A little law about the Catholic Church

The ABC commented this morning on AM that “A court case in New South Wales five years ago found that the Church could not be held legally liable for abuse cases because the Church doesn’t exist as a legal entity and it’s also not liable for its priests nor their actions.” 

The case being referred to is Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis [2007] NSWCA 117.  That case involved a lawsuit by Ellis in relation to abuse he allegedly experienced at the hands of one Reverend Aidan Duggan between 1974 and 1979.  At that time Ellis was an altar boy, and Duggan was the assistant priest in the Bass Hill Parish, and a member of the Order of St Benedict.  Ellis commenced proceedings against Cardinal Pell as the current occupier of the position of Archbishop of Sydney, the Trustees of the Roman Catholic Church for the Archdiocese of Sydney, and Duggan himself.  Duggan died in 2004 and Ellis did not pursue the claim against his Estate (this may have been from a realization that the estate had no value, or from a realization that as he was dead there was no prospect of getting an extension of the limitation period, or both).

There are some obvious difficulties. Assuming it could be established, as was alleged, that “because of the special responsibilities conferred on him by the Church and the precepts of Canon Law, the [Archbishop] was in a fiduciary relationship with the Plaintiff and was liable to ensure the protection of the Plaintiff from abuse” it was Cardinal Freeman, and not Cardinal Pell, who personally would have had any such responsibility at the relevant time, and not Cardinal Pell.

Instead, he was sued as the “successor in title” to Cardinal Freeman and as “representative” of the Archdiocese.  That there could be “no more suitable a representative” is a nice rhetorical flourish, but is not legally particularly relevant.  The Cardinal would need to be a representative of some legal entity, and this is where the case as pleaded stumbled.  It was held (as was blindingly obvious) that the Catholic Archdiocese of Sydney was an unincorporated association and as such could not be sued in its name.  To that extent the Catholic Archdiocese was no different from any other unincorporated association.  There was simply no basis for holding Cardinal Pell liable, whether personally or in some “representative” capacity for the conduct of Duggan.  This is not some special immunity conferred on the Catholic Church: it is simply an application of orthodox legal principle.

Then we come to the issue of the Trustees.  They were not sued on the basis that they owned the land upon which the abuse occurred.  Instead, what was claimed was that the Trustees “constituted the entity which the 
Roman Catholic Church in the Archdiocese of Sydney adopted and put forward as 
the permanent corporate entity or interface between the spiritual and temporal
 sides of the Church.”

The Trustees were established as a body corporate pursuant to the Roman Catholic Church Trust Property Act 1936.  Any fair reading of that Act reveals that the Trustees does little more than hold property for the use of the Archdiocese.  Nothing in that Act, or in the description of their functions and powers, suggests that they have any responsibility for the conduct of Church affairs or management beyond the holding of property.  And in that sense, again, they are no different from many other organisations (clerical and lay) that separate out entities that conduct different functions.  In NSW there is legislation establishing church property trusts not only for the Catholic Church, but also the Anglican Church, the Antiochan Orthodox Church, the Baptist Churches, Christian Israelite Church, the Coptic Orthodox Church, the Greek Orthodox Church, the Holy Apostolic Catholic Assyrian Church, the Presbyterian Church, the Russian Orthodox Church, the Mormons, the Methodist Church of Samoa in Australia, and the Uniting Church as well as for various individual Catholic church orders (under the Roman Catholic Church Communities’ Lands Act 1942). 

There is nothing sinister about establishing a trust to hold property.  It is a common feature of public and private life.  And in any case where someone was injured as a result of the condition of the land, for example, the Trustees would be an appropriate entity to sue for that liability.  But where the liability arises from conduct that does not fall within the bailiwick of the Trustees’ responsibility (such as, for example in Ellis’ case, pastoral care or the day-to-day management of the parish) then it is difficult to see why the Trustees should be held liable.  It would be like holding a local council liable for abuse by a child care worker at a Day Care Centre operating on council-owned land.

The difficulties confronting plaintiffs such as Ellis is not that the valuable assets of the Church are held in a property trust.  One difficulty is that the perpetrators are usually men of straw, so that they and their estates are of little value.  A further difficulty is that there is no entity that could be regarded as a priest’s employer.  But this difficulty is not solved merely by requiring the Roman Catholic Church in NSW to incorporate (assuming it were possible to do so).  It would not necessarily follow that the Church so-incorporated would automatically be vicariously liable for the deliberate, criminal conduct of the Catholic Clergy.  The Church, so-incorporated, may have no more control over the conduct of its clergy than it does over the doctors who operate at St Vincent’s Public or Private Hospital.  There might need to be a distinction drawn between diocesan clergy and members of the Catholic orders, in which case consideration would need to be given to the legal status of each individual order.  That there are enormous difficulties in holding the Church vicariously liable for the conduct of its clergy cannot be gainsaid.  It is not impossible, but while incorporating the Catholic Church removes the legal entity hurdle, it does not remove the vicarious liability hurdle.

Next week in the High Court of Australia

Apart from the judgments referred to in the previous post, the High Court of Australia will hear argument in three cases next week, commencing on Tuesday, 13 November 2012.

The first is Commissioner of Taxation v Consolidated Media Holdings Ltd.  This case considers the proper constructions of section 159GZZZP of the Income Tax Assessment Act 1936 and its application to a buy-back of 29% of Consolidated Media’s shareholding in Crown Melbourne Ltd at a price of $1 billion. At issue is whether this should properly be treated as a capital gain, or whether it should be treated as a dividend (and therefore entitled to a rebate).

The second and third are cases relating to the same, valuable, family company.  In the first, Beck v Weinstock, at issue is whether or not a share can be a “preference share” for the purposes of the Corporations Act 2001 when the rights attaching to it do not confer any preference or priority over the rights attaching to other shares issued in the company.  In the second, Weinstock v Beck, at issue is the ambit of the power under section 1322(4) of the Corporations Act 2001 to validate the purported appointment of a company director by a person who was themselves not validly appointed as a director but who had been acting as a de facto director.  Both cases are salient lessons in the need to properly attend to the corporate governance of small but valuable family companies.

Forthcoming judgments in the High Court of Australia

On Wednesday, 14 November 2012 the High Court of Australia will deliver three judgments.

The first is in the related cases of Mansfield v The Queen and Kizon v The Queen.  These appeals address the issue of whether or not, in a prosecution for insider trading, it is necessary for the Crown to establish that the “inside information” possessed by the appellants is “truthful information” or “a factual reality”.

The second is in Cooper v The Queen, a case which considers whether or not the defence counsel’s failure to lead evidence of certain mental health service records which indicated the deceased suffered from a psychosis that could be exacerbated by drugs and alcohol, and the failure to cross-examine the deceased’s grandmother concerning the deceased’s mental health, gave rise to a miscarriage of justice.

The third is in Mills v Commissioner of Taxation, which considers whether the Commissioner was entitled to disallow certain imputation credits where the purpose of a scheme involving the issue of unsecured subordinated notes was to enable subscribers to obtain imputation credits, and the imputation credits were not simply a natural incident of the capital raising being undertaken.

On Thursday, 15 November 2012 the High Court will deliver judgment in Stanford v Stanford.  A somewhat tragic case, in issue is whether (and if so in what circumstances) the Family Court has jurisdiction to make an order for property settlement pursuant to section 79 of the Family Law Act 1975 where a marriage is still intact but where a physical separation has been forced upon the parties by reason of one of the parties’ health.  The proceedings were initiated by the wife’s daughters who asked that the former matrimonial home be sold so that the proceeds of sale could be spent on care for their mother. The appeal to the High Court raises numerous related issues, but central to the case is the constitutional question of the scope of the term “matrimonial cause” in placitum 51(xxii) of the Constitution.

Next week in the High Court of Australia

Apart from the delivery of judgments referred to in the previous post, the High Court of Australia will hear argument in three cases next week, commencing on Tuesday, 6 November 2012.

First up is TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the FederalCourt of Australia, a challenge to the power of the Federal Court to enforce arbitral awards made in accordance with the UNCITRAL Model Law on International Commercial Arbitration and pursuant to the International Arbitration Act 1974 (Cth).  In a nutshell, the argument is that by requiring the Federal Court to enforce an award notwithstanding the errors of law apparent on the face of the award and notwithstanding limitations placed on the parties’ arbitration agreement. By excluding the court’s traditional supervisory jurisdiction with respect to arbitral awards, the amendments made to the International Arbitration Act 1974 (Cth) in 2010 are said to substantially impair the institutional integrity of the Federal Court and impermissibly vest Commonwealth judicial power in arbitral tribunals by making their awards binding and conclusive.

Next is X7 v Australian Crime Commission.  This case is a challenge to the power of the Australia Crime Commission to conduct an examination of a person charged with an indictable offence where the examination concerns the subject matter of the offence so charged.  The challenge is mounted firstly as a question of the proper construction of the Australian Crime Commission Act 2002 (Cth), and if properly construed the Act does authorise such an examination whether the Act itself is, to that extent, invalid on the basis that it impermissibly interferes with the administration of justice in the exercise of Commonwealth judicial power and/or is contrary to section 80 of the Constitution.

Finally, the High Court will hear argument in Baini v The Queen.  This case considers whether the approach of the High Court in Weiss v The Queen to the application of the “proviso” in dismissing a criminal appeal in Victoria survives the introduction of section 276 of the Criminal Procedure Act 2009 (Vic).

Forthcoming judgments in the High Court of Australia

On Wednesday, 7 November 2012 the High Court of Australia will deliver two judgments.

The first is in the case of RCB v The Honourable Justice Colin James Forest.  This is the case in which the High Court rejected an application on behalf of four sisters who opposed their return to Italy under the Hague Convention pending determination of the custody dispute by Italian courts.

The second is in the case of Montevento Holdings Pty Ltd v Scaffidi.  The question in this case was whether or not it was open to an Appointor who was a beneficiary of a discretionary trust to appoint a Trustee where the Appointor/beneficiary had effective control of the office of Trustee.  While this is a question of construction of the particular trust deed, it may have broader ramifications for the drafting of discretionary family trusts generally.