New South Wales Supreme Court CITATION : Metroplitan Petar v Mitreski [2002] NSWSC 125 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3369/97 HEARING DATE(S) : 22 February 2002 JUDGMENT DATE : 22 February 2002 His Grace Metropolitan Petar, the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (P1) The Very Reverend Father Mitko Mitrev (P2) Lambe Mitreski (D1) Pero Damceski (D2) PARTIES : Boris Minovski (D3) Eftim Eftimov (D4) Mile Marcevski (D5) Macedonian Orthodox Community Church St Petka Incorporated (D6) Naum Despotovski (D8) Attorney General for State of NSW (D9) JUDGMENT OF : Hamilton J T G R Parker (P 1 & 2) COUNSEL : K S McConnell, Solicitor (D1 - 6 & 8) No appearance (D9) Sachs Gerace Lawyers (P1 & 2) SOLICITORS : McConnell Jaffray (D1 - 6 & 8) I V Knight (D9) CATCHWORDS : PROCEDURE [671] - Costs - Security for costs - Practice matters - Whether security given as ordered - Whether defence ought be filed pending determination of adequacy of security given. LEGISLATION CITED : Supreme Court Rules 1970 Part 1 r 3, Form 64B DECISION : First to sixth and 8th defendants directed to file and serve defence on or before 13 March 2002. - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J FRIDAY, 22 FEBRUARY 2002 3369/97 HIS GRACE METROPOLITAN, THE DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOX DIOCESE OF AUSTRALIA AND NEW ZEALAND & ANOR v LAMBE MITRESKI & 7 ORS JUDGMENT 1 HIS HONOUR: There has been argument before me this morning in this embattled and difficult matter as to whether or not the defendant ought be proceeding to prepare a defence and ought now be directed to file a defence before the manner of the giving of security for costs is further agitated before the Chief Judge in Equity on 14 March 2002. On that day, by arrangement with his Honour, there is to be returned before him a motion in that regard which I have today given the defendants leave to file. By "the defendants" in this judgment I mean the first to sixth and the eighth defendants represented by Mr Keith McConnell of McConnell Jaffray, solicitors. These are all the current defendants in the proceedings, save for the Attorney General, whom I have joined as the ninth defendant. 2 Because of the possibility of issues arising as to the credit of witnesses and as to the likelihood of the plaintiff's success in the case, I declined to deal with the question of security for costs in this matter, which has otherwise been case managed by and is to be tried by me. That function has been undertaken by the Chief Judge in Equity. On 19 November 2001 his Honour ordered that the plaintiffs supply security for costs in the sum of $365,000 to be furnished by 1 February 2002 in the form of one or more guarantees in the form of Form 64B of the Supreme Court Rules 1970 ("the SCR"), in each case witnessed by a solicitor independent of the defendants and the plaintiffs in these proceedings certifying that he or she has explained the guarantee to the guarantor, who appears fully to understand the same. Guarantees in the form ordered have now been brought forward in satisfaction of the order for security in or close to the sum ordered by his Honour. This was not done by 1 February 2002 but the bulk were brought forward on 4 February 2002 and others have been brought forward subsequently. The guarantees brought forward fall essentially into two categories. There are four guarantees in effect by individual churches in Melbourne totalling some $320,000 and the balance are guarantees by individuals. 3 Returning to the progress of the preparation for trial, on 14 December 2001 I gave the plaintiff leave to file in Court its further amended statement of claim, which had the virtue of greatly simplifying the pleading of the plaintiffs' case. This had previously been deficient by reason of over complication. I directed that the defendants file and serve a defence on or before 21 February 2002. Mr McConnell, the defendants' solicitor, has pointed out, and correctly, that I did that on the basis that guarantees to comply with Young CJ in Eq's order for security were in the process of being brought forward. 4 Complaint is now made that the guarantees brought forward are not fit to meet the requirements of the Chief Judge's order. The complaints include that the deeds of two of the Melbourne churches totalling some $220,000, and therefore more than half the total amount ordered, are on their face executed by unincorporated associations in the name of the association. The other two church guarantees are apparently executed by incorporated associations under common seal. Further complaints are made as to the power of those incorporated associations to give guarantees of the type represented by the deeds, and consequently as to their liability to be bound by the deeds. Doubts are also raised as to the ability both of the churches and of the individual guarantors to meet the amounts guaranteed. An objection is also taken that the solicitor who witnessed the guarantees, or many of them, is not in fact independent within the terms or intent of the Chief Judge's order, in that he was the solicitor for the hierarchical church in a suit not dissimilar to the present, which has been previously tried by Byrne J in the Supreme Court of Victoria. It is these matters that are fixed to be agitated before the Chief Judge on 14 March 2002. I make no comment one way or the other as to the validity of any of these complaints, save that I do note that there must be grave doubt as to the efficacy or usefulness of deeds executed and sealed in the name of unincorporated associations. 5 The situation as it appears to me at the moment is that there are guarantees in place, and apparently good at least on the face of them, to the tune of some $145,000. Those it appears to me could be relied on in appropriate circumstances by the defendants whether or not they are adjudged by the Chief Judge in Equity to be a proper satisfaction of his Honour's order. 6 The defendants started to complain about the adequacy of the guarantees immediately after they became apprised of the form and content of the guarantees shortly after 4 February 2002. Correspondence has been pursued between the solicitors since that time. Mr McConnell has avowedly taken the stance on behalf of the defendants that they were not or ought not be required to comply with my directions for filing of the defence on 21 February 2002 until the Chief Judge's order had been satisfactorily complied with. It is only in the last few days that the final $20,000 odd of guarantees have been brought forward. On this basis nothing had been done towards the larger than usual task of preparing the defence. Although it may be that Mr McConnell could, under the directions, have sought to agitate the correctness of this stance before me earlier than he did, it must be recorded that he has this week approached my Associate to attempt to have the matter restored, but I was unable to put the matter in for agitation before me prior to today, when the matter was already listed before me for further directions. It would, therefore, be quite incorrect to suggest that Mr McConnell had done nothing to regularise the situation before today. 7 Mr McConnell's submissions before me today were, as usual, pragmatic and frank; he takes the stance that until protected by a proper compliance with the security for costs order, his clients ought not be expected further to prepare the matter and asks that the direction I give be that the defendants file their defence within 21 days after proper compliance with the Chief Judge's order for security for costs. Mr T G R Parker, of counsel for the plaintiffs, put to me forcefully that the defendants were wrong not to comply with my direction of 14 December 2001 for the filing of the defence in all the circumstances and they now ought be directed to file a defence within seven days. I indicated to Mr McConnell that I did not propose to accede to his submission that the requirement of a defence ought be postponed until after full and satisfactory compliance with the Chief Judge's order and asked him to tell me in those circumstances when it would be possible to file a defence. He said 21 days and, bearing in mind his frank avowal that nothing has been done to date, I accept in general terms Mr McConnell's word as to the necessity for this amount of time. 8 For reasons I shall shortly give, I am insistent on a defence being filed before the matter returns to the Chief Judge for consideration of the adequacy of the response to the security for costs order. I propose to shorten the time asked for by Mr McConnell by a couple of days so as to direct that the defence be filed on or before 13 March 2002. In that way the matter may be progressed in the meantime and the defence, lest it be useful for those purposes, may be available in the Chief Judge's court when the matter returns to him on 14 March 2002. 9 The reasons that I propose to insist upon the filing of a defence before the settlement of the question of the form of the security are as follows. This matter must come to finality at some stage. I do not propose to allow the trial fixture made for later in the year to be endangered if at all possible. Whilst it is true that the defendants have expended considerable moneys in the past on costs, the order for security is in essence intended to be prospective to cover (at least in the first instance) costs incurred after the making of the order for security. Whether or not they are adjudged adequate in the end, the plaintiffs, if a little belatedly, have brought forward deeds propounded by them in satisfaction of the order for security for costs. Some of those deeds, indeed to the tune of $145,000, appear to me to be enforceable on their face and to provide security against the costs which will be incurred between now and 14 March in complying with my direction for the filing of the defence. 10 I do not propose in any way to deal with or attempt to forecast what will occur after the Chief Judge in Equity deals with the matter on 14 March 2002. I simply propose to put the matter back in my list for the situation as to preparation to be reviewed in light of the then circumstances at that time. However, I remind the parties of the provisions of Part 1 r 3 of the SCR and I indicate that, having given in effect the time asked for by Mr McConnell for the preparation of the defence, I expect my direction for its filing on or before 13 March 2002 to be complied with. The costs of today will be reserved. 11 The orders of the Court will therefore be: 1 I direct that the first to sixth and eighth defendants file and serve their defence on or before 13 March 2002. 2 I adjourn the matter to 9.30am on 20 March 2002 before me for further directions. 3 The costs of today are reserved. ********** Last Modified: 03/14/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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