Dragosavljevic v Serbian Orthodox Church St Knez Lazar Incorporated & Others [2002] ACTSC 19 (28 March 2002)

Last Updated: 12 April 2002

Ilija Dragosavljevic v Serbian Orthodox Church St Knez Lazar Incorporated & Others [2002] ACTSC 19 (28 March 2002)

CATCHWORDS

PRACTICE AND PROCEDURE - various interlocutory applications to strike out or dismiss plaintiff's action - whether on allegations in statement of claim plaintiff has arguable case for standing to bring claim - whether failure to comply with direction to clarify nature of claim justifies striking out or dismissing - whether security for costs should be ordered where claim brought on behalf of another person - whether proof that plaintiff "will not be able" to pay defendant's costs - application for release of frozen funds to pay legal costs.

Supreme Court Rules, O 29 r 4

Associations Incorporation Act 1991

Land (Planning and Environment) Act 1991

No SC 502 of 2001

Judge: Miles CJ

Supreme Court of the ACT

Date: 28 March 2002

IN THE SUPREME COURT OF THE )

) No SC 502 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ILIJA DRAGOSAVLJEVIC

Plaintiff

AND: SERBIAN ORTHODOX CHURCH ST KNEZ LAZAR INCORPORATED

First Defendant

AND: STEVAN RADOVANOV

Second Defendant

AND: HARCOURT HOMES PTY

LIMITED ACN 003 235 587

Third Defendant

ORDER

Judge: Miles CJ

Date: 28 March 2002

Place: Canberra

THE COURT ORDERS THAT:

1. The motion on notice dated 19 February 2002 be dismissed.

2. The motion on notice dated 20 February 2002 be dismissed.

3. The Bishop be made a fourth defendant to the proceedings.

1. This decision follows a hearing on 22 and 25 February last of the following applications:

(i) Application by the third defendant on notice of motion dated 19 February 2002 (superseding a notice of motion dated 13 November 2001) to strike out the action as an abuse of process.

(ii) Application by the third defendant on the same notice of motion that the action be stayed for failure to comply with directions.

(iii) Application by the third defendant on the same notice of motion for the plaintiff to provide security for costs in the sum of $30,000.

(iv) Application by the second defendant on notice of motion dated 20 February 2002 for orders (i) and (ii) above and for a further order for the release of $20,000 from the second defendant's bank account to be paid to his solicitors on account of costs.

2. Overall the case is a mess and this is an opportunity to sort it out, or to try.

3. Surprisingly, there is a simple background of fact and basic issues.

4. It is well known that there is a substantial Serbian community in Canberra. The plaintiff is a well known figure in that community. He gives evidence from time to time in this Court and in the Magistrates Court about local Serbian affairs. He was the only representative of what may be broadly called the Orthodox faith at the recent ecumenical service to mark the opening of the Law Year 2002.

5. The first defendant (the Mawson Church) owns or owned or thinks it owns land at Mawson next to land owned by the Serbian Club (the Club). Both the Mawson Church and the Club are incorporated under the Associations Incorporation Act 1991.

6. The second defendant (Stevan Radovanov), who is or was an officer of both the Mawson Church and the Club, sold or purported to sell the land on behalf of the Mawson Church and on behalf of the Club to the third defendant (Harcourt Homes). There are associated mortgages and powers of attorney from, or purporting to be from, the Mawson Church and from the Club to Harcourt Homes.

7. The plaintiff in the present matter is concerned that the Mawson Church land was sold or might have been sold without his knowledge and without proper authority and accordingly seeks various forms of relief.

8. Certain members, or persons claiming to be members, of the Club, including the plaintiff in associated proceedings (Ms Vesic), are aghast at the idea that the Club land was sold or might have been sold without their knowledge and without the authority of the Club. They want to stop the sale, or if it is too late to do that, to have it set aside, or if it is too late to do that, to chase up the money that was paid by Harcourt Homes but not paid to the Club. Those matters are the subject of the associated proceedings in SC 491 of 2001.

9. The plaintiff commenced proceedings in this Court by originating application dated 21 July 2001. A statement of claim was filed on 31 October 2001. The statement of claim asserts the following (in paraphrase):

(i) The Serbian Orthodox Church is a religious body under the authority of the Patriarch in Belgrade, Yugoslavia.

(ii) The Serbian Orthodox Church has approved the Constitution of the Diocese of Australia, New Zealand and South Africa (the Diocese).

(iii) The Diocese is "hierarchically and juridically an integral part of the Serbian Orthodox Church".

(iv) "Adherents of the Serbian Orthodox Church in Australia" are "governed by" the Diocese.

(v) The Bishop exercises certain powers under the Constitution of the Diocese.

(vi) The plaintiff is an ex officio member of the Mawson Church by reason of its Constitution and a parish priest of a parish within the Diocese.

(vii) The purported sale of the Mawson Church land is outside the power of the Mawson Church without the approval of the Bishop or the Diocese or both; alternatively the Mawson Church was not a party to the purported sale.

A defence and counter-claim was filed on behalf of Harcourt Homes on 13 November 2001. For present purposes it is sufficient to say that by its defence Harcourt Homes admits that the plaintiff has been the parish priest of the Serbian Orthodox Parish of Farrer since February 1985 but denies that the plaintiff is authorised by the Bishop of the Diocese to bring this application on behalf of the Diocese and the Bishop. Harcourt Homes also admits that the Mawson Church was governed by its Constitution (a copy of which is now in evidence in the present application).

10. Harcourt Homes in its defence also asserts that it does not know and therefore does not admit the allegations in the statement of claim paraphrased above relating to the Serbian Orthodox Church and its constituent bodies, office holders and structure. Harcourt Homes denies that it knew that the sale was beyond the power of the Mawson Church. Harcourt Homes further denies that the plaintiff has any standing to bring the action and to seek the relief set out in the statement of claim.

11. By way of counter-claim against the plaintiff, Harcourt Homes alleges that at no time did it have notice that the plaintiff or the Diocese or any trustee for the members of the Diocese or the Bishop had any equitable interest in the land. Harcourt Homes seeks against the plaintiff or anybody whom the plaintiff purports to represent a declaration that Harcourt Homes holds its interest in the land free of any equitable interest in favour of anyone else.

12. Further, by way of "counter-claim", in the event of the plaintiff being successful in his action against the Mawson Church, Harcourt Homes seeks judgment against Stevan Radovanov for money had and received in the sum of $150,000 being the amount paid by Harcourt Homes to Stevan Radovanov in advance of the purchase price. The "counter-claim" appears to me to be really in the nature of a third party claim, but this aspect can be overlooked for the moment.

13. There are other issues raised on the pleadings relating to a change in the purchase price and the payment of part only of the purchase price. They are of marginal importance to the present applications.

14. At the commencement of the hearing on Friday, 22 February 2002, Mr Erskine, who had previously appeared for the plaintiff, announced that his instructions were in doubt and applied for an adjournment. The application for adjournment was refused. Mr Erskine remained at the bar table. Mr Walker made submissions to support the applications made on behalf of the third defendant. When those submissions were about to continue on Monday, 25 February, Mr Arthur of counsel announced his appearance for the Club in the associated proceedings and was given leave to lodge written submissions.

15. Mr Spry of counsel also made submissions on behalf of Stevan Radovanov.

APPLICATION TO STRIKE OUT OR STAY PROCEEDINGS ON GROUND OF ABUSE OF PROCESS

16. One ground for the strike-out application is that the allegations in the statement of claim do not disclose matters which if proved would give the plaintiff standing to bring the proceedings. This is in the nature of what used to be called demurrer. The power is conferred by O 29 r 4 of the Supreme Court Rules. It is not necessary to show that the proceedings are an abuse of process.

17. It is true that there is no allegation that the Mawson Church is incorporated and it follows that the plaintiff does not sue on behalf of a corporation. Then it is submitted that the "nature of the membership of the Church is entirely undefined and probably incapable of definition" and that the statement in the Constitution of the Diocese that it is "an integral part of the autocephalous Serbian Church with its see at Belgrade" is meaningless, there is no allegation that the Bishop holds property on behalf of the Mawson Church and no allegation that the Bishop has authorised the plaintiff to bring the proceedings on behalf of the Mawson Church.

18. The short answer is that the statement of claim makes relevant assertions which expressly or implicitly amount to allege that the plaintiff is an ex-officio member of the administrative committee of the Mawson Church, an incorporated association, whose members are governed by the unincorporated Diocese which is part of the Serbian Orthodox Church based at Belgrade.

19. It is arguable, having regard to the objects and purposes of the Mawson Church, that property held in its name is the property of the Diocese, alternatively that the Mawson Church holds the land in question on behalf of or in trust for the Diocese. In that respect it is further arguable that the land is parish property within Article 23 of the Constitution of the Diocese and that it is under the direct supervision of the Bishop. It is also arguable that the Bishop may authorise a person to bring proceedings to protect that property.

20. As the situation is far from clear however, it is desirable to order that the Bishop be made a fourth defendant to the proceedings. Whether this should be done by reference to the title of office or by reference to the personal name of the Bishop is not a matter on which I express an opinion or offer advice. It should be observed also that no appearance has been entered for the Mawson Church itself, already a party to the proceedings. On the present state of the pleadings the Mawson Church does not oppose the plaintiff bringing the proceedings, although the plaintiff does not purport to do so on behalf of the Mawson Church.

21. The next submission is that no trust arises on the pleadings, that is that the matters of fact pleaded, if proved, are not capable of leading to a conclusion that the Mawson Church held or holds an interest in the land on trust for the Diocese or the Bishop.

22. The rules of the Mawson Church are not clear about persons who constitute the membership although they describe various categories who are not eligible for membership, for instance, communists and atheists. It is arguable that the persons who hold office on the administrative committee, including the plaintiff, are included in the membership of the incorporated association. The plaintiff has sufficient interest in the subject matter of the proceedings to attract the standing to bring and maintain them.

23. It follows that the plaintiff's claim being arguable in law is not to be struck out as not disclosing any cause of action or ground for relief and cannot be dismissed or stayed as an abuse of process.

APPLICATION TO STRIKE-OUT FOR FAILURE TO COMPLY WITH DIRECTIONS

24. This is an altogether different ground on which it is sought that the proceedings be stayed or dismissed as a consequence of the failure of the plaintiff to comply with directions of the Court as to the conduct of the proceedings under O 33A r 1.

25. On 5 February 2002 the Court ordered that the plaintiff inform the other parties by close of business on 11 February whether he intended to seek any order "to prevent the transfer and registration of the church land or of the processing of any development application or approval under the Land (Planning and Environment) Act 1991 associated with that transfer". At the commencement of the second day of the hearing on Monday, 25 February 2002, Mr Erskine, whose instructions were otherwise in doubt, informed the Court that no order was sought in the nature of that described in the order of 2 February 2002. Although there had been a failure to comply with the order, the failure was not persistent and such delay as that failure occasioned has not been shown to result in any prejudice to any defendant. It would not be appropriate to strike out the plaintiff's claim on that basis. The delay in compliance can be dealt with by an appropriate order for costs.

APPLICATION FOR SECURITY FOR COSTS

26. The notice of motion of 19 February 2002 seeks an order that the plaintiff provide security for costs of the third defendant.

27. Whether or not there is a general or inherent power to order security for costs, the power is expressly conferred by O 33B r 3 and is exercisable in accordance with the rule in a variety of specified circumstances including, for the purposes of the present matter, where:

"(d) the plaintiff:

(i) has made the claim on behalf of a person other than the plaintiff; and

(ii) will not be able to pay the defendant's costs if ordered to do so; or

(e) the interests of justice so require."

28. There is an onus on an applicant for security to justify the making of an order, since lack of resources has never been sufficient reason for denying a party access to the courts. Nevertheless, par (d) clearly contemplates a case like the present where the plaintiff has no real interest in the proceedings. The classic case is where those with the real interest put up a so-called "man of straw" in order to avoid exposure to an order for costs against them. This is clearly not such a case. Moreover, par (d)(ii) requires it to be shown that the plaintiff "will not" be able to comply with an order for costs. Whilst it is not necessary to prove the other party's incapacity to the degree of certainty, there must be a positive case of a definite likelihood of an incapacity to pay the defendant's costs. None is shown in the present case. The constitution of the Diocese shows that as a parish priest, the plaintiff is entitled to remuneration, housing and other benefits whilst in office. Whilst there may not be a great deal available from such sources to satisfy an order for costs, the natural interests of the members of the parish and of the members of the Diocese generally in seeing that their parish priest is not declared bankrupt or not subject to seizure of his goods in execution of judgment, is another factor which favours declining to exercise the discretion against making an order for security of costs.

APPLICATION BY SECOND DEFENDANT FOR RELEASE OF FUNDS

29. On 4 September 2001 the Court ordered that Stevan Radovanov be restrained from disposing of or otherwise dealing with his property. On 5 October 2001 the Court ordered that the order of 4 September 2001 be varied to the extent necessary to allow Stevan Radovanov to pay $10,000 to a solicitor for the purpose of gaining legal advice and representation in these proceedings.

30. By the notice of motion of 20 February 2002 Stevan Radovanov seeks an order that "$20,000 be released from the second defendant's bank account and paid to Romano and Co on account of legal costs incurred to date and in anticipation of legal costs to be incurred in defending this matter."

31. The evidence to support the application is the affidavit of Peter Romano, solicitor, for Stevan Radovanov sworn 21 February 2002. That affidavit deposes that at that date "the legal costs, disbursements in the matter total $25,897.48 inclusive GST" and estimates that, allowing for the $10,000 already provided, at least $20,000 will be required further "to continue for the time being with the second defendant's defence". The affidavit was filed in Court by leave on 25 February 2002 and received scant attention.

32. I am unconvinced that the $20,000 asked for is reasonably required. In my view, $10,000 is sufficient to cover the preparation of the case on behalf of Stevan Radovanov to date and at least until the stage of filing a defence. I do not accept that costs in excess of $25,000 have been incurred in this matter when it has not yet reached the stage where a defence has been filed on behalf of Stevan Radovanov. A cursory glance at the "matter transaction report" annexed to the affidavit shows that it covers items that appear to be related to other proceedings, possibly the associated proceedings brought by Ms Vesic and possibly criminal proceedings which I was told have been commenced against Stevan Radovanov and in respect of which he has now been granted legal aid. This application fails.

COSTS

33. Unless the parties wish to be heard I would order that costs occasioned by the plaintiff's failure to comply with the order of 5 February 2002 be paid by the plaintiff, that the costs occasioned by the notice of motion of 19 February 2002 be paid by Harcourt Homes and that costs occasioned by the notice of motion dated 22 February 2002 be paid by Stevan Radovanov.

34. I shall hear counsel on whether and what orders should be made in the associated proceedings.

35. I propose to set a timetable for the conduct of this matter and of the associated proceedings and will hear counsel on that also.

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Miles.

Associate:

Date: 28 March 2002

Counsel for the plaintiff: Mr C Erskine

Solicitor for the plaintiff: Meyer Clapham

Counsel for the first defendant: -

Solicitor for the first defendant: No appearance

Counsel for the second defendant: Mr M Spry

Solicitor for the second defendant: Romano & Co Solicitors

Counsel for the third defendant: Mr P Walker

Solicitor for the third defendant: O'Connor Harris

Dates of hearing: 22 and 25 February 2002

Date of judgment: 28 March 2002