The Presbyterian Church of Queensland (PCQ) is liable for tens of millions in debt incurred by Prescare, its former aged care operator. This is the latest result in continuing litigation that has already placed the church denomination in receivership, and future court cases will be needed to determine how the debt can be paid.
Handing down a judgment in three linked cases, Justice Thomas Bradley of the Queensland Supreme Court found that the church is liable for the debts run up by unsuccessful property deals in Townsville, Carina and Corinda (the last two of which are suburbs of Brisbane). The deals involved complex arrangements with a group of property companies named Catalyst, which eventually resulted in significant debts.
The judgment finds that there are two Presbyterian Church of Queensland bodies , an unincorporated association, and a body formed by the church to hold property, with the same name, called in the judgment as “the Corporation”. The Corporation consists of the PCQ Moderator, Clerk and the Treasurer of the Church.
The problem for PCQ is that it failed to have its Aged Care arm, Prescare, as a separately incorporated body. This meant, as determined in this latest judgment, that when Prescare incurred massive debt, the church was liable.
An earlier part of the cases identified debts of $12.39 million and $14.36 million.
The judgment records that the “Receivers alleged that the Catalyst parties could not enforce any of their claims because the Corporation lacked power to enter into the agreements, or because the Corporation had breached its duties as a trustee when it entered into those agreements.
“The Receivers alleged each agreement with a Catalyst party was imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust. They alleged that the Corporation did not exercise the caution, conservatism and restraint expected of it as trustee of a charitable purpose trust.”
But Justice Bradley found that the Corporation carried out the deals “for the charitable purposes of the Church and in accordance with the Church’s constitution.
“The evidence did not show that, in doing so, the Corporation acted other than in good faith, responsibly and reasonably, and exercising the degree of caution expected of a trustee of property held for such charitable purposes…
“The Corporation’s transactions with the Catalyst parties were not imprudent, hazardous,or wholly unsuitable for the Corporation acting as trustee of property for the charitable purposes of the Church.”
Justice Bradley found that the receivers “had failed in their defences,” which means that the church owes tens of millions. He found that “the Catalyst parties have failed in their claims for occupation rent and outgoings, but otherwise succeeded in their claims.”
But this does not mean congregations will be stripped of their property. Further litigation will determine how the debt is handled or what property may be sold.
Justice Bradley goes into considerable detail about the structure of the PCQ, its history in detail and the operation of its rules, known as the code. He noted, “The Code distinguishes ‘congregational property’ from ‘denominational property.”
“Property held by the Corporation (or other trustees) for the purposes of a particular
congregation of the Church is congregational property… Property held by the Corporation for the charitable purposes of the Church is denominational property… Denominational property is “given over” to the committees and boards of the General Assembly to which the General Assembly has allocated responsibility.”
Further cases will determine which properties will be available to meet the debt.
A property which had been held by the PCQ denomination, the campus of Queensland Theological College, was in danger of being sold to pay the receiver’s fees. But in 2022, a massive fundraising effort rescued the college with a new entity, “A Future QTC Ltd,” taking ownership of the college’s inner city home.