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Court of Appeal of New Zealand |
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Court of Appeal of New ZealandLast Updated: 31 August 2011
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CA191/2010
[2011] NZCA 402 |
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BETWEEN SENETI TIME
Appellant |
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AND LUAIVA FAGALILO
Respondent |
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Hearing: 25 July 2011
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Court: O'Regan P, Heath and Lang JJ
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Counsel: R J Buchanan for Appellant
O Woodroffe for Respondent |
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Judgment: 22 August 2011 at 11.30 am
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JUDGMENT OF THE COURT
(a) to compile a list of members of the Green Valley Church Assembly affiliated with Assemblies of God in New Zealand Incorporated over the age of 18 years as at the date of this judgment;
(b) to organise a ballot at which those persons elect not less than five and not more than nine persons who are to be nominated for appointment as trustees of Green Valley Samoan Assembly of God Property Trust Board (the Trust Board); and
(c) to report back to the High Court when that ballot has concluded setting out the names of those who have been nominated for appointment as trustees of the Trust Board and outlining the process by which the ballot was conducted and the manner in which those entitled to vote in the ballot was determined with a view to that Court formally appointing new trustees as the trustees of the Trust Board.
_______________________________________________________________
REASONS OF THE COURT
(Given by O’Regan P)
Schism in the Green Valley Church Assembly
[1] The applicant and the respondent are leaders of two factions of a church congregation that worshipped at a church owned by The Green Valley Samoan Assembly of God Property Trust Board, which is a trust board incorporated under the Charitable Trusts Act 1957 (we will call it the Trust Board). The appellant’s group is affiliated with the Assemblies of God Incorporated New Zealand (the AOGNZ).[1] The respondent’s group is affiliated with the Samoan Assemblies of God New Zealand (the SAOG). The respondent’s group excluded the appellant’s group from worshipping at the Green Valley Church. The appellant sought orders from the High Court under s 61 of the Charitable Trusts Act, s 51 of the Trustee Act 1956, and s 60 of the Charities Act 2005, appointing a new trustee of the Trust Board.
[2] The application was heard by Ronald Young J. He determined that the respondent had unlawfully excluded the appellant and the appellant’s group from the Green Valley Church.[2]
[3] The Judge found that the trustees of the Trust Board, all of whom were associated with the respondent’s group, had not been validly elected. He appointed Public Trust as an interim trustee and gave directions as to how the Public Trust should organise an election to elect new trustees so that the Trust Board could operate within the terms of the Trust Deed under which the Trust Board operates (the Trust Deed). Importantly for present purposes, he directed that any person who was a member of the Green Valley Church as at 1 March 2005 (prior to the schism leading to the formation of the appellant’s group and the respondent’s group) would qualify to vote for the new trustees.
[4] The appellant takes issue with that aspect of the High Court decision. He otherwise adopts the High Court decision which largely affirmed the position contended for by the appellant in the High Court. He argues that by allowing members of the respondent’s group to vote, the Judge was allowing persons who were no longer members of a congregation of the kind required by the Trust Deed to participate in the election of trustees. He argued that only those who remained members of the appellant’s group, and therefore affiliated with the AOGNZ, ought to be entitled to vote.
[5] The Judge’s decision appears to be based on an underlying premise that there remains a single assembly associated with the Green Valley Church, albeit one that has split, and that all members of that assembly should be entitled to vote for trustees. The appellant contends that this has the effect of allowing the respondent’s group to maintain their control of the Green Valley Church because they are a larger group than the appellant’s group, and that once they have elected trustees they will take steps to disaffiliate from the AOGNZ and formalise their affiliation with the SAOG.
[6] In his decision, the High Court Judge contemplated that, once the election contemplated by the decision had been held, the elected trustees would thereupon take office. The appellant argues that the court itself should appoint the new trustees after the election has occurred. This is the second (and very much subsidiary) issue on appeal. This point was not raised in the notice of appeal and counsel for the respondent, Mrs Woodroffe objected to the point being raised without leave being granted to amend the notice of appeal. We are satisfied that the point is ancillary to the main point raised by the appellant and there is no prejudice to the respondent in our dealing with it. We do not see any need for the notice of appeal to be amended.
[7] In his notice of appeal, the appellant sought a direction from this Court to the Public Trust to hold a vote on the matter of the affiliation of the Green Valley Church Assembly with the AOGNZ or the SAOG. However, his counsel, Mr Buchanan, told us the appellant did not wish to pursue this. We therefore say no more about it.
[8] Both parties sought to adduce further evidence in this Court. For the most part, this was updating evidence. Neither party objected to the other’s evidence being adduced and we allowed this.
[9] Before turning to the issues it is necessary to set out the factual background. As the Judge’s factual and legal findings are accepted by both parties, we can set out relatively briefly the facts that are important for the determination of the issues before us. For a full account of the facts, reference should be made to the High Court judgment. It should be recorded, however, that the issues of fact that were subject to the Judge’s findings were strongly contested by the respondent in the High Court.
Factual background
[10] The relevant factual background, as found by the High Court Judge and not challenged on appeal is set out below.
Origins of the Green Valley Church Assembly
[11] The Green Valley Church Assembly was formed in 1984 and was formally affiliated with the AOGNZ in May 1985. It was, however, a predominantly Samoan congregation and had a less formal association with a group known as Samoan Assembly of God. However this was not a formally constituted body: the High Court Judge described it as “little more than a loose affiliation of [the AOGNZ] Churches with predominant Samoan congregations”.[3]
[12] The respondent strongly contended in the High Court that the Green Valley Church Assembly was affiliated right from the start with the SAOG and not with the AOGNZ, but the Judge found that, in fact, he was aware all along that the Green Valley Church Assembly was affiliated with the AOGNZ and that, from 1988, he was also an accredited Minister for the AOGNZ, which required him to agree to conform to the rules and constitution of the AOGNZ. The respondent now accepts those findings.
[13] In late 1985 the Green Valley Church Assembly decided to set up a trust to own their church property. Both the appellant and the respondent were members of the church board at that time and both were inaugural trustees. The Trust Deed was signed on 27 March 1986 and the Trust Board was incorporated under the Charitable Trusts Act in August of that year.
Trust Deed
[14] The following provisions of the Trust Deed are material to the present dispute:
(a) The first recital refers to the Green Valley Church Assembly being “under the direction of [the AOGNZ]” and to the fact that the trustees had been appointed to the board of the Green Valley Church Assembly by the AOGNZ. We will call the Officers Board the Church Board. (A later recital seems to contradict the statement that the Green Valley Church Assembly is under the direction of the AOGNZ. It is clear from a reading of the Trust Deed as a whole that the first recital is correct).
(b) There must be not more than ten but not less than four trustees.
(c) The trustees (the Trust Board) agree to hold the trust property (the church) and to permit that property to be used by the Green Valley Church Assembly (i.e. the assembly “under the direction of” the AOGNZ).
(d) The power to appoint new trustees is vested in the “Officers Board of the Green Valley Church Assembly” (that is, the Church Board appointed by the AOGNZ). Any new trustee being appointed must be a member of the Officers Board or a member of a “Local Assembly” recognised by the AOGNZ.
(e) The office of a trustee becomes vacant at the expiration of three years from the date of the last appointment unless a terminating event occurs before that period expires).
(f) The trustees are required to refuse to act in any capacity or execute any deed under the terms of the trust deed “if they consider such act as inconsistent with the Constitution and Rules of [the AOGNZ]”. If there is any dispute as to the application of that clause the decision of the executive council of the AOGNZ is final and binding.
(g) If the Green Valley Church Assembly ceases to function then the trustees are required to execute all necessary documents to transfer or dispose of the surplus of the trust property to the AOGNZ.
(h) Any amendment to the terms of the trust set out in the trust deed may be made by the trustees at the direction of the Church Board, but such amendments may not be inconsistent with the rules and constitution of the AOGNZ and must be unanimously approved by the board or executive council of the AOGNZ.
Constitution and By-laws of the AOGNZ
[15] The requirement in the trust deed to refrain from acting in a way that is inconsistent with the constitution and rules of the AOGNZ requires us to consider the constitutional documents of the AOGNZ. The document in evidence before the High Court was the Constitution and By-Laws of the AOGNZ adopted in October 1997, including amendments to October 2005.
[16] The constitution describes the concept of self-governing churches working together in co-operative fellowship. Clause 7 of the constitution provides:
Each local church has the right of self-government under Jesus Christ, its living head. It shall have the power to transact all business relating to its own affairs according to the scriptures and its local church trust deed, constitution and by-laws, but shall be subject to the General Council [of the AOGNZ] in all matters on which the Fellowship [i.e. the AOGNZ] has made collective rulings.
[17] By-law 2(a) of the by-laws of the AOGNZ provides for local churches to be members of the AOGNZ. That by-law includes the following provision:
No member church of the Fellowship [i.e. the AOGNZ] may also hold a certificate of membership with another organised body possessing a distinct constitution.
[18] That is important in the present case because the respondent’s claim that his group is affiliated with the SAOG is clearly in conflict with that provision.
[19] By-law 2(e) provides the process by which a local church may withdraw from membership of the AOGNZ. It requires a meeting of all of the members of the church after a notice period of one month, and for the resolution to withdraw to be passed by a majority of two-thirds of those present and voting at the meeting.
The schism
[20] The Judge found that the Green Valley Church Assembly had operated as an assembly affiliated with the AOGNZ from 1984 to October 2005, when the schism occurred. At that time the Samoan Assemblies of God began to formalise its organisation and structure. Eventually it incorporated as the SAOG in November 2005. This led to the clash between the AOGNZ and the SAOG and disputes arose in a number of individual churches as to which national organisation the church should be affiliated with. There was litigation between the AOGNZ and the SAOG that was ultimately settled. Although it was argued in the High Court that the settlement affected the present proceedings, it is now accepted that the Judge correctly found that it did not.
[21] In October 2005 the Green Valley Church Assembly split into the two groups now at the centre of this litigation. The appellant’s group wanted to have a vote to determine which organisation the Green Valley Church Assembly should be affiliated with, as contemplated by the AOGNZ by-laws. The respondent strongly resisted such a vote and decided that the Green Valley Church Assembly would affiliate solely with the SAOG. It was made clear to the appellant and the appellant’s group that unless they were also prepared to affiliate solely with the SAOG, they should leave the Green Valley Church Assembly.
[22] The respondent then served trespass notices on the appellant and others in the appellant’s group. The Judge found that the respondent had no right to do this and, indeed, the appellant remained as a trustee at the relevant time so was entitled to enter the Green Valley Church not only as a member of the assembly but as a member of the Trust Board. There was a confrontation, which led to the police being called, and the respondent then arranged for the locks on the Green Valley Church property to be changed. He frankly admitted in answer to a question from the Judge that the purpose of issuing the trespass notice was to stop a vote on affiliation from taking place.
[23] The appellant’s group then began worshipping at rented premises away from the Green Valley Church property (the local school hall) and the respondent’s group has exclusively continued to occupy the Green Valley Church property. Subsequently the AOGNZ revoked the respondent’s ministerial accreditation to the AOGNZ, and the respondent then obtained certification as a minister of the SAOG. The AOGNZ also ceased to recognise the respondent as a member of the Green Valley Church Assembly.
High Court judgment
[24] The Judge found that during the period between 1984 and 2005 the Church Board and the Trust Board were treated as being one and the same, though they had, in reality, distinct functions. Meetings of the Church Board were treated as meetings of the Trust Board and new Church Board members (and, therefore, trustees), were elected every two years (though the Trust Deed referred to a three year term). Elections were held for members of the Church Board, involving members of the Church Assembly who were over 18 years old. However the method of identifying members of the Church Assembly was unclear.
[25] The Judge found that the actions of the respondent and his supporters were not in accordance with the Trust Deed and therefore unlawful. (The respondent said he had not even read the Trust Deed). After those unlawful acts the trustees continued to be those elected as office holders of the respondent’s group, which then claimed to be the Green Valley Church Assembly, albeit that they were now affiliated with the SAOG. It was clear that those purported trustees were acting unlawfully in terms of the Deed because they were not administering the church property for the Green Valley Church Assembly affiliated with the AOGNZ: on the contrary, they were excluding those who continued to be members of the assembly associated with the AOGNZ.
[26] The Judge found that the trustees in office at the time of the High Court proceeding had not been properly appointed and some of those who had been entitled to vote for members of the Church Board had been prevented from doing so. He observed that, even if those purporting to be trustees had been properly appointed, he would have removed them under s 51 of the Trustee Act. He determined that the appropriate course was that there should be an interim trustee appointed, using the power under s 51, and he appointed the Public Trust for that purpose. He directed that the Public Trust should hold an election to appoint new trustees so that the Trust Board could be run as required by the Trust Deed. He determined that those entitled to vote at the election of trustees should be determined as at a time before the schism occurred in October 2005.
[27] This meant that those who had been members of the Green Valley Church Assembly at 1 March 2005, whether they were now associated with the appellant’s group or the respondent’s group, would qualify to vote. The Judge determined that those who were 18 years or over and had been regular church attendees and committed to the Green Valley Church Assembly prior to 1 March 2005 should be permitted to vote. He rejected the contention that members of the respondent’s group should be prohibited from voting because they had disassociated themselves from the AOGNZ.
[28] The Judge said that a church congregation is free to change its affiliation at any time provided it keeps to the rules and those who wanted to change affiliation in the present case should not be prohibited from voting, assuming they would otherwise qualify as members of the Green Valley Church Assembly. He said if the approach advocated by the appellant was taken there could never be any change in affiliation permitted because those who wanted change would be immediately disqualified from voting on the change. On the other hand the appellant’s group should not be excluded because they never abandoned the Green Valley Church Assembly. Rather, they were wrongly excluded.
[29] In a subsequent judgment the Judge awarded costs of $40,000 plus disbursements in favour of the appellant.[4] He ruled that the respondent and the Trust Board would be jointly and severally liable for those costs and disbursements.[5]
Events after High Court hearing
[30] The appellant sought a recall of the High Court judgment on the basis that the Judge had ordered that there be a process for the appointment of trustees that was outside the Trust Deed and contrary to the tenor of the judgment. The Judge considered that the matters raised by the appellant were essentially appeal points and refused to recall his judgment.[6]
[31] Since the hearing of the application to recall the High Court judgment, the respondent’s group has purported to pass a resolution disaffiliating from the AOGNZ. Mrs Woodroffe suggested that this was a step that was contemplated by the High Court judgment but there is no doubt that the Judge contemplated that any debate about disaffiliation would not be undertaken until new trustees had been appointed and the matter could be done in accordance with the Trust Deed and the Constitution and by-laws of the AOGNZ. Purporting to undertake this step while the process for the proper appointment of the trustees was still in motion was unhelpful. The purported resolution has no legal effect.
Who should elect the new trustees?
[32] We now turn to the first issue, namely who should be entitled to vote for new trustees. Ronald Young J took the view that all who were members of the Green Valley Church Assembly on 1 March 2005 should be entitled to vote. This appears to have been based on the premise that the respondent’s group should not be disenfranchised by having renounced any affiliation with the AOGNZ and effectively constituting themselves as a congregation affiliated with the SAOG. By backdating the position to 2005, before the schism occurred, the Judge sought to facilitate the undertaking of the process in the present of the kind that ought to have been undertaken in the past.
[33] The difficulty with this approach is that the respondent’s group refused to undertake the proper process in 2005 and specifically resisted the attempts by the appellant’s group to get them to do so. Mr Buchanan asked us to infer from those actions that the respondent’s group did not have the necessary numbers to disaffiliate in 2005, but said the position has now changed and the effect of the Judge’s ruling will be that people associated with the respondent’s group will be elected as the Trust Board and will then vote to disaffiliate from the AOGNZ and effectively take the property across to the SAOG. He said that this meant that they were effectively profiting by their own unlawful actions and that this was inequitable to the members of the appellant’s group who had been forced out of the church property unlawfully, and prevented from undertaking the processes mandated by the Constitution and by-laws of the AOGNZ and the Trust Deed.
[34] Whether the appellant’s group outnumbered the respondent’s group in October 2005 and whether the position is now reversed does not seem to us to be of significance to the issue before the Court. Rather, the issue turns on the status of the members of the appellant’s group and the respondent’s group respectively.
[35] In our view the answer to the question comes from the Trust Deed itself. As noted earlier[7] cl 5 requires that any new trustee must be a member of the Church Board or the member of a Local Assembly recognised by the AOGNZ. The initial members of the Church Board were, under the terms of the Trust Deed, appointed by the AOGNZ. It is clear from the terms of the Trust Deed that the Church Board is the board of an assembly affiliated with the AOGNZ. The Trust Deed itself provides for trustees to be appointed by the Church Board. In the period between 1984 and 2005 the Green Valley Church Assembly operated in an environment where those who were elected to the Church Board automatically became the trustees. That seems to have conflated two steps, namely the election of the Church Board and the appointment by the Church Board of the Trust Board. Since 2005 that process has continued, but within the respondent’s group only. This led to the High Court Judge concluding that there were no validly appointed trustees.
[36] In terms of the future, the key question is whether members of the respondent’s group can still be said to be members of the Green Valley Church Assembly (that is, the Green Valley Church Assembly under the direction of the AOGNZ). In our view the answer to that is “No”. As the High Court Judge found, the respondent unlawfully purported to disaffiliate the Green Valley Church Assembly from the AOGNZ without following the procedure mandated by the AOGNZ Constitution and By-laws. In the process, he caused the congregation constituted by the respondent’s group to become a congregation affiliated with the SAOG. In fact, he claimed that there had never been a Green Valley Church Assembly affiliated with the AOGNZ, though in this Court he now accepts that he was wrong about that.
[37] We do not think there is any doubt that the congregation constituted by the respondent’s group has no affiliation with the AOGNZ. For an Assembly to be affiliated with the AOGNZ, it must comply with the requirements of the by-laws. The respondent’s group cannot comply with By-law (2)(a) because it is now a member of an organised body possessing a distinct constitution, namely the SAOG.[8] It does not therefore qualify to be an Assembly affiliated with the AOGNZ. No tithes are being paid by the respondent’s group to the AOGNZ. The respondent himself is no longer a minister of the AOGNZ, having been excommunicated from the AOGNZ. The respondent’s own evidence was that his group was affiliated with the SAOG. He described the appellant’s group as wanting to remain affiliated with the AOGNZ, and he said the appellant’s group had “left the church”, essentially because “the church” was now affiliated with the SAOG.
[38] The respondent was clear about this in his evidence. In his affidavit of 23 May 2008, he made it clear that the congregation constituted by the respondent’s group was “solely affiliated with the SAOG”. He confirmed this in answer to questions put to him by the Judge at the trial.
[39] The reason that the above factors did not dissuade the Judge from determining that members of both the appellant’s group and the respondent’s group should be able to vote for the new trustees was that the Judge decided that it was appropriate to determine the entitlement to vote of those involved as at March 2005, before the schism occurred. We consider the Judge erred in that conclusion. The requirements of the Trust Deed for an appointment as trustee have to be interpreted in the present, and only those who are members of the Green Valley Church Assembly affiliated with the AOGNZ can become trustees.
[40] The Trust Deed contemplates that the Church Board of the Green Valley Church Assembly affiliated with the AOGNZ will appoint the trustees. We do not consider it was right to override these terms of the Trust Deed and allow those who have separated themselves from the Green Valley Church Assembly affiliated with the AOGNZ to participate in the vote and, even less so, to put themselves forward as trustees. In our view, the determination of who should be trustees must be managed in a way that conforms more closely with the expectation of the Trust Deed.
[41] We have considered whether the election should be an election for the Church Board rather than for the Trust Board, on the basis that the Church Board would then appoint the trustees of the Trust Board. We see that as conforming more closely with the requirements of the Trust Deed. However, we do not think that the Court’s power under s 51 extends to requiring election of a Church Board which is governed by the rules and customs of the Green Valley Church Assembly affiliated with the AOGNZ, rather than by the terms of the Trust Deed. In the circumstances we consider it as appropriate to require an election by the members of the Green Valley Church Assembly affiliated with the AOGNZ of persons to be nominated for appointment as trustees. If the members of that Assembly consider it appropriate, they can elect the current members of the Church Board to be the nominees for appointment to the Trust Board. We allow the appeal to this extent and amend the High Court orders to bring about this outcome.
[42] We recognise that, whereas the practical effect of the High Court decision was to give full control of the church property to the respondent’s group, the effect of our decision is to give full control to the appellant’s group. We regret that such an “all or nothing” approach is required, but we do not see any alternative being available under the terms of the Trust Deed. We sought to persuade the parties to compromise and took an extended break during the hearing of the appeal to allow for discussions to take place. But no settlement could be reached.
[43] Since the hearing, we have received a report from Mr Buchanan on the correspondence between counsel in relation to settlement. The appellants proposed discussions aimed at reaching a settlement and obviating the need for this Court to give judgment but the respondents decided it was more appropriate to await this Court’s decision. However, the respondents indicated a preparedness to explore the possibility of a reconciliation after this judgment is delivered. We welcome the parties’ readiness to work towards a settlement. We do not think it is too late for the parties to reach a suitable compromise and we exhort them to continue their efforts to do so. As we see it, such a compromise would involve a Trust Board comprising equal numbers of representatives from the appellant’s group and the respondent’s group, with an independent trustee as chair. It would be necessary to amend the Trust Deed (this would have to be undertaken by the congregation constituted by the appellant’s group, given their status under the Trust Deed) to allow for the appointment of the Trust Board as proposed above and to allow both groups to use the church property notwithstanding the affiliation of the respondent’s group to the SAOG.
[44] No doubt both the AOGNZ and the SAOG would need to be involved in this to facilitate that outcome, but we do not see that as providing an insurmountable obstacle. We are aware that other litigation involving other congregations has been settled between the two organisations. Such a settlement could be on the basis that each congregation has access to the church for, say four hours each Sunday. It could be provided that each could choose the hours it prefers to have access to the church and it would then be given access for those hours on alternate Sundays, with the other congregation having access in the remaining hours. Arrangements for the sharing of the burden of serving the mortgage and rates, maintenance costs and the like would then be under the control of the reconstituted Trust Board.
Should the Court appoint the new trustees?
[45] Mr Buchanan argued that it would be preferable for the Court to appoint new trustees, rather than for the Public Trustee to resign and hand over to trustees elected by the members of the Green Valley Church Assembly. Given that the election of trustees is not the process contemplated by the Trust Deed itself, we agree with Mr Buchanan that it would be preferable for the Public Trustee to organise an election of nominees for appointment as trustees and report back to the Court, and the Court then formally to appoint the trustees under s 51 of the Trustee Act, if it is satisfied that the electoral process has been conducted appropriately. We order accordingly. It will be for the High Court to determine whether all or only some of the nominees should be appointed as trustees.
Costs
[46] The parties asked that we reserve costs, and we agreed to do so. We require that any application for costs on the part of the appellant be made within ten working days of the date on which this judgment is delivered, with any submission in reply by the respondent being required within a further ten working days and any reply submission from the appellant within a further five working days. We will determine costs on the papers unless either party seeks a hearing and the Court determines that it is necessary.
Solicitors:
Buchanan Gray, Wellington for
Appellant
Woodroffe Law Partnership, Auckland for Respondent
[1] That is, it is a
member of the AOGNZ: see [17]
below.
[2] Time v
Fagalilo HC Wellington CIV-2008-485-540, 9 March
2010.
[3] At
[20].
[4] Seneti
Time v Luaiva Fagalilo HC Wellington CIV-2008-485-540, 30 June
2010.
[5] Seneti
Time v Luatva Fagalilo HC Wellington CIV-2008-485-540, 27 July
2010.
[6] Seneti
Time v Luatva Fagalilo HC Wellington CIV-2008-485-540, 30 June
2010.
[7] At [14](c)
above.
[8] See at [17] above.
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