COURT FILE AND PARTIES

COURT FILE NO.: 07-31226
DATE: 2012-04-23
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ZORAN PANKERICHAN et. al, Applicants

AND:

RT. REV. BISHOP GEORGIJE DJOKIC, et al., Respondents

BEFORE: The Honourable Mr. Justice R. B. Reid

COUNSEL:
J-D Giacomelli and R. Phalavong, Counsel, for the Applicants
M. Protich, Counsel, for the Respondents

HEARD: January 31, February 1 and 2, 2012

ENDORSEMENT

Introduction:

[ 1 ] The applicants in this case are members of a local congregation of the Serbian Orthodox Church. The respondents are the Bishop of the Serbian Orthodox Diocese of Canada and representatives of diocesan authorities.

[ 2 ] The parties have clashed over the propriety of the Diocese taking administrative control over the Congregation’s property. They have turned to the court to help them resolve the dispute which, over the last six or seven years, has become intractable.

Relief Claimed:

[ 3 ] The applicants seek a declaration that the Congregation’s elected trustees (rather than appointees of the Bishop) hold congregational properties in trust and have authority to manage and deal with the properties.

[ 4 ] Further, the applicants seek a declaration that the actions of the Bishop (acting on behalf of the diocesan authorities) dismissing the Congregation’s elected Executive Board and appointing a temporary trusteeship constituted a wrongful invasion of the trust.

[ 5 ] The applicants seek an order reinstating the Executive Board, requiring new elections, and for an accounting and proper reporting by the temporary trusteeship as to its activities since September 1, 2005.

General Background:

[ 6 ] The Serbian Orthodox Church-School Congregation of St. Nicholas in Unity was formed in 1963. Over the years, members of the Congregation contributed funds to acquire land, to build and to maintain the church buildings, and otherwise support the ongoing life of the Congregation. The Congregation is not incorporated and as a result, its lands are held in trust pursuant to the Religious Organizations’ Lands Act [1] (“ ROLA ”).

[ 7 ] The Serbian Orthodox Diocese of Canada is part of the Serbian Orthodox Church and is subdivided into parishes and church-school congregations. The Congregation is within the ecclesiastical jurisdiction of the Diocese.

[ 8 ] The Diocese is administered by the Bishop who is assisted by the Diocesan Assembly, the Diocesan Council and Diocesan Administrative Board.

[ 9 ] Each congregation is an organized religious community headed by the parish priest or priests in a specified territory. Each congregation is administered by individuals who have been admitted to membership according to the rules of the Diocese, who display certain specified Christian attributes, and who abide by the prescribed oath sworn before their parish priest.

[ 10 ] Each congregation typically elects an executive board to administer and manage church property. This particular congregation also elected five trustees nominally to administer the Congregation’s lands.

[ 11 ] The Serbian Orthodox Church is hierarchical in structure. The Bishop and Diocese are superior in the hierarchy to the Congregation.

The Parties:

[ 12 ] Two of the applicants held the office of elected trustees for the Congregation as of February 13, 2005. Fourteen of the applicants were elected to the Executive Board on that day.

[ 13 ] The named respondents include the Diocesan Bishop, members of the Diocesan Council, the two parish priests of the Congregation and members of the temporary trusteeship appointed September 1, 2005.

Origins of the Dispute:

[ 14 ] In 2004, several disagreements arose as between the Executive Board of the Congregation and the Diocese. One was whether or not the Congregation had contributed the appropriate amount to the Diocese as its payment of diocesan dues. Another related to the denial of the Executive Board’s request for diocesan approval to spend a portion of the Congregation’s building fund in support of a Serbian nationalist organization.

[ 15 ] These two disagreements were minor in comparison to the third dispute which arose over the course of 2004 and 2005 concerning one of the Congregation’s two priests.

[ 16 ] Father Stevo Stojsaljevic had been a priest to the Congregation for many years. The Bishop’s practice was to have priests retire at age 65. Father Stevo wished to continue in his role beyond age 65. This was supported by the Executive Board on behalf of the Congregation. The Bishop granted a one-year extension of Father Stevo’s tenure to March 31, 2005 when he turned 66.

[ 17 ] The Executive Board continued lobbying the Bishop to extend Father Stevo’s appointment.

[ 18 ] Although it is not necessary to arbitrate or even fully canvass the issues that existed between members of the Executive Board and the Diocese, it is clear that the Congregation through the Executive Board did not abandon its efforts to retain Father Stevo as one of its parish priests despite the Bishop’s decision to the contrary. It is also clear that the relationship between the Congregation (especially the Executive Board) and the Diocese was strained as a result.

[ 19 ] On August 17, 2005, the Bishop appointed Father Djuro Samac to be one of the parish’s priests, effective September 1, 2005, filling the vacancy created by Father Stevo’s retirement. On August 28, 2005, the Bishop introduced Father Djuro to the Congregation during Holy Liturgy marking the Dormition of the Most Holy Mother of God, a significant religious holy day in the Serbian Orthodox tradition. In the midst of that service, members of the Executive Board including some of the applicants conducted, in their words, a “peaceful protest”. From the perspective of the respondents, the conduct was a disrespectful disruption of the service by shouts and gestures designed to encourage people to leave the church in the midst of the liturgy as a protest against the Bishop and his decision not to extend Father Stevo’s tenure.

Temporary Trusteeship:

[ 20 ] On September 1, 2005, following the incident of August 28, the Diocesan Administrative Board with the support of the Bishop removed the elected Executive Board of the Congregation and replaced it with temporary trustees. In doing so, the Bishop separated the elected Executive Board members from their ability to control and manage the property and financial affairs of the Congregation. That action led directly to this application in which members of the elected Executive Board challenge the legality of the diocesan action, request the reinstatement of the elected representatives, and seek an accounting by the temporary trusteeship of their actions over the past 6 1/2 years.

[ 21 ] Although the trustees were not specifically removed by the diocesan action, by replacing the elected Executive Board, the effective control by the Congregation of its property through the Executive Board was removed.

[ 22 ] The applicants argue that the replacement of the elected Executive Board was done by the Bishop and diocesan authorities in bad faith. They argue that, pursuant to ROLA , it was not legal to constructively remove the trustees of the real property. As a result, to the extent that any purported authority existed within the Serbian Orthodox Church to do so, it must be subservient to provincial legislation and was therefore invalid in these circumstances.

[ 23 ] The respondents claim that they behaved appropriately, in good faith and pursuant to the internal rules of the Church. They say that their actions were not contrary to any provincial legislation including ROLA , and contend that the dispute is entirely within the realm of private canon law through the application of the diocesan legislation.

Legislative Framework:

Provincial Legislation:

[ 24 ] ROLA provides for the acquisition, holding and dealing with land by religious organizations that are not incorporated. As part of that function, it provides for the appointment, tenure and duties of trustees in relation to land.

[ 25 ] It is common ground that the Congregation’s property, both real and personal, cannot be held by the Congregation itself and that a trust is necessary for that purpose.

[ 26 ] There is no dispute that the Congregation falls within the definition of a “religious organization” in section 1(1) of ROLA . Similarly, the Congregation’s trustees fall within the definition of trustees in the Act as regards of the holding of real property.

[ 27 ] ROLA provides in section 3 that the religious organization may “by resolution adopted at a meeting of the organization” provide for the appointment and removal of trustees. A trustee is to hold office until he or she dies, resigns or ceases to be a member of the organization “unless the constitution or a resolution of the religious organization otherwise provides.”

Institutional Legislation:

[ 28 ] Within institutional structure of the Serbain Orthodox Church, there are governance documents to which the various components of the Church must adhere.

[ 29 ] At the congregational level, it is typical to have bylaws which amount to the local rules used by a congregation.

[ 30 ] The bylaws are subject to the broader framework of the Diocese.

[ 31 ] In this case, the Congregation enacted bylaws in 1979 which have continued without amendment since that time. The bylaws were submitted to the Bishop as required by the diocesan Constitution in effect at the time and were approved.

[ 32 ] The Diocese enacted its Statute in 1996. The Statute replaced the Constitution which applied to the predecessor diocese that comprised the Serbian Orthodox Church in the United States of America and Canada.

[ 33 ] That Statute contains rules and regulations for the governance of the Diocese (as did the predecessor Constitution) including what amounts to the basic bylaws required of each congregation. To the extent that any congregation wishes to add particular local terms to its bylaws, the congregation is free to do so as long as they are approved by the Bishop and Diocesan Council and are consistent with the Statute. [2]

[ 34 ] As to a congregation’s property, the Statute provides that property shall be used to serve the church, school, religious, educational and charitable purposes of the congregation and shall be maintained by the congregation. [3] The Executive Board is to administer the property “as directed by the Assembly and Diocesan Administrative Board”. [4] The Assembly of the Congregation is its governing body in matters relating to the administration of its property. [5]

[ 35 ] Section 31.15 of the Statute states as follows:

If in the opinion of the Diocesan authorities, the Executive Board of a Church-School Congregation is not serving according to the precepts of the Church, the Diocesan Administrative Board may appoint a temporary trusteeship which performs all the duties of the Executive Board and which has all the rights, powers and obligations of an Executive Board under this Statute, until the Diocesan Administrative Board determines that conditions in the Church-School Congregation have normalized so that a new Board may be elected.

That is the provisions relied on by the diocesan authorities to remove the elected Executive Board and replace it with a temporary trusteeship as of September 1, 2005.

[ 36 ] After implementation of the Statute in 1996, the Diocese required that all congregations update their bylaws to be compliant with the Statute. Updating was not done by the Congregation.

[ 37 ] The temporary trusteeship prepared a draft version of new bylaws for review by the Congregation in February 2006. The proposed new bylaws were not adopted.

[ 38 ] In February 2007, by decision of the Diocesan Assembly, all bylaws of any congregation not brought into compliance with the Statute were deemed superseded by the terms of the Statute. This decision applied to all congregations in the Diocese.

[ 39 ] The applicants have relied on the provisions of the Congregation’s 1979 bylaws, and particularly the requirement for the democratic election of the trustees and Executive Board to give legitimacy to their position. Since February 2007, those bylaws have had no application.

Analysis and Conclusion:

[ 40 ] Courts are reluctant to exercise jurisdiction over disputes within religious organizations that involve issues of church governance. To do so would deprive the religious organizations of the right to interpret matters of religious doctrine which are not appropriate terms for judicial determination. [6] However, courts have intervened to review the actions of religious bodies when the controversies (typically regarding membership) involve property, contracts or other civil rights.

[ 41 ] In this case, the threshold question is whether or not the respondents have violated trust law in constructively removing and replacing the elected trustees. If there has been a violation, there would be a breach of property rights which could justify judicial intervention.

[ 42 ] There is no doubt that the Congregation’s property is held in a charitable trust for the benefit of its members. Since the Congregation is an unincorporated organization, its property must be held in trust, and ROLA applies to the real property. In non-hierarchical organizations, the trustees may be said to hold property in trust for themselves and all members of the congregation [7] . Here the structure of the Church as set out in its Statute makes it clear that individual members do not have a beneficial, equitable interest in the property. The property would devolve to the Diocese in the event of dissolution of the Congregation, therefore individual members of the Congregation have no right to an ownership interest in either the real or personal property held for the Congregation but rather they have the right to share in the benefits derived indirectly from the use of that property for religious purposes by virtue of their membership. As a result, their individual property rights are not engaged as for example in a case where membership in the religious organization was accompanied by certain rights to occupy and use communally owned property. [8]

[ 43 ] There is no reference to the position “trustees” in the Statue. The Congregation’s bylaws established the powers of the elected trustees in article 56. In it, the trustees are said to be “warrantors” of the Congregation’s property. Their consent and signature is a necessary prerequisite for any loan against or sale of property. However, all actions concerning the purchasing or borrowing against property must be submitted to the diocesan authorities for final approval. As well, in article 41, the officers of the Executive Board are said to be responsible for the “movable and real estate property”, including the ability to buy, sell and rent based on appropriate approval by the congregational Assembly. This is not unlike the power given to the Executive Board under section 31.21(10) of the Statute referred to above. As result, it is reasonable to say that under both the Congregation’s bylaws and the Statute, the actions of the trustees are directed by the administrative decisions of the Executive Board (or temporary trusteeship) and subject to diocesan approval.

[ 44 ] Since the Congregation’s bylaws were superseded by the Statute as a result of the diocesan resolution in February 2007, the provisions of the Statute apply to this matter. In it, the Executive Board is given the duty to represent and protect the interests of the Congregation and administer Congregation property as directed by the Assembly and Diocesan Administrative Board. In effect, by the Statute, the Executive Board is given the role previously shared (at least nominally) in the bylaws between the Executive Board and the trustees.

[ 45 ] In my view, the actions of the Diocese in supplanting the parish bylaws with the provisions of the Statute and in substituting members of the Executive Board with appointed temporary trustees pursuant to section 31.15 of the Statute were within its administrative authority.

[ 46 ] Those actions were not in conflict with section 3 of ROLA . The trustees have continued to exist but the entity directing them has been changed by the Bishop and diocesan authorities. As a result, I find no breach of provincial law and therefore no engagement of property, contract or other civil rights.

[ 47 ] The applicants take issue with the use to which the Congregation’s funds have been put since the imposition of the temporary trusteeship. The type of replacement flooring chosen for the church building is an example. In fact, the charitable use of the Congregation’s property has never been really at issue, since the permitted uses of the funds are defined in section 29.8 of the Statute, and there is no evidence that the temporary trusteeship has gone beyond those uses.

[ 48 ] The applicants argued that the actions of the respondents were taken in bad faith. The applicants considered that their lobbying efforts to the Bishop regarding Father Stevo’s retirement were within their rights. In their view, the Bishop overreacted and secured the support of the Diocesan Council imposing the temporary trusteeship in order to demonstrate his authority and to penalize the Congregation for their challenge to that authority.

[ 49 ] Further, the applicants allege bad faith in the long-term nature of the temporary trusteeship, which as of the hearing date had existed for almost 6 1/2 years. They argue that the failure of the Diocesan Administrative Board to determine that “conditions in the church school congregations [had] normalized so that a new board may be elected” [9] also amounts to bad faith.

[ 50 ] As to the Bishop’s motivation in seeking the temporary trusteeship, there appears to be ample evidence which, if believed, would indicate that the elected Executive Board was not serving in accordance with the precepts of the Church. However, to determine that question would bring this court squarely into the realm of interpreting matters of religious practice and doctrine which is specifically to be avoided. The same situation would apply as regards considering whether or not there has been a normalization of conditions in the Congregation.

[ 51 ] The applicants have resisted the various decisions imposed on them through the Church hierarchy, where the Bishop and diocesan bodies have overriding authority. This includes the Bishop’s decision not to extend Father Stevo’s tenure. The temporary trusteeship and the corresponding loss of direct control of congregational property followed as a consequence of that resistance.

[ 52 ] The real legal dispute has always been about the loss of the ability by the Congregation through its Executive Board to direct the trustees and administer the Congregation’s property. Underlying that legal dispute is the conflict between the democratically elected Executive Board members and the authority of the Bishop and diocese in a hierarchical structure. Both those issues fall within the private canon law application to the parties and outside the purview of the court.

[ 53 ] For the forgoing reasons, the application is dismissed.

[ 54 ] If the parties are unable to resolve the issue of costs consensually, I am prepared to receive written submissions according to the following timetable: the respondents are to provide the applicants a bill of costs together with brief written submissions within two weeks of this date. The applicants are then to provide their submissions to the respondents within a further two weeks. The submissions of both parties are then to be filed with the court together with any reply submissions by the respondents by no later than five weeks from this date.

Reid J.

Date: April 23, 2012

[1] R.S.O. 1990, c. R.23

[2] Statute, section 29.7

[3] Statute, section 29.8

[4] Statute, section 31.21(10)

[5] Statute, section 30.1

[6] Lakeside Colony of Hutterian Brethren v. Hofer , 1992 37 (SCC) , 1992 CarswellMan 138 (S.C.C.) at paras. 6-11

[7] Routledge v. Johnston, [1968] O.J. No. 309 (Ont. H.J.C.) at par. 6

[8] Ibid. at paras. 2 - 4

[9] Statute, section 31.15