Supreme Court New South Wales Medium Neutral Citation: Lincu v Krnjulac [2014] NSWSC 532 Hearing dates: 26, 27, 28 and 29 August 2013 Decision date: 28 May 2014 Jurisdiction: Equity Division Before: Lindsay J Decision: Determination that defendants are liable to account for trust property of a church transferred into their names. Catchwords: CHARITIES - Charitable purposes - Advancement of religion - Religious buildings Church CHURCHES AND RELIGIOUS ASSOCIATIONS - Church property and trusts - Trustees and Management Dispositions of, and dealings with, church property - Congregational form of church government EQUITY - Trusts and trustees - Charitable trust - Advancement of religion - Church building Legislation Cited: Charitable Trusts Act 1993 NSW Conveyancing Act 1919 NSW, ss 23C or 54A Real Property Act 1900 NSW Trustee Act 1925 NSW, ss 70-71 Cases Cited: Attorney-General ex rel Elisha v Holy Apostolic and Catholic Church of the East (Assyrian) Australia NSW Parish Association (1989) 37 NSWLR 293 at 315A-C Barnes v Addy (1874) LR 9 Ch App 244 at 251-252 Barnes v Alderton [2008] NSWSC 107; 13 BPR 25, 281 at [76]-[77 Bridgewater v Leahy (1998) 194 CLR 457 at 494 [126]-[128] Cadd v Cadd (1909) 9 CLR 171 at 187 Central Bayside General Practice Association Limited v Commissioner of State Revenue (Victoria) (2006) 228 CLR 168 at 178 n 28 Ciaglia v Ciaglia [2010] NSWSC 175 at [65]-[85] Congregational Union of NSW v Thistlethwayte (1952) 87 CLR 375 at 441-445; 44 Federal Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204 Fielding v Houison (1908) 7 CLR 393 at 406 Glebe Administration Board v Commissioner of Pay-Roll Tax (1987) 10 NSWLR 352 at 357C and 357F-358B Heperu Pty Limited v Bell (2009) 76 NSWLR 230 at 267-268 [163] Incorporated Council of Law Reporting (Queensland) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 666-667 Jones v Dunkel (1959) 101 CLR 298 at 308, 312 and 320-321 Letterstedt v Broers (1884) 9 App Cas 371 at 386-387; Miller v Cameron (1936) 54 CLR 572 at 579 and 580-581 Macqueen v Frackelton (1909) 8 CLR 673 at 696 Maguire v Makaronis (1997) 188 CLR 449 at 469 Maks v Maks (1986) 6 NSWLR 34 at 36E Mack v Lenton (1993) 32 NSWLR 259 at 260E-261E Minassion v Minassion [2010] NSWSC 708 at [44] Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 669 [166]-671 [178] Re Dawson [1966] 2 NSWLR 211; 84 WN (NSW) (Pt 1) 399 Re Moroney; Maquire v Reilly (1939) 39 SR (NSW) 249; 56 WN (NSW) 105 Rochefoucauld v Boustead [1897] 1 Ch 196 at 205-206 Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1 at 22-24, 25-26 and 32-33 Scandrett v Dowling (1992) 27 NSWLR 483 The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 at 583-584 Wratten v Hunter [1978] 2 NSWLR 367 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 Texts Cited: BH McPherson, "The Church as Consensual Compact, Trust and Corporation" (2000) 74 ALJ 159 at 167-168 F Jordan, Chapters on Equity in New South Wales (6th ed, 1947), pp 36-37 and 38-39 (reproduced in F Jordan, Select Legal Papers (Legal Books, Sydney, 1983) FM Bradshaw, The Law of Charitable Trusts in Australia (Butterworths, Sydney, 1983), pp 22-27, esp p 25 n 183; p 47 n 216 G Dal Pont, Charity Law in Australia and New Zealand (Oxford University Press, Melbourne, 2000), pp 152-158, esp 157 n 83 GE Dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010) paragraph [10.14] note 81 H Picarda, The Law and Practice Relating to Charities (Bloomsbury Professional, UK, 4th ed, 2010), pp 104-106 Tudor on Charities (Sweet & Maxwell, London, 9th ed, 2003), paragraphs [3-039]-[3-040]; [2-048], [2-052] and [2-057] Category: Principal judgment Parties: Mathew Lincu (First Plaintiff) Zivadin Kovacevic (Second Plaintiff) Laza Krnjulac (First Defendant) Steve Krnjulac (Second Defendant) Simon Krnjulac (Third Defendant) Attorney General for the State of NSW (Fourth Defendant) File Number(s): 2011/00406044 Judgment INTRODUCTION 1By these proceedings the plaintiffs seek to recover, for the charitable purposes of a small, gathered congregation of Christians, land, upon which a church building stands, transferred, in 2004, out of the names of the trustees (including the plaintiffs) in which it was purchased in 1978, into the names of one of the original trustees (the first defendant), and two members of his family (adult sons), for their own purposes. THE CASE IN OVERVIEW 2The name "The Apostolic Christian Church Nazarene - Sydney", which is centre stage in these proceedings, depends for its meaning on the context in which it is used. There is, not uncommonly, an element of ambiguity that attaches to use of the word "church". So it is here. 3The word "church" can, commonly, refer to: (a) a community of saints, and sinners; (b) a legal construct such as a corporation or, as here, an unincorporated voluntary association of members, a club by another name; (c) the purpose or purposes (including, but not limited to, charitable purposes) for which property is held on trust; or (d) a physical building used as a place of worship. 4In legal form, as an association of persons, "The Apostolic Christian Church Nazarene - Sydney" is an unincorporated voluntary association (Fielding v Houison (1908) 7 CLR 393 at 406; Macqueen v Frackelton (1909) 8 CLR 673 at 696) which appears always to have operated without a formal written constitution, but on a common understanding that business undertaken by members of the association in pursuit of their common purpose is ordinarily decided by a process which, in a secular context, would be recognised as a form of democracy, bound by conventions grounded in custom, informed by shared beliefs. 5The fact that the Church is without a written constitution, and a trust deed prepared at the time of acquisition of the land for the Church cannot be found, is not to say that the Church has no constitution or that property held for its purposes cannot be validly so held. The absence of writing, in the present case, is an evidentiary complication, not one fatal to the case the plaintiffs seek to make: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 667 [149] et seq. 6Having regard to the whole of the evidence that is available, including evidence given by the first defendant as one of the original trustees of the Church, I am satisfied that that case can be, and has been, made out. 7In the understanding of lawyers, "The Apostolic Christian Church Nazarene - Sydney" is to be characterised as a congregational, as distinct from hierarchical, church: Attorney-General ex rel Elisha v Holy Apostolic and Catholic Church of the East (Assyrian) Australia NSW Parish Association (1989) 37 NSWLR 293 at 315A-C; Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 669 [166]-671 [178]. 8Contrary to a submission made on behalf of the first defendant and his sons (the second and third defendants), the fact that the government of the Church takes a democratic, congregational form does not, of itself, carry a consequence that the terms of a trust (for the charitable, religious purposes of the Church) upon which property may be held for the Church can be varied, or the identity of the trustees can be changed, by a popular vote of the members of the Church in its guise as a voluntary association. Unless the terms of the trust are proven to include a power of amendment, or a power to appoint and remove trustees, it is not open to the members of the Church to change the trust: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 667 [151]; BH McPherson, "The Church as Consensual Compact, Trust and Corporation" (2000) 74 ALJ 159 at 167-168. I am not satisfied that there is, in this case, any material power to change the identity of trustees at the will of a meeting of Church members. 9As the facts of this case demonstrate, property "of" the Church can be held by individuals on trust for church purposes: Glebe Administration Board v Commissioner of Pay-Roll Tax (1987) 10 NSWLR 352 at 357C and 357F-358B. However, if those purposes are not charitable the trust may fail, with the consequence that the property may be held, for example, on trust for individual members of the Church at the time the property was acquired or their respective estates: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 661 [107]-662 [115]; Tudor on Charities (Sweet & Maxwell, London, 9th ed, 2003), paragraphs [3-039]-[3-040]. 10Unlike larger denominations of Christians, the Church does not have special legislation, specific to it, governing the constitution and operations of a trust for church property, of the type considered in cases such as Fielding v Houison (1908) 7 CLR 393 at 406 and Scandrett v Dowling (1992) 27 NSWLR 483 . 11The plaintiffs' principal opponent (the first defendant) presents his, and his sons', defence in the guise of a dispute (arising out of private, social tensions between different personalities, rather than any theological difference) between members of a congregation of worshippers about control of property acquired, and still available, for worship. 12He concedes that he is under a continuing obligation to make the land available for public worship, according to the tenets of "The Apostolic Christian Church Nazarene - Sydney" (about which there is no current dispute), but he contends that that obligation resides in the law of contract, not the law of trusts, to the extent that the law permits any cognisance at all to be taken of spiritual obligations: cf, Scandrett v Dowling (1992) 27 NSWLR 483. 13For the reasons elaborated in this judgment, I do not accept that he, or for that matter his sons, can circumvent the fact (as I find) that the land was acquired in 1978, and remains, impressed with a trust for the charitable, religious purposes of the Church. 14He accepts, and I find, that a mortgage debt incurred by the original trustees at the time they purchased the land, with (as I find) the common intention that it be purchased for the Church, was paid off: (a) by them, as members of the Church; (b) by donations from the congregation that worshipped (as a church) in the building on the land; and (c) by donations from like-minded congregations elsewhere, including a large donation from a congregation in the United States of America. 15He contends, but I do not accept, that the land was transferred into the names of himself and his sons (respectively, the first, second and third defendants) in 2004: (a) in consideration of a promise by him to pay expenses on the land; and (b) to forestall a perceived threat that a congregation of like-minded people, interstate, would take control, or ownership, of the land. 16He accepts, and I find, that the purpose for which the land was purchased in 1978 was for use as a place for worship. 17The land was purchased, and paid off, for the purpose of public worship according to the system of belief of this particular Christian church community. Even though membership of the unincorporated voluntary association associated with that community might have had special meaning, and the nature of an attendee's participation in a worship service might have varied according to a variety of considerations, including membership of the association, services have always been open to the public. 18I am satisfied that the land was purchased on trust for the advancement of religion, not for the benefit of particular individuals, and that its purchase was directed to the benefit of the public. In short, I am satisfied that the land was purchased on trust for, and dedicated to, charitable purposes: F Jordan, Chapters on Equity in New South Wales (6th ed, 1947), pp 36-37 and 38-39 (reproduced in F Jordan, Select Legal Papers (Legal Books, Sydney, 1983); FM Bradshaw, The Law of Charitable Trusts in Australia (Butterworths, Sydney, 1983), pp 22-27, esp p 25 n 183; G Dal Pont, Charity Law in Australia and New Zealand (Oxford University Press, Melbourne, 2000), pp 152-158, esp 157 n 83; GE Dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010) paragraph [10.14] note 81; Tudor on Charities (9th ed, 2003), paragraphs [2-048], [2-052] and [2-057]; H Picarda, The Law and Practice Relating to Charities (Bloomsbury Professional, UK, 4th ed, 2010), pp 104-106. 19A trust for the advancement of religion falls squarely within the meaning of the word "charity" under the general law: The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 at 583-584 applied, inter alia, in Incorporated Council of Law Reporting (Queensland) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 666-667; Glebe Administration Board v Commissioner of Pay-Roll Tax (1987) 10 NSWLR 352 at 357G-358A; Central Bayside General Practice Association Limited v Commissioner of State Revenue (Victoria) (2006) 228 CLR 168 at 178 n 28. 20A gift to the trustees of a church, for the purposes of the church, is classically a dedication of property to a charitable purpose insofar as the gift is for the advancement of religion, and incidental purposes, for the benefit of the community or a considerable section of the community: Congregational Union of NSW v Thistlethwayte (1952) 87 CLR 375 at 441-445. A trust for the erection or maintenance of a church building in which believers in the tenets of a religious community may worship and find spiritual edification is a religious, charitable trust: Thistlethwayte at 87 CLR 44, citing Re Moroney; Maquire v Reilly (1939) 39 SR (NSW) 249; 56 WN (NSW) 105. 21The mere fact that a religious body is small does not, of itself, affect its charitable character: Bradshaw, The Law of Charitable Trusts in Australia (1983), p 47 n 216. 22Not every trust for a religious purpose will be a religious charitable trust : Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 671[179]-[180]. A religious institution that engages in a commercial enterprise runs a risk that that activity will be denied the status of a charity (Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1 at 22-24, 25-26 and 32-33; Federal Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204); but that risk is not here present. The subject land was purchased as, and for use as, a church. It has been consistently used, and used only, as a church. As intended at the time of its acquisition, it has been consistently used for the advancement of religion and for no other purpose. 23It is not necessary, in these proceedings, to have resort to s 23 of the Charitable Trusts Act 1993 NSW (formerly s 37D of the Conveyancing Act 1919 NSW) to uphold the validity of the trust attaching to the Church land. The land was acquired, is held, and has been consistently used exclusively for a charitable purpose (the advancement of religion), and incidental purposes, unqualified by a possibility that it is also allowed to be applied for a non-charitable purpose. There is no need to invoke the legislation to construe the terms of the trust as limited to charitable purposes. 24The fact that the first defendant and his sons have, in breach of obligations of trust, used the Church land as security for their own secular purposes does not deprive it of its character as land dedicated to religious, charitable purposes. 25The first defendant accepts, and closer attention must be given to inferences available to be drawn from his acceptance, that implicit in arrangements made for transfer of the land to him and his sons in 2004 was an undertaking by them that the congregation accustomed to worship there would be allowed, by them, to continue to use the land for worship. This, notwithstanding that the sons have never, at any material time, been members of the Church. 26The first defendant says that, as promised, he has paid expenses on the land; and that he and his sons have, at all times, allowed the land to be used for worship by the congregation. 27That he has paid expenses on the land is not presently in dispute; but it is qualified by his appropriation of legal title in the land to himself and his sons, and by his subjection of the land to a mortgage (granted by them in favour of Community First Credit Union Limited) for personal purposes. 28That he has allowed the land to be used for worship is, likewise, not presently in dispute; but it is qualified by his alienation of members of the congregation, and his endeavours to recast the congregation in his own image. 29He explains the plaintiffs' disaffection with him by reference to events of May-October 2010 when, he says, the first plaintiff, having lost the confidence of a majority of the congregation, was removed by the congregation from his position as a minister of the Church, consequent upon which the first plaintiff and other members of the congregation withdrew from worship at the Church, leaving him to form a separate congregation continuing to worship there. 30The case for which the first defendant, and his sons, contend is flawed. 31The land was acquired, and held, on trust for the charitable purposes of the church community for whose worship it was purchased. Insofar as the trustees paid part of the purchase price, or incurred a mortgage debt, they did so for the purpose of advancing the charitable purposes of the Church, with no intention that they or any other individuals would acquire a private proprietary right. 32The land, with the building erected on it, was dedicated to charity from the time of its acquisition in 1978 up to and including the time when, in 2004, the first defendant contrived to have the property transferred into the names of himself and his sons. 33By that transfer his sons, with him, acquired the legal title to the property, with notice that it was held on trust for charitable purposes. They did so, knowing that he had no present, or prospective, beneficial entitlement to it, and for no consideration. They took title to the property as constructive trustees for the charitable purposes of the Church. It remains dedicated to charity. 34Immediately after they took title to the land, in breach of their obligations as trustees the first defendant and his sons mortgaged the property for their own private, business purposes. The first defendant contrived to appropriate the title to the property to himself with that object, not disclosed to fellow worshippers, clearly in mind. 35As trustees, the first, second and third defendants are liable to account for the trust property they have misapplied. They are obliged to restore it to the Church, represented in these proceedings by the Attorney General for NSW (the fourth defendant) as, ex officio, protector of charities and, pursuant to leave granted under the Charitable Trusts Act 1993 NSW, by the plaintiffs. 36The property remains dedicated to the same charitable purposes for which it was originally acquired, subject only to such (if any) rights as the current, registered mortgagee may have as a bona fide purchaser for value. 37As the mortgagee is not a party to these proceedings, such rights as it may have are reserved for further consideration in the event that the first defendant and his sons are not able to make good the trust property they have misapplied. 38Having acquired, and subsequently dealt with, trust property in breach of trust, the first, second and third defendants cannot be permitted to hold church trust property any longer than may be necessary, or expedient, to vest it in trustees who have the confidence of the Court, assisted by the Attorney General as the protector of charities. The powers of the Court (both inherent and statutory) are ample enough to remove and replace a trustee of a charitable trust where the due administration of the trust so requires: Charitable Trusts Act 1993 NSW, ss 7-8; Trustee Act 1925 NSW, ss 70-71; Letterstedt v Broers (1884) 9 App Cas 371 at 386-387; Miller v Cameron (1936) 54 CLR 572 at 579 and 580-581. 39In the absence of any substantive controversy about the terms of the charitable purposes to which the land is dedicated, there may be no need for the purposes of the trust to be elaborated in a grant of declaratory relief. Care needs to be taken not, unnecessarily, to constrain the Church as a living church: Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at 6667 [151] - 669 [164]. However, the occasion of reviewing the identity of the trustees of the Church provides an opportunity for further consideration to be given by the Court, with the benefit of submissions from the Attorney General, to the question whether elaborate declarations about the purposes of the trust should be made and, if so, as to their scope and form. 40An opportunity will be allowed to the parties, following publication of these Reasons, to make submissions about the orders to be made to give effect to the Judgment. ELABORATION OF FACTUAL CONTEXT 41On 1 December 1978 five men, members of a small congregation of Christians, accustomed to worship under the name of "The Apostolic Christian Church Nazarene-Sydney", completed their purchase of land in Station Street, Arncliffe (being Lot 32 in Deposited Plan 1823, then the whole of the land contained in Certificate of Title Volume 2150 Folio 146, now the land contained in Folio Identifier 32/1823) for the purpose of enabling the whole congregation, as such, to worship, to pray, there. 42The Memorandum of Transfer in favour of the purchasers was dated 1 December 1978 and, on 16 January 1979, registered on the title to the land (under the Real Property Act 1900 NSW) as dealing number R31017. It recorded that the consideration for the transfer ($25,000) was paid by the five purchasers and that the land was transferred to them as joint tenants. 43The purchase was funded, at least in part, by a mortgage over the land granted to the purchasers in favour of Bank of New South Wales Savings Bank Limited. The Memorandum of Mortgage, dated 25 November 1978, was registered on the title of the land (as dealing number R31018) on 16 January 1979. 44The Bank's mortgage was discharged in or about 1982. A formal Memorandum of Discharge was registered (as dealing number T155853) on 22 July 1982. 45The Memorandum of Mortgage recorded, on its first page, that the money lent by the Bank was lent to the purchasers, as debtors to the Bank, "in an account styled 'Trustees of The Apostolic Christian Church Loan Account'". 46A Deed of Trust was executed at about the time the land was purchased; but it has been lost. 1978 is a long time ago in the life of a small church community such as we have here. 47There is a hint in the evidence that the Deed may have come into the possession of the first defendant at or about the time the Bank of New South Wales mortgage was discharged in 1982; but there is insufficient evidence for a finding that it did. He concedes that he, personally, collected a "title deed" from the Bank, and retained it, but he denies that that Deed was anything other than an old form of Certificate of Title for the Church land. 48Although the Deed of Trust is not in evidence, the fact (as I find) that it was prepared as part of the security documentation required by the Bank in 1978 supports an inference that its terms provided, in essence, for: (a) a declaration by the five individual purchasers that they would hold the land on trust for "The Apostolic Christian Church Nazarene - Sydney"; and (b) no greater elaboration of the terms of the trust. That is an inference that I am comfortably satisfied should be drawn. The Bank had no readily discernable or necessary interest in an elaboration of the Church's charitable purposes, in specification of a means for variation of them or in governance of the internal affairs of the voluntary association of Church members. 49In my judgement, there is, before the Court, secondary evidence of the existence, and the contents, of the Deed of Trust that satisfies any requirement for a clear and convincing proof: Maks v Maks (1986) 6 NSWLR 34 at 36E; Mack v Lenton (1993) 32 NSWLR 259 at 260E-261E; Minassion v Minassion [2010] NSWSC 708 at [44]. 50That evidence includes the form of the Bank's Memorandum of Mortgage; an unsigned minute of members of the Church, prepared at the request of the Bank to ratify the borrowing of the bulk of the purchase price of the land; the contemporaneous correspondence, and a statement of account, of the solicitor who acted on the purchase of the land; the evidence of each of the surviving purchasers (the plaintiffs and the first defendant) that they regarded themselves as trustee for the Church in their acquisition of the land; the nature of the building (a church building) on the land; the early recognition of the purchasers of the land (including the first defendant) that the Church was the owner of the land; and the first defendant's reiteration, at several points in his oral evidence, that the land has always been regarded by everybody associated with the Church as dedicated to God. 51Albeit on the basis of secondary evidence of the Deed of Trust, I am satisfied that each of the five men who purchased the land for the Church in 1978 did, in fact, execute a Deed of Trust to the effect that they would hold the land as trustees for the Church. 52On that basis, I am satisfied that nothing in the Statute of Frauds provisions of the Conveyancing Act 1919 NSW, ss 23C or 54A, is an impediment to enforcement of the trust which, the plaintiffs contend and I find, attaches to the land in favour of the Church. 53In any event, it is not open to the first defendant, in equity, to use those provisions as a cloak for fraud, to defeat his obligations as a trustee, in circumstances in which, I am satisfied, he was party to acquisition of the land with the intention, common to all the purchasers, that it would be acquired, and held, as trustees for the Church, not for themselves or any other individual personally: Rochefoucauld v Boustead [1897] 1 Ch 196 at 205-206; Cadd v Cadd (1909) 9 CLR 171 at 187; Wratten v Hunter [1978] 2 NSWLR 367; Barnes v Alderton [2008] NSWSC 107; 13 BPR 25, 281 at [76]-[77]; Ciaglia v Ciaglia [2010] NSWSC 175 at [65]-[85]. 54There is in evidence an unsigned minute of a meeting of members of the Church that purports to ratify the purchasers' borrowings from the Bank. It was a document prepared at the request of the Bank rather than an internally generated record of Church business. So viewed, it adds something, but only a little, to an inference that can be drawn from the Memorandum of Mortgage itself. The purchasers were content, there, to be regarded as trustees of the Church. 55That is how their solicitor (the present solicitor for the plaintiffs) regarded them. When writing to his "client" with a report on settlement of the purchase, accompanied by a settlement statement and an account of his costs and disbursements, on 6-7 December 1978, he addressed each document to "The Apostolic Christian Church, C/- Mr M Lincu [the first plaintiff]". 56One item of work for which he charged $100 (together with a disbursement of $6.50 for stamp duty) is supported by the following entry in his account: "To our costs of and incidental to acting for you [The Apostolic Christian Church, on 'your purchase' of the land] in relation to your [sic] preparation of Deed of Trust, stamping and attending to execution thereof... $100.00." 57Few other contemporaneous records are extant. 58However, two items, not contemporaneous, but ante-dating the present controversy, warrant a mention. 59First, there is a certificate dated 29 November 1979 issued by the South British United Insurance Group in lieu of a formal policy, for fire insurance in respect of the building on the land. It named the "Owner" of the property as "Apostolic Christian Church" and the mortgagee as Bank of New South Wales Limited. 60Secondly, there is an application to Rockdale Municipal Council (dated 11 October 1989) for approval to develop the "existing church property" by the addition of a room, nominally described as a "games and bible study room", but, apparently, to be used as a "prayer" room. Representatives of the Church (described as "the Apostolic Christian Church") signed in two capacities. The First Plaintiff signed for the Church as the applicant for approval. The First Defendant signed for the Church as owner of the land. The "existing development" was described in the application as a "church building" bought, and used, as "a church". 61The first plaintiff's evidence that, to the best of his knowledge and belief, rates and taxes were never charged against the land, as church property, is consistent with its having had the status of a church, open to the public, not merely that of private property used by members of a religious group. 62There is no reasonable ground upon which to doubt the fact, alleged by the plaintiffs, that the land was purchased in 1978 by trustees for "The Apostolic Christian Church", of which the first plaintiff was a leading member. The few available, contemporaneous records corroborate evidence given by the first plaintiff and the plaintiffs' solicitor to that effect. I accept their evidence. Nor is it really in dispute on the defendants' side of the record. There is a suggestion of dispute in the Defence filed by the first, second and third defendants (where they allege that the purchasers merely agreed amongst themselves, orally, that they would make the property available for church services) but it did not survive cross examination of the first defendant. 63Although he has, on my findings, acted wrongly in his dealing with the land since 2004 or thereabouts, the evidence he gave orally at the hearing of the proceedings suggests that he still attaches importance to membership of the community of the Church. 64He could not, and did not, deny that he had acted as a trustee for the Church. He could not in good conscience, and did not, deny that the property should remain available for public worship. If I am not mistaken, he was also embarrassed by an inability, at the time of the hearing, to discharge the mortgage by then on the title to the property. He appeared, to me, to exhibit a consciousness of guilt in having charged church property with a personal indebtedness he was unable readily to repay. 65I mention that, here, not intending to reflect adversely on his credit, but to underline an impression of the continuing importance of the church community to him and his acceptance that, at the time it was acquired in 1978, the land was acquired by the purchasers as trustees for the Church. 66As one of the purchasers of the land in 1978 he was described in the Memorandum of Transfer, and the Memorandum of Mortgage, as "Lazar Krnjulac". 67A formal memorandum (dated 8 July 2004) was registered on the title to the land (as dealing number AA852413) on 3 August 2004 to record that his first name is correctly spelt with the "r", "Laza". 68In his cross examination at the final hearing of these proceedings several exchanges, worthy of notice as evidence (not merely as admissions) against his interest, occurred: At transcript page 143 "Question: Mr Krnjulac, in 1978 a decision was made to purchase a church at Arncliffe? Answer: Yes. Question: And the purpose of that purchase was to have a place where the congregation could pray? Answer: Yes. Question: In 1978, the praying in the congregation in Sydney was normally done on a Sunday? Answer: Yes. Question: But there were other occasions, were there not, when the congregation gathered together for other ceremonies within the church such as baptisms? Answer: Yes. That was a Sunday. Question: They occurred on a Sunday or ... Answer: Saturday and Sunday. Question: Saturday and Sunday. And sometimes marriage celebrations? Answer: Yes. Question: Although I don't think anybody in the congregation had the authority to perform civil marriage ceremonies under the laws of Australia? Answer: That's true. Question: But there were celebrations of the marriage then conducted subsequently in the church? Answer: Again in the church, yes. Question: And funerals, the occasional funeral? Answer: Funerals is [sic] not held in the church, it's in a funeral parlour. Question: Now the purpose of praying together in this congregation in 1978, and in the continuing years, I presume was to improve the spiritual well-being of the people in the congregation? Answer: Well, you can say yes." At transcript page 147 "Question: In 1978 you knew that the church was being purchased not for the five individual men but for the Congregation as a whole, didn't you? Answer: Yes. Question: And you knew that it was being purchased to enable the Congregation to pray together? Answer: For all people, yes, yes. Question: For all people to pray together? Answer: Yes." At transcript page 153 "Question: Mr Krnjulac, in the years immediately after the purchase [of the land], say in the 1980s, you always considered the church building and premises was [sic] the property of the Apostolic Christian Church, didn't you? Answer: For worshipping, yes, the building, yes. But on the title is [sic] only five names that we are owners of the property. We bought for the people using it but we are actually five owners of the property. Question: But you never considered yourself ... Answer: No. Question: ... an actual owner of the property? Answer: No, not at that time, yes, no. Question: In the 1980s or in the 1990s for that matter? Answer: That's right, that's correct." At transcript page 155 "Question: In 2010 you still considered, didn't you, the true owner of the church was the Apostolic Christian Church? Answer: No. Question: So something changed between the 1970s, 80s, 90s and the beginning of 2000s, something changed where you changed your attitude that you now believed that you and your two sons were the owner [sic] of the church? Answer: That's correct. Question: You said in your affidavit that the reason that you gave the Congregation for transferring the title of the church into your name is that you were worried that the church in Melbourne was seeking to take over the property? Answer: Yes. Question: And that's the only reason you gave for transferring the church into your name? Answer: At the time, yes. Question: But there was no justification for you to transfer it into your name and your two sons' to obtain that same result, was there? Answer: No." At transcript page 156: "Question: Following [on] from your reason to the Congregation that you were worried about the church in Melbourne taking over the property, you told the Congregation that you wanted to protect the church from others, that is, protect it from perhaps people in the Melbourne Congregation? Answer: I did not tell the Congregation that. Question: But that was certainly your attitude, wasn't it, that you wanted to protect the church? Answer: That is my point that there was [sic] rumours around going on they're going to take it over. Question: And that certainly was your feeling that you wanted to protect the church from anything going wrong, somebody taking the church? Answer: Yes. Question: And that, I take it, is still your attitude, is it? Answer: It is. Question: You wanted to keep the property safe from others? Answer: Yes. Question: You wanted to keep the church available for prayer and worship by the congregation? Answer: Always. Question: And always even to this day? Answer: Even to this day. Lindsay J: Can I just ask a question here, and if there's objection to this question please do not answer it. Question: Within the church community of which you have been part, do you say that the church building was 'Dedicated to God'? Would that be an expression that you would use? Answer: Yes. Question: Was that always your view? Answer: Always my intention. Question: And would it still be your view? Answer: Still my view. Question: Do you know anybody within the church community using that as a broad expression who, to your knowledge, takes a different view? Answer: No." At transcript page 157 (following on from the page 156 extract) "Question (by the plaintiffs' counsel): And following from that attitude that you say that you wished to protect the church from others, in May of 2010 [at a gathering of church members], you told those gathered in the church that the church was 'on security', you used those words, 'on security', didn't you? Answer: Yes, I did. Question: You said 'It was on security so nobody can touch it'? ... Answer: Yes. Question: But the fact is, Mr Krnjulac, that the church is not safe, that people can touch it because you have mortgaged the church, haven't you? Answer: Yes." At transcript page 158 "Question: ... But you know when you mortgage a property, if you default on the mortgage payments, the mortgagee, being the bank or whoever lends you the money, can take possession of the property and sell it? Answer: Yes, if you don't make repayments, yes. Question: And that's the case here, isn't it, that if you stopped making mortgage payments, for whatever reason, that the Community First Credit Union can come in and take possession of the church and sell it? Answer: Well I said again, if I don't pay repayments, yes. Question: What if you get run over by a bus...? Answer: That's why I got two sons behind me. Question: ... And you and your two sons can't, for some problem of fortune, can't afford in the future to pay those mortgage payments, the church is lost? Answer: Well, it is, yep." At transcript pages 187-188 "Question: ... Prior to 2004, and I am saying the early two-thousands, 1990s, 1980s? Lindsay J: Any date before 2004. Witness: It was on my name, the property. Question (by the plaintiffs' counsel): You would never put this property down as an asset of your family? Answer: No. Question: And then, even though you considered it, as at May 2004, as still the property of the church congregation, you still put it down as an asset of your family for banking purposes? Answer: Because I was owner. Question: Because you were on it? Answer: I was the owner.... Question: Because you are the owner? Answer: That's correct. Question: Now you did not consider, as at May 2004, that you were holding this property for other people? Answer: Still consider that? Question: You still consider that? Answer: Still consider that. Question: Didn't you think it was prudent to tell the lending institution that you were actually holding this property for other people, that you were keeping it safe for them? Answer: No, I did not." At transcript page 198 "Question: Now after you had obtained the title to the church, you and your sons, you couldn't sell the church, could you? Answer: No I could not sell the church. Question: You couldn't sell it because the congregation would notice that it's been sold? Answer: No I could not sell the church at all. Question: You could use it for security, but one thing you couldn't do was sell it? Answer: I would never sell it." At transcript pages 198-199 "Lindsay J: ... The question that is being put to you [by counsel for the plaintiffs], very neutrally, is Do you accept that at [an encounter between members of the Church in 2010] you used the expression, 'I can liquidate the church', or something like that. Answer: Your Honour, they provoke me. I was very angry. Probably I did say it. They come down like a ton of bricks on me, and that's why I stand up. They abuse my family. And I probably did say it... Question (by the plaintiffs' counsel): Your evidence is that you probably used the word 'liquidate'? Answer: Yes, probably. Question: And the sense in which that was used is that you had the power to liquidate this asset, that is to get rid of it if you wanted to? Answer: Well, what do you mean 'get rid of it'? Question: To get rid of it? Answer: To sell it? Question: Yes? Answer: No. Question: But you said that to the assembled people? Answer: No I would not sell it. Question: What does liquidate mean? Answer: The bank take over. Question: The bank take over? Answer: Yeah. Question: Bank take over so that - and a consequence of that would be that the congregation would not have access to the church? Answer: No-one will have it. Lindsay J: Is that presently a risk in any event, that the bank will take it over, the credit union will take it over because you are having difficulty financially? Answer: If I have that difficulty, not paying, they will take over, yes. Question: Do you have that difficulty? Answer: Not." 69Of the five men who purchased the land: (a)two died well before the events of 2004 that triggered the commencement of these proceedings: Joca Krnjulac died on 20 September 1989, and Djura Liptak died on 26 September 2001. (b)two of the three survivors are plaintiffs in the proceedings: Mathew Lincu as first plaintiff, and Zivadin Kovacevic as second plaintiff. (c)the remaining survivor (Laza Krnjulac) is the first defendant, together with his sons, Steve Krnjulac (the second defendant) and Simon Krnjulac (the third defendant). 70In one capacity or another the first plaintiff and the first defendant have remained associated with the Church, each of them (at one time or another) serving as a Minister. It is not necessary, or productive, to set out here precise particulars of their membership of the Church, or of particulars of discord within the Church membership that has attended their relationship, and other relationships, within their community. It is sufficient, for present purposes, to record that each of them has an association with the Church going back beyond 1978. 71The second plaintiff, on the other hand, moved to Melbourne in or about 1980. He has remained active in a like-minded congregation. However, he has not been a member of the Sydney Church since his move to Melbourne. 72A formal notice of the deaths of Joca Krnjulac and Djura Liptak (incorporating two statutory declarations, each dated 21 May 2004, respectively deposing to the deaths of the deceased trustees) was registered on the title to the land (as dealing number AA695222) on 4 June 2004. Its execution by the plaintiffs was procured by the first defendant as part of the process pursuant to which the land was transferred to him and his sons. 73The first, second and third defendants are currently registered as proprietors of the land (holding the legal estate in it as joint tenants), subject to a mortgage dated 23 July 2004 (registered on 3 August 2004 as dealing number AA852414) in favour of Community First Credit Union Limited. 74Without full disclosure of his intent to the plaintiffs, or members of the congregation associated with the land, the first defendant procured a transfer of the land to himself, and his sons, to enable him to borrow money from the Credit Union for his own personal, business purposes. 75He and his sons became registered proprietors of the land upon registration of a Memorandum of Transfer dated 4 June 2004 registered on the title (as dealing number AA695223) that same day. 76The Memorandum of Transfer incorporates an annexure that bears the signatures of each of the first plaintiff, the second plaintiff and the first defendant as transferors; but the circumstances in which the plaintiffs signed the document lie at the heart of the plaintiffs' case. 77The plaintiffs contend, and I find, that: (a) they were tricked by the first defendant into "transferring" the land to him and his sons; (b) that they never intended to transfer the land to him, or for the personal benefit of him and his family, or to transfer it away from the Church; (c) that the first, second and third defendants took the land on a constructive trust for the charitable purposes of the church; (d) that the defendants acted in breach of trust in mortgaging the land for their own personal benefit; and (e) that they are liable to account for the trust property they have taken, and to be removed and replaced as trustees for the Church. 78On 3 May 2010 the first plaintiff lodged a caveat (numbered AF462852 in the records of the Registrar General) on the title to the land. 79It described, as follows, the "estate or interest" in the land claimed by the first plaintiff as caveator: "Previous registered proprietor removed from title through improper or fraudulent actions by the current registered proprietor(s)". 80It described, as follows, the facts by virtue of which the caveator claimed an estate or interest in the land: "The Caveator asserts that dealing numbers AA695222 (Notice of Death) and AA695223 (Transfer) were lodged through improper or fraudulent means by the current registered proprietor(s). Title to the land has now been transferred from the Caveator by improper or fraudulent means. Caveat being lodged to resolve improper transfer of title." 81The proceedings were commenced when, on 16 December 2011, in response to a lapsing notice (served by the first, second and third defendants pursuant to s 74J of the Real Property Act 1900 NSW), the first plaintiff - then the only plaintiff - filed a summons for an order that the operation of Caveat AF462852 be extended, and obtained directions, inter alia, for the proceedings to proceed by way of pleadings. 82A statement of claim (subsequently amended) was filed on 22 December 2011, at which time the second plaintiff was joined as a party. 83The following additional orders affecting the constitution of the proceedings should also be noted: (a)on 28 September 2012 the Attorney General was joined as the fourth defendant in the proceedings. (b)on 7 December 2012 the plaintiffs were granted leave by the Court, under ss 6(1)(b) and 6(2A) of the Charitable Trusts Act 1993 NSW, to bring the proceedings and to continue them, subject to any further order of the Court. (c)on 16 April 2013, subject to further order: (i)the plaintiffs were jointly appointed by the Court to represent in the proceedings themselves and all members of The Apostolic Christian Church, Nazarene - Sydney who contend that the land is trust property; and (ii)the first defendant was appointed by the Court to represent in the proceedings himself and all other members of The Apostolic Christian Church, Nazarene - Sydney not represented by the plaintiffs. 84The Memorandum of Transfer (registered as dealing AA695223) in favour of the first, second and third defendants is a curious document insofar as the signatures of the respective transferors are found, not on the face of the Memorandum, but on an annexure to it; the consideration for the transfer is recorded in its receipt clause as $1 (although the evidence is that not even that was paid); and, as registered, the Memorandum bears a receipt of the Office of State Revenue for stamp duty of $10,790.00. If the Transfer had been presented to the Commissioner of State Revenue as merely a change of trustees, only nominal stamp duty would have been payable. THE COURSE OF THE EVIDENCE 85In the course of the hearing of the proceedings evidence was given by: (a)each of the first plaintiff, the second plaintiff and the first defendant; (b)Paul Pentsa, an Elder of the Church (and a member of a related Brisbane congregation) with spiritual oversight over the Church; (c)John Allanson, the solicitor for the plaintiffs, who also acted on the purchase of the land in 1978; (d)two members of the congregation who support the plaintiffs; and (e)Allan Beresford James (the first defendant's accountant, in 2004 an employee of the first defendant), who deposes to having witnessed some documents (of a nature not now recalled by the witness) signed by the first plaintiff, at the business premises of the first defendant, in or about May 2004. 86Neither of the first defendant's sons (the second and third defendants) has given evidence. Their absence from the witness box is unexplained, although it is common ground that they are not members of the Church. In reality, any case advanced on their behalf rises no higher than that of their father. 87It is common ground that any interest they acquired in the land was acquired by them as volunteers. 88Given the nature of the land (upon which a church building is and has been at all material times erected); their residence with their parents, and their involvement in their family's business enterprises, at the time the land was acquired; their father's close connection with worship and other church activities on the land; their lack of any personal connection with either the land or church activities on it; and their father's evidence that he put them on the title to help "protect" the Church, they cannot but have been aware that the land was dedicated to charitable purposes of the Church. I infer that they were, in fact, so aware, from (at least) the time of their acquisition of an interest in the land. 89That inference is the more readily available for their unexplained absence from the witness box; they could have contradicted it, by giving evidence, but they chose not to do so: Jones v Dunkel (1959) 101 CLR 298 at 308, 312 and 320-321. 90There is no suggestion that they acquired their respective interests in the land otherwise than as nominees of their father. On the contrary, in final submissions their counsel described them as "ready emanations" of their father. If he acquired title to the land in his own name in breach of, or subject to obligations as a trustee, they too can comfortably be said to have acquired their interest in the land on the same terms. 91Their counsel invites the Court to find that, if they have any liability (otherwise than as guarantors of the Credit Union mortgage) it must be a liability no more extensive than as volunteers in receipt of trust property according to the principles enunciated in Heperu Pty Limited v Bell (2009) 76 NSWLR 230 at 267-268 [163] rather than by reference to Barnes v Addy (1874) LR 9 Ch App 244 at 251-252. 92It is not necessary, I apprehend, to explore this territory. It is, for present purposes, sufficient to record that, as I have found, the sons were aware that the land was dedicated to charitable purposes of the Church from at least the time of their acquisition of an interest in the land. They granted a mortgage to the Credit Union, to secure a debt they personally owe to the Credit Union, at a time when they must be found to have held the land on a constructive trust for the Church. 93Controversy attaches to the circumstances in which the land was transferred to the first defendant and his sons in 2004. There is a direct conflict in the evidence between each of the plaintiffs (on the one hand) and the first defendant (on the other hand) about how the plaintiffs came to place their respective signatures on: (a)each of two printed pages in the form of statutory declarations, which currently bear the date 21 May 2004, and together form an annexure to the Notice of Death registered on the title to the land as dealing number AA695222; and (b)a single printed page headed "Annexure 'A'", itself undated, currently reproduced as "Annexure A" to the Memorandum of Transfer dated 4 June 2004 registered as dealing number AA695223. 94Each of the three signed pages bears the signature of the first plaintiff, the second plaintiff and the first defendant. 95Each signature purports to have been witnessed by Kevin John Perram, purportedly a Justice of the Peace. 96Mr Perram's address is recorded as having been the same address as the first defendant's place of business, at Liverpool, in the western suburbs of Sydney. 97In his affidavit evidence the first defendant deposed to Mr Perram's conduct of a separate business "next door" to his own place of business. 98In his affidavit evidence he also deposed to Mr Perram having died between the time of witnessing the disputed documents and the time of the final hearing. However, in cross examination he conceded that that evidence was incorrect. Mr Perram had not died. 99Nevertheless, Mr Perram was not called to give evidence at the final hearing. Nor did the defendants explain his absence from the witness box beyond noting his vulnerability to criticism for false attestation of signatures as a justice of the peace. 100The first defendant, belatedly, did faintly suggest that Mr Perram suffers from dementia; but that suggestion appears to have emerged only as an expedient, off-the-cuff rationalisation (by way of an excuse) for not calling him as a witness, inconsistent with the first defendant's evidence that Mr Perram told him that, having received a letter about the case from the plaintiffs' solicitor, he was calling the first defendant (by telephone) to ask what the case was about. 101The first defendant's failure, in his evidence in chief, to correct the statement in his affidavit to the effect that Mr Perram was dead, and his account, in cross examination, of his conversation with Mr Perram do not relieve the first defendant and his sons from the burden of a Jones v Dunkel inference arising from the absence of Mr Perram's evidence. 102Each of the plaintiffs denies knowing Mr Perram, or ever having met him, at all. 103There is nothing in the evidence to contradict those denials but for: (a) the form of the disputed documentation, recording Mr Perram as having witnessed the plaintiffs' respective signatures; and (b) evidence of the first defendant's accountant (Mr James) to the effect that, in or about May 2004, at a time when he was employed in the first defendant's business, he saw the first plaintiff sign a number of documents in the presence of Mr Perram, who appeared to sign the same documents. 104The first defendant does not swear that he, himself, saw the first plaintiff sign the documentation in the presence of Mr Perram. He says that he was nearby, but preoccupied by other business, and he left Mr Perram to superintend the first plaintiff's execution of the documentation. 105Mr James' evidence is too thin a reed to be relied upon as a basis for rejection, or even qualification, of the evidence of the first plaintiff. He says that he did not know the nature of the documents that he saw signed by the first plaintiff in the presence of Mr Perram, and it was not any part of his concern to know what was being signed. He was at the first defendant's business premises, as an employee, transacting other business. He is uncertain of the date. 106He had, apparently before this unspecified date "in or about May 2004", met the first plaintiff on a number of occasions at the first defendant's business premises. 107His evidence is altogether too imprecise to be of utility. I do not find him to have been a dishonest witness; but, in the circumstances of these proceedings, I do find his evidence to be unreliable. 108He was predisposed to support the first defendant's case, as he perceived it to be. 109Despite familiarity with the financial circumstances of the first defendant, his family and their business entities, he was quite prepared, in 2004, to accept that, apparently out of nowhere and for no offsetting liability, the first defendant and his sons had fortuitously acquired the Church land as an asset, available to secure their business borrowings, at a time when he was aware that their prospective lender (Community First Credit Union Limited) required an injection of additional security as a condition of approving a financial package to enable them to purchase a new business. 110Conformably with Jones v Dunkel, the first defendant and his sons must bear the burden of an inference that Mr Perram's evidence could not have assisted the case they seek to make. 111The form of the disputed Memorandum of Transfer is consistent with its having been signed by the plaintiffs without knowledge that the signature page, purportedly recording their signatures as transferors of the Church's land, was to be annexed to the, or any, Memorandum of Transfer. 112Following a concession made by the first defendant in cross examination, it is common ground that Mr Perram did not, in fact, witness the second plaintiff's signature. Mr Perram's signature, purporting to be that of a witness to the signature of the second plaintiff, was added to the disputed documentation on a separate occasion, at a later date, in the absence of the second plaintiff. 113The second plaintiff's evidence, and that the first defendant himself, uncontradicted by any other evidence, is to the effect that the second plaintiff signed the disputed documentation, at the request of the first defendant, in Melbourne, absent Mr Perram. 114The form of the disputed documentation, viewed in the context of this evidence, casts substantial doubt on the credibility of the whole of the first defendant's evidence. With apologies to AP Herbert (Uncommon Law (2nd ed, 1969), chapter 5, "Rex v Haddock : Is it a Free Country"), it is like the 13th chime of the clock: not only itself discredited, but casting doubt over all other assertions by the first defendant. 115Independently of that doubt, I prefer the evidence of the plaintiffs as witnesses of truth. 116The first plaintiff's evidence is that he was approached by the first defendant, personally, on two occasions in 2004 which, in retrospect, are material to these proceedings. 117He says that, on the first occasion, the first defendant approached him, personally and unaccompanied, to sign three pages of documentation (now identified as the statutory declarations attached to the Notice of Death recording the deaths of two of the original trustees for the Church, and Annexure "A" to the disputed Memorandum of Transfer) to record on the title to the land notice of the deaths of the deceased trustees. None of those three pages refer to the word "Transfer". None was attached to a Memorandum of Transfer form. Trusting the first defendant, the first plaintiff signed each of the three pages and allowed the first defendant to take them away with him. 118He says that, on the second occasion, the first defendant approached him, personally, to ask whether he (the first defendant) would be able to pay the Church's bills directly instead of making regular contributions to "church dues" (which I take to refer to free-will offerings or, by another name, regular donations, rather than any form of compulsory levy) and its charity fund. He (the first plaintiff) was amenable to that request, which he caused to be put to a meeting of the Church's congregation for approval, and it was approved. These events were, as recounted by the first plaintiff, wholly unconnected with his earlier execution of the disputed Memorandum of Transfer. 119The first plaintiff says, and I accept, that he never intended to sign away the Church's land, or to resign as a trustee for the Church. In his estimation, he remains a trustee. 120His evidence accords with that of the second plaintiff. 121The second plaintiff's evidence is that, in 2004, the first defendant visited him, personally and unaccompanied, at his home in Melbourne, asking him to sign documentation to record the deaths of the two deceased trustees and suggesting to him that he should resign as a trustee of the Church property because he was no longer a member of the Sydney congregation. Trusting the first defendant, he, in the presence of his wife and the first defendant, signed the documentation (the same three pages subsequently presented to the first plaintiff for signature) and returned them to the first defendant. 122He says that, had he known that the first defendant was intending to "remove" the first plaintiff as a Church trustee and as a registered proprietor of the Church's land, he would not have agreed to "resign" as a trustee. 123He says that, his "resignation" as a trustee having been obtained by a misrepresentation made to him by the first defendant, he believes that it was of no effect and, accordingly, that he remains a trustee of the land for the Church. He is, he says, prepared to be confirmed as a co-trustee should the Court so determine. 124On my reading of the evidence, he did not, in fact, resign as a church trustee, but was tricked by the first defendant into signing documents the effect of which was to transfer title to the Church's land out of the names of the surviving, original trustees and, particularly, out of the names of the first plaintiff and himself. 125The first defendant's evidence casts him in the role of a benefactor, and protector, of the Church. He says that, believing that the congregation had difficulty in paying outgoings, he had a conversation with the first plaintiff to the effect that, if the land was transferred into his name, he would pay all the bills for it. He says that that proposal was approved by the first plaintiff, and subsequently brought to fruition through the execution of the disputed documents. He denies having any conversation with the first plaintiff about paying Church bills instead of making contributions to the Church's charity fund, or making other voluntary contributions, however described. 126He says that he has no recollection of ever having attended a meeting of the Church's congregation in relation to any approval for him to pay the Church's bills. 127He says that, after the property had been transferred into the names of his sons and himself, he had a conversation with the first plaintiff, after service on a Sunday, in which, he says, the first plaintiff informed him that he (the first plaintiff) had spoken to members of the Church and they had agreed to transfer of the land to him and his sons. 128The first defendant explains his attendance on the second plaintiff, to procure the second plaintiff's signature on the disputed documentation, by saying that he asked the second plaintiff to sign the property over to him so that it could not be taken over by anybody else (he having in mind the Melbourne congregation or Mr Paul Pentsa, an Elder of the church based in Queensland); he says that he told the second plaintiff that he would "put the property on security so nobody can touch it". 129The second plaintiff denies this conversation, but says that after the property transactions of 2004 came to light in 2010, he did have a conversation with the first defendant in which the first defendant sought to justify the transactions on the basis that "Paul Pentsa our Elder Brother tried to sell the church[;] I have put it into my name and my [sons' names] to save the Church". 130No explanation has been given for the absence of the second plaintiff's wife from the witness box. Conformably with Jones v Dunkel, I assume that her evidence could be of no assistance to the plaintiffs' case. 131Whatever view one takes of the evidence, there is no suggestion, on either side of the record, that, before the Church land was transferred out of the names of the plaintiffs and the first defendant as the surviving original trustees, there was disclosure to the plaintiffs of an intention on the part of the first defendant to transfer an interest in the land to his sons as well as himself. Plainly, there was no such disclosure. 132As previously noticed, at one point in his evidence the first defendant appeared to suggest that the land was transferred into the names of his sons, as well as into his name, in aid of a plan by him plan to "save the church". If anything were to happen to him, they could and would carry on with that plan. 133That suggestion lends comfort to a finding that the sons' rights and obligations vis-á-vis "the Church" are coincident with those of the first defendant, and that the sons have no entitlement to protection as a bona fide purchaser for value without notice. 134The principal reason for their involvement in the transaction appears, in reality, to have been that the first defendant procured a transfer of the church land into his, and their, joint names, not to "save the church", but because he, urgently, needed that land as security for prospective borrowings from the Credit Union, for which his sons were to be liable as co-guarantors. 135I do not exclude the possibility that all three men rationalised their use of church property on the basis that they could, and would, preserve the land, in fact, for the use of the Church. The road they chose to travel was paved with good intentions. 136However, their primary motivation was grounded in self-interest, untainted by altruism or religious scruple. 137They wilfully disregarded the risk that, by pledging it as security for their personal indebtedness to the Credit Union, the land could be lost to the Church if, through misadventure, they were unable to service the debt, exposing the land to a mortgagee sale. 138That risk is not remote from recent experience. It is too close for comfort. Their business activities having taken a turn for the worst, the first defendant and his sons were evidently unable, at any time before the time of the hearing of these proceedings, to repay the Credit Union debt charged against the Church land, although able to continue servicing the debt. 139This may not be a case of deliberately wicked men consciously embarking on a scheme designed to deprive the Church, permanently, of a temporal home. However, it is, at least, a case of a well-intentioned, but seriously misguided, over-proud man (the first defendant) who, blinded by avarice, "borrowed" the title to the Church's land to allow his family interests to borrow money (for personal, secular purposes), only to find, to his own surprise, that he is experiencing difficulty in making due restitution to the Church if called upon to do so. 140A flaw in this characterisation - one that renders it too generous to the first defendant and his sons - is the absence of any unequivocal undertaking by those defendants, or any of them, to make restitution to the Church, coupled with the absence of any expression of intention in 2004 to return legal title of the land to trustees for the Church, and the persistence in these contested proceedings of a denial of the plaintiffs' claim that church property should be returned to the Church. 141Ostensibly, a dilemma for the first, second and third defendants (which emerged in re-examination of the first defendant and in the final submissions made by their counsel and which, on one view, they seek to force on the Church) is that, they say, they do not presently have an ability, immediately, to discharge the Credit Union mortgage if ordered to do so. 142Two exchanges in the course of oral submissions illustrate the point: At transcript page 333 "Lindsay J: ... [Is] this legal analysis [of the first defendant's obligations in terms of the law of contract rather than the law of trusts] driven by an apparent inability on the part of the first defendant to transfer the property back? Why doesn't he just transfer it back, he says it's for the Church, dedicated to God. Transfer it back. Why not? Counsel for the first, second and third defendants: Well he can't your Honour. ... At transcript page 356 "Lindsay J: ... But at the end of the day the relief that is sought against [the second and third defendants] in these proceedings is that steps are taken, whatever may need to be taken for them to deliver up the, with their father, to deliver up the property unencumbered. Counsel: Yes. I think that's something we would dearly love to do." 143The manner in which the first defendant gave evidence at the final hearing suggests a man whose discovery that he has feet of clay, has stopped just short of an epiphany to which, however, he remains open. He gave evidence, as a person resolved to tell the truth, still trapped by self-delusion. There was, in my assessment, a consciousness of guilt, sufficient to amount to an admission of the essential correctness of the plaintiffs' case, in his acceptance that implicit in arrangements made for the transfer of the Church's land to him and his sons in 2004 was an undertaking by them that the congregation accustomed to worship there would be allowed, by them, to continue to use the land for worship. CONCLUSION 144One could not exclude the possibility that the church community in which the first defendant has lived for many years, and in which he probably still wishes to live, will exhibit a generosity of spirit towards him and his sons, in the future. However, operating within the limits of its judicial function and legal procedures, the Court is bound to grant relief such as that presently sought by the plaintiffs. 145Each of the first, second and third defendants has an obligation, in Equity, to restore to the Church the trust property they have taken from it: Re Dawson [1966] 2 NSWLR 211; 84 WN (NSW) (Pt 1) 399; Maguire v Makaronis (1997) 188 CLR 449 at 469; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484. 146It may be necessary, in the particular circumstances of this case, for the Court to make a succession of orders designed, with the benefit of additional factual inquiries, to mould relief to achieve practical justice: Bridgewater v Leahy (1998) 194 CLR 457 at 494 [126]-[128]. 147Prima facie, the relief to be granted should, for the time being, comprise orders to the following effect: (a)A declaration that, subject to these orders, each of the first plaintiff, the second plaintiff and the first defendant remains in office as a trustee, for "The Apostolic Christian Church Nazarene - Sydney", of the land contained in folio identifier 32/1823 ("the Church land") and an incidental right to recover that land for the Church. (b)An order that the first defendant be removed from office as a trustee of the Church land and the incidental right to recover it, without prejudice to his obligations under these orders to account for his use and enjoyment of the title to that land. (c)A reservation of further consideration of all questions about the identity of the trustees for "The Apostolic Christian Church Nazarene - Sydney". (d)A declaration that the Church land is dedicated to the charitable, religious purposes of "The Apostolic Christian Church Nazarene - Sydney", subject to such, if any, rights as the proprietor of registered mortgage number AA852414 ("the Credit Union Mortgage") may have. (e)A declaration that the first, second and third defendants hold the Church land as constructive trustees for "The Apostolic Christian Church Nazarene - Sydney" and, as such, are liable to account for it to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land. (f)A declaration that the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land are entitled (as against the first, second and third defendants) to an estate in fee simple in the Church land, unencumbered by the Credit Union mortgage. (g)An order that the first, second and third defendants forthwith deliver up possession of the Church land to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land. (h)An order that the first, second and third defendants account to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land for their use of title to the Church land. (i)An order that the first, second and third defendants indemnify the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land against all claims that may be made against the Church land by the proprietor of the Credit Union mortgage. (j)A reservation of further consideration of all questions relating to the entitlement of the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land to equitable compensation from the first, second and third defendants. (k)A reservation of further consideration of all questions relating to transfer of the Church land to the plaintiffs (or such other persons as may be duly appointed) as trustees of the land or to the vesting of legal title in that land in such trustees. (l)An order that the first, second and third defendants pay the costs of these proceedings assessed on the indemnity basis. 148Whether there is need of other orders (such as an order that an inquiry be held to settle the precise terms upon which property is held on behalf of the Church or a freezing order or similar injunctive relief) is a question which may require further consideration by the Court after the parties have had an opportunity to digest these Reasons for Judgment. 149I will allow the parties an opportunity to make submissions about topics of that character, and about what (if any) negotiations the parties may need to have with one another, the Attorney General and the mortgagee as a step towards the Court making comprehensive, final orders. ********** I certify that this and the preceding 41 pages are a true copy of the reasons for judgment herein of his Honour Justice Lindsay. Associate 28 May 2014 ADDENDUM (30 May 2014) 150In some paragraphs of the reasons for judgment published on 28 May 2014, the second and third defendants are described as "guarantors" of the Credit Union mortgage. 151The application for finance made to the Credit Union by the first defendant and his family contemplated, at one stage, that the borrowers would be the first defendant and his wife and that their sons (the second and third defendants) would be guarantors. 152The moneys borrowed from the Credit Union were evidently applied by the family for the purposes of the family collectively. 153As registered proprietors of the Church land, the first, second and third defendants executed a mortgage in favour of the Credit Union. 154Records of the Credit Union include reference to the first defendant, his wife and their sons as "borrowers" which, in substance, they evidently were. 155It has not been suggested to me, and I proceed on the basis that there is no suggestion, that something of consequence turns upon whether the second and third defendants are described as "guarantors "or "borrowers". 156Having allowed counsel an opportunity to make submissions about the form of orders to be made, I make the following orders and notations: (1)DECLARE that, subject to these orders, each of the first plaintiff, the second plaintiff and the first defendant remains in office as a trustee, for "The Apostolic Christian Church Nazarene - Sydney", of the land contained in folio identifier 32/1823 ("the Church land") and an incidental right to recover that land for the Church. (2)ORDER that the first defendant be removed from office as a trustee of the Church land and the incidental right to recover it, without prejudice to his obligations under these orders to account for his use and enjoyment of the title to that land. (3)RESERVE for further consideration of all questions about the identity of the trustees for "The Apostolic Christian Church Nazarene - Sydney". (4)DECLARE that the Church land is dedicated to the charitable, religious purposes of "The Apostolic Christian Church Nazarene - Sydney", subject to such, if any, rights as the proprietor of registered mortgage number AA852414 ("the Credit Union Mortgage") may have. (5)DECLARE that the first, second and third defendants hold the Church land as constructive trustees for "The Apostolic Christian Church Nazarene - Sydney" and, as such, are liable to account for it to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land. (6)DECLARE that the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land are entitled (as against the first, second and third defendants) to an estate in fee simple in the Church land, unencumbered by the Credit Union mortgage. (7)ORDER that the first, second and third defendants forthwith deliver up possession of the Church land to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land. (8)ORDER that the first, second and third defendants account to the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land for their use of title to the Church land. (9)ORDER that the first, second and third defendants indemnify the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land against all claims that may be made against the Church land by the proprietor of the Credit Union mortgage. (10)RESERVE for further consideration of all questions relating to the entitlement of the plaintiffs (or such other persons as may be duly appointed) as trustees of the Church land to equitable compensation from the first, second and third defendants. (11)RESERVE for further consideration of all questions relating to transfer of the Church land to the plaintiffs (or such other persons as may be duly appointed) as trustees of the land or to the vesting of legal title in that land in such trustees. (12)NOTE that nothing in Order 7 is, of itself, intended to exclude the first defendant or any other person from entry upon the Church land for the purpose of participation in public worship. (13)ORDER that the first, second and third defendants pay the costs of these proceedings assessed: (a)as regard the plaintiffs, on the indemnity basis; and (b)as regards the fourth defendant, on the ordinary basis. (14)ORDER, up to and including 4 June 2014 or further order, that the first, second and third defendants by themselves, their servants and agents be restrained from removing from Australia or in any way disposing of, dealing with or diminishing the value of their assets in Australia up to an unencumbered value of $700,000.00. (15)ORDER that the proceedings be adjourned to 4 June 2014, at 9.30am, before Lindsay J for further consideration of the operation of order 14 and for such, if any, directions as the parties may seek in relation to questions reserved for further consideration. (16)RESERVE to all parties (between today and 4 June 2014) liberty to apply to Lindsay J on 6 hours notice. (17)ORDER that these orders be entered forthwith. Amendments 10 June 2014 - Addendum (30 May 2014) added. Amended paragraphs: 150-156 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. Decision last updated: 10 June 2014