New South Wales Court of Appeal CITATION: Macedonian Orthodox Community Church St Petka Incorporated v Metropolitan Petar [2008] NSWCA 165 HEARING DATE(S): 11 July 2008 JUDGMENT DATE: 11 July 2008 JUDGMENT OF: Allsop P at 32, 38; Campbell JA at 1, 33 EX TEMPORE JUDGMENT DATE: 11 July 2008 (1) Application for leave to appeal dismissed. DECISION: (2) Applicant to pay the costs of the First and Second Respondents. (3) Reserve to the trial judge the question of whether an order should be made under UCPR 42.25 concerning the costs so ordered to be payable. CATCHWORDS: PRACTICE AND PROCEDURE – application for leave to appeal – whether proposed appeal has sufficient prospects of success to warrant grant of leave – whether arguable case that primary judge made appealable error – costs of application for leave to appeal – where respondents seek order under r 42.25 Uniform Civil Procedure Rules that costs of application not be paid out of trust assets – where question of whether proceedings brought in proper execution of trust will depend on outcome of ultimate proceedings LEGISLATION CITED: Charitable Trusts Act 1993 Australian Securities and Investments Commission in the matter of GDK Financial Solutions Pty Limited v GDK Financial Solutions Pty Limited (in liquidation) (No 4) [2008] FCA 858 Brimaud v Honeysett Instant Print Pty Limited (19 September 1988, unreported) CASES CITED: House v R (1936) 55 CLR 499 Metropolitan Petar v Macedonian Orthodox Community Church of St Petkar Incorporated [2006] NSWCA 277 Metropolitan Petar v Mitreski [2008] NSWSC 243 Macedonian Orthodox Community Church St Petka Incorporation (Applicant) PARTIES: His Eminence Metropolitan Petar Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (First Respondent) Mitko Mitrev (Second Respondent) Attorney-General for the State of New South Wales (Third Respondent) FILE NUMBER(S): CA 40187/08 GO Blake SC (Applicant) COUNSEL: TGR Parker SC; RE Steele (First and Second Respondents) MA Izzo (Third Respondent) McConnell Jaffray Lawyers, Sydney (Applicant) SOLICITORS: Sachs Gerace Lawyers, Sydney (First and Second Respondents) Crown Solicitor's Office, Sydney (Third Respondent) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): 3369/97 LOWER COURT JUDICIAL OFFICER: Young CJ in Eq LOWER COURT DATE OF DECISION: 25 March 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Metropolitan Petar v Mitreski [2008] NSWSC 243 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40187/08 SC 3369/97 ALLSOP P CAMPBELL JA 11 JULY 2008 MACEDONIAN ORTHODOX COMMUNITY CHURCH ST PETKA INCORPORATED v HIS EMINENCE METROPOLITAN PETAR DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOX DIOCESE OF AUSTRALIA AND NEW ZEALAND AND ORS Judgment 1 CAMPBELL JA: At the outset of this application for leave to appeal I should say that as the outcome may have significant consequences for the litigation concerning which the application is made, it is appropriate to give somewhat longer reasons than is customary concerning applications for leave to appeal. 2 The applicant in this application for leave to appeal is an incorporated association that holds various items of property that it acquired in connection with the operation of the parish of St Petka, a parish of the Macedonian Orthodox Church. There has been a long-running dispute between, broadly, the Bishop of that church on the one hand and the applicant and various parishioners on the other concerning the use of that property. 3 Hamilton J has held that some of the property identified as the Schedule A property is held on a particular charitable trust. The status of the remainder is undecided. In proceedings not yet heard the Bishop alleges that the applicant has acted in breach of trust in the use to which it has permitted the trust property to be put. 4 After Hamilton J had decided that the Schedule A property was held on that particular trust, the Bishop applied for an interlocutory injunction to restrain the applicant and the parishioners from using the trust property to finance the litigation. 5 As a consequence of a decision of the Court of Appeal that was given on 6 October 2006, Metropolitan Petar v Macedonian Orthodox Community Church of St Petka Incorporated [2006] NSWCA 277, an injunction was issued that prohibited the applicant until further order from paying the legal costs of the applicant and the parishioners from its property. There were some exceptions but they are not of present relevance. 6 The injunction issued by the Court of Appeal extended not only to the Schedule A property that Hamilton J had already decided was held on trust but also the other property of the applicant the Bishop claimed and the applicant disputed was held on trust. The applicant sought special leave to appeal to the High Court from that decision but special leave was refused. 7 The decision from which leave is now sought to appeal was given by Young CJ in Eq: Metropolitan Petar v Mitreski [2008] NSWSC 243. Before Young CJ in Eq, the applicant sought to vary the injunction that had been granted by the Court of Appeal by adding some additional exceptions. Broadly those exceptions were designed to allow the applicant's property to be expended in paying the costs of preparation for the hearing and the hearing itself. The primary judge declined to make the variations that the applicant sought. 8 It is common ground that an appeal against the primary judge's decision could succeed only within the well known principles of House v R [1936] HCA 40; (1936) 55 CLR 499. Before the primary judge the Attorney-General argued in favour of the variation of the injunction subject to a monetary cap on the amount that was expended. This was different to the stance that the Attorney-General had taken when the application for an interlocutory injunction was first before Hamilton J. 9 The applicant submits that the primary judge made an error in finding that he could not by reason of the 2006 judgment of the Court of Appeal give effect to the view of the Attorney-General that it was in the public interest that the injunction be varied. 10 If his Honour had found that he was prohibited as a matter of law from taking into account the Attorney-General's view this might arguably have been an error of law. However I do not read his Honour as having so decided. 11 He set out at para [35] a précis of the Attorney-General's submission. He said, "there's certainly a lot to be said for this approach", but then continued, "[h]owever, I do not consider I can take this approach in light of what was said by the Court of Appeal in 2006." 12 He noted that the Court of Appeal had held that the applicant should not be permitted to use the properties for the purpose of defending the proceedings, and that there had been no material change in the applicant's financial circumstances since then. 13 His Honour had earlier set out principles articulated by McClelland J in Brimaud v Honeysett Instant Print Pty Limited (1988) 217 ALR 44, and other authority to the effect that even though there was no res judicata or estoppel that prevented an interlocutory order from being revisited and varied there was an ordinary but not invariable rule of practice founded on the interests of justice that such an application should be founded on a material change in circumstances or discovery of new material. 14 He considered that there had been some change in circumstances that warranted reconsidering the terms of the injunction. In particular, Palmer J and the Attorney-General had now both expressed the view that it would be beneficial for the assets to be available to fund the litigation. For that reason he turned to consider the merits of the application, rather than dismiss it in a summary fashion. 15 When he turned to consider the merits, the primary judge recognised the role of the Attorney-General as the protector of charities, and he acknowledged that the Attorney-General took the view that it was in the public interest that the variations be made. Even so, he took the view that the fact that the Attorney-General had changed his stance was not enough to warrant any significant change in the injunction. For the primary judge to take that view involved a weighing of the factors in the case before him. 16 It was submitted by Mr Blake SC, for the applicant, that an appeal against the primary judgment would enable this Court to examine the role of the Attorney-General as defender of charities and the weight to be given to the opinions he puts before the Court concerning administration of charities. Mr Blake relied on a change that there had been to the previous law under which suits to enforce charitable trusts always needed to be brought by the Attorney-General on the relation of someone who complained about an alleged breach. 17 Mr Blake noted that there had been a change, arising from the Charitable Trusts Act 1993, in the role of the Attorney-General, and liberalisation of the class of people entitled to enforce charitable trusts. That gave rise to a question, according to Mr Blake, of what weight should the Court now give to the view of the Attorney-General concerning administration and enforcement of charitable trusts. The significance of the change in the law for the present case is starkly shown, Mr Blake submits by recalling that, had there been an application to vary the injunction before the changes brought about by the Charitable Trusts Act, then it would have been open to the Attorney-General to simply consent to that alteration of the injunction. 18 It seems to me, that even though there has been this change, the primary judge still has recognised the role of the Attorney-General as the protector of charities. It seems to me, as I read his judgment, that he has weighed the Attorney-General's view against the significance of the factors pointed to by the Court of Appeal, not relied on any principle that is arguably wrong, and came to a conclusion not on its face outside the range of a proper discretionary judgment. In those circumstances there is nothing that could count as an appealable error. 19 The applicant also submits that the primary judge erred in regarding the decision of the Court of Appeal as precluding him from making other than minor variations to the injunction. Read in context, what his Honour was saying was that there had not been sufficient change in circumstances since the Court of Appeal's decision to warrant a change in the order in other than minor respects. That was also a matter of weighing of the factors in the case before him. 20 Another complaint made by the applicant in its written submissions concerned the way that the primary judge had characterised the dispute between the parties. 21 Early in his judgment the primary judge had said "[a]lthough it is a gross simplification, the basal dispute between the parties is whether the sixth defendant holds the property vested in it absolutely or as a trustee for the purposes of the Macedonian Orthodox Church or otherwise on trust." 22 The appellant submitted that this was a serious mischaracterisation of the dispute because Hamilton J had already held that the Schedule A property was held on trust. 23 The disputed characterisation appears in the primary judge's judgment at the start of a summary of the history of the litigation. The characterisation was an accurate one as the litigation had started out. The primary judge went on the trace the subsequent course of the litigation, including the decision of Hamilton J. 24 In my view it could not seriously be thought, reading his judgment as a whole, that he took the view that what he described as "the basal dispute" represented the currently live issues in the litigation. 25 Another attack that the applicant made on the primary judge's judgment is that he stated that if the injunction was varied this might mean there would be hardly anything left of the applicant's assets. 26 There is evidence to suggest that the value of the applicant's assets significantly exceeds the amount of the cap that the Attorney-General proposed be placed on the variation to the injunction. The primary judge did indeed say, concerning the possible variation of the injunction, "even though this may mean that there will be hardly anything left in a very real sense the assets will have been used to protect the charity." 27 However this was not in a part of the judgment where the judge was expressing his own views. Rather, it was in a part where he was summarising the submission of the Attorney-General. The Attorney-General's submission was that, as a matter of characterisation or principle, defending the proceedings would involve using the assets to protect the charity, and that that characterisation held good, even if defending the proceedings used up practically all the assets. There was no error in the judge recording the submission. 28 Finally, the applicant submits that the primary judge was in error in saying that he "should" not take into account as a material consideration the view of the Attorney-General that it was in the public interest that the injunction be varied. 29 I do not accept the primary judge said any such thing. After recording the Attorney-General's submission and acknowledging that there is certainly a lot to be said for this approach he continued "I do not consider I can take this approach in view of what's been said by the Court of Appeal in 2006". That is not refusing to take the Attorney-General's view into account. It is saying that the view of the Court of Appeal has in the circumstances greater weight. 30 Another matter relied upon in oral submissions by Mr Blake was that in a recent decision, Australian Securities and Investments Commission in the matter of GDK Financial Solutions Pty Limited v GDK Financial Solutions Pty Limited (in liquidation) (No 4) [2008] FCA 858. Finkelstein J had shown what Mr Blake submitted was a more favourable attitude to the making of pre-emptive costs orders than had previously been the case. That decision had not been given at the time of the primary judge's decision, and hence was not drawn to his attention. Quite apart from whether it is an error for a primary judge to fail to take into account a development in the law that had not occurred at the time he made his decision, it is not submitted that GDK stands for a legal principle that the primary judge can be seen, in retrospect, to have misapplied. 31 In all these circumstances in my view the proposed appeal has insufficient prospects of success to warrant the grant of leave. I would propose the application for leave to appeal be dismissed. [ARGUMENT CONCERNING COSTS] 32 CAMPBELL JA: I would propose that the applicant pay the costs of the respondents, other than the Attorney-General. 33 ALLSOP P: I agree with the reasons of Justice Campbell. I agree with the proposed orders. The orders will be as proposed by Mr Justice Campbell. [COUNSEL ADDRESSED FURTHER ON COSTS] 34 CAMPBELL JA: A question has arisen about the costs of the application which has been made today. We have already decided it is appropriate that an order for costs be made against the applicant so far as the costs of the first and second defendant are concerned. The Attorney-General did not seek costs and so no order for costs has been made in the Attorney-General's favour. 35 The respondents to the application now seek an order under UCPR 42.25 that the costs of the applicant of this application not be paid out of the trust assets. The question of whether these proceedings were brought in proper execution of the trust or not, is one that will depend on the outcome of the ultimate proceedings. 36 The issue before the court today was whether there was an arguable case that a primary judge had made an appealable error. The issues before the court today do not enable the court to form a view on whether it is appropriate to make an order under UCPR 42.25. 37 Under those circumstances it is appropriate to order that the question of whether the costs of this application should be subject to an order under UCPR 42.25 should be reserved to the trial judge. 38 The further order that I propose concerning costs is: Reserve to the trial judge the question of whether an order should be made under UCPR 42.25 concerning the costs so ordered to be payable. 39 ALLSOP P: Those are the orders of the court in relation to that aspect of costs. I have already made orders as to the dismissal of the application for leave and the payment of costs as proposed otherwise by Justice Campbell. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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