and it was contested at all stages by the applicant.

This matter could be brought up so that the Court could look generally at section 63 even if in the end it is not likely to affect the result.  It presents a problem if it is going to be suggested, as I apprehend it will, if special leave is granted, that the hearing should not take place this year, and so that is a consideration that we will put forward.

We cannot deny that section 63 raises some significant issues.  We do not accept that anything that has been said in the Court of Appeal is really subject to criticism, and we submit that having regard to the other factors in this case, namely, the very small likelihood of the result being changed and the fact that we have a trial which hopefully will take place this year, if not in June then in September, that the Court should not grant special leave in this particular case.

HEYDON J:   Why do you say “or September”?

MR PARKER:   I say that because when we were recently before Justice Young he raised the question as to whether the two weeks which had been fixed in June would be enough, and we can see that there is a real possibility that it will prove not to be enough and we will have to take three weeks, in which case as I apprehend it would be in September.  Justice Young has been told to hear this matter by the Court of Appeal because there is another appeal in the main proceedings which came to a halt when the Court of Appeal decided that it was not going to entertain any more interlocutory appeals and that the matter was just going to be fixed and dealt with finally.

Now, I have to say, we have said from the outset that the pendency of this application should not be a reason why the main proceedings should not go on, but up until this point we have not been successful in that argument and we are concerned that if special leave is granted that that will involve a further delay to the main proceedings, which if we are right ‑ ‑ ‑

HEYDON J:   I cannot see how a September date would be affected.  The appeal would be heard before September, and it might be possible to make orders, of course ‑ ‑ ‑

MR PARKER:   The matter has to be got ready before September.  Now, what has happened is that once this application ‑ ‑ ‑

HEYDON J:   The trial has to be ‑ ‑ ‑

MR PARKER:   Yes.  Once this application came on in 2004 an application was made to the then trial judge, Justice Hamilton, for him in effect not to do anything, not to order them to do anything to prepare the case, discovery, affidavits, all of these things, until this application had been dealt with.  As I have mentioned, that was opposed by us but unsuccessfully.

Now, the practical reality is that although this case has been going for 10 years, really the main hearing requires an enormous amount of preparation.  We still have not got their discovery and there is all the party’s evidence to deal with.  The pleadings are not even closed.  Obviously, in that situation even if the Court were able to deal with this matter as a matter of urgency and deal with it before September, we would probably lose any possibility of a September date.  I simply do not know what the position is as far as other dates would be concerned this year.

Now, for those reasons, despite the apparently novel aspect to this application and the opportunity for this Court to pronounce on section 63

for the first time, we submit that the Court should pass up the opportunity having regard to the special facts of this particular case.

HEYDON J:   Thank you, Mr Parker.  We need not call on you, Mr Lindsay.  There will be a grant of special leave in this matter.  Mr Lindsay, I take it you want this heard sooner rather than later?

MR LINDSAY:   We do.

HEYDON J:   I do not think it is necessary to make a formal order as to expedition.  If the date which is notified to you is unsatisfactory it might be possible to arrange an earlier date, but it could well be heard before the end of June.

MR LINDSAY:   Thank you, your Honour.

AT 3.14 PM THE MATTER WAS CONCLUDED