Sheppard v The Uniting Church in Australia Property Trust (Victoria)
[2020] VSC 12
•30 January 2020 (Reasons: 4 February 2020)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2019 04946
| JENNIFER SHEPPARD | Plaintiff |
| v | |
| THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (VICTORIA) | Defendant |
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JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 January 2020 |
DATE OF JUDGMENT: | 30 January 2020 (Reasons: 4 February 2020) |
CASE MAY BE CITED AS: | Sheppard v The Uniting Church in Australia Property Trust (Victoria) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 12 |
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PRACTICE AND PROCEDURE – Application for summary judgment – Claim to enforce a charitable trust brought by an individual in her own name without the fiat of the Attorney‑General – Purported group proceeding – Proceeding summarily dismissed – Supreme Court Act1986 (Vic), Part 4A, ss 33B, 33C; Civil Procedure Act2010 (Vic), s 62.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr I W Upjohn CSC QC with Mr R Young | Waters Lawyers |
| For the Defendant | Mr J McComish | Mr Stewart Peters |
HIS HONOUR:
On the application of the defendant, I ordered that this proceeding be summarily dismissed, for reasons to be later published. These are those reasons.
By writ filed 30 October 2019, the plaintiff sued the defendant as trustee of the Gore Charitable Trust (Trust). The plaintiff alleged that she sued in a representative capacity pursuant to Part 4A of the Supreme Court Act 1986 (Vic) for the beneficiaries of the Trust, whose number, she alleged, was greater than seven.
Two observations may immediately be made.
First, a charitable trust is a trust for a purpose regarded by the law as charitable and is not a trust for the private benefit of persons. By definition, a charitable trust lacks individual beneficiaries.[1]
[1]Attorney-General (NSW) v Perpetual Trustee Co (Ltd) (1940) 63 CLR 209, 222–223; FederalCommissioner of Taxation v Bargwanna (2012) 244 CLR 655, 661 [8].
It must follow that the plaintiff is not and cannot be a beneficiary of the Trust and accordingly does not have standing to enforce the Trust. It is well established that the proper and only competent party to protect a charitable trust, to seek to enforce the charitable purpose and to look after the interests of the public in such a trust is the Attorney‑General for the State of Victoria.[2]
[2]Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566, 583 [39].
On the return of the defendant’s application for summary dismissal, the plaintiff accepted that the object of the Trust is a charitable purpose. The plaintiff further conceded that she was not the correct party to advance the claim being made and that it was necessary to substitute the Attorney‑General as the Protector of Charities in Victoria as plaintiff. The concession was made because the proceeding involved the administration of a charitable trust and sought the removal of the trustee.[3]
[3]Num-Hoi, Pon-Yu, Soon-Duc Society Inc v Num Pon Soon Inc & Ors (2001) 4 VR 527 (Num Pon Soon case).
Secondly, the Trust was established in February 2000 by the Will of the late Edward Kent Gore dated 21 October 1997. By that will, the defendant was appointed as trustee of the Trust, the object of which was the advancement of religion for the purpose of the Wesley Uniting Church Box Hill Parish. The sum of approximately $1.47 million, representing the capital and/or income of the Trust, was paid to the defendant. The plaintiff alleged there was use of those funds in a manner inconsistent with the charitable purpose, resulting in withdrawals of capital from the Trust that were not permitted by its terms. The plaintiff claimed damages, indemnity costs, an order for the replacement of the trustee and for such other orders as were just and equitable in the circumstances.
The claim concerning the Trust is, by definition, a claim concerning property subject to a trust. Section 33B(2) of the Supreme Court Act provides that Part 4A of the Act does not apply to a proceeding concerning property subject to a trust. It must follow that Part 4A of the Act has no application to the claim advanced by the plaintiff or indeed to that same claim if advanced by the party in whom it is properly invested, namely the Attorney‑General.
Further, because the Trust is a trust for a charitable purpose and not a trust for the private benefit of persons, there cannot be seven or more persons whose claims against the defendant are in respect of or arise out of the same or similar or related circumstances, giving rise to substantial common questions of law or fact.[4]
[4]As required by s 33C(1) of the Supreme Court Act 1986 (Vic).
It follows that the claim’s formulation as a group proceeding is misconceived. Part 4A cannot have any application to the proceeding.
The plaintiff conceded that the proceeding could not continue as a group proceeding with the group compromising the members of the Parish as originally alleged. However, this concession does not go far enough. The plaintiff could not commence this proceeding as a group proceeding because of the limitations on such proceedings imposed by s 33B and s 33C of the Supreme Court Act.
For these reasons, the statement of claim indorsed on the writ cannot disclose a cause of action for the benefit of either the plaintiff or those persons alleged to be group members.
The defendant contended that the plaintiff had no real chance of success in the proceeding and it was clear that there could not be a question to be tried between the parties to the proceeding. It asserted that the statement of claim failed to disclose a reasonable cause of action and that failure could not be rectified by the plaintiff.
Although the plaintiff submitted a proposed amended pleading on the hearing of the defendant’s application, that document and the plaintiff’s contentions in support of it, confirm the incurable nature of the defect. The plaintiff accepted that she could not be the plaintiff and that it was necessary for the Attorney‑General to be substituted as plaintiff and to advance against the defendant the claims of breach of trust.
I was informed that the plaintiff has applied to the Attorney‑General for a fiat, anticipating that a decision will be made by early March 2020. I was invited to accept the assurance of counsel that this was so, notwithstanding that I can see no difficulty in the way of the plaintiff’s solicitor filing an affidavit exhibiting the correspondence with the Attorney‑General in relation to this application. Notwithstanding this unsatisfactory state of the evidence, I proceed by accepting counsel’s assurance.
On this basis, the plaintiff invited me to adjourn the defendant’s application for summary dismissal and adjourn, or alternatively stay, the whole proceeding until the Attorney‑General has determined whether to grant a fiat for a relator action. In support of this application, the plaintiff submitted a form of proposed amended writ. It is proposed that the proceeding would be no longer be constituted as a group proceeding pursuant to Part 4A of the Supreme Court Act and that the Attorney‑General would be substituted for the present plaintiff.
However, unless and until the Attorney‑General grants her fiat, the plaintiff has no standing to commence this proceeding and has no standing to continue or maintain the proceeding against the defendant. The defective nature of the pleading is not to be remedied by a process of piecemeal amendment for the claim to progress. There must first be a substitution of plaintiff and a pleading by the substituted plaintiff of the claim that one is entitled to bring in relation to the Trust.
In support of her application for an adjournment, the plaintiff drew my attention to the way in which Harper J granted relief in the Num Pon Soon case. However, from a procedural perspective, that case concerned a dispute between rival trustees of a charitable trust. The principal issue before the court was the identity of the trustee or whether the supposed trustee should be removed. Such an issue could properly be regarded as one against the trustee for the administration of a charitable trust and as a proceeding that concerned the conduct and management of a charity. Only the Attorney‑General had power to institute such a proceeding.
Harper J, finding that the claim was not ‘so manifestly hopeless that a trial would be a futility’,[5] concluded that the dispute was one in which the Attorney‑General was the only person who could really represent the charity and sue on its behalf representing the objects of the charity. Harper J held that where the objects of the charity were in dispute, it was both the duty of the Attorney‑General to become involved and the duty of the court to take such steps as will enable him or her to do so.
[5]Above n 3 [25].
The present claim, as articulated by the plaintiff, does not concern the objects of the charity.
Additionally, since this decision, the Civil Procedure Act 2010 (Vic) has come into force, affecting both the object and purpose of civil litigation and the test for summary dismissal of a proceeding.
In my view, it is illusory to suggest that there is an advantage to the plaintiff if the proceeding is maintained, either on the basis of an adjournment or a stay, assuming that the plaintiff had standing to make that application. No such application is made by the Attorney‑General, neither is there any evidence that the Attorney‑General has authorised the plaintiff to make this application on her behalf. Summary dismissal of the proceeding will be no impediment to a claim being commenced with the Attorney‑General’s fiat against the defendant in respect of the affairs of the Trust. The defendant acted promptly and has taken no steps in the proceeding other than to file an appearance and an application for summary dismissal.
The costs thrown away by reason of the erroneous constitution by the plaintiff of an incompetent proceeding have been minimised. Effectively, all that the plaintiff would preserve by the orders she proposes is the filing fee and the costs of service. If the Attorney‑General’s fiat is granted, a further proceeding can be commenced. If this proceeding is adjourned, an application for substitution of the plaintiff and an amendment of the statement of claim will be required, costs that would not be incurred in a fresh proceeding.
I am satisfied that the overarching purpose of facilitating the just, efficient, timely and cost effective resolution of the real issues in dispute is most effectively achieved by the summary dismissal of this incompetent proceeding.
The defendant applied, not for the costs of the proceeding, but for its costs of and incidental to the application for summary judgment. It further sought an order that such costs be taxed on an indemnity basis. Taxation on that basis was resisted by the plaintiff.
It is well settled that a proceeding of this sort cannot be initiated by a person without the fiat of the Attorney‑General and that such fiat must be obtained before the proceeding is commenced. It was not proper for the plaintiff’s solicitor to certify, in accordance with s 42 of the Civil Procedure Act, that each allegation of fact in the statement of claim had a proper basis.
On 12 November 2019, the defendant’s solicitor drew to the attention of the plaintiff’s solicitor the defects in the statement of claim identifying, correctly, that the proceeding was brought without a proper basis in disregard of known facts and clearly settled law. In these circumstances, I consider it appropriate that the defendant’s costs be taxed on an indemnity basis.[6]
[6]Civil Procedure Act 2010 (Vic) ss 18, 28(2), 42; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233-4; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 [7].
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