Canon Law’s Application in Property Today
What is Canon Law?
The Code of Canon Law, is the internal code of the Latin (Western) Catholic Church, promulgated in 1983. It governs a range of Catholic ecclesiastical entities and individuals. As Church law, it imposes obligations on those to whom it applies.
What does Canon Law apply to?
In addition to individual members of the Church (referred to as ‘physical persons’ by the code), Canon Law applies to entities known as ‘juridic persons’ (canons 113-123). These are organisations recognised by the Church as having certain legal capacities of which there are two types:
- Public Juridic Persons, which act in the name of the Church and include entities such as dioceses, parishes, religious institutes, and the Church itself.
- Private Juridic Persons, which do not act in the name of the Church but are recognised by ecclesiastical authority to pursue religious or charitable purposes consistent with the Church’s mission. An example is the St Vincent de Paul Society. A person only becomes a private juridic person if they are approved by the bishop or competent authority via written decree (canon 117).
What general requirements are imposed under Canon Law from a property perspective?
The obligations under Canon Law are extensive. Juridic persons are subject to detailed canonical governance, particularly in relation to property. Under Canon 1257, all temporal goods owned by the universal Church, the Apostolic See, or other public juridic persons are classified as ecclesiastical goods and are therefore governed by the Code of Canon Law (Canons 1254–1310). Jane Power in ‘Corporate and Canonical Governance: Understanding Church Property’, nicely summarises some of these obligations and states that,
“Canonical administrators must ‘fulfil their function with the diligence of a good householder’, including provisions to ensure the protection of the property in civil law (insurance coverage where necessary), obtaining relevant approvals of the diocesan bishop and otherwise reflecting some of the good governance practices imposed by the Corporations Act 2001 (Cth).”
Canon Law also regulates how such property is acquired, managed, and transferred. For example, Canon 1284 states that all ecclesiastical goods must be managed carefully and according to civil law where applicable — including taking steps to protect the Church’s ownership through ‘civilly valid methods’. In a practical sense, this usually means using corporate structures to own or operate property such as schools or hospitals. This also provides civil liability protection for the broader Church by separating operational risk from the corporate entity.
The Supreme Court of New South Wales has acknowledged the relevance of Canon Law in a property context, such as in considering the validity of leases executed by Church authorities. Under Canon 532, a parish priest acts as the legal representative of the parish, but his authority is subject to canonical limits. For instance, Canon 1281 requires that acts of extraordinary administration — including significant property transactions — may only be undertaken with the written consent of the diocesan bishop. In Trustees of the Roman Catholic Church for the Archdiocese of Sydney v TGP Architects & Planners Pty Ltd [2005] NSWSC 381, the Supreme Court of New South Wales held that a lease was not valid as the priest in this instance acted beyond ordinary acts of administration, as approved by the diocesan bishop. Each diocese will have a different description as to what acts are to be considered ‘ordinary’.
Further, while the Catholic Church itself is not a legal entity at civil law and cannot hold property in its own right, civil law accommodates Church ownership structures. In Victoria, this is achieved through the Roman Catholic Trusts Act 1907 (Vic) and the Roman Catholic Trusts Amendment Act 2001 (Vic), which establish corporate trustees for each Catholic diocese. These statutory bodies hold legal title to Church property but are subject to Canon Law in how that property is used, administered, and alienated.
Although Canon Law is not incorporated into Australian statute, it can still have legal consequences. Courts may consider a breach of Canon Law a breach of fiduciary duty. Just as directors have fiduciary duties to companies, canonical administrators owe duties to the public juridical person that they represent – these duties apply in a civil and canonical sense.
Property owned by a private juridic person is not categorised as ‘church property’ under the Code and therefore is not subject to the canon laws that restrict dealings with property.
Can Canon Law apply to an organisation’s property as opposed to Common Law?
It is not accurate to suggest that Canon Law applies instead of Common Law. Canon Law does not override or displace Common Law, which continues to apply. Rather, it operates as an internal legal system of the Catholic Church, governing the acquisition, use, and administration of Church-owned property in accordance with the Church’s religious objectives.
Depending on the circumstances, Canon Law and Common Law may apply concurrently. For example, a Catholic school established by the Church is bound by Canon Law, given its status as an ecclesiastical good – including canons relating to education, property and internal governance. However, this does not exempt the school from complying with Common Law or statutory obligations under Australian education law or general principles of trust and property law.
However, to use an example, where there is a commercial enterprise on Church land, that enterprise itself is not subject to canon law, but the property itself is. Provided that the enterprise is independent from the Church, and not used for religious purposes, they would not be entitled to the concessions that are afforded to religious organisations (see below).
Although Canon Law is not codified in Australian legislation, a breach of Canon Law may nonetheless have legal significance. For example, where Church property is held on trust, as tends to be the case due to the operation of the Roman Catholic Trust legislation, a failure to comply with Canon Law may amount to a breach of fiduciary duties — which is actionable under Common Law or equity.
What advantages/disadvantages does the application of Canon Law have?
In terms of advantages from a property perspective, being bound by Canon Law creates a clear charitable mission, which can be used for charity registration under the Australian Charities and Not-for-profits Commission which enables access to several tax concessions. Further, whilst not strictly related to Canon Law, religious entities are exempt from land tax pursuant to section 74 of the Land Tax Act 2005 (Vic).
Again, given that Canon Law is not binding from a Common Law perspective, this may create some difficulties. For example, Canon Law authorises priests to administer church land, however, precludes the priest from acts of ‘extraordinary administration’ – to a lay person, these lines can be blurred and difficult to tell whether the priest has the authority to enter into certain transactions. Depending on the structure of the corporate entity, and the approval of the diocese bishop, the priest may in fact not have the legal authority to do so. As was the case in Trustees of the Roman Catholic Church for the Archdiocese of Sydney v TGP Architects & Planners Pty Ltd [2005] NSWSC 381 – this can create tension between Canon Law and Common Law as there are many inconsistencies.
Can we get around Canon Law applying?
As explained above, Canon Law is the internal law of the church, to the extent that an entity is considered a juridic person (public or private), Canon Law applies. There is no way around that for those captured by the definition.
Canon Law, however, will not apply where an entity is set up that is not ecclesiastical (noting that all property owned by public juridic persons is considered ecclesiastical and therefore governed by Canon Law). Whilst it is difficult to identify an appropriate structure without a specific example, this would generally include setting up a structure that does not act in the name of the Church and is not subject to canonical governance.
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Disclaimer
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.