Exit Distraction Free Reading Mode
- Unreported Judgment
- Illuzzi v The Christian Outreach Centre[1997] QCA 204
- Add to List
Illuzzi v The Christian Outreach Centre[1997] QCA 204
Illuzzi v The Christian Outreach Centre[1997] QCA 204
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9569 of 1996
Brisbane
[Illuzzi v. Christian Outreach Centre]
BETWEEN:
DOROTHY MAY ILLUZZI
(Plaintiff) Appellant
AND:
FREDERICK JOHN EDWARDS
(First Defendant)
AND:
WESTPAC BANKING CORPORATION
(ARBN 007 467 141)
(Second Defendant)
AND:
THE CHRISTIAN OUTREACH CENTRE
(Third Defendant) Respondent
Fitzgerald P
Williams J
Lee J
Judgment delivered 15 July 1997
Joint reasons for judgment of Fitzgerald P and Lee J; separate reasons of Williams J, concurring as to orders made.
APPEAL DISMISSED WITH COSTS
CATCHWORDS: AGENCY - vicarious liability for undue influence or breach of fiduciary duty by "counsellor" to church member - no actual or ostensible authority - application of vicarious liability to equitable claims doubted.
FIDUCIARY RELATIONSHIPS - relationship between church and church member - possibility of relationship existing discussed - direct fiduciary duty not pleaded.
Counsel: Mr C Francis for the appellant
Mr A Warnick for the respondent
Solicitors: Morrisons for the appellant
Flower and Hart for the respondent
Hearing Date: 30 April 1997
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9569 of 1996
Brisbane
Before Fitzgerald P.
Williams J.
Lee J.
[Illuzzi v. Christian Outreach Centre]
BETWEEN:
DOROTHY MAY ILLUZZI
(Plaintiff) Appellant
AND:
FREDERICK JOHN EDWARDS
(First Defendant)
AND:
WESTPAC BANKING CORPORATION
(ARBN 007 467 141)
(Second Defendant)
AND:
THE CHRISTIAN OUTREACH CENTRE
(Third Defendant) Respondent
JOINT REASONS FOR JUDGMENT - FITZGERALD P. AND LEE J.
Judgment delivered 15 July 1997
This is an appeal against the dismissal of the appellant’s action against the respondent in the District Court with costs to be taxed. The appellant seeks orders that the appeal be allowed, the orders made below in favour of the respondent be set aside, that judgment be entered for the appellant against the respondent for an amount to be fixed by the District Court Judge who tried the action, and that the respondent be ordered to pay the appellant’s taxed costs of and incidental to the action in this appeal.
On 8 June 1989, the appellant mortgaged her home to a bank as security for the indebtedness to the bank of one Frederick John Edwards, and in December 1990, she sold the property under pressure from the bank, which retained almost all the proceeds in reliance on its security. The appellant, who sued Edwards, the bank and the respondent, compromised her action with the bank and recovered judgment against Edwards for $74,809.60, with further orders relating to costs. There has been no appeal by Edwards. However, as noted, the appellant’s claim against the respondent was dismissed.
The appellant’s claim against the respondent is that it is “vicariously liable” for the misconduct of Edwards. That contention is essentially based upon the circumstance that both she and Edwards were members of the respondent’s church community, in which Edwards held an official position described further below. The respondent admitted that it is a “religious institution”, which “provided religious worship, spiritual guidance and pastoral services to its members”. While the appellant was undoubtedly a vulnerable woman, there is nothing to indicate that the appellant was more vulnerable than its other adherents. While she suffered from chronic schizophrenia, characterised by psychotic episodes, auditory hallucinations, thought disorder and marked disorganisation in her behaviour, her condition was not always apparent. For example, on the day when she mortgaged her home to the bank, Edwards took her from the psychiatric ward of the Wesley Hospital, where she had been admitted some days before following a drug overdose, to the bank’s Chermside branch where the documents were signed, and then returned her to the hospital. The trial judge accepted evidence from the bank officers that there was nothing untoward about the appellant’s behaviour during the period of about half an hour when she was at the bank.
The respondent was not associated with the initial contact between the appellant and Edwards, which occurred in January 1989. Her son was employed by Edwards, who had failed to interest him in the activities of the respondent. However, in January 1989, Edwards encountered pressing difficulties in accommodating greyhound dogs which he had owned, trained and raced for some years, and the appellant’s son evinced what the trial judge described as “a fleeting interest in training them”. It is convenient to quote a passage from the judgment below, which was not questioned in this Court:
“... The possibility emerged that Mr Edwards’ dogs could be kept at Mrs Illuzzi’s home, where she was housebound, to a considerable extent, because of obesity. The dogs were moved in, complete with kennels provided by Mr Edwards, who became a regular visitor, to check on the dogs, in whose progress and welfare he was much interested. Any interest [the appellant’s son] may have had in the dogs rapidly waned, but was taken up by [the appellant’s daughter] with determination - a development which pleased the [appellant], who recognised a valuable interest and activity to occupy [the appellant’s daughter’s] time and energy.
Having become a regular visitor to the household, Mr Edwards was not slow to set about proselytizing on behalf of the [respondent], and he had almost universal success with the whole family very quickly.”
As will be seen from the next passage quoted, the appellant was a “water baptism active” member of the respondent’s community within about a month of meeting Edwards.
In an earlier passage which again was not the subject of challenge, his Honour had stated:
“The [respondent] has a large church at Mansfield in Brisbane, where a service which may be attended by thousands is conducted for 2 hours or so on Sunday mornings, a less well attended service in the evenings. So far as activities in Brisbane are concerned, the church was headed by a Pastor Taylor (two brothers in succession) with four pastors below in the hierarchy, each with responsibility for a geographical area, to which assistant pastors might be allocated as well. One of the high points of the service was that at which members of the congregation might come forward to be ‘born again’; some would subsequently signify their new commitment by undergoing ‘water baptism”, as Mrs Illuzzi did, following her son Domenico and his wife. Later, [the appellant’s daughter] was ‘born again’. The [respondent] arranged the attendance of a suitable number of ‘salvation counsellors’ who were seated in a special section at the front, apart from the pastors, and were further distinguished by badges or name tags which they wore. I find the probability is that Mr Edwards, who was a salvation counsellor, wore a badge which showed his own name, with the designation ‘counsellor’. The function of the salvation counsellors was to accompany, one to one, those who were born again at the service, bringing them to a pastor for relevant prayer, taking them on to a room where details of name and address and so forth would be taken for entry in the [respondent’s] records. At a typical service, there would be a substantial number of ‘counsellors’ - [the appellant’s daughter] told me, ‘a couple of hundred’ ... . The services included music and singing, preaching, bible readings and prayer. A feature which impressed Mrs Illuzzi was what she thought was emphasis on making gifts to the [respondent], particularly by tithing, but also as special projects arose, such as sealing the carpark. I accept that Mrs Illuzzi gained the impression from the services she attended at Mansfield that the [respondent] regarded sacrificial giving as something that ought to be part of the Christian life. I ought also to say that she seems to have been capable of resisting whatever appeals were made so far as she was concerned herself, her own contributions being minimal, she says because of her limited financial resources and income, she being on a pension.
The [respondent] also promoted what the [appellant] called ‘home church groups’, but were known as ‘care groups’ and so described in some church documents in evidence, this activity occurring in designated members’ homes on a Wednesday evening. Mr Edwards found himself conducting one of these ... . I find that it was known to the [respondent’s] hierarchy and approved by them that Mr Edwards ran a ‘home church’. The idea of these groups was to provide fellowship for members during the week and reinforcement of their religion. Mr Edwards’ group seems to have had a certain focus on music and singing.
I have no clear picture of the duration of Mrs Illuzzi’s regular attendance at church activities. She had difficulties obtaining transport, and it turned out that she persevered with home church for longer than the Mansfield Sunday morning services. There were special meetings for new Christians on Tuesday evenings, of which she attended four, with a break between the second and third. The climax of her enthusiasm for the [respondent] was probably around about 13th February 1989 when she was ‘water baptism active’ according to the [respondent’s] record. She persisted with home church, in Mr Edwards’ group, for some time.
Her most regular contact with him, however, occurred at her own home, ... .”
Other findings by the trial judge, which again were not the subject of contest, are unfortunately imprecise with respect to the period involved. His Honour said:
“[Edwards] says (and no one asked me to doubt it) that he observed problems within the family, particularly friction between Mrs Illuzzi and the children, and that he believed he could offer assistance. Mrs Illuzzi at the least was satisfied with and grateful for his contributions. I find that his conversations and activities came to develop a marked religion cast, with biblical readings or allusions frequent, prayers and some physical activity which Mrs Illuzzi interpreted as ‘laying on of hands’, although Mr Edwards would not accept that description, presumably because this activity was a prerogative of the pastors. On occasions, the subject of Christian giving was raised in the home, specifically when Mrs Illuzzi was told she could give to the [respondent] regularly if she ceased purchasing Vodka: Mr Edwards says his motivation here was to limit Mrs Illuzzi’s drinking.
I find that he had become a confidant of and religious advisor to the household and that he was a valued and respected visitor there on that account. Mrs Illuzzi regarded him as a holy man and as a representative of the [respondent].”
Earlier, his Honour had said:
“I find that the [appellant] did trust Mr Edwards. She regarded him as a holy man, because of his connection with and activities in the [respondent] ...
Whatever Mrs Illuzzi may have thought, the [respondent] had no knowledge of nor any interest in any transaction Mr Edwards got into, nor did it derive (or ever stand to derive) any benefit. If Mr Edwards was in any relevant sense the agent of the [respondent], he was an errant agent, acting solely with a view to looking after his own private interests ... . One point of distinction which makes Mrs Illuzzi’s claim against the [respondent] more problematical is that, although there were contacts between her and Mr Edwards at premises and during activities of the [respondent], the transaction that came about was only ever discussed or negotiated elsewhere, usually at Mrs Illuzzi’s home, although that did not apply on 8th June 1989 [the date when she went to the bank and mortgaged her home]. The only mention of the [respondent] was in response to Mrs Illuzzi’s enquiry why Mr Edwards did not seek financial assistance from [the respondent]; he said its attitude was that if he were helped, all counsellors would have to be.”
Later, after finding that there was “a true analogy with the ‘priest and penitent’ category for purposes of the rules regarding undue influence” as between the appellant and the respondent, his Honour continued:
“The [respondent’s] position is a completely different matter, as noted above. It had no relevant knowledge of any aspect of Mr Edwards’ private dealings with Mrs Illuzzi, had not authorised him to engage in any financial dealings with her whatever, in my assessment had done nothing to give any appearance of having done so, and had no interest arising from any such dealings (that which Mrs Illuzzi suggests, of preserving Mr Edwards’ continued occupancy of his residence which was used for home church, being of the most tenuous nature - presumably his new premises, or others, even Mrs Illuzzi’s, could have been used to keep the group going). [Counsel for the appellant] engaged in an attempt to make something of Mrs Illuzzi’s rapid progress from being born again to water baptism as showing that she had progressed as far as she could in the [respondent], as if this placed it under some obligation to her. I cannot see why it should. The considerable numbers of counsellors, in my opinion, make it untenable to argue that the [respondent] in some way might assume responsibility for or willy nilly become vicariously liable for the dealings of counsellors, whether or not also leaders of a home church, as a general proposition. I would accept there could be special circumstances where such a responsibility arose, such as dealings coming about at the [respondent’s] premises at Mansfield, particularly if the other party were in a state of high religious excitement, creating a position of possible disadvantage or distraction from his or her best financial interests.”
It was then made clear that the circumstances were different from those last referred to. His Honour said:
“The dealings which arose between Mr Edwards and Mrs Illuzzi happened primarily at her place, subject to the dramatic exception of 8th June. About April, Mr Edwards, having discovered that she had unencumbered title to the property, suggested to her in a context given a religious colour (every other door being closed, the approach to her made under the guidance of Jesus, for example) that she make her property available as security for the borrowing of $30,000.00 by him ... . Mrs Illuzzi was led to believe that the injection of funds would in some way permit Mr Edwards to preserve his tenancy of his residence (meeting place for the moment of his home church group which ... moved from Wishart to Mansfield between August and September 1989).
The arrangement for provision of the [appellant’s] property as security for borrowing ... Mr Edwards wished to make was accompanied by certain promises by him. ... From about April 1989, Mr Edwards was in possession of Mrs Illuzzi’s title deed, which she retrieved from the custody of her solicitors in the city for the purpose of handing over.
Views may differ as to the value of the arrangements just described to Mrs Illuzzi, or the Illuzzi family as a whole. ... I would say that his was the favoured side of the bargain. However, it is unnecessary to resolve that question because events on 8th June 1989 led to a recasting of the arrangement. ... The amount he was to borrow increased to $48,000.00 ... From Mrs Illuzzi’s point of view, the risk of the transaction increased enormously, and her rights against Mr Edwards decreased enormously. ... Whatever might be said of the original transaction, the revised one was, in my opinion, plainly to the disadvantage of Mrs Illuzzi, whose capacity to appreciate or deal effectively with the situation was very much under a cloud.”
According to the appellant’s pleading, Edwards promised her that, if she assisted him financially, “she would have a pipeline to Heaven and be blessed one hundred times over” by the respondent. While the trial judge did not find that that was said, he does seem to have accepted that, when the appellant asked Edwards what the position would be if “something happened” to him, he replied, “Oh, there’s always the church there to look after you.” It is unnecessary to make further detailed reference to the trial judge’s factual findings.
The appellant’s case was based on the premise that Edwards was the respondent’s agent for a variety of specified purposes, none of which bore any relationship to financial matters except one; according to para. 25(e) of the appellant’s amended pleading, the respondent “appointed or permitted [Edwards] to persuade or encourage members of the [respondent] to give one tenth or other proportion of their income to the [respondent] or make other donations or give other forms of financial assistance to the [respondent]”. There was no suggestion that any of the purposes related to Edwards obtaining a personal financial benefit. Broadly stated, the other purposes pleaded involved spiritual and pastoral activities. After reference to Edwards’ misconduct towards the appellant, it was alleged in para. 32 of her pleading that “[i]n the premises, the [respondent] is liable to pay to the [appellant] equitable compensation”. The relief claimed against the respondent was “[e]quitable compensation for breach of fiduciary duty, undue influence and unconscionable conduct”.
We have found it difficult even to formulate the appellant’s case against the respondent based on any notion of agency. Edwards neither had, nor needed, the respondent’s authority to obtain a personal financial benefit from the appellant. Implicitly at least, his Honour found that Edwards had neither actual nor apparent authority to do so, and in that he was plainly correct. Even if that were not so, there is no basis upon which this Court could legitimately interfere with his factual conclusions on the evidence in this case.[1] Further, subject to one qualification, it is impossible to imply such an authority into the relationship between the respondent and Edwards, who had no authority to act for the respondent in relation to any transaction for his financial benefit. The qualification referred to relates to the possibility that the law might imply such an authority into the relationship of “church” and “counsellor”.[2] However, there is nothing which we can identify to give substance to such a conclusion, and no authority was cited which might support that view.
Reference is made in the reasons for judgment of Williams J. to an attempt by the appellant to extend her allegations to encompass the proposition that the respondent represented, or enabled Edwards to represent, that he had the respondent’s “backing” for his financial dealings with the appellant. That new case lacks any factual basis, and is inconsistent with the findings which were made.
The appellant also sought to contend in this Court that the respondent breached its fiduciary duty to the appellant by placing Edwards in a position whereby he became the confidant and religious adviser to the appellant, and was able to gain her trust and exercise undue influence over her. Taken in isolation, the relief which the appellant claimed against the respondent might extend to compensation for breach of such a duty. However, when the relief claimed by the appellant is set in the context of her pleading, that was not the case which the respondent had to meet at trial. In any event, the appointment by a church of a spiritual adviser to one of its members is not, without more, a breach of the church’s duty to the member. The respondent gave no material authority to Edwards, had no reason to suspect that Edwards might seek to influence the appellant for his own financial benefit or otherwise act unconscionably, and gained no financial benefit from the appellant. This new approach appears to be an attempt to set up a contention of strict liability, or perhaps a claim for common law damages for negligence[3] despite the absence of any basis for a conclusion that the respondent failed to exercise due care.
The remaining possibility for consideration is that the “vicarious” liability which the appellant sought to attribute to the respondent derived from the respondent’s respective relationships with the appellant and Edwards. Shortly stated, the argument must be that the respondent is vicariously liable in equity to compensate one of its members who is financially disadvantaged by the exercise of undue influence or other unconscionable acts done by one of its “officers” whose misconduct was facilitated by his position with the respondent. Although the theoretical foundation for such a conclusion did not clearly emerge, to the best of our understanding it was Edwards’ liability to the appellant, not his misconduct, which the appellant submitted equity attributed to the respondent.
Whichever approach was intended, the source of such a principle was not identified and, in our opinion, the general proposition upon which the appellant must rely is unsustainable. The reference to vicarious liability seems to add nothing of substance but merely serves to disguise the appellant’s reliance upon breach of a duty allegedly owed to her by the respondent. Her claim is unsupported by any authority to which the Court was referred. The foundation of equitable relief is conduct which offends against conscience, and although the respondent is a church, we can find nothing in its conduct which makes it conscientious for it to compensate the appellant or makes its refusal to do so unconscionable.
The appeal should be dismissed, with costs to be taxed.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9569 of 1996
Brisbane
Before Fitzgerald P
Williams J
Lee J
[Illuzzi v. Christian Outreach Centre]
BETWEEN:
DOROTHY MAY ILLUZZI
(Plaintiff) Appellant
AND:
FREDERICK JOHN EDWARDS
(First Defendant)
AND:
WESTPAC BANKING CORPORATION
(ARBN 007 467 141)
(Second Defendant)
AND:
THE CHRISTIAN OUTREACH CENTRE
(Third Defendant) Respondent
REASONS FOR JUDGMENT - WILLIAMS J
Judgment delivered 15 July 1997
By the amended plaint filed in the District Court the appellant, as plaintiff, claimed relief against the first defendant, FJ Edwards, the second defendant, Westpac Banking Corporation, and the third defendant, the present respondent. Against each three defendants a claim was made for $200,000 equitable compensation for breach of fiduciary duty, undue influence and unconscionable conduct. Against the second defendant there was also a claim for damages pursuant to the Trade Practices Act 1974. The action against the second defendant was settled, and the trial proceeded with respect to the first defendant and the present respondent. The plaintiff succeeded in obtaining a judgment against the first defendant for $74,809.60 with costs, but her action against the present respondent was dismissed with costs. It is from the order dismissing the action against the respondent that the present appeal is brought.
The plaint alleged that the appellant suffered from chronic schizophrenia, characterised by psychotic episodes, auditory hallucinations, thought disorder and marked disorganisation in her behaviour. It would appear that the learned trial judge accepted that she was so afflicted. In the plaint it was alleged that the first defendant was a counsellor with the respondent and that was the subject of a specific response in the defence of the respondent. The learned trial judge made some specific findings as to the relationship between the first defendant and the respondent and it will be necessary to refer to them later.
It was alleged in the plaint and admitted that the respondent was a "religious institution" and "provided religious worship, spiritual guidance and pastoral services to its members."
Over a period of time leading up to 8 June 1989 the first defendant informed the appellant that he was experiencing financial difficulties with his business and that he needed an advance of some $30,000 in order to overcome those difficulties. The first defendant was aware that the appellant had unencumbered title to the house property in which she resided and (to adopt the words of the learned trial judge) he "suggested to her in a context given a religious colour (every other door being closed, the approach to her made under the guidance of Jesus, for example) that she make her property available as security for the borrowing of $30,000 by him, so he could preserve or improve his business by upgrading the stock." It is not necessary to refer in greater detail to the despicable conduct of the first defendant in persuading the appellant to execute a mortgage facilitating such an advance. One cannot imagine a clearer case of undue influence and unconscionable conduct. The appellant rightly obtained judgment against the first defendant.
The more difficult question, and that specifically raised by this appeal, is whether or not in the circumstances the appellant is also entitled to judgment against the respondent. The essential allegations for present purposes made in the plaint were that the "First Defendant was the agent of the Third Defendant for the purposes of carrying out the functions of the Third Defendant" and that "in the course of making a home visit to the Plaintiff, [the First Defendant] orally requested that she permit him to borrow Thirty Thousand Dollars ($30,000) on the security of her said property, and orally represented to the Plaintiff that such sum of Thirty Thousand Dollars ($30,000) would be repaid by him ... and that if she did so, she would have a pipeline to Heaven and be blessed one hundred times over by the Third Defendant." The respondent requested further and better particulars of the breaches of fiduciary duty relied by the appellant and the further and better particulars thereof supplied asserted in each instance that the respondent was "vicariously liable" for the conduct of the first defendant.
In my view it is particularly important to note that neither in the amended plaint, nor in the further and better particulars of breach of fiduciary duty, was anything directly alleged against the respondent. The whole case mounted against the respondent was that it was vicariously liable for the conduct of the first defendant, and that was the case it met at trial. That was recognised by the learned trial judge in his reasons when he noted that the respondent had been joined in the action "on the basis that it is vicariously liable for what the defendant, Mr Edwards, has done."
The reasons for judgment of the learned trial judge contain a careful and detailed analysis of the evidence. As this appeal is only concerned with the liability of the respondent it is not necessary to recount here all of the detail relating to the transaction giving rise to the action.
The learned trial judge found that the appellant "did trust" the first defendant and "regarded him as a holy man". He went on to say: "Whatever Mrs Illuzzi may have thought, the third defendant had no knowledge of nor any interest in any transaction Mr Edwards got into, nor did it derive (or ever stand to derive) any benefit. If Mr Edwards was in any relevant sense the agent of the third defendant, he was an errant agent, acting solely with a view to looking after his own private interests." There was also an express finding that on the critical occasion "the only mention of the third defendant was in response to Mrs Illuzzi's enquiry why Mr Edwards did not seek financial assistance from the church; he said its attitude was that if he were helped, all counsellors would have to be."
Findings were made with respect to the role of "salvation counsellors" in the respondent's organisation. Their particular role was on the occasion when a member of the congregation was "born again". On such occasions salvation counsellors wore a badge showing the person's name and the designation "counsellor". According to the findings the "function of the salvation counsellors was to accompany, one to one, those who were born again at the service, bringing them to a pastor for relevant prayer, taking them on to a room where details of name and address and so forth would be taken for entry in the church's records". On the occasion the appellant was "born again" the first defendant was her "salvation counsellor". That ceremony would appear to have occurred prior to 13 February 1989. There was a specific finding that on that date the appellant was "water baptism active" and that such incident represented the "climax of her enthusiasm for the church".
There was also a finding that a feature which impressed the appellant "was what she thought was emphasis on making gifts to the church ... that the church regarded sacrificial giving as something that ought to be part of the Christian life." But, of some significance was the finding that the appellant "seems to have been capable of resisting whatever appeals were made so far as she was concerned herself, her own contributions being minimal, she says because of her limited financial resources and income, she being on a pension."
The learned trial judge then went on to make some findings with respect to what were called "home church groups" or "care groups". Such activity occurred in designated members' homes on a Wednesday evening. The first defendant took over conducting one of those groups. There was a specific finding that that "was known to the church hierarchy and approved by them". The idea of the groups was to "provide fellowship for members during the week and reinforcement of their religion".
It is of significance that the relationship between the first defendant and the family of the appellant did not commence with the latter's involvement with the respondent. Apparently there had been contact for some years. The appellant's son had been employed as a yardman in the first defendant's used car business. Though the learned trial judge described the evidence as "obscure" there was a finding that around January 1989 that son of the appellant was at least assisting the first defendant in training and racing greyhounds. The kennels were moved to the house property owned by the appellant and from about January 1989 all the first defendant's dogs were apparently housed there and were trained from there. The appellant's daughter also became actively involved in caring for the dogs. All of that resulted in the first defendant being a regular visitor to the appellant's premises for reasons not associated with the respondent.
The findings go on to record that having thus become a regular visitor to the household the first defendant "was not slow to set about proselytizing on behalf of the church". The learned trial judge found that "his conversation and activities came to develop a marked religion cast with biblical readings or allusions frequent, prayers and some physical activity which Mrs Illuzzi interpreted as 'laying on of hands', although Mr Edwards would not accept that description ... I find that he had become a confidant of and religious advisor to the household and that he was a valued and respected visitor on that account. Mrs Illuzzi regarded him as a holy man and as a representative of the third defendant. As between Mrs Illuzzi and Mr Edwards, I consider there is a true analogy with the 'priest and penitent' category for purposes of the rules regarding undue influence."
His Honour then went on to consider the church's position and considered it "a completely different matter". He found that it had "no relevant knowledge of any aspect of Mr Edward's private dealings with Mrs Illuzzi, had not encouraged him to engage in any financial dealings with her whatever ... had done nothing to give any appearance of having done so, and had no interest arising from any such dealings". He pointed out, as was established by the evidence, that there were a large number of counsellors holding meetings of "care groups" in private homes. In consequence he found that the "considerable numbers of counsellors ... make it untenable to argue that the church in some way might assume responsibility for or willy nilly become vicariously liable for the dealings of counsellors, whether or not also leaders of a home church, as a general proposition." He pointed out there could be special circumstances where such a responsibility arose but concluded that there were no such circumstances here.
Ultimately he concluded that the first defendant was not the agent of the respondent in any relevant way nor did the church hold him out as its agent for any purpose unrelated to activities of the Mansfield Church (its principal place of worship) or the care group. Because of that he dismissed the action against the respondent.
In the course of submissions counsel for the appellant referred to certain passages in the appellant's testimony at trial which were not the subject of a specific finding. According to the appellant, on a number of occasions the first defendant at the home group meetings sought donations to the church. As I have said, there was no specific finding as to whether or not such statements were made, but the important point (and there was a general finding on this) is that the appellant never succumbed to that importuning for funds.
Counsel for the appellant also submitted that there was evidence that when the first defendant approached the appellant to make her property available as security for a loan the first defendant told her that the respondent would "back" him. There is no such specific evidence. The appellant did give evidence that in the course of the critical conversation she asked, in effect, what would be the position if "something happened" to the first defendant; she alleges he replied, "Oh, there's always the church there to look after you." That does not amount to a representation that the church would "back" him with respect to the loan transaction.
On the hearing of the appeal the appellant's counsel sought to argue that, on the findings of fact made by the learned trial judge, this court should conclude that the respondent placed the first defendant in the position whereby he became the confidant of and religious advisor to the appellant, was able to obtain the appellant's trust, and was able to exercise undue influence over the appellant. In my view this court should not draw any such conclusions. That was not the case pleaded, nor was it the case conducted at trial. The case the respondent had to meet was that it was vicariously responsible for the inequitable conduct of the first defendant; it did so. One does not know what additional evidence could have been led by or on behalf of the respondent if it had to meet a case that it was directly liable to the appellant because it placed the first defendant in that alleged position.
Counsel for the appellant also argued that the conduct of the respondent in permitting the first defendant to become the confidant of and religious advisor to the appellant, obtain the appellant's trust, exercise undue influence over the appellant and "collect money from and on behalf of the respondent" placed the first defendant in a position from which it would be reasonable to assume that he could represent that he had the backing of the respondent for the short term use of the plaintiff's property as security for his loan. Again that was not the case either pleaded or run at trial. There was no litigation of the question whether or not the respondent permitted or authorised the first defendant to collect money from the appellant on its behalf. In the absence of findings on issues such as that this court should not embark upon a consideration of the theoretical validity of propositions such as that advanced by counsel for the appellant.
There is good reason, and this appears to be in accord with the findings made by the learned trial judge, for concluding that the respondent had no knowledge of the first defendant's private dealings with the appellant. The relationship must be considered in the light of all the dealings between the appellant's family and the first defendant. The non-religious aspects of that cannot be ignored.
As already noted it was neither alleged nor the subject of a finding by the learned trial judge that the respondent had authorised or given any appearance of authorising the first defendant to engage in financial dealings with the appellant on its behalf. Further, it is clear as found by the learned trial judge that the respondent had no interest arising from the impugned dealings. The fact that all relevant dealings took place at the appellant's home and not on premises of the respondent or during formal meetings approved of by the respondent, only highlights the difficulties of the appellant's case.
In so far as the reasoning of the learned trial judge addressed the question whether or not the respondent was vicariously liable for the conduct of the first defendant it was correct. I must say that I have some reservations about determining a claim for equitable damages by relying on a common law concept such as vicarious liability. In my view equity would prefer to consider the direct relationship between the plaintiff and the church and then determine whether or not that relationship gave rise to fiduciary obligations which were breached by the church. As that was not the way this litigation was conducted it is inappropriate for this court to make factual findings which might (if other evidence was not available to rebut the conclusion) lead to a finding that there was a fiduciary relationship between the appellant and the respondent.
Numerous authorities establish that the relationship between "priest and penitent" will in appropriate circumstances give rise to a fiduciary relationship which may well call into play the rules regarding undue influence. But, as I pointed out in Clark v. The Corporation of the Trustees of the Roman Catholic Archdiocese of Brisbane and Rush (unreported, No 1007 of 1994, judgment delivered 20 December 1996) the mere relationship of church and communicant does not automatically in all circumstances give rise to a fiduciary relationship or impose on the church a duty to protect the communicant from foreseeable risks of harm. Nothing said in the course of argument in this case has caused me to alter the views therein expressed.
This case can readily be distinguished from situations where the church authority knew of the improper conduct on the part of its servant and by failing to take appropriate action breached the fiduciary relationship which existed between it and the member of its congregation. The New South Wales Court of Appeal was only concerned with procedural matters in delivering judgment in Archbishop of Perth v. "AA" to "JC" Inclusive (1995) 18 ACSR 333, but nevertheless there are statements in the judgments which indicate that the plaintiffs arguably had a viable cause of action. In that case the relevant claim was that the church breached its fiduciary duty "in failing to respond resolutely to the reports and complaints of sexual and other abuse which ... the church's hierarchy ignored" (337). That situation is similar to that considered by the Supreme Court of Colorado in Moses v. The Diocese of Colorado 863 P. 2d 310 (Colo 1993). The allegation there was that a priest established a sexual relationship with a mentally disturbed woman whom he was counselling. The local bishop became aware of the relationship, became involved in the controversy, and prohibited the victim from discussing the relationship with anyone other than another priest or counsellor. There was also an allegation that the bishop failed to help the victim even though he knew that she was very vulnerable. The appellate court found that there was evidence on which the jury could have returned its verdict that there had been a breach of fiduciary duty owed to the parishioner.
Perhaps the high water mark is represented by the decision of Goodfellow J of the Nova Scotia Supreme Court in FWM v. Mombourquette and Roman Catholic and Episcopal Corporation of Antigonish (1995) 28 CCLT (2d) 157. That was a claim for damages against both a priest and the church with respect to the sexual assaults upon a young boy committed by the priest. The evidence did not disclose any actual knowledge by the diocese nor circumstances in which the diocese ought to have known that the priest was engaging in criminal sexual assaults. Nevertheless it was held that a fiduciary relationship existed between the "diocese by its servant or agent, the parish priest and the parishioners." The judgment went on to hold at 180 that the "Diocese, through its servants and agents, has a fiduciary or trust duty to care for and protect the child from any abuse by the power the priest holds over the child." It may well be of significance that that case was concerned with a child because the learned judge referred to the fact that the dependency and control in question exceeded that of parent and child. However the decision is of no relevance for present purposes because such a relationship was not directly pleaded or relied on at trial in this particular case.
Further, it is worth recording that there was in this case no allegation that the respondent was negligent in not having a proper screening procedure in place with respect to the appointment of persons as counsellors. Such considerations have been said to be possibly relevant in a number of decisions dealing with analogous situations.
Given the pleadings, and the way the matter was conducted at trial, the learned trial judge was correct in all the findings and conclusions that he came to and there is no basis on which this court could properly interfere.
In the circumstances the appeal should be dismissed with costs.
Footnotes
[1] Zuvela v. Cosmarnan Concrete Pty Ltd (1996) 71 A.L.J.R. 29.
[2] Breen v. Williams (1996) 186 C.L.R. 71; Aussie Traveller Pty Ltd v. Marklea Pty Ltd (C.A. 2777 of 1996, unreported, 11 February 1997).
[3] See Bennett v. Minister of Community Welfare (1992) 176 C.L.R. 408; Wickstead v. Browne (1992) 30 N.S.W.L.R. 1; reversed on one point (1993) 10 Leg.Rep. page S.L. 2; Archbishop of Perth v. “A.A.” to “J.C.” Inclusive (1995) 18 A.C.S.R. 333; cf. M. (F.W.) v. Mombourquette (1995) 28 C.C.L.T. (2d) 157.