New South Wales Supreme Court CITATION : Metropolitan Petar v Mitreski [2010] NSWSC 1067 HEARING DATE(S) : 19 July 2010 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 19 July 2010 DECISION : Motion dismissed with costs. CATCHWORDS : PROCEDURE – Supreme Court Procedure – New South Wales – Procedure under Rules of court – Amendment – whether defendant should be given leave to further amend their defence – after judgment given in separate questions – where proposed amendments would alter basis of case on which separate questions decided CATEGORY : Procedural and other rulings Metropolitan Petar v Mitreski [2003] NSWSC 262 CASES CITED : Metropolitan Petar v Mitreski [2009] NSWSC 106 Mitreski v His Eminence Metropolitan Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2009] NSWCA 319 His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia & New Zealand (first plaintiff) The Very Reverend Father Mitko Mitrev (second plaintiff) Lambe Mitreski (defendant) Pero Damcevski (second defendant) PARTIES : Boris Minovski (third defendant) Eftim Eftimov (fourth defendant) Mile Marcevski (fifth defendant) Macedonian Orthodox Community Church St Petka Incorporated (sixth defendant) Naum Despotoski (eighth defendant) Attorney-General for the State of NSW (ninth defendant) FILE NUMBER(S) : SC 97/25609 Mr TGR Parker SC w Mr Steele (Ps) COUNSEL : Mr Holmes QC w Mr N Beaumont (D1-6, 8) Ms Samuels (D9) Sachs Gerace Lawyers (Ps) SOLICITORS : McConnell Jaffray Lawyers (D1-6, 8) Crown Solicitor (D9) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Monday, 19 July 2010 1997/25609 His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand v Lambe Mitreski JUDGMENT (ex tempore) 1 HIS HONOUR: Before the Court is a notice of motion filed on 8 July 2010 by the first to sixth and eighth defendants by which they seek leave further to amend their defence in the proceedings by filing an amended defence to the statement of claim (version 10) in the form of a proposed amended defence dated 1 June 2010 provided to the plaintiffs and the ninth defendant (the Attorney General), on 1 June 2010, as further amended before me today. To this point, argument has proceeded in respect of amendments up to and including paragraph 22.1 of the proposed amended defence. The argument having proceeded as it has, has sufficiently illuminated the relevant issues to enable me to rule on the amendments proposed to that point and thereby, at least aspirationally, to give guidance and reduce argument in respect of the remaining issues arising on the application. 2 In the substantive proceedings the plaintiffs, the Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand and the Reverend Mitko Mitrev, allege that the sixth defendant (the Association) holds certain real and personal property upon charitable trust for the purposes of the Macedonian Orthodox Church – to not entirely accurately summarise the allegation – and that in breach of trust the Association has inter alia excluded the Bishop and the priest from the Parish Church of St Petka, employed a priest not authorised by the Bishop, and closed, altered or added to the church building or its ornaments without the Bishop's approval. By way of relief, in the statement of claim (version 10) – although some amendment to this has been foreshadowed – they seek injunctions restraining continuation of those breaches, the appointment of a new trustee in place of the Association as trustee, and pecuniary remedies in respect of amounts for which the Association is said to be liable to account. 3 The proceedings have had a lengthy history, and that history is important to the argument that has taken place on the application for leave to amend. On 4 April 2003, Hamilton J gave judgment on separate questions; see Metropolitan Petar v Mitreski [2003] NSWSC 262. Those questions were as follows: (a) Whether the property referred to in Schedule A and any other property referred to in paragraph 11 of the Further Amended Statement of Claim ('the Property') was, prior to it being vested in the Sixth Defendant, held upon any and if so what trust, (i) for the purposes of the Macedonian Orthodox Church (as that term is defined in the Further Amended Statement of Claim); (ii) for some other purpose or beneficiary, and if so what purpose or beneficiary. (b) Whether any trust found under (a) above is a valid charity. (c) Whether the effect of the vesting of the Property in the Sixth Defendant was that the Sixth Defendant thereafter held the Property free of either trust. 4 His Honour answered those questions as follows: (a)(i) & (ii) The property referred to in Schedule A was prior to the transfer of the legal titles to the sixth defendant held upon trust to permit the trust property to be used by The Macedonain Orthodox Church St Petka Rockdale as a site for a church of the Macedonian Orthodox Religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of the Macedonian Orthodox Religion. I am unable on the evidence to answer the question as to other property. (b) Yes. (c) No. 5 Thus, at least in respect of the original real property (though not in respect of post-incorporation property and personal property) his Honour decided, as a separate question, that prior to the transfer of legal title to the sixth defendant, the property was held upon a valid charitable trust to permit it to be used by the Macedonian Orthodox Church of St Petka Rockdale as a site for a Church of the Macedonian Orthodox religion and for other buildings and activities concerned with or ancillary to the encouragement, practice and promotion of that religion. His Honour further held that it was not a consequence of the vesting of the property in the sixth defendant that it thereafter held the property free of the trust. 6 The balance of the proceedings was set down for final hearing before Young CJ in Eq, as his Honour then was, in November 2008. The defendants were not ready, and in order to make use of the time that had been reserved it was instead determined to address what his Honour described as "a set of vital questions" as preliminary questions. Those questions were as follows [Metropolitan Petar v Mitreski [2009] NSWSC 106]: What are the terms of the Declared Trust or the Church Trust in so far as material for the following alleged breaches of trust:- (a) preventing the Diocesan Bishop from conducting services in the Church Building; (b) preventing a priest appointed by the Diocesan Bishop as parish priest of the St Petkar Parish from conducting religious services in the Church Building; (c) preventing a priest licensed by the Diocesan Bishop to conduct religious services in the Church Building from doing so; (d) excluding the priest appointed by the Diocesan Bishop as a parish priest of the St Petka from the executive committee of the body responsible for the administration of the St Petka Parish; (e) employing a priest not appointed by the Diocesan Bishop to act as the parish priest of the St Petka Parish; (f) employing a priest under valid ecclesiastical discipline in accordance with Church Law to act as the parish priest of St Petka Parish; (g) requiring or permitting a priest to conduct religious services upon the Church Land when: (i) that priest has not been authorised by the Diocesan Bishop to do so; or (ii) that priest is under valid ecclesiastical discipline in accordance with Church Law. (h) any or all of: (i) closing the Church Building; (ii) removing the Holy Objects from the Church Building; (iii) installing Holy Objects; (iv) reinstalling Holy Objects; (v) carrying out of building works in and upon the Church Building without the authority and blessing of the Diocesan Bishop. (i) refusing or failing to accept applications for membership from believers in the doctrines of the Macedonian Orthodox Church who have satisfied the criteria for eligibility specified in the Constitution, the Diocesan Statute and the By-Laws; (j) failing to remit to the Diocesan Bishop the contribution from the income of the parish as specified in the Diocesan Statute. (k) are any such terms fundamental terms? 7 Having considered the various alleged breaches of trust referred to in that question, his Honour ultimately concluded as follows: The question is: What are the terms of the Declared Trust or the Church Trust in so far as material for the following alleged breaches of trust? The question should be answered by saying that the terms of the relevant trust do not justify the exclusion of the bishop from the parish Church of St Petka nor the employment of any priest not authorised by the bishop nor the closing, alteration, addition to the Church building or its ornaments without the Bishop's approval. I do not consider that it is useful to address each sub-question. I will direct the plaintiffs to bring in short minutes of orders. It may be that I will be persuaded that it would be helpful to provide some answers to the sub-questions. 8 It can thus be seen that while posing a question as to what were the terms of the declared trust or the Church trust so far as material for the various alleged breaches of trust, his Honour instead answered that the terms of the relevant trust would not justify the exclusion of the Bishop from the parish church nor the employment of any priest not authorised by the Bishop, nor the closing, alteration, addition to the church building or its ornaments without the Bishop's approval. 9 The final hearing of the balance of the proceedings is set down to commence before me in a fortnight's time on 2 August 2010, for four weeks. From the foregoing it will be seen that, by the series of separate determinations, it has already been determined that the original real property is held upon the declared charitable trust, and that certain conduct encompassed by the various alleged breaches, if it occurred, would be a breach of that trust. As I understand what remains to be determined, and as Mr Parker of Senior Counsel, for the plaintiffs, has formulated it today, the case before me will involve, first, the plaintiffs essaying to prove that conduct of the type which Young CJ in Eq said would be a breach of trust in fact occurred; secondly, that the first to fifth, seventh and eighth defendants were relevantly implicated in that conduct, so as to attract accessorial liability in one form or another; and, thirdly, by way of reply, effectively that the defendants should not be excused in respect of those breaches. 10 However, because Hamilton J's judgment referred only to the original real property and not the post-incorporation property (nor, in terms, the personalty), there may be an argument as to whether additional property is also trust property. In addition, although Young CJ in Eq answered the questions before his Honour in the way I have described, the plaintiffs wish to contend that there were more extensive breaches – although all the breaches for which they contend were referred to in the questions posed before Young CJ in Eq for determination, though not necessarily in his Honour's answer to them. 11 At least up to paragraph 22.1, with which I am presently dealing, the proposed amendments appear to be motivated by the entirely commendable purpose of producing a much more concise pleading than that with which the Court is presently burdened on the part of the defendants. The latest version of the defence, filed on 24 December 2009, extends to some 193 pages. The proposed amendment reduces that to about 40 pages. This is an outcome in many respects devoutly to be wished. In addition, although Mr Parker of Senior Counsel says that there is prejudice in a manner to which I will come, no inability to deal with or answer the amendments in time for the trial commencing on 2 August, nor any jeopardy to that trial date, has been identified. The proposed amendments, at least to this point, do not appear to raise any new allegation of fact that would require evidence, but seek to characterise the material facts in a manner said to be consistent with the judgment of Hamilton J. Moreover, Mr Holmes of Queen's Counsel, for the defendants/applicants, eschews any attempt to go behind the judgments of Hamilton J or Young CJ in Eq. 12 However, on the basis that there is no attempt to go behind the judgments already given on the separate questions in these proceedings, the only utility of amending the pleading in respect of material facts underlying the existence or the terms of any trust could be to clarify the rights of the parties on appeal from the determinations of those separate questions. An application for leave to appeal was indeed brought by the plaintiffs, and ultimately a cross-application by the defendants, but the Court of Appeal decided that it was inappropriate to deal with those applications before the final hearing of the case. 13 In this respect then, the application is really in the nature of one to amend the pleadings after judgment. It is clear that in an appropriate case leave to amend – even after judgment, and even on appeal – can be granted, but that is an exceptional course, and ordinarily a case should proceed to appeal on the basis of the pleadings that were before the judge who gave the relevant decision. 14 An application to amend, if necessary, could still be made to the Court of Appeal. If the present application had any purpose beyond clarifying the rights of the parties for the purpose of the appeal, then it would render otiose the whole process which has been followed to this point of deciding important aspects of the case by way of separate determination – in order, no doubt aspirationally, to give greater opportunity of reduction of dispute over what remained in issue. 15 At least on what is before me at the moment, I cannot see how paragraphs of the pleading which go to the existence of the trust, or how it came into existence, or to its terms, can be relevant to the hearing that is to take place before me. There is great force in the argument that, in particular where the proceedings before Young CJ in Eq dealt with a separate question because the defendants were not ready to deal with the whole of the case, there would be duplication, potential unfairness and a waste of the Court's resources in permitting a different basis or different terms of trust now to be contended for, or for that matter permitting the defendants to advance any case different from that which was advanced before Young CJ in Eq. There is also great force in the argument that the time for advancing any argument as to what was the trust was in the proceedings before Hamilton J, and the time for advancing any argument as to what were the relevant terms of the trust was in the proceedings before Young CJ in Eq, not now before me. 16 As the defendants eschew any intent to impugn – at least before me – the judgments of Hamilton J and Young CJ in Eq, I cannot see any utility in allowing the proposed amendments. In so far as those judgments, in particular that of Hamilton J, do not address the post-incorporation real property or the personal property, the remaining issue must be, not whether there was any such trust as that declared by Hamilton J, nor whether conduct of the type referred to in the questions before Young CJ in Eq would have been a breach of that trust, but whether those particular assets were acquired on the terms of those trusts or otherwise. But the proposed amendments do not seek to distinguish in any way between the original real property, the post-incorporation property and the personal property. There would be a significant risk of inconsistent decisions if it were now permitted to be argued that the trusts, if any, applicable in respect of the post-incorporation property and the personal property were different from those applicable to the original real property as pleaded in the pleadings extant at the time of the proceedings on the two separate questions. 17 For those reasons, despite the commendable purpose of reducing to a manageable size what is otherwise a burdensome pleading, in my view the disputed amendments should not be permitted. 18 I note that, although originally indicated as disputed, the proposed amendments to paragraphs 19 and 19B are no longer disputed. Ultimately, therefore, I would grant leave to further amend the defence up to paragraph 22, other than in respect of the paragraphs highlighted in yellow on the draft amended defence except for paragraphs 19 and 19B. However, I will formulate the appropriate order at the conclusion of the argument in respect of the balance of the pleading. ********** 19 Since the above reasons were given this morning, Mr Holmes QC has drawn attention to the judgment of the Court of Appeal on the defendants' application for leave to appeal from the judgment of Young CJ in Eq Mitreski v His Eminence Metropolitan Petar the Diocesan Bishop of the Maceodnian Orthodox Diocese of Australia and New Zealand [2009] NSWCA 319, in particular at paragraph 13 which was as follows: The second issue (that his Honour did not answer some questions) need not be discussed at any length. To the extent that some of the questions were not answered, they remain unanswered and remain live in the litigation. I do not see a need to invoke the appellate jurisdiction to deal with questions not answered in the light of the fact that a contested hearing in the Equity Division will otherwise proceed in any event. 20 It is apparent from that paragraph that the Court of Appeal contemplated that, to the extent that his Honour did not answer the whole of the question posed for separate determination, it would remain open to the primary judge at the final hearing to resolve the issues raised. Young CJ in Eq answered the question as his Honour did, having scrutinised the terms of the trust relevant to all the alleged breaches referred to in the question. Having done so, his Honour decided that it was not necessary or useful to answer the question in terms, but instead would be sufficiently answered by the answer given. That decision was made on the basis of the pleadings as they then were – in particular paragraph 22 of the amended statement of claim, which pleads the provisions of church law said to be terms of the trust. 21 By the proposed amended pleading the defendants seek to introduce a paragraph 22.1A in the following terms: In answer to paragraph 22 of the Statement of Claim, the Defendants: 22.1A say that, even if the Original Parish Property and/or the Further Parish Property have been held by the Association on trust since 1997, and even if the provisions pleaded in paragraph 22 are provisions of Church Law: (a) a provision of Church Law is not a term of the trust, except to the extent that it is consistent with the other terms of the trust, including the 1992 Association Constitution; and (b) a failure to act in accordance with a provision of Church Law does not constitute a breach of trust, except to the extent that it results in a diversion of trust property to a different religion. 22 The propositions in subparagraphs (a) and (b) are said to be applicable generally, not only to limited or specific provisions of the church law pleaded in paragraph 22. If they were correct, they would have required a different answer to that given by Young CJ in Eq. Again, it seems to me that the time for arguing that a provision of the church law was not a term of the trust except to the extent that it was consistent with other terms including the 1992 Constitution, and that a failure to act in accordance with the church law was a breach of trust only to the extent that it resulted in a diversion of trust property to a different religion, was at the time of the proceedings on the separate question before Young CJ in Eq, not now. So far as the first of those propositions is concerned, while it is much to be desired that the more concise form of pleading now proposed by the defendants be before the Court if the issue were to arise, I do not see that that argument legitimately now arises in the light of Young CJ in Eq's decision. In any event, if it does arise, the defendant has already pleaded, although in much more expansive terms, to similar effect to paragraph 22.1(a), and if otherwise entitled to do so will not by any defect in the pleading be precluded from raising that at the hearing. 23 As to the proposition in subparagraph (b), as I have suggested it would be inappropriate for that proposition to be raised now in response to those aspects of the question which Young CJ in Eq did not answer, when it would have been an answer to the questions that his Honour did answer and when the totality of his Honour's response to the question might have been influenced had different arguments as to the application of the church law then been advanced. 24 I therefore remain of the view that brevity and conciseness being desirable as they are, in the circumstances of this case it would be inappropriate to falsify the basis upon which the separate questions before Young CJ in Eq proceeded. I remain of the view that the application for leave to amend up to and including paragraph 22 should be refused, except in so far as it is not opposed. ********** 25 Counsel for the defendants/applicants having indicated that, in the light of that decision, the application for leave to amend would be withdrawn, I order that the motion be dismissed with costs. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.