THE bitter stoush between sacked Methodist Ladies College principal Rosa Storelli and the school board could be headed for the Supreme Court after the Uniting Church ordered both parties to attend mediation.
At a hearing at the Uniting Church synod yesterday, legal counsel for Moderator Isabel Thomas Dobson determined she had powers to intervene in the affairs of the college.
Ms Thomas Dobson directed both parties to attend mediation over both the issue of the overpayment of Ms Storelli's remuneration and the termination of her employment.
She also ordered a freeze on the termination process until the mediation had occurred or there was a further order from her or the Supreme Court.
The board sacked Ms Storelli last week, saying it had lost confidence in her after she refused to repay more than $700,000 of alleged overpayments racked up over 10 years.
Ms Storelli has only agreed to repay $100,000 relating to payments to her nanny, saying the rest is in dispute. She maintains she has done nothing wrong.
Board members were adamant before yesterday's hearing that they were prepared to go to the Supreme Court if the church tried to overturn Ms Storelli's dismissal.
They said they were prepared to defend their constitutional right to fire Ms Storelli under MLC's articles of association.
The Moderator yesterday directed both parties to keep discussions confidential after a week of the drama playing out in the media.
In a carefully worded statement released after the hearing, the board said its rights to employ and terminate the principal's employment were clear in the college's constitution, which it said was approved by the church.
Ms Thomas Dobson said Ms Storelli and the board had until noon on Friday to agree on someone to arbitrate on the issue of the overpayment of the principal's remuneration.
This was not in dispute.
''All parties have agreed that an independent arbitrator should determine conclusively the amount of the overpayments that Ms Storelli owes the college,'' the board said in its statement.
''The board expects this to be resolved in the next three weeks. As the financial issues will now be conclusively resolved by an independent arbitrator, the board is of the opinion that there are no other outstanding issues.''
However, Ms Thomas Dobson also said she would nominate a person by Friday to mediate over the issue of Ms Storelli's termination.
''The mediation is to be completed within 14 days of the appointment of the mediator,'' she said.
Ms Storelli's lawyer, David Shaw, said the parties had been directed not to make any comments to the press. ''Ms Storelli will not be making any comment,'' he said.
Meanwhile, MLC parents have organised a public forum tomorrow night to be chaired by retired Court of Appeal Justice David Ashley.
The forum, which will allow parents to discuss publicly the tumultuous events of recent days, will be addressed by MLC benefactor Marjorie Nicholas, whose husband Hilton is an heir to the Aspro fortune.
The meeting will be held at 7.30 tomorrow night at the Hawthorn campus of the University of Melbourne.