Ermogenous v Greek Orthodox Community of SA Inc A22/2001 [2001] HCATrans 374 (15 August 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A22 of 2001

B e t w e e n -

SPYRIDON ERMOGENOUS

Appellant

and

GREEK ORTHODOX COMMUNITY OF SA INC

Respondent

GAUDRON J

McHUGH J

KIRBY J

HAYNE J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 15 AUGUST 2001, AT 2.45 PM

Copyright in the High Court of Australia

MR A.J. BESANKO, QC: If the Court pleases, I appear with my learned friend, MR A. ROSSI, for the appellant. (instructed by Mantzoros & Partners)

MR T.M. McRAE: If the Court pleases, I appear for the respondent. (instructed by Niarchos & Co)

GAUDRON J: Yes, thank you, Mr Besanko.

MR BESANKO: If the Court pleases, in our submission, the majority of the Full Court made four important errors in this matter, and if I might indicate what we submit are those errors. First we say that Justice Bleby incorrectly formulated the test for an intention to create legal relations in the context of a church and a minister of religion. Secondly, we submit that his Honour appears to have had regard to the subjective intention of one of the parties, namely, the respondent, in considering the question of an intention to create legal relations. We submit that that is not a permissible course in the circumstances of this case. Thirdly, your Honours, we submit - - -

KIRBY J: Is that because it is an incorrect legal course or because it was not open to judges who had not seen the witnesses to draw inferences as to subjective intentions?

MR BESANKO: The former, your Honour. The point is put that, as a matter of law, he ought not to have had regard to subjective intention and it appears that he did so. There is a secondary point that his Honour, in the case of Mr Manos, appears to have relied on the evidence that was not relied on in the courts below and drawn certain inferences about that evidence. Evidence that was not the subject of any findings. The third matter, if the Court pleases, is that his Honour exceeded his appellate function, if I can put it that way, having regard to the circumstances surrounding the appeal and the relevant legislation.

GAUDRON J: I do not understand that. What do you mean, "exceeded his appellate function"? By? What followed?

MR BESANKO: By interfering with the findings made in the court below, to the extent that he did.

GAUDRON J: With the factual findings.

MR BESANKO: Yes, your Honour. Fourth, your Honours, we submit that his Honour incorrectly concluded that a critical issue had not been addressed by the courts below. Your Honours, might I start then with the question of the legal intention, or the legal test, rather, for the intention to create legal relations? Could I identify where his Honour has dealt with that matter and the particular matters that we rely on? His Honours reasons are in volume 4 of the appeal books.

KIRBY J: Why does this not come before courts very often? Is it because, in most cases, parties are at arm's length or in a commercial relationship and, therefore, one can readily assume that there is an intention to enter a legally enforceable contract that the courts of law will give effect to?

MR BESANKO: I think that is so, your Honour, yes.

KIRBY J: And that the exceptions to that are very limited and really relate only to interfamilial arrangements or, as it is said, arrangements of the special kind that relate to a priest or minister of religion and the church.

MR BESANKO: And domestic arrangements - I am sorry, your Honour has mentioned those - social arrangements and possibly arrangements between governments although the law seems to be changing in that regard but there - - -

KIRBY J: It is the sort of thing one learns in contract law at law school but you do not often see it in professional life. Maybe that is your point, or one of your points.

MR BESANKO: Yes, your Honour. Your Honours, at page 1188 of volume 4 of the appeal books, his Honour sets out what he says are the relevant legal principles.

KIRBY J: This is reported now, is it not, in the State reports?

MR BESANKO: Yes, it is.

KIRBY J: Can you give the paragraph as well so that we can have easy reference.

MR BESANKO: Yes, it is paragraph 207 but, your Honours, the particular subparagraphs that we wish to draw attention to do not really have any argument with the propositions that his Honour sets out in paragraphs 1 to 5, but his Honour, in paragraph 6, says that the United Kingdom cases:

have direct relevance to the approach that courts in this State should take in similar situations.

Paragraph 7 is, in a sense, an observation by his Honour. In paragraph 8, his Honour says:

In most commercial transactions, where the performance of duties or services is associated with the payment of remuneration and the affording of other conditions such as leave etc, an intention to enter into an enforceable contract is presumed.

Then he goes on to say:

the position concerning ministers of religion is noticeably different. Such an intention cannot be presumed in such cases, and the intention will have to be proved.

Now, your Honours, to a point, we would not argue with those propositions, but if one reads on in paragraphs 9 and 10, we submit that his Honour has, in effect, erected a very high onus on a minister of religion to show an intention to create legal relations. Your Honours will see that, in paragraph 9, what his Honour does is to identify a number of factors, and he says that those factors:

will all generally militate against a finding that the necessary intention into contractual relations has been formed.

We just make the observation, if we may, that those factors will be present in most cases. There might be cases where one is not present but in most cases of a church and a minister of religion those matters will be present. Then in paragraph 10, his Honour, in really making another point, refers to "the usual non-contractual status of a priest or minister".

HAYNE J: Let me just go back a stage, Mr Besanko. Why should we assume the matters identified in 9 are commonly present? Why is that a matter of assumption as distinct from a matter for proof? How do we know whether those things are common or not common without first identifying the range of inquiry and the range of religious organisations with which familiarity is asserted?

MR BESANKO: Well, your Honour, we accept that it is a matter of proof in each case. But if one looks at those matters, and again, to some extent, one does generalise, the spiritual character of the relationship, the fact that there is some ecclesiastical authority exercised over the person, the nature and duties of a priest or minister - - -

HAYNE J: Well, pause there, for example. Much may depend upon whether the organisation of the religion concerned is presbyterian in character, congregational in character, episcopal in character; whether the priest or minister concerned has some financial relationship, if I may leave it as general as that, with the congregation; the hierarchy; the trust corporation - these things can be infinitely various and I, at the moment, do not see why we should unthinkingly assume that there is a single paradigm case to which all religious organisations approximate. It is not self-evident to me. It may be right.

MR BESANKO: Yes, well, your Honour - - -

KIRBY J: Could I add to that, that in the past judges coming to a problem like this, and particularly English judges, would have come to it with certain assumptions and knowledge from their own lives, of their own spiritual upbringing, but that cannot now be taken as for granted in Australia because there will be judges and lawyers who will have no spiritual upbringing or will have not accepted a spiritual approach, and they will just treated as another secular problem to be dealt with on evidence. You cannot assume that everybody - I mean, Justice Bleby may covet this because of his own life's experience but not everybody who has to decide cases like this will come at such a problem in the same way or in the way that the English judges appear to have done so, at least in Australia.

MR BESANKO: Yes. Your Honour, we do not disagree with that, with respect. We do not disagree that it is a matter of evidence in any particular case, it must be. It, perhaps, is an overgeneralisation that those factors, like the spiritual character of the relationship, the nature and duties of a priest or minister, the commitment and dedication to the service of God, are likely - - -

KIRBY J: Can I just ask you to pause there, because you are not asserting a contractual relationship with a church, you are asserting a contractual relationship of a special kind with a community and, therefore, some of the learning on the relationship between a church and a priest may not be relevant to the relationship which was of a supportive and financial kind, as you suggest, between a priest or a bishop and a community which, in a sense, is underwriting the financial aspects of the church spiritual. It is dealing with the rather necessary but less spiritual elements of money.

MR BESANKO: Yes. Well, that is so, with respect, your Honour, although, we submit, somewhat oddly, the fact that it is a community that has non-religious activities and interests - - -

KIRBY J: And no doubt non-religious members.

MR BESANKO: Non-religious members has, in a sense, been used against us, and I will come to the passages in the judgments of Chief Justice Doyle and Justice Bleby.

HAYNE J: The general point is, can you approach this problem with any preconceptions? Do you say you can? If you say you can, what are the preconceptions that one may make in approaching the task?

MR BESANKO: What we submit to the Court is that one approaches the problem by applying the sort of - or directing one's attention to and having evidence on the sort of matters that Justice Windeyer referred to in South Australia v Commonwealth. Your Honours, that decision is case No 1 in the applicant's list of authorities. Your Honours, at page 154, his Honour identifies various matters at about line 7, including:

The status of the parties, their relationship to one another, the topics with which the agreement deals, the extent to which it is expressed to be finally definitive of their concurrence, the way in which it came into existence -

They are the matters that one would look at, in determining in any particular case, whether there was an intention to create legal relations. What we say, or submit to the Court, is his Honour Justice Bleby, although rejecting any absolute rule of law that you cannot have a contract, has, in effect, set up a very strong presumption that there will not be a contract of employment between a minister and his church.

GAUDRON J: Is an intention to create or to enter into a legal relationship a question of fact?

MR BESANKO: It is.

GAUDRON J: It is not a question of law at all, is it?

MR BESANKO: It is an objective test and it is a requirement - generally, it is solved by a determination of the facts.

GAUDRON J: Yes, that is what I am asking. It is not unusual for there to be presumptions in relation to intentions. For example, you presume to intend the logical consequences of your acts and so forth. But we are, nonetheless, dealing with questions of fact, are we not?

MR BESANKO: The line is a little blurred, in our submission - - -

GAUDRON J: And, ultimately, one is going to probably draw inferences from the proven facts to get to the answer.

MR BESANKO: Yes.

GAUDRON J: Well, now, is there not an anterior question whether the findings of fact at first instance were attended by the sort of error that could result in their being overturned?

MR BESANKO: There is, your Honour, but the way the majority have approached it, in particular Justice Bleby, in our submission, is to say, "Well, the position is - and we say, almost as a matter of law, certainly a very strong presumption - that a minister will not be an employee. Here are all the things that mean - - -

HAYNE J: An employee of whom?

MR BESANKO: Of his church.

HAYNE J: Of his church, you say, but I understood, perhaps - correct me if I am wrong - that the allegation was not that the appellant was an employee of his church but an employee of the incorporated body that is respondent.

MR BESANKO: It is, and - - -

GAUDRON J: Which is a body that has functions extending beyond the spiritual. It is not registered as a church, is it? I do not know if he can register as a church.

MR BESANKO: I do not think it is, your Honour.

GAUDRON J: Accepted as a church for tax purposes, perhaps. I do not know.

KIRBY J: I think it drew a distinction. It paid, so it says, the cheques to the archdiocese, ie the church, which, in turn, paid, presumably, the stipend to your client. We will have to get that clear. But I think it is very important in this case to keep quite distinct the position of the church, the orthodox church, and the position of the respondent which is a secular corporation, as far as I am concerned. Which, it is said, made special arrangements in order to ensure that the members of the organisation would be served in their spiritual domain, those who wanted it. That does not seem to embrace many of the problems that arise when you assert a contractual obligation on the part of a church, as such, because a secular organisation can make a contract as it likes.

MR BESANKO: Yes, I mean, we would accept, your Honour, that some of the problems, or so-called problems, might still arise. But we do very much rely on the fact that this is a community, a registered association, and not a church in the sense that his Honour has referred to in these propositions.

HAYNE J: But it is not simply the gathering of the faithful.

MR BESANKO: No.

HAYNE J: In that sense, "church" is commonly used.

MR BESANKO: Yes. But, your Honours, might I come back to just the factual issue with the community because we do make the submission that his Honour has erred in the formulation of the test for an intention to create legal relations.

GAUDRON J: Let us understand what this test is. The test as to how to find facts in a particular category of cases, is that what it is? Do you say it could ever be more than that? What I am really getting at is - - -

MR BESANKO: It might be.

GAUDRON J: Has there been a process by which pure questions of fact, the means by which facts are to be found, has been metamorphosed into a question of law?

MR BESANKO: We say it has, your Honour, because the matters that Justice Hayne referred to in paragraph 9, as matters that are not self-evident, are, in a sense, matters that his Honour has said, as a generalisation, are matters which will militate against an intention to enter into contractual relations. So he is dealing with it at a level of generality in saying, "Well, all of those things are reasons why, generally speaking, you will not have an intention to create legal relations", and we submit that that creates some form of presumption in the case of these sorts of contracts that there is not an intention.

KIRBY J: Where is the best encapsulated statement of the principle that governs determining whether parties have an intention to enter into contractual relations which will be enforceable in a court of law, either in this Court or in the House of Lords, or somewhere else in our legal system? So that one can see a bright line between a case where they do and a case where they do not.

MR BESANKO: There is one, your Honour, in South Australia v The Commonwealth, commencing at the bottom of page 153, the quote commencing, "It is of the essence of contract". That emerges, I think, if your Honours then go to case No 2, Placer Development v The Commonwealth at page 367, from a case Australian Woollen Mills v The Commonwealth - - -

KIRBY J: Which page on Placer?

MR BESANKO: Page 367, your Honour, at about point 2.

HAYNE J: Where his Honour Justice Windeyer posits and objective test rather than an inquiry into the subjective intentions of the parties.

MR BESANKO: Yes.

HAYNE J: Do you support that?

MR BESANKO: Yes, we do. There are some circumstances referred to in the books where subject of intention might be relevant, but they are not relevant in this case. So it is an objective question.

KIRBY J: It seems a little odd to say that an intention to enter into contractual relations is an objective question; it is objectively ascertained. But it must have some subjective component, because of the very word "intention". I will have to get this clear, but is there no statement that says, some arrangements - what one would conceive of as a principle is, not all agreements are legally enforceable; in some, because of the nature of the parties or the nature of their ongoing relationships, as in a club or family arrangements, it is not within the contemplation of the parties that their arrangement will ever come to or be passed upon and be enforced by a court of law. Now, is there anything that, as it were, gives some milestones that you look to, to ascertain whether the intention exists or not, because just saying, in the terms that Justice Windeyer uses, in these two cases, does not seem to give very much guidance?

MR BESANKO: His Honour says in Placer at about point 5:

Social engagements and domestic arrangements are outside the realm of contract law, simply because the parties to them must be regarded as intending that their mutual promises, whether kept or broken, are not to land them in Court.

KIRBY J: Well that is itself a statement. Take, for example, cases where you get actions against parents for having failed to provide proper medical care. I mean, ordinarily you would not expect domestic arrangements to end up and land people in a court of law, but it can sometimes happen, the law of obligations, in the sub-branch of torts.

MR BESANKO: That is so, your Honour. I am not sure how the process evolved has been articulated, but it seems that it has been assumed that there are certain sorts of agreements that the parties would not wish to have come before the courts, irrespective of the particular intentions of particular parties in particular cases. So one has in the contract books, for example, references to the types of contracts where there is an onus on the party to prove an intention to create legal relations in the particular case.

KIRBY J: Well it is not a very all-embracing definition, because it just talks of social arrangements and domestic arrangements; that would not come anywhere near dealing with this case.

MR BESANKO: No, I have to say, your Honour, that most of the books, certainly that we have looked in preparing the case, have only referred to the four types of categories that I mentioned earlier, that namely those two, plus religious arrangements and arrangements between governments. So there is quite a small area where an intention is not presumed.

GAUDRON J: Is it said so in a blanket sort of way in respect of religious arrangements? I am thinking, in particular, of persons in religious orders but who are not necessarily engaged in pastoral work of the kind that your client is concerned. I am thinking perhaps of people in religious orders who teach in a particular school; perhaps a school not even predominantly staffed by religious people.

MR BESANKO: Yes. There are a number of cases that make it clear that what might be considered the general rule does not preclude a finding that a minister, for example, has a contract to teach or one of the examples was to work for a duke; that has been made clear on a number of occasions. So we do not suggest any rule goes that far.

KIRBY J: Do you say that they are the four categories only that have come up for decision in courts in England and this country: social, domestic, religious, inter-governmental?

MR BESANKO: Certainly the latter two, your Honour, have come up for decision. The question of domestic arrangements has come up in England, of course, with Balfour v Balfour, which is the case that is referred to in many of the earlier cases. That is a domestic one between husband and wife. I am not sure about whether there has ever been any case in this country or in England concerning social arrangements. I think there have been one or two in America concerning social arrangements, but I can perhaps find those references and give them to your Honour.

HAYNE J: But the question of "intention to create" really takes its context from the fact that otherwise there are arrangements between the parties to which the parties by their words or conduct are to be taken as having acceded and which are otherwise sufficiently certain to admit of enforcement.

MR BESANKO: Yes.

HAYNE J: So you have what otherwise would constitute a contractual arrangement, do you not?

MR BESANKO: Yes.

HAYNE J: And the question of "intention to create" then may perhaps - it may not - be properly regarded as an exception to what otherwise would follow from the objective construction of the words and acts of the parties.

MR BESANKO: Yes.

HAYNE J: Hence the paucity of exception.

MR BESANKO: Yes. But, your Honour, there seem to be categories where the courts have said that there is no intention unless it is specifically proved and it needs to be proved by objective evidence and that seems to be, not on the basis of a particular finding in that case, but on the basis of the approach taken in earlier cases.

Your Honours, one can see how his Honour has then applied those tests if one goes to the paragraphs commencing at 235 on page - - -

KIRBY J: I will still want some more help from you tomorrow on what it is that says "of some social, domestic or religious maintenance" because those categories are too broad. There is litigation involving social, domestic and religious people. As Justice Gaudron pointed out, a cleaner in a school, a church school, would undoubtedly have an entitlement to enforce arrangements, so what is it? You can say it is because there is no intention or there is no voluntary agreement to submit to courts, but that is the result, and I want to get very clearly in my mind what it is that takes certain of these arrangements out of the norm, which is part of the rule of law, that we are all subject to the law, and everyone is subject to having disputes resolved in a peaceful way in courts of law rather than by third parties or by violence. Now, what it is that distinguishes those cases and puts them into this sort of exemption from the normal rule of our sort of society. I really do not understand it at the moment.

GAUDRON J: It may be that in the case of religious matters it has been assumed that there are rules and procedures of the religious organisation that are available to resolve any problems that arise, particularly having regard to notions of obedience in some religious organisations. I just suggest that may be one basis.

MR BESANKO: Yes.

GAUDRON J: But that would not seem to be the case where you are not talking about obedience to superiors in a religious order, for example, or compliance with the rules of a religious order or a church, but you are talking about arrangements between what is a community of people with particular cultural backgrounds and aims and a person in the position of your client.

MR BESANKO: Yes.

McHUGH J: But may it not be this that, what is a contract? It is a voluntary assumption of a number of legally enforceable duties, and so the courts have asked themselves, having regard to the parties to it, the subject-matter of the contract, is it more probable than not that these parties intended to assume a legally enforceable duty. In the case of a family arrangement, such as in Balfour v Balfour, you do not impute to the arrangement made between the family members that there was to be legally enforceable duties. The same in a case like Rose & Frank v Crompton, but that said, in this particular case, at least in some aspects of it, one would think that the parties would have intended to assume a legally enforceable duty. After all, the Archbishop was brought out from the United States. Maybe it was all at his risk, but if he had been here for a short while after an agreement had been entered into, they could say to him, "Well, off you go." He has got no rights. It does not seem very likely, and, after all, this is all a matter of imputing something to parties.

MR BESANKO: Yes.

HAYNE J: The test being an impersonal test rather than a subjective inquiry for what was within the mind or breast of the parties.

MR BESANKO: Yes, we agree with that, with respect. Your Honours, could I illustrate how his Honour went on to apply his tests by asking the Court to go to paragraph 241 on page 1200 of volume 4. His Honour in that short paragraph identifies two matters:

The nature of the church as an institution -

Now, just pausing there, what his Honour is talking about there is not the community; he is talking about the church, as he has earlier identified it, as being a collection of the communities, who have come together for a common religious purpose. So he emphasises that and the respondent's intended role in it were also important, and what he means by role, was he was to perform a spiritual function and to have a spiritual responsibility. It was not a function which lent itself to legal relationships or to regulation by legal rules.

In our submission, his Honour erred on identifying the other party to the arrangement, and he should have identified the community - and I will come to that point, if I might - but he also - - -

KIRBY J: You say that the Industrial Commission did not make that error; that they saw clearly and drew a distinction between the community and the church?

MR BESANKO: Yes.

KIRBY J: I have not read the Industrial Commission decisions, but do you say that that is a dividing line that was not observed in the Full Court which the courts before it had drawn between the relationship of the present appellant with the community as distinct from with a church?

MR BESANKO: Yes, your Honour, we do. I will identify those passages in a moment if I might. But his Honour has, in our respectful submission, gone a long way in saying it was not a function which lent itself to legal relationships or to regulation by legal rules. He is almost saying that if that is what you are employed to do, then you cannot be an employee. We would respectfully submit that that goes too far; it places too heavy an onus on a minister.

KIRBY J: The arrangement with your client was an unusual one. It was not, one would think, the normal one of a religious with a church. The normal arrangement of a religious with the church would be that which would be laid down by a church constitution or church rules, such as the Salvation Army book of rules, that is referred to in one of the cases, or the Roman Catholic canon law, or Church of England rules. That is not your case, is it?

MR BESANKO: No, your Honour.

KIRBY J: Your case was a very peculiar one, which is bound up in the nature of the branch of the Greek Orthodox Church that your client and some members of the congregation were associated with. It grew out of that peculiarity and to that extent some of the general cases on relations with the church as such, or different churches, is not really to the point.

MR BESANKO: It is - - -

KIRBY J: The solution in this case is to be found by rummaging around the particular, peculiar facts of the relation with the Community Inc.

MR BESANKO: Yes. Your Honours, could I just identify some of the findings that were made by the industrial magistrate and which are relevant to this question of intention. Could I ask the Court to go back to page 924. At about line 28 the magistrate refers to a meeting that took place in Adelaide on 21 March 1970 and, after talking about who was there and making some comments about their recollection, at page 925, at line 11, he sets out what was the Archbishop's recollection of what occurred at that meeting.

KIRBY J: The respondent says in the written submissions that your client gave conflicting versions of the events. Is that correct or not?

MR BESANKO: I do not think he gave conflicting versions. He certainly was asked about it on a number of occasions, both in-chief and in cross-examination, and sometimes put the matter in a slightly different way but, in our submission, there was not any conflict. But in any event, he was accepted as a witness of credit by the industrial magistrate and we submit that an appeal court would not interfere with that finding. But your Honours will see at about line 21 that there was evidence from the Archbishop that he was told he:

"would be paid similarly to the priest and I [would] be one of their employees".

Now, in our respectful submission, if that is accepted, as it was by the industrial magistrate, that really is the end of the point. There must be inferred in those circumstances an intention to create a legal relationship.

KIRBY J: This conversation would have been in the Greek language, presumably?

MR BESANKO: I think that is so, your Honour, yes.

KIRBY J: One does not know if the word "employee" in the Greek language has quite the same meaning as in the English language.

MR BESANKO: That was a difficulty during the course of the trial that one sees in the transcript time and time again, where our word for "direction" was translated as "request", and there were various other difficulties. I will not read this but if your Honours then go to page 928, the bottom of that page, there is a finding made that the applicant's testimony and recollection is to be accepted. And then over the page, at 929, at line 3, his Honour makes a finding that an agreement was reached at the Adelaide meeting with the South Australian Community. Now, it may have been an agreement that might have been changed in the future. As it happens, it was not, but it was an agreement.

KIRBY J: Is this the Adelaide meeting or the Melbourne meeting?

MR BESANKO: No, this is the Adelaide meeting. This is the meeting, your Honour, with the community - only the South Australian Community.

KIRBY J: The respondent says that the agreement was not reached until the Melbourne meeting.

MR BESANKO: Yes. We say that the finding was that there was an agreement at the Adelaide meeting, and there was evidence accepted by the industrial magistrate that no final agreement was reached at the Melbourne meeting. And if I might come to those findings - - -

CALLINAN J: What about the evidence though at page 75 in volume 1? In a way, that might be even more powerful to you, because your client says at about line 28 that he was paid a wage throughout his period as Archbishop, and every fortnight they sent him a cheque by post, with some writing: "your salary", "your wages".

MR BESANKO: Yes.

CALLINAN J: "That was our agreement - ", to "pay normal wages, holidays and long service leave." And then later he gives evidence of directions being given by the respondent and his compliance with those directions. I think that is at about pages 79 and following. Now, did he ever contradict any of those two pieces of evidence to which I have referred?

MR BESANKO: No.

CALLINAN J: Not in cross-examination?

MR BESANKO: No. There was certainly some debate about whether he had been given directions and whether he had complied with the directions, but he did not contradict the evidence about being paid salary or wages and receiving a - - -

CALLINAN J: And paid the salary or wages, however you describe it, by the respondent.

MR BESANKO: Yes.

KIRBY J: But the respondent's submissions, which were very careful submissions - the written submissions - said that the salary was paid through the archdiocese. Now, I would like to get it very clear. Did the respondent pay the money directly to the Archbishop or was it paid to the church, and thereafter whatever stipend was paid by the church was paid to the Archbishop?

MR BESANKO: Your Honours, the period, of course, is 1970 to 1993. There was a time when the cheques were made out as payable to the archdiocese but there was evidence that the only one who operated that bank account in the name of the archdiocese was the Archbishop. And we submit the evidence went so far as to establish that, in effect, it was his bank account.

KIRBY J: Is that quite right? Would it not be the church's?

MR BESANKO: Well, it might be convenient if I just take your Honours briefly to two passages in the evidence. They are both in volume 3 of the appeal books.

KIRBY J: What page?

MR BESANKO: Page 638. At line 28 there is a question asked about who were signatories of that account of the archdiocese, and Mr Niarchos gave evidence that:

only the archbishop could operate the cheques that were given to him.

And then there was some evidence, your Honours, at page 654, commencing at the bottom of the previous page and then the top of the following page. We respectfully submit that once it was found that the incorporated body that your Honours will see referred to was, in effect, a dead letter - nothing ever happened - that simply because there is a bank account and the name is used, "the archdiocese", is neither here nor there. It was at the end of the day the Archbishop's bank account.

KIRBY J: Well, you say that, but it is an odd notion that a body which has sporting and other functions is the employer of an archbishop. I mean, it may be that that is the ultimate final, appropriate legal analysis, or an analysis that ought not to be altered by an appellate court. But the notion that a group of people can employ an archbishop is an odd notion.

MR BESANKO: Your Honour will appreciate, of course, from the reasons that it was accepted that the priests are employed by the community, and in fact - - -

KIRBY J: I realise that.

MR BESANKO: And, in fact, your Honour, Mr Manos said, "It is provided in our constitution that the priests are employed by the community".

KIRBY J: It may not be so odd if you are brought up in a Congregational church. I was brought up in an Anglican church, and the notion may strike me as odd because it is not the way it is done in my church, but maybe that is exactly what Congregationalists do. This gets back to Justice Hayne's question at the outset, that we should not just assume things in cases. It just has to get back to the actual evidence.

MR BESANKO: Yes. In one sense - - -

GAUDRON J: I mean no disrespect but, if you were to make an analogy with matters with which we might be familiar, this was almost of the nature of a schism.

MR BESANKO: Yes.

GAUDRON J: This was a group of communities who were intent upon asserting their independence from the Patriarch of Constantinople. So there was no established religious hierarchy once they had asserted their independence from the Patriarch. Is that not right?

MR BESANKO: That is so, yes.

McHUGH J: The fragmented nature of the case in this Court may create some problems. I am beginning to wonder whether or not, on the proper analysis, that there was a binding contract here, but it was not a contract of employment, given the parties to it. That is to say, there was a contract by a certain party to pay money in return for services being offered, but that there was not a contract of employment. But the contract of employment points - - -

GAUDRON J: That point was addressed by the magistrate though, was it not?

MR BESANKO: Yes, it was.

GAUDRON J: And it was addressed elsewhere but not in the Full Court.

MR BESANKO: That is right. It has been addressed all the way up until the Full Court.

McHUGH J: Yes, I know.

GAUDRON J: Does that mean that - let me just ask - were you to succeed on the issues found against you by the Full Court, there would be grounds of appeal unresolved in the Full Court?

MR BESANKO: Your Honour, it is not entirely clear from the Full Court's reasons, but certainly they had both arguments put to them and they seem to have rested their decision fairly and squarely on no intention to create legal relations. And they have not gone on to say, "Well, we don't need to deal with that issue and we won't deal with that issue".

HAYNE J: How was that issue reflected in the notice of appeal to the Full Court. Am I looking at the right notice if I look at page 1112 and following in volume 4?

MR BESANKO: I think in ground 1.5.

McHUGH J: Ground 1.5 on 1114.

MR BESANKO: Your Honours, there is one passage in the reasons of Justice Bleby, paragraph 272 on page 1207, and he is talking there about various post-contractual events that were led in evidence to show control, and his Honour says at about line 11:

All this was of principal relevance, of course, to the question whether the contract entered into was a contract of employment. None of it is relevant to the question of whether there was an intention to enter into legal relations.

It is quite clearly just focused on that one issue of an intention to enter into legal relations.

We would respectfully submit, your Honours that that is the basis of the decision below. Other matters were argued. That is the basis of the decision. If we are successful, the appeal should be allowed. There are not any remaining grounds or issues to be determined.

GAUDRON J: But that does leave unanswered my question. All these other grounds would have to go back to the Full Court, on your argument. I am looking at 1114.

MR BESANKO: No, your Honour, that is the notice of appeal to the Full Court.

GAUDRON J: Yes. So, if you were right thus far, there remains 1.3, whether he could "in law or fact be an employee of the Appellant" - I am reading at 1114. That would still remain, would it not?

MR BESANKO: Well, we say, your Honours, that those arguments were addressed to the Full Court - - -

GAUDRON J: Yes, but they do not appear to have considered those issues.

McHUGH J: They knocked the case out on the basis that there was no contract of any sort, employment or otherwise. In fact, I think Justice Bleby emphatically said there was certainly no contract of employment following on from when he said there was no intention to create legal relationships.

MR BESANKO: Yes. Well, there may be an issue in those circumstances as to whether leave would be given on that issue because two of the judges before the Full Court - - -

KIRBY J: That would have to be dealt with by the Full Court. That cannot be dealt with by us. So all that you can succeed on here is getting set aside the threshold point that there was no contract because there could be no intention to enter into contractual relations and if that is knocked away, then you still have to go in and determine whether if there were intentions to enter into contractual relations with the respondent the contract as posited by you was one which was open to the courts below to deal with, or whether leave should be granted to allow that to be argued.

MR BESANKO: Yes, I cannot argue with that, your Honour.

KIRBY J: Where do we find the scope of the leave they granted?

MR BESANKO: I do not think there was a formal order.

KIRBY J: Did they simply grant it in general terms to deal with the matter which they dealt with?

MR BESANKO: Yes. I do not think it was more precisely defined than that, that leave was given to consider the legal issue and to go - - -

GAUDRON J: I am looking at 1210 of the Full Court's orders: "leave to appeal be granted". It is not limited. I suppose you would say, were you to succeed, we would set aside orders 3, 4, 5 and 6, but leave 1 and 2 standing?

MR BESANKO: Yes, well, there is - - -

KIRBY J: Not necessarily, because the leave might have been granted because they thought the question of whether a religious contract where there could be an intention to enter contractual relations was one on which to grant leave, whereas if that is knocked away, then they might take a view that the general question of there being a contract as to whether it was labelled employment or not is not one that would interest them enough to grant leave.

MR BESANKO: Yes.

HAYNE J: Though the notice of appeal to the Full Court was cast on the assumption that leave was not required for that limb of the argument.

MR BESANKO: Yes, it was.

HAYNE J: They may be right or wrong in that but, as I understand the notice of appeal, grounds 1.1 to 1.6 are put forward as grounds lying as of right.

MR BESANKO: Yes, and there was an application made at the hearing for leave in so far as it was necessary. But, your Honours, in fact, leave was given by the Chief Justice, as your Honours will see in paragraph 2 on page 1122, in particular at line 15, precisely on the basis that it raised an issue of importance and a consideration of a body of case law not previously considered by the court. Now, we say by inference leave was not being given for the question of whether there was a contract of employment and whether the test referred to in Stevens v Brodribb and cases like that were satisfied. Leave was being given on this question of an intention to create contractual relations. The same may be said about Justice Bleby who, though he found that there was a question of jurisdiction in the relevant sense, if your Honours go to 1150, paragraph 94, his Honour at about line 97 sets out - - -

GAUDRON J: His Honour there says:

If it became necessary, however, I would nevertheless have granted leave to appeal.

MR BESANKO: Yes, but we emphasise, your Honours, the sentence:

It involves questions as to whether and when an intention to enter into contractual relations should be inferred as a matter of course.

CALLINAN J: Can I ask you about another piece of evidence at page 495, the evidence of Mr Manos. At the top of page 495 there is reference to a minute, I think, of a meeting very early in the discussions or rather perhaps at the termination of the discussions:

"Mr Aristidis moved to guarantee $100 as salary and fees to pay for the expenses" -

and so on. Do you see that?

MR BESANKO: Yes, your Honour.

CALLINAN J: On whose behalf was Mr Aristidis speaking?

MR BESANKO: He was at the Melbourne meeting and he was speaking on behalf of one of the interstate communities. If your Honour goes to volume 3, the minutes appear at page 829; they became an exhibit.

HAYNE J: Are those the minutes or a translation of the minutes?

CALLINAN J: They are translated, are they not, because there was a debate but it was ultimately accepted by Mr Manos that the word could be "wages" or "salary", is that correct?

MR BESANKO: Yes, your Honour.

CALLINAN J: But was Mr Aristidis speaking on behalf of the respondent as well perhaps as other people? What was his position?

MR BESANKO: No, we would submit that the proper analysis of the facts is that there was a meeting with the South Australian Community in March where the application was, in effect, engaged. It was intended - - -

CALLINAN J: Engaged by whom?

MR BESANKO: Engaged by the South Australian Community. That was the finding of the industrial magistrate.

CALLINAN J: Although he was brought out, was he not, by the federation of communities, is that right, or am I wrong about that?

MR BESANKO: Yes, your Honour, that is so.

CALLINAN J: Who paid his fare out?

MR BESANKO: I am not sure there is evidence of that.

CALLINAN J: In any event, he was invited to come out by the federation, is that correct?

MR BESANKO: Yes.

GAUDRON J: There is some debate as to who was acting in what capacity though, is there not, because the Melbourne gentleman who issued the invitation and apparently made travel arrangements seems, on one view, to have done it in his personal capacity and not on behalf of the federation.

CALLINAN J: That is really what I am trying to get at. I am trying to identify who the parties were. After what her Honour has referred to occurred, there were then meetings with the federation or the constituents of the federation or members of the federation. Was there not a proposal at one stage that he might work for one of the communities? It was the federation of communities, was it not?

MR BESANKO: Yes.

CALLINAN J: Well, did that happen? Did he in fact in the early stages work for only one or for more than one?

MR BESANKO: He was based in Adelaide. He went from time to time to communities interstate and he performed work there, but for most of the time he was in Adelaide.

CALLINAN J: All right, now, Mr Aristidis is - - -

MR BESANKO: He is representing the Sydney Community.

CALLINAN J: The Sydney Community.

MR BESANKO: Yes.

GAUDRON J: When he went to work - let me just get this right - in, say, Wollongong or Sydney, his salary continued to be paid, or the money that eventually reached him originated in the South Australian Community.

MR BESANKO: Yes.

GAUDRON J: Were there then agreements between the other communities and the South Australian Community as to reimbursing the South Australian Community, or did it just sort of happen?

MR BESANKO: No, there is evidence that from time to time contributions were made by the other communities to the South Australian Community. So the South Australian Community made the payments and from time to time received contributions. The evidence was not very precise as to how much or on what basis. There was evidence that some communities were not required to pay because they did not for various reasons have the resources, and there were some - - -

GAUDRON J: Some communities re-established themselves, did they not, as part of the church headed by the Patriarch of Constantinople?

MR BESANKO: They did.

CALLINAN J: I just want to be clear about this. He gave evidence that when he did move interstate he did so at the direction of the South Australian Community. Was that contradicted, that he took directions from the South Australian Community?

MR BESANKO: Yes, it was by - - -

CALLINAN J: Was there a finding made about that direction?

MR BESANKO: Yes, I think there was, your Honour, and I will - - -

CALLINAN J: You can look it up later perhaps. I would be interested in that.

MR BESANKO: Yes.

CALLINAN J: I notice Mr Manos gave very interesting evidence about the schism which he goes into, but he describes the nature of the relationship, both before and after the schism, between the community and an archbishop and I must say, on a quick reading of that, it suggested to me the likelihood of a relationship of employer and employee of a kind that might not exist in other religions, that there is this close relationship between the archbishop and the community and the community actually finds its own archbishop - or in this case certainly did - and, indeed, was concerned to find an archbishop who, if he was not obliged to take instruction about spiritual matters, was certainly obliged to do some other things in accordance with the directions of the community.

KIRBY J: In many churches the community must just accept the archbishop who is imposed upon them.

MR BESANKO: Yes.

CALLINAN J: This is the position, I think, with those members who subscribe to the church that was dominated by the Patriarch, is that right?

MR BESANKO: Yes, it is.

CALLINAN J: That was one of the reasons for the schism in Australia.

MR BESANKO: Yes. The community was anxious to maintain control, we would submit, just as it maintained control of the church property and the other facilities of which it was the owner and the priests that it employed. So a number of factors pointed to a conclusion that it wanted to maintain a level of control, even though the applicant was an archbishop.

CALLINAN J: Do any of the judges in the Full Court refer to that evidence of Mr Manos? It seems to me that it was not contradicted. Indeed, Mr Manos seemed to have a very good knowledge of these matters. I do not know if he was even cross-examined about that material. It starts about page 479 and goes on from there.

MR BESANKO: No, he was not. In fact, I think it was - - -

CALLINAN J: Well, when the members of the Full Court were talking about assumptions that might be made in relation to a relationship between a priest or a cleric and a community, did any of their Honours make any reference at all to that body of evidence of Mr Manos?

MR BESANKO: There were some passages from Mr Manos's evidence referred to in the evidence of Justice Bleby. Your Honours can see that at pages 1151 and 1152. At 1153 his Honour set out a passage that your Honour may have had in mind about the independence of the communities but that is not then analysed with a view to seeing whether it affects whether there was an intention to create legal relations.

CALLINAN J: It seems to me to be at least relevant to that question.

MR BESANKO: Yes. As I said earlier, that fact was, in fact, used against us because it was suggested, particularly by the Chief Justice, that the community was just like a sponsor to bring the Archbishop out and take him to meetings and introduce him to people, and so on and so forth. We say very much that that is a factor in our favour.

CALLINAN J: Why would you distinguish on those facts between the priest and the archbishop?

MR BESANKO: Yes, well, we say, your Honour, you would not.

KIRBY J: The suggested basis of distinction, as I understand it, in the respondent's submissions, is that a priest is the working person of the parish whereas the archbishop is the spiritual leader and has to give spiritual direction to everything and, therefore, that the relationship was different. But it was never contested that the relationship of the priest was that of employment with the community, by the community.

MR BESANKO: Never contested. It was conceded and, again, Justice Bleby says, with great respect to him, "Because it was conceded, the facts did not come out, so I do not put too much weight on the concession". We say, with respect, that that is an important fact, that the priest's work - - -

CALLINAN J: You can only really use it, I think myself, if it is an admission against interest - and I do not know whether it is that - in a cause or an issue between the respondent and the Archbishop.

MR BESANKO: It does throw considerable light on the role of the community and the nature of the relationship that the community may have wished to set up with the Archbishop.

KIRBY J: You use it in the way that Justice Callinan last said. That is to say, that once you move from what a person brought up in a hierarchical church might assume is the relationship between religious and the church, and you got to a point that, unusually in this particular branch of the Greek Orthodox Church, the ordained priests are employees of a community incorporated, then there has to be a good reason why other religious, higher up the hierarchy, are in a different relationship. At least prima facie, if you could do it for one religious group, you can do it for others.

MR BESANKO: Yes, and, of course, one has the possible dilemma of the community having control over the priest. It is not just a question of them, in a sense, being employees and paid wages, but subject to the control of the community and also subject to some control, presumably, from the Archbishop.

McHUGH J: Mr Besanko, there is a matter I think I should draw to your attention. I have just noticed that one of the witnesses called by your opponent was Mr Harry Danalis, who was the president of the Greek Orthodox Community in New South Wales, and has been for nearly 25 years. I have known Mr Danalis for probably 35 years. He often briefed me when I was at the Bar. I have not seen much of him in recent years. It does not seem to me that his evidence went to any critical issue in the case. I certainly do not feel any embarrassment about it, but I draw it to your attention.

MR BESANKO: Yes, your Honour, we have no difficulty with that, if your Honour pleases.

GAUDRON J: I take it the same goes for your, Mr McRae.

MR McRAE: And us likewise, your Honour.

GAUDRON J: Yes, thank you.

KIRBY J: I have met Archbishop Stellianos many, many times and have very happy relations with him. I hope that that does not cause any problems. I do not think it does.

MR BESANKO: No, your Honour, no.

MR McRAE: No, nor for me.

MR BESANKO: Your Honours, before I leave those minutes that I took the Court to at page 829, as your Honours will know from the reasons, they are minutes of what is called a federal council. It was an unincorporated group - - -

McHUGH J: What page is that, Mr Besanko?

MR BESANKO: Page 829, your Honour, of volume 3, and your Honours will see that present at that meeting were various people from Melbourne, Adelaide, Newcastle and Sydney, and there was debate about possible arrangements to be made with the Archbishop. There was a hope by the parties that there would be a formal arrangement involving not just the South Australian Community but would involve other communities, and that was one of the reasons the registered church was established but, your Honours, that never came to fruition. That was the finding of the industrial magistrate.

Although I will not take your Honours through the minutes, there are a number of passages in the minutes that indicate that no agreement was reached at the Melbourne meeting. So the magistrate's finding was, "We had the agreement at Adelaide. Yes, it might be varied at some stage. No, it was not varied in Melbourne". We submit that when one looks at those minutes, it is clear that everybody is going away to check with their own executive committees or general meetings. Your Honours, could I come back then to the reasons of the industrial magistrate.

GAUDRON J: For what purpose are we going to these reasons? I just want to be clear in my own mind what you are intending to establish by reference to the reasons of the magistrate, because he did not deal with the issue upon which you failed in the Full Court.

MR BESANKO: Well, we say he did.

GAUDRON J: I see, yes, thank you.

KIRBY J: It is very, very indirect though. You say it is implicit. He did not mention it particularly.

McHUGH J: He found a contract very early on in his reasons, did he not?

MR BESANKO: He did, and he was wrong in placing the reliance he did on MacQueen v Frackelton.

KIRBY J: On what?

MR BESANKO: The case of MacQueen v Frackelton, which is an early decision of this Court, which his Honour discusses and uses to distinguish the English cases. But could I ask the Court to go to page 937. At line 1, his Honour says:

After the former meeting was over (and weeks before the Melbourne one had even convened), there was a complete and binding agreement (and leaving aside for the moment the nature of that agreement) between the applicant and the SA Community -

Now, we emphasise the finding of an agreement but an agreement, leaving aside for the moment the nature of that agreement. So his Honour has addressed the issue. He has not rolled it up into the issue of contract of employment or not. He has addressed the issue of whether there was an agreement. We would submit that the Full Court erred in saying that the crucial issue had not been addressed by the industrial magistrate.

KIRBY J: It does not seem to be a very thorough consideration or a reference to the sorts of issues you opened with, that is to say, the nature of the parties, the nature of their arrangements, the cases on the subject. It has all been wrapped up in the fact that he concludes that there is a contract. I think it is pretty hard to criticise the Full Court when they say that he did not turn his attention to it.

MR BESANKO: We would accept that to some extent, your Honour, but - - -

KIRBY J: You did find one judge in the Full Court of the Industrial Commission who did specifically refer to intention to enter into contractual relations, but none of the others seem to have addressed it.

MR BESANKO: Well, Judge Cawthorne agreed with both the reasons of the senior judge and with Judge Parsons, so he has agreed with her Honour's reasons, and she has addressed it, and we say that, in effect, a majority of the Court has addressed the issue. But the point your Honour makes, with great respect, may reflect the way in which the matter was argued, because the matter has been argued on the basis that as a matter of law there could not be a contract between a church and a minister of religion, and the South Australian Community is to be considered a church. That has been an argument that has been put in a number of courts below.

KIRBY J: Was the respondent treated as a church? Maybe it is. It may be like a Congregationalist church.

MR BESANKO: Yes, that was the argument that was put, that it was a church and the principles that precluded a contract between a church and a minister - - -

HAYNE J: That carries with it so many assumptions in the single word "church" that require examination as not to be a statement of particular utility.

MR BESANKO: Yes.

CALLINAN J: The passage that helps you, also on that last point that you discussed with Justice Kirby, page 638 line 4:

even had things gone otherwise, the change in the revenue arrangements would not of themselves have altered the fundamental nature of the relationship agreed between the parties at the meeting in Adelaide -

That suggests to me that the magistrate certainly gave consideration to the nature of the relationship.

MR BESANKO: Yes. Well, I think his Honour made findings that remuneration was discussed, annual leave was discussed, long service leave was discussed. In those circumstances, there must have been an intention to create legal relations and the matter did not really require much greater analysis than that. We submit that that is correct. That, indeed, was the approach taken by Justice Mullighan in dissent in the Full Court when he said the very sorts of things you would expect to be discussed in the case of a contract of employment were discussed.

Your Honours will see at page 936 of appeal book 4 at line 7 his Honour's analysis of which was the important meeting and why. His Honour then at page 937 discusses the Melbourne meeting and makes a finding at line 24 that nothing was settled at the Melbourne meeting. There were a number of things that were to occur before there was a legally binding agreement. So, your Honours, we respectfully submit that his Honour did address the issue. He made findings about those findings, having regard to the nature of the conversations, that were appropriate findings, findings based on evidence and the Full Court erred in overturning those findings.

GAUDRON J: Which particular finding do you say the Full Court overturned? I would just like to be clear about what you say in that regard.

MR BESANKO: Yes.

CALLINAN J: Is not the finding at page 925 in which the magistrate accepts the appellant when he said, at line 22:

I would be paid similarly to the priest and I [would] be one of their employees.

That is the clearest expression of the relationship as an employer/employee relationship, is it not, in the reasons?

MR BESANKO: Yes, it is.

GAUDRON J: Now, it may be that the Full Court was wrong to overturn that decision then on the basis that it did, but the question whether it should be overturned on other grounds, or should have been overturned on other grounds, remains to be decided, does it not? There is no notice of contention in this Court about it. Would this be a convenient time?

MR BESANKO: Yes, your Honour.

GAUDRON J: We will adjourn until 10.15 am tomorrow.

AT 4.15 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 16 AUGUST 2001