Solowij & Ors v Parish of St Michael and Ors No. Scciv-00-649

SOLOWIJ AND ORS V THE PARISH OF ST MICHAEL OF THE UAOC IN ADELAIDE INCORPORATED AND ORS
[2001] SASC 256

JUDGE BURLEY. By application dated 26 February 2001 the plaintiffs applied to join the Ukranian Autocephalic Orthodox Church in Australia and New Zealand (the Church) as a plaintiff and for leave to amend the statement of claim. The application was heard on 9 April 2001 but was not completed on that occasion. The hearing was adjourned to enable the plaintiffs to consider their position with regard to the proposed joinder of the Church as a plaintiff. The hearing was resumed on 18 May 2001. On that occasion counsel for the plaintiffs announced that the application to join the Church as an additional plaintiff was withdrawn but the existing plaintiffs wished to proceed with the proposed amendments to the statement of claim. The only difference between the amendments pursued on 9 April 2001 and those pursued on 18 May 2001 was that the Ukranian Autocephalic Orthodox Church in Australia and New Zealand was referred to as “the Church” rather than “the second plaintiff”.
As a result of counsel’s announcement on 18 May 2001, the application for joinder was dismissed with costs to the defendants. The defendants sought indemnity costs and I reserved that question. I then heard counsel on the question of the proposed amendments. During the course of submissions I directed that written submissions be exchanged by the parties, upon the receipt of the last of which I would reserve my decision. That process was completed by 6 June 2001.
Having given the directions in relation to written submissions, I invited counsel to put their submissions on the question of whether or not indemnity costs should be awarded. On the completion of those submissions I reserved my decision on that question.
As a result, there are two matters to be decided: first, whether the proposed amendments or any of them should be allowed; and, second, whether or not indemnity costs should be awarded.
Before turning to counsels’ submissions, it is necessary to set out briefly the nature of the dispute raised in the pleadings. The Church constitutes a diocese of the Ukranian Autocephalic Orthodox Church in Diaspora (UAOC in Diaspora). The plaintiffs and the parties described as the second defendants are all members of the Parish of St Michael of the Ukranian Autocephalic Orthodox Church in Adelaide Incorporated, which is the first defendant. The Church is a body which was incorporated in New South Wales. The first defendant is an association incorporated pursuant to the provisions of the Associations Incorporation Act 1985 (SA) in South Australia. It is alleged that under the Constitution of the first defendant the governing authorities of the diocese (of which the first defendant is a parish) are certain groups convened pursuant to the Articles of Association and Constitution of the Church.
It is alleged that on 3 May 1998 at an Extraordinary General Parish Meeting a resolution was passed that the first defendant wishes to submit to the spiritual care of the Ukranian Orthodox Church of the Patriarch of Kyiv. At that time, it is alleged, the first defendant was subject to a different Ukranian Orthodox Church Patriarch. It is further alleged that at the Annual General Meeting of the first defendant on 5 March 2000, a resolution was passed that a committee be appointed to carry out the wish of the first defendant to come under the protection of the Kyiv Patriarchate.
The plaintiffs allege that the first resolution was invalid because no notice had been given of the proposed resolution prior to the meeting in May 1998 in circumstances where notice should have been given, that the second resolution was invalid because it purported to implement the allegedly invalid resolution of May 1998 and that, in any event, the second resolution in itself was invalid because it was unconstitutional.
In addition, the plaintiffs allege that the first defendant could not submit to the protection of the Kyiv Patriarchate without the consent of the governing authorities of the first defendant. The plaintiffs also plead that the relevant governing authorities have not given their consent to the submission of the parish to the protection of the Kyiv Patriarchate and have directed the first defendant to withdraw such submission and to acknowledge that it is part of the Australian and New Zealand diocese of the UAOC in Diaspora.
It is apparent from the proposed statement of claim that there is a dispute between members of the parish about whether or not references were to be made to the Patriarch of Kyiv in a particular service conducted by the parish priest. The parish priest does not agree to such a reference. It is alleged that the defendants have refused to pay the stipend of the parish priest and have prevented him from taking access to the parish church and buildings.
The submissions put by counsel on 9 April 2001 were directed mainly to whether or not the Church should be joined as a plaintiff. During the course of Mr Slattery’s submissions I raised with him my concern that I had difficulty in accepting that an entity which was not a member of the first defendant could bring an oppression action under Section 61 of the Associations Incorporation Act as pleaded in the proposed statement of claim. It was also not clear to me whether or not, and if so the extent to which, the plaintiffs, including the proposed plaintiff, relied upon contractual law, property law or equity or all of them in pursuing the relief sought. Mr Slattery indicated that he wished to take the opportunity to consider the application for joinder and the revised pleading in light of the comments that I had made. I granted an adjournment with costs to the defendants.
The Defendants’ Application for Indemnity Costs
In support of the application for indemnity costs Mr Brohier, counsel for the defendants, relied principally upon my decision in Taylor v Santos Ltd and Ors, an unreported decision delivered on 8 October 1999, Judgment No [1999] SASC 430. In that case the plaintiff sought leave to interrogate. Submissions on the application had reached the stage where submissions in reply were to be put by the plaintiff. The plaintiff sought an adjournment to enable a revised set of interrogatories to be put forward. I refused that adjournment on the basis that the plaintiff would in reality be pursuing a new application for leave to interrogate in respect of differently drafted interrogatories. The plaintiff then withdrew the application for leave to interrogate based on the proposed interrogatories then before the court.
Having reviewed the authorities, including Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248, I expressed the view (at page 6):
“I think that any litigant properly advised would have realized that pursuing an application for leave to administer those interrogatories ran the serious risk that the application would be refused. Instead of pursuing … the application to the end, the plaintiff has staged a strategic withdrawal. An adjournment was sought so that additional affidavit material could be filed and the interrogatories could be re-drawn. The application for an adjournment was refused and the plaintiff decided not to pursue the application. This was at a point where the application was complete but for submissions in reply. I think the decision to withdraw the application does not save the plaintiff from an order for indemnity costs.”
In my view, the same may be said of the position of the plaintiffs as at 9 April 2001 when an adjournment was sought so that the plaintiffs might consider their position with regard to the joinder of the Church. Such an approach is supported by what was said by French J in J-Corp Pty Ltd v Australian Builders Labourers Federation (Federal Court of Australia, February 1993, unreported (at 5)):
“Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.”
In my view, there was little chance of the plaintiffs being able to make out a case for the joinder of the Church as a plaintiff on the pleading as it was then propounded. The Church clearly could not be part of an action maintained pursuant to Section 61 of the Associations Incorporation Act because, under the provisions of that Act, it had no standing to do so. The proposed pleading did not sufficiently raise any other cause of action which might be maintained by the Church. In those circumstances I consider that the costs of the application up to and including 9 April 2001 should be awarded to the defendants on an indemnity basis and I so order.
As for the hearing on 18 May 2001, to the extent that time was taken on that day to debate whether or not indemnity costs ought to be awarded, because the defendants have been successful on that application, they should have the costs of that hearing. I do not understand the defendants to have argued that the costs of the hearing should be awarded on an indemnity basis. It is notoriously difficult to anticipate what the result of such an application might be given the broad nature of the discretion as to costs conferred upon the courts. It would be difficult to argue that the plaintiffs should have foreseen prior to argument, that their resistance to an order for indemnity costs was hopeless. Consequently, unless I am convinced to the contrary, the costs of the argument on the application for indemnity costs which took place on 18 May 2001 should be taxed or agreed on a party and party basis.
The Amendment Application
During the course of his submissions, Mr Brohier sought to refer to some of the documentation referred to in the proposed pleading. Copies of the documentation are annexed to the affidavit of the defendants’ solicitor, Mr Niarchos, sworn on 12 March 2001. They include the Constitution of the first defendant, the Memorandum of Association of the Church, the Articles of Association of the Church and the Constitution of the Diocese of Australia and New Zealand of the UAOC in Diaspora. Mr Brohier wished to put submissions in relation to that documentation as part of his case that the proposed amended statement of claim disclosed no maintainable cause of action against the defendants. I ruled that that type of reference to documentation contained in the proposed pleading foreshadowed by Mr Brohier was not permissible on this application to amend. Although I gave brief reasons at the time of my ruling, I think it appropriate to set out those reasons more formally.
Whilst I accept that it is appropriate, on a given application to amend, for the party opposing the amendment to refer to documentation referred to in the pleading, it should not be permitted to the extent that the application loses its character as one for leave to amend and becomes a summary determination such as could be pursued pursuant to SCR 25. In most circumstances, the sufficiency of the pleading is to be determined by reference to the content of the pleading itself and not the evidence by which the pleaded material is sought to be proved. On any given application, a judgment has to be exercised as to when the application loses its character as an application for leave to amend and becomes a summary judgment application. In my view, the extent to which the defendants wished to rely upon the documentation referred to in the pleadings, which consists of the evidence that the plaintiffs will rely upon to establish the pleaded point, went far beyond what would normally be permitted on an amendment application. A pleading raises issues which are to be determined at trial or, if they are capable of summary determination, on the hearing of an application for summary relief. It is not the function of the court, on an amendment application, to try the issues in dispute between the parties. The submissions which Mr Brohier sought to advance based on the documentation were of that order and for that reason I declined to permit him to pursue such opposition on the amendment application.
In his outline of submissions handed up on 18 May 2001, Mr Brohier argued that the application to amend should be supported by an affidavit setting out the reasons for the proposed amendments and an explanation for the delay. I accept this is a correct statement of principle: The State of Queensland and Anor v JL Holdings Pty Ltd (1996-97) 189 CLR 146 at 169-171 per Kirby J. The original application for leave to join the Church as a plaintiff was supported by the affidavit of Mr Lazarevich, the plaintiffs’ solicitor. It refers mainly to the need to join the additional plaintiff, an application which has now been withdrawn. Mr Lazarevich swore further affidavits which were filed as the application progressed. It is apparent from his affidavits that the requirement to amend first arose out of a perceived need to join the Church as a plaintiff but, after the hearing on 9 April 2001, it became apparent that it was necessary to amend in the same terms whether or not the Church was joined as a plaintiff. There is nothing to suggest that the plaintiffs pursued the amendment application other than in good faith. There is the prejudice of delay to the defendants in the finalization of these proceedings because their progress is held up whilst the question of amendment is determined. I do not think that such a prejudice supports the contention that the amendments should not be allowed. Indeed, The State of Queensland v JL Holdings is authority to the contrary.
The proposed pleading raises factual matters which arose after the institution of the proceedings. Such a pleading is now permitted under the Rules even to the extent of a new cause of action being able to be pleaded (see SCR 46A.12). If the proposed pleading is otherwise good I do not think it is inappropriate to permit the plaintiff to plead those matters which have arisen after the institution of the proceedings.
Mr Brohier contended that the matters in dispute raised both by the original and the proposed pleading were not justiciable in a civil court. By this submission Mr Brohier attacked paragraphs 1 to 4, 22 to 26 and 38 of the proposed statement of claim. He argued that the question of whether or not the parish could change its subordination from one patriarch to another was a spiritual matter and the courts would not interfere. He referred to Scandrett v Dowling (1992) 27 NSWLR 483 at pages 512G, 554F, 564B and 566F. That case concerned the constitution of the Anglican Church in New South Wales. The question at issue was whether a Bishop could ordain a woman without approval of the Synod. The Court of Appeal held that even if a Bishop’s actions were in breach of the Constitution, the issue was not justiciable and the relief sought should not be granted.
Mr Brohier emphasised that in order to found a cause of action, property rights needed to be involved. I do not consider that the court should on this application give what amounts to a final determination of that question. In any event, it is arguable that property rights are involved in the cause of action which the plaintiffs seek to pursue in the sense that the first defendant has sought to place the parish under the protection of a particular Patriarch at a time when the parish was, to use Mr Slattery’s phrase, subordinated to another orthodox Patriarch. The reality is that the first defendant has the use of property which it owns. It is not for me to determine at this stage that such a subordination could not be said to alter the property rights of or the manner in which property is used, by the first defendant. As such, the matters sought to be litigated by the plaintiffs may be distinguishable from the dispute which concerned the Court of Appeal in Scandrett v Dowling.
Accordingly, I consider that the plaintiffs ought to be able to plead the matters in those paragraphs which the defendants have sought to impugn. That ruling is subject to a concession made by the plaintiffs in their written submissions dated 23 May 2001. The defendants complained that paragraph 38 of the proposed pleading refers only to acts of the Parish Council and therefore could not include reference to those defendants who are not members of the Council. A similar complaint was made in relation to paragraphs 22 and 23 of the proposed pleading. As a result, the plaintiffs now seek to change paragraphs 22, 23 and 38 so that any reference to the defendants should be to the first defendant. I think that that concession sufficiently answers the defendants’ complaint and that amendment should be allowed accordingly.
As I understand it, the combined effect of a number of the submissions of the defendants about the statement of claim is that the parties referred to as the second defendants, Mr Pradun, Mr Shumsky, Mrs Kowalski and Mr Tkachuk have been incorrectly joined. Put another way, the proposed pleading does not disclose a maintainable cause of action against those parties because, it was argued, if the plaintiffs are entitled to any relief, it is only against the first defendant. I think there is some substance to this complaint because it is not clear from the pleading whether or not the plaintiffs seek relief against the second defendants on the basis that their actions are actions performed, for example, as agents for the first defendant. If that is the case of the plaintiffs, it should be made clear. If it is not the case of the plaintiffs then I can see no reason why the second defendants should be joined in the proceedings at all. Consequently, I do not think that the plaintiffs should be permitted to file an amended statement of claim which refers to the second defendants unless it is also clearly pleaded that there is some basis, such as agency, for relief being sought against them. Subject to any other rulings disallowing any part of the proposed amendments, I would permit the plaintiffs to amend in the terms sought but without reference to the second defendants unless the plaintiffs can plead a maintainable basis upon which they seek relief against those defendants. If no additional pleading is made to that effect, or if such addition is not sufficient, it would be open to the defendants to apply to have the pleadings struck out as against the second defendants.
Mr Brohier submitted that a number of paragraphs should be disallowed because they constituted a pleading of evidence rather than material facts. The paragraphs are 4.9 and 4.10, 9.1 to 9.3 and 10.1. To some degree, Mr Brohier is correct. However, the paragraphs do no more than set the factual basis for a proper understanding of the issues sought to be raised by the plaintiffs. As such, I think they should remain.
The defendants complain that paragraphs 7(r) and (s) are “valueless pleas” because they refer to the division of parish property where there has been no pleading that the defendants or any of them have sought to divide the parish property other than in accordance with the Constitution. I think this is an unduly technical complaint. The reference to Clauses 89 and 103 of the Constitution of the first defendant in paragraphs 7(r) and (s) informs the court as to what the Constitution says in relation to the property of the parish. It is necessary to do so because the purported change in the subordination of the parish may have effect on property use by the parish if not property rights.
The defendants complain that paragraph 26 of the proposed pleading refers to Clause 40 of the Constitution of the first defendant without setting out its contents. I have no doubt that this causes no embarrassment whatsoever to the defendants and as such it should not have been raised as a complaint. I reject any submission implicit in what has been put that paragraph 26 should not be allowed.

For the above reasons, subject to the qualifications referred to above, I give leave to the plaintiffs to file and serve the proposed amended statement of claim. I will hear the parties as to costs.

[2001] SASC 256

1 August 2001